Madison Square Garden (NYSE:MSGS) reported fiscal 2026 second-quarter results that management said reflected strong consumer and corporate demand across its core revenue streams, even as local media rights fees moved lower under amended agreements with MSG Networks.
Quarterly results show higher revenue and AOI
For the fiscal second quarter, MSG Sports generated revenue of approximately $403 million and adjusted operating income (AOI) of about $30 million, according to Chief Operating Officer Jamaal Lesane. Chief Financial Officer Victoria Mink said total revenue was $403.4 million, up from $357.8 million in the prior-year period, and AOI increased $9.4 million to $29.7 million.
Per-game in-arena revenue trends improved
Lesane said per-game revenues increased across all in-game categories, including ticketing, suites, sponsorship, and food, beverage, and merchandise. Mink’s breakdown showed event-related revenues of $167.2 million, up 20% year over year, driven largely by ticket, food, beverage, and merchandise revenue. Suites and sponsorship revenues were $98.5 million, an increase of 24% year over year.
Management pointed to multiple demand indicators and pricing actions:
- Combined Knicks and Rangers season ticket renewal rate of approximately 94%.
- Optimization of pricing and mix of individual and group ticket sales to maximize revenue per game.
- Higher per-game ticketing revenue, reflecting in part higher Knicks season ticket prices following last year’s playoff run.
MSG Sports also cited merchandise and per-cap spending strength. Lesane said the company introduced new merchandise offerings for both teams, including Rangers centennial-season items such as a centennial jersey and a Winter Classic jersey. He added that collaborations with brands including KISS and New York or Nowhere drove demand, and that when the Knicks’ KISS collection launched in November and the Rangers’ centennial collection debuted in October, single-game merchandise sales were among the highest in each team’s history. Management said food, beverage, and merchandise per-cap spending was higher than the prior-year quarter.
Sponsorship and premium hospitality activity
Marketing partnerships were highlighted as a growth area. Lesane noted a multi-year agreement with Game 7, which included naming the multi-platform sports and entertainment brand as the Rangers’ first-ever jersey patch partner. He said Game 7 appears on the Rangers’ home, away, and centennial jerseys and served as presenting partner for a centennial theme night.
Additional partnership activity disclosed on the call included new multi-year partnerships with PwC and Polymarket, along with multi-year renewals with Anheuser-Busch and Infosys. In response to an analyst question, Lesane said the company is seeing good momentum and remains on track for growth in both marketing partnerships and premium hospitality in fiscal 2026.
On premium hospitality, management said suite renewals and new sales remained strong and that the company is realizing incremental revenue from renovated Lexus Level suites. Lesane said the renovations, completed in partnership with MSG Entertainment ahead of the 2025-26 season, are intended to improve the guest experience while creating incremental revenue opportunities.
Media rights: national increases offset by local reductions
National and local media rights fees were $122.3 million, down 4% year over year, Mink said. The decline primarily reflected amended local media rights agreements with MSG Networks, partially offset by higher national media rights fees due to the NBA’s new national media rights deals. Lesane noted the NBA’s new national agreements with Disney, NBCUniversal, and Amazon began this season and are reflected in the quarter’s results.
Management reiterated that the amendments to local media rights agreements included 28% and 18% reductions in annual rights fees payable to the Knicks and Rangers, respectively, effective January 1, 2025, along with elimination of annual rights fee escalators. In the Q&A, the company said it continues to believe in the value of local media coverage in the New York and tri-state market and described MSG Networks as a “great partner” for delivering tailored local content. The company also noted that the amended agreements run through the end of the 2028-2029 seasons.
Costs, balance sheet actions, and capital allocation discussion
While AOI rose, Mink said the increase in direct operating expenses partially offset revenue growth. She cited higher team personnel compensation and corresponding luxury tax, higher revenue sharing expenses (net of escrow), and other cost increases. She also noted AOI included $9.9 million of non-cash arena operating lease costs, compared with $9.3 million in the prior-year quarter.
On the balance sheet, Mink said the company refinanced the Knicks and Rangers senior secured revolving credit facilities in November, improving the average borrowing rate and extending maturities to a new five-year term ending in November 2030. She added that total capacity under the Knicks revolver increased by $150 million to $425 million, with no change to borrowings outstanding. At quarter-end, MSG Sports had approximately $81 million in cash and $291 million of debt, comprised of $267 million under the Knicks revolver and $24 million advanced from the NHL.
Asked about potential capital returns, management said its priorities remain maintaining liquidity to fund operations and invest in the core business, maintaining a strong balance sheet, and being opportunistic with other uses of cash flow. The company said it would not rule out a return of capital program in the future and that the refinancings provide enhanced financial flexibility.
On other strategic topics, management said it had no news regarding a minority interest sale, while noting awareness of recent reported transactions in the marketplace and reiterating confidence in the value of the franchises. The company also said it continues to assess the impact of upcoming changes to the tax deductibility of compensation, noting the change becomes effective for the company for the year ended June 30, 2028, and that it had nothing further to share at this time.
About Madison Square Garden (NYSE:MSGS)
Madison Square Garden Sports Corp (NYSE: MSGS) is a leading sports and entertainment holding company focused on professional sports franchises and related media assets. The company owns and operates teams such as the NBA’s New York Knicks, the NHL’s New York Rangers and the WNBA’s New York Liberty. Through these flagship franchises, MSG Sports offers a range of products and services including ticketing, premium seating and sponsorship opportunities, targeting fans in the New York metropolitan area and beyond.
In addition to team operations, Madison Square Garden Sports Corp holds a majority stake in MSG Networks, a regional cable network that broadcasts live sporting events, news and original programming.
