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01/11 03:11
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals a decrease in total revenue, event-related revenues, and media rights fees, leading to a significant operating loss. The Q&A section highlights management's lack of commitment to capital returns and unclear responses to strategic questions. Despite a strong cash position, the negative financial results and uncertain guidance, particularly in media rights and operating expenses, suggest a negative market reaction. The market cap indicates moderate sensitivity to these factors, resulting in a predicted stock price movement of -2% to -8%.
Total Revenue (Fiscal 2025) $1.04 billion, representing an increase driven by sustained consumer and corporate demand for the Knicks and Rangers, as well as increases in key in-game revenue categories like ticketing, sponsorship, and suites.
Adjusted Operating Income (Fiscal 2025) $38.2 million, reflecting the impact of sustained demand and operational investments.
Total Revenue (Q4 Fiscal 2025) $204 million, a decrease from $227.3 million in the prior year period, attributed to one fewer Knicks and Rangers regular season home game and six fewer playoff home games.
Event-Related Revenues (Q4 Fiscal 2025) $140.3 million, an 8% decrease year-over-year, due to fewer games and playoff events.
Suites, Sponsorship, and Signage Revenues (Q4 Fiscal 2025) $31.9 million, an 8% decrease year-over-year, also impacted by fewer games and playoff events.
National and Local Media Rights Fees (Q4 Fiscal 2025) $27.8 million, a 2% decrease year-over-year, reflecting the impact of amended local media rights agreements with MSG Networks.
Adjusted Operating Loss (Q4 Fiscal 2025) $16.8 million, a decrease of $73.3 million year-over-year, primarily due to higher direct operating expenses and a decrease in revenues.
Cash Balance (End of Q4 Fiscal 2025) $145 million, reflecting the company's liquidity position.
Debt Balance (End of Q4 Fiscal 2025) $291 million, including $267 million under the Knicks senior secured revolving credit facility and $24 million advanced from the NHL.
Knicks and Rangers Performance: The Knicks reached the Eastern Conference finals, generating the highest per game gate revenues in team history. The Rangers named Mike Sullivan as Head Coach and are preparing for their 100th anniversary season.
Merchandise and Fan Engagement: In-arena single game Knicks merchandise sales hit new highs during the Eastern Conference finals. The company introduced exclusive merchandise drops and hosted special programs for fans, including watch parties and social media content, driving over 775,000 net new followers.
Marketing Partnerships: New partnerships were formed with Abu Dhabi's Department of Culture and Tourism, Lenovo, and Motorola. Renewals were secured with Verizon, Pepsi, and Benjamin Moore.
Media Rights: The NBA's new national media deals with Disney, NBCUniversal, and Amazon will begin in fiscal '26. The NHL announced a new 12-year agreement with Rogers Communications for Canadian national media rights starting in '26/'27.
Revenue Growth: Fiscal '25 revenues exceeded $1 billion, driven by ticketing, sponsorship, and suite revenues. Average season ticket renewal rate for the Knicks and Rangers is approximately 90%.
Premium Hospitality: Record suite revenues were achieved, supported by expanded and renovated club spaces. Additional suite renovations are underway to drive incremental revenue in fiscal '26.
Local Media Rights Agreements: Amendments to local media rights agreements with MSG Networks included reductions in annual rights fees (28% for the Knicks, 18% for the Rangers) and elimination of annual rights fee escalators, effective January 1, 2025.
Franchise Valuation: The company emphasized the value of owning iconic sports franchises, citing recent franchise transactions at record-level valuations.
Local Media Rights Agreements: Amendments to local media rights agreements with MSG Networks resulted in 28% and 18% reductions in annual rights fees for the Knicks and Rangers, respectively, effective January 1, 2025. This also includes the elimination of annual rights fee escalators and a shortening of contract expirations to the end of the 2028-29 seasons, potentially impacting long-term revenue stability.
Merchandise Revenue: Overall merchandise revenues, including online sales, did not reach last year's levels due to the absence of new jersey launches for the Rangers, which had positively impacted the prior year's results.
Event-Related Revenues: Event-related revenues decreased by 8% year-over-year in Q4 2025, driven by fewer Knicks and Rangers home games and playoff games compared to the prior year.
Operating Expenses: Higher direct operating expenses were reported, including increased team personnel compensation, luxury tax, and revenue sharing expenses, which contributed to an adjusted operating loss of $16.8 million in Q4 2025.
Playoff Performance Impact: The Knicks' playoff run generated high revenues, but the Rangers' failure to qualify for the playoffs led to a decision not to raise season ticket prices, potentially impacting revenue growth.
Media Rights Revenue: National and local media rights fees decreased by 2% year-over-year in Q4 2025, reflecting the impact of amended local media rights agreements.
Revenue Growth Projections: The company anticipates revenue growth across all in-arena categories for fiscal 2026, driven by strong consumer and corporate demand for the Knicks and Rangers.
Media Rights Impact: Fiscal 2026 results will reflect the impact of the NBA's new national media rights deals and a full year of the amended local media rights agreements with MSG Networks.
Season Ticket Renewals: The average combined season ticket renewal rate for the Knicks and Rangers is approximately 90% for the 2025-2026 seasons.
Pricing Strategy: The company plans to optimize pricing and the mix of individual and group sales to maximize revenues in fiscal 2026. Season ticket prices for the Knicks have been raised, while prices for the Rangers remain unchanged.
Premium Hospitality Revenue: Incremental revenue growth is expected from the renovation of additional suites, following the success of previous renovations.
Rangers Centennial Initiatives: Special offerings and initiatives are planned for the Rangers' 100th anniversary season to strengthen fan engagement.
The selected topic was not discussed during the call.
The earnings call reveals a decrease in total revenue, event-related revenues, and media rights fees, leading to a significant operating loss. The Q&A section highlights management's lack of commitment to capital returns and unclear responses to strategic questions. Despite a strong cash position, the negative financial results and uncertain guidance, particularly in media rights and operating expenses, suggest a negative market reaction. The market cap indicates moderate sensitivity to these factors, resulting in a predicted stock price movement of -2% to -8%.
The earnings call reveals a mixed outlook: strong revenue growth, especially in sponsorship and event-related areas, but a decrease in operating income due to higher expenses. The company's cash position is strong, but there are uncertainties regarding local media rights revenue and potential minority stake sales. The Q&A section highlights management's evasiveness on key issues, which may concern investors. Given the market cap of $4.5 billion, the stock is likely to remain stable, resulting in a neutral prediction for the next two weeks.
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