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The Madison Square Garden Company Reports Fiscal 2019 Second Quarter Results

New York, N.Y., February 1, 2019 – The Madison Square Garden Company (NYSE: MSG) today reported financial results for the second quarter ended December 31, 2018.

Effective July 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (ASC Topic 606), the new accounting standard for revenue recognition.  The most significant impact of ASC Topic 606 in fiscal 2019 is a change in the timing of when certain Company revenue streams and professional sports team-related fulfillment expenses are recognized during the fiscal year.  Prior period results have not been restated to reflect the adoption of ASC Topic 606 and, therefore, the Company’s consolidated and segment results for the fiscal 2019 second quarter are not directly comparable to the results for the second quarter of fiscal 2018.

For the fiscal 2019 second quarter, the Company generated revenues of $632.2 million, operating income of $78.3 million and adjusted operating income of $130.4 million. 

Excluding the impact of ASC Topic 606, fiscal 2019 second quarter revenues would have been $593.6 million, an increase of 11% as compared with the prior year period.  In addition, fiscal 2019 second quarter operating income would have been $46.8 million, a decrease of 36%, and adjusted operating income would have been $98.9 million, a decrease of 17%, both as compared to the prior year period.

Fiscal 2019 second quarter results on a reported basis, as well as excluding the impact of ASC Topic 606, both include $40.8 million in net provisions for certain team personnel transactions, as compared to $2.8 million in the prior year quarter.

Executive Chairman and CEO Jim Dolan said, “Demand for our core assets and brands drove solid second quarter financial results, including strong growth across bookings, the Christmas Spectacular, sponsorship and signage and media rights.  At the same time, we continue to make progress on two strategic priorities for our Company – our proposed Sports business spin-off and our MSG Sphere venues.  Looking ahead, we remain confident that our Company is positioned to deliver long-term growth and value creation for shareholders.”

MSG Entertainment
For the fiscal 2019 second quarter, MSG Entertainment revenues of $316.5 million increased 17%, as compared to the prior year period. This primarily reflects higher overall event-related revenues at the Company’s venues, an increase in revenues for the Christmas Spectacular Starring the Radio City Rockettes production and, to a lesser extent, higher sponsorship and signage and suite license fee revenue.  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 an increase in average per-show paid attendance.

Fiscal 2019 second quarter operating income of $93.3 million increased 25% and adjusted operating income of $101.0 million increased 23%, both as compared to the prior year period.  The increase in operating income and adjusted operating income primarily reflects higher revenues, partially offset by an increase in direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses.  The increase in direct operating expenses was primarily due to higher overall event-related expenses at the Company’s venues, and, to a lesser extent, higher expenses for the Christmas Spectacularproduction and TAO Group, as well as the impact of a full quarter of Obscura Digital expenses.  The increase in selling, general and administrative expenses was primarily due to TAO Group venue pre-opening costs, the impact of a full quarter of Obscura Digital expenses, higher professional fees and employee compensation and related benefits.

Excluding the impact of ASC Topic 606, fiscal 2019 second quarter MSG Entertainment revenues would have been $325.0 million, an increase of 20% as compared to the prior year period.  In addition, fiscal 2019 second quarter operating income would have been $90.8 million, an increase of 21%, and adjusted operating income would have been $98.5 million, an increase of 20%, both as compared to the prior year period.

MSG Sports
For the fiscal 2019 second quarter, MSG Sports revenues of $315.8 million increased 19%, as compared to the prior year period, primarily due to ASC Topic 606, which impacted the timing of various revenue streams.  The overall increase in revenues reflects higher local media rights fees from MSG Networks Inc., as well as increased league distributions, event-related revenues from other live sporting events, suite license fee revenue, professional sports teams’ pre/regular season ticket-related revenue and sponsorship and signage revenues.  This was partially offset by lower revenues from professional sports teams’ pre/regular season food, beverage and merchandise sales.

Second quarter operating income of $41.8 million decreased by 16% and adjusted operating income of $48.6 million decreased by 13%, both as compared to the prior year period.  This reflects higher direct operating expenses and, to a lesser extent, an increase in selling, general and administrative expenses, which more than offset higher revenues.  The increase in direct operating expenses was primarily driven by higher net provisions for certain team personnel transactions and, to a lesser extent, the impact on team personnel compensation from the adoption of ASC Topic 606.  The increase in selling, general and administrative expenses was primarily due to higher employee compensation and related benefits and higher corporate general and administrative expenses.

Excluding the impact of ASC Topic 606, fiscal 2019 second quarter MSG Sports revenues would have been $268.7 million, an increase of 1% as compared to the prior year period.  In addition, fiscal 2019 second quarter operating income would have been $12.9 million, a decrease of $37.1 million, and adjusted operating income would have been $19.7 million, a decrease of $36.0 million, both as compared to the prior year period.  Fiscal 2019 second quarter results include $40.8 million in net provisions for certain team personnel transactions, as compared to $2.8 million in the prior year quarter.

Corporate and Other
For the fiscal 2019 second quarter, Corporate and Other’s operating loss of $49.6 million and adjusted operating loss of $19.2 million increased by 9% and 2%, respectively, both as compared with the prior year period, due to higher selling, general and administrative expenses.  The increase in selling, general and administrative expenses was primarily due to higher employee compensation and related benefits (including share-based compensation) and costs associated with the proposed spin-off transaction, partially offset by lower expenses related to the Company’s business development initiatives.

Click here to view the full press 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, Hulu Theater at Madison Square Garden, Radio City Music Hall and Beacon Theatre; the Forum in Inglewood, CA; and The Chicago Theatre. Other MSG properties include legendary sports franchises: the New York Knicks (NBA) and the New York Rangers (NHL); two development league teams –  the Westchester Knicks (NBAGL) and the Hartford Wolf Pack (AHL); and esports teams through Counter Logic Gaming, a leading North American esports organization, and Knicks Gaming, MSG’s NBA 2K League franchise.  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, Beauty & Essex and Vandal.  More information is available at www.themadisonsquaregardencompany.com.

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