MSG Sports Sees Strong Revenue Growth Amid Dwindling Media Rights Fees

Date of Call: Feb 5, 2026

Financials Results

• Revenue: $403.4M, up 12.7% YOY

Business Commentary:

Revenue Growth and Media Rights Impact:

• Madison Square Garden Sports Corp. reported revenues of approximately $403 million for the fiscal '26 second quarter, up from $357.8 million in the prior year period.
• The increase was driven by more home games at the Garden and higher per-game revenues across ticketing, suites, sponsorship, food, beverage, and merchandise, as well as increased national media rights fees from the NBA's new deals.

Media Rights Adjustments:

• National and local media rights fees were $122.3 million, a 4% decrease year-over-year.
• This decrease was primarily due to amended local media rights agreements with MSG Networks, which included reduced annual rights fees and the elimination of escalators, partially offset by higher national media rights fees.

Strong Fan Engagement and Merchandise Sales:

• The Knicks and Rangers achieved a combined season ticket renewal rate of approximately 94%.
• This high renewal rate, along with strong per-cap spending, was driven by fan enthusiasm, optimized pricing strategies, and successful marketing initiatives such as the Rangers Centennial season celebrations.

Marketing Partnerships and Sponsorship Growth:

• The company signed new multiyear partnerships with brands like PwC and Polymarket, and reached renewals with Anheuser-Busch and Infosys.
• These developments reflect strong demand for marketing partnerships and a strategic focus on exclusive retail offerings, contributing to growth in sponsorship revenues.

Financial Stability and Strategic Refinancing:

• MSG Sports refinanced the Knicks and Rangers' senior secured revolving credit facilities, improving average borrowing rates and extending maturity terms.
• This strategic move enhances financial flexibility and demonstrates confidence in the long-term outlook for the teams and leagues.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'positive momentum' with per-game revenues up, strong season ticket renewal rates (~94%), and higher merchandise sales. They noted the company is 'well positioned to drive long-term value' and 'remain confident in the trajectory of our business.'

Q&A:

• Question from Doug Wardlaw (JPMorgan): Given your current cash and debt balances, can you update us on how you're thinking about any potential capital returns? Is this largely contingent on playoff runs for the teams?
  Response: Capital allocation priorities are maintaining liquidity, a strong balance sheet, and opportunistic returns. Recent refinancing improved rates and extended maturities, providing enhanced financial flexibility. A return of capital program is not ruled out in the future.

• Question from Steven Sheeckutz (Citigroup Inc., Research Division): Could you comment if a minority interest sale remains a potential option?
  Response: No news on a minority interest sale. The company is confident in the teams' value, believes recent reported transactions confirm their scarcity, and feels the current stock price does not reflect that value. A sale is never ruled out, but there is nothing to report at this time.

• Question from Steven Sheeckutz (Citigroup Inc., Research Division): How are you thinking about the potential impact of the upcoming changes to the tax deductibility of compensation set to begin in 2027?
  Response: The company is assessing the impact of tax regulation changes, which become effective for the fiscal year ended June 30, 2028. At this time, there is nothing further to share.

• Question from David Joyce (Seaport): Could you please provide an updated outlook on the evolving RSN and local media rights landscape?
  Response: The RSN industry continues to evolve. The company believes in the value of local media coverage for fan engagement, especially in a large market like New York. They have a great partner in MSG Networks, and their amended agreement runs through the end of the 2028-2029 seasons. They remain confident in their position as a rights holder.

• Question from Peter Supino (Wolfe Research, LLC): Could you talk about the Rangers' performance (missing the playoffs) and if that will possibly impact the financials going forward?
  Response: The business remains strong with growth in all in-game revenue categories. The immediate financial markers for the playoffs are incremental home games and the historical policy of not raising season ticket prices if a team misses the playoffs. The company is focused on making the season successful and is monitoring standings.

• Question from Joseph Stauff (Susquehanna Financial Group, LLLP, Research Division): Could you provide an update on opportunities for sponsorship growth and further suite upgrades?
  Response: There is good momentum in both areas. New deals and renewals in marketing partnerships include extensions with Anheuser-Busch and Infosys, and new deals with PwC and Polymarket. The partnership with Game 7 is synergistic. In premium hospitality, strong demand leads to robust suite renewals and new sales. Renovations of Lexus-level suites are yielding benefits, and the company is on track for growth in both areas this fiscal year.

