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The Madison Square Garden Company Reports Fiscal 2018 Second Quarter Results

Fiscal 2018 second quarter revenue of $536.3 million, up 20% versus prior year period
Fiscal 2018 second quarter operating income of $72.4 million, up 24% versus prior year period
Fiscal 2018 second quarter adjusted operating income of $118.0 million, up 23% versus prior year period

New York, Feb. 02, 2018 — The Madison Square Garden Company (NYSE:MSG) today reported financial results for the second quarter ended December 31, 2017.

For the fiscal 2018 second quarter, the Company generated revenues of $536.3 million, an increase of 20% as compared with the prior year period.  In addition, the Company generated fiscal 2018 second quarter operating income of $72.4 million and adjusted operating income of $118.0 million, which represent increases of 24% and 23%, respectively, both as compared to the prior year second quarter. (1) (2)

Executive Chairman and CEO Jim Dolan said, “For the fiscal 2018 second quarter, we delivered strong year-over-year growth in revenues and adjusted operating income, fueled by our continued focus on providing the very best in live experiences.  Our performance this quarter was highlighted by strong bookings results, record revenue for the Christmas Spectacular and broad-based growth across our Sports segment.  With regard to our venue expansion strategy, we continue to make important progress on the design of our Las Vegas venue.  Looking ahead, we remain confident in our ongoing ability to deliver attractive long-term growth and value creation for our shareholders.”

MSG Entertainment
For the fiscal 2018 second quarter as compared to the prior year period, MSG Entertainment revenues of $271.2 million increased 41%.  The increase was primarily due to the inclusion of operating results for TAO Group and higher overall event-related revenues at the Company’s venues, as well as an increase in revenues for the Christmas Spectacular Starring the Radio City Rockettes production.  The increase in event-related revenues was primarily due to higher revenues at The Theater at Madison Square Garden, the Forum, The Garden and The Chicago Theatre.   The increase in revenues for the Christmas Spectacular production was primarily due to higher ticket-related revenue, mainly as a result of higher average ticket prices and the impact of additional scheduled performances, partially offset by a decrease in average per-show paid attendance.

Fiscal 2018 second quarter operating income of $74.5 million increased 31% and adjusted operating income of $81.9 million increased 29%, both as compared to the prior year period.  The increases primarily reflect higher revenues, partially offset by an increase in direct operating expenses and higher selling, general and administrative expenses.  The increase in direct operating expenses was primarily due to the inclusion of TAO Group’s operating results and higher overall event-related expenses at the Company’s venues.  The increase in selling, general and administrative expenses was primarily due to the inclusion of TAO Group’s operating results (including a management fee incurred by TAO Group payable to the Company) and higher corporate general and administrative costs and professional fees.

MSG Sports
For the fiscal 2018 second quarter as compared to the prior year period, MSG Sports revenues of $265.1 million increased 5%.  The increase in revenues was primarily due to higher sponsorship and signage revenues, professional sports teams’ pre/regular season ticket-related revenue and food, beverage and merchandise sales, as well as higher local media rights fees from MSG Networks Inc., suite rental fees and league distributions.  This was partially offset by lower event-related revenues from other live sporting events.

Second quarter operating income of $49.3 million increased 23% and adjusted operating income of $55.1 million increased 17%, both as compared to the prior year period.  The increases primarily reflect higher revenues, partially offset by an increase in direct operating expenses and selling, general and administrative expenses.  The increase in direct operating expenses was primarily due to higher other team operating expenses, net provisions for NBA and NHL revenue sharing expense, net provisions for certain team personnel transactions, and expenses associated with food, beverage and merchandise sales, partially offset by lower event-related expenses for other live sporting events and venue operating costs.

Corporate and Other
For the fiscal 2018 second quarter as compared to the prior year period, Corporate and Other’s operating loss of $45.5 million and adjusted operating loss of $19.0 million increased 18% and 27%, respectively, primarily due to higher employee compensation and related benefits and the inclusion of certain selling, general and administrative expenses for Obscura Digital, partially offset by a management fee earned for providing management and strategic services to TAO Group.

Purchase Accounting Adjustments
For the fiscal 2018 second quarter as compared to the prior year period, operating expenses related to purchase accounting adjustments of $5.9 million increased $5.6 million, primarily due to the amortization of intangible assets and expense related to the step-up in value of leases for TAO Group.

Other Items
During the fiscal second quarter, the Company purchased a nearly 5-acre site in London, zoned for commercial and leisure use and adjacent to the Westfield Stratford City shopping center, for $79.5 million (£60.0 million).  This amount excludes transactional taxes, a significant majority of which is recoverable value-added tax.

As a result of the recently enacted Federal tax reform legislation effective January 1, 2018, which reduces the Company’s federal tax rate to 21% from 35% and provides that future net operating losses have an indefinite carry-forward period, fiscal 2018 second quarter net income includes a non-cash income tax benefit of $113.5 million to reduce the Company’s net deferred tax liabilities.

Click here to view the full press release.MSG 2Q’18 Release

About The Madison Square Garden Company
The Madison Square Garden Company (MSG) is a world leader in live sports and entertainment experiences.  The company presents or hosts a broad array of premier events in its diverse collection of iconic venues: New York’s Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall and Beacon Theatre; the Forum in Inglewood, CA; The Chicago Theatre; and the Wang Theatre in Boston.  Other MSG properties include legendary sports franchises: the New York Knicks (NBA), the New York Rangers (NHL) and the New York Liberty (WNBA); two development league teams — the Westchester Knicks (NBAGL) and the Hartford Wolf Pack (AHL); and one of the leading North American esports organizations, Counter Logic Gaming.  In addition, the Company features the popular original production – the Christmas Spectacular Starring the Radio City Rockettes – and through Boston Calling Events, produces New England’s preeminent Boston Calling Music Festival.   Also under the MSG umbrella is TAO Group, a world-class hospitality group with globally-recognized entertainment dining and nightlife brands: Tao, Marquee, Lavo, Avenue, The Stanton Social, Beauty & Essex and Vandal.  More information is available at www.themadisonsquaregardencompany.com.

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