Contradiction Point 1

Clarity and Future Outlook on Capital Return Programs

Contradiction on the certainty and immediate plans for a capital return program.

Considering current cash and debt levels, can you discuss your approach to capital return strategies? - Doug Wardlaw (JPMorgan)

2026Q2: A return of capital program is not ruled out in the future. - Victoria Mink(EVP, CFO & Treasurer)

Will changes to MSG Networks' media rights impact future capital returns? - Brandon A Ross (LightShed Partners, LLC)

2025Q4: The company now has greater near-term clarity for capital allocation decisions... They will consider a return of capital program in the future. - Victoria M. Mink(EVP, CFO & Treasurer)

Contradiction Point 2

Potential for Minority Interest Sales in Team Ownership

Contradiction on the active consideration versus definitive dismissal of a minority stake sale.

Is a minority interest sale still a potential option? - Steven Sheeckutz (Citigroup Inc., Research Division)

2026Q2: There is no news on a minority interest sale.... A sale is never ruled out, but there is nothing to report at this time. - Jamaal Lesane(COO)

Does it make sense for MSGS to sell small minority stakes in the Knicks or the Rangers? - Brandon A Ross (LightShed Partners, LLC)

2025Q4: While they would never rule out the possibility of a minority stake sale, there is nothing to report at this time regarding such a transaction. - Jamaal T. Lesane(COO)

Contradiction Point 3

Strategic Intent and Flexibility on Local Media Rights & Distribution

Shift from open assessment to a firm stance on maintaining local media value.

What's the updated outlook on the RSN and local media rights landscape? - David Joyce (Seaport)

2026Q2: The company believes in the value of local media coverage for fan engagement, especially in a large market like New York. - Jamaal Lesane(COO)

With current issues involving MSG Networks and Optimum's blackout, should investors anticipate a Knicks and Rangers fee reduction as the sole outcome, or is there potential to explore alternative distribution methods like broadcasting or streaming? - David Karnovsky (JPMorgan)

2025Q2: The focus is on maximizing shareholder value and maintaining the connection with local fans. While industry-wide pressure on local media rights exists, and MSG Networks has approached about reducing fees, the company will not speculate on hypotheticals and is simply assessing the best path forward. - Jamaal Lesane(COO)

Contradiction Point 4

Financial Impact Assessment of Potential League Actions

Contradiction on quantifying the cash flow impact of a potential MSG Networks fee reduction.

With current cash and debt levels, what are your plans for potential capital returns? - Doug Wardlaw (JPMorgan)

2026Q2: A return of capital program is not ruled out in the future. - Victoria Mink(CFO)

How would a pause or reduction in local rights payments due to MSG Networks' bankruptcy impact your liquidity and ability to fund team operations, including access to revolvers and other capital sources? - Brandon Ross (LightShed Partners)

2025Q2: A $1 reduction in revenue does not translate to a $1 cash flow reduction due to offsetting factors in revenue sharing and income taxes. - Victoria Mink(CFO)

Contradiction Point 5

RSN Industry Outlook and Strategic Position

Contradiction on the company's stance regarding its local media rights agreements and the RSN industry's stability.

What's the updated outlook on the RSN and local media rights landscape, considering your flat arrangement with MSG Networks and the trend of leagues reclaiming sports rights? - David Joyce (Seaport)

2026Q2: The company believes in the value of local media coverage for fan engagement, especially in a large market like New York. The amended agreements with MSG Networks run through the end of the 2028-2029 seasons. The company remains confident in its position as a rights holder... - Jamaal Lesane(COO)

Have the Knicks and Rangers considered taking a media rights haircut to stabilize the RSN model amid industry pressures? How is the net effect of the new NBA media rights deal calculated, considering the reduction in exclusive game inventory for MSG Networks? - David Karnovsky (JPMorgan)

2024Q4: The impact of the NBA's new national media rights deals... is being actively evaluated. Updates will be provided as appropriate. - Jamaal Lesane(COO)