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0001952073FALSE00019520732024-02-072024-02-07

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 7, 2024
MSG Ent Corp Logo.jpg
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
(Exact name of registrant as specified in its charter)
Delaware 001-41627 92-0318813
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
Two Penn Plaza , New York , New York 10121
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (212) 465-6000
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading
Symbol(s)
Name of each exchange
on which registered
Class A Common Stock MSGE New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☑
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☑



Item 2.02    Results of Operations and Financial Condition.

On February 7, 2024, Madison Square Garden Entertainment Corp. (the “Company”) announced its financial results for its second quarter ended December 31, 2023. A copy of the press release containing the announcement is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, regardless of any general incorporation language in such filings.


Item 7.01    Regulation FD Disclosure.

Investor Presentation

On February 7, 2024, the Company also issued an investor presentation. The investor presentation is included as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

The information furnished pursuant to this Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings.

Forward-Looking Statements

This document may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results, developments or events may differ materially from those in the forward-looking statements as a result of various factors, including financial community perceptions of the Company and its business, operations, financial condition and the industries in which it operates and the factors described in the Company’s filings with the Securities and Exchange Commission, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein. The Company disclaims any obligation to update any forward-looking statements contained herein, except as may be required by law or applicable regulations.

Item 9.01    Financial Statements and Exhibits.
(d) Exhibits
99.1
99.2
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
(Company)
By:
/s/ Philip D'Ambrosio
Name:
Philip D'Ambrosio
Title: Executive Vice President and Treasurer
Dated: February 7, 2024

EX-99.1 2 msgentertainmentcorpearnin.htm EX-99.1 Document

msgelogo8k991era01a.jpg

MADISON SQUARE GARDEN ENTERTAINMENT CORP. REPORTS
FISCAL 2024 SECOND QUARTER RESULTS

FY24 Revenue Range Increased to $930-950 Million, a 10% Increase Year-Over-Year at Midpoint of Range
FY24 Operating Income Range Increased to $95-105 Million and AOI Range Increased to $170-180 Million

Record-Setting Revenues for Christmas Spectacular Production, With Over One Million Tickets Sold
Bookings Business Remains On Track to Deliver Low Double-Digit Percentage Increase in Events in FY2024

NEW YORK, N.Y., February 7, 2024 - Madison Square Garden Entertainment Corp. (NYSE: MSGE) ("MSG Entertainment" or the "Company") today reported financial results for the fiscal second quarter ended December 31, 2023.
The fiscal 2024 second quarter was highlighted by the Christmas Spectacular production’s record-setting holiday season run and robust growth across the Company's bookings business. After extending its run by 8 performances due to strong demand, the Christmas Spectacular concluded its 90th holiday season in early January with over one million tickets sold across 193 shows, marking a return to pre-pandemic attendance levels. In addition, the Company hosted a busy schedule of events across its portfolio of venues and remains well-positioned to achieve a low double-digit percentage increase in the number of bookings events in fiscal 2024.
Financial results for the three and six months ended December 31, 2023 reflect the Company on a fully standalone basis. Results for the three and six months ended December 31, 2022, which were prior to the spin-off from Sphere Entertainment Co. (“Sphere Entertainment”), are presented in accordance with generally accepted accounting principles ("GAAP") for the preparation of carve-out financial statements. These prior year results do not include all of the expenses that would have been incurred by MSG Entertainment had it been a standalone company for the periods presented. Therefore, results for the three and six months ended December 31, 2023 are not fully comparable with results for the prior year period.
For the fiscal 2024 second quarter, the Company reported revenues of $402.7 million, an increase of $46.8 million, or 13%, as compared to the prior year quarter. In addition, the Company reported operating income of $137.4 million and adjusted operating income of $151.0 million, increases of $24.0 million and $24.7 million, respectively, as compared to the prior year quarter.(1)
Executive Chairman and CEO James L. Dolan said, “We continue to see robust demand for our portfolio of live entertainment offerings, which led to record results for this year’s Christmas Spectacular production. Looking ahead, we remain on track to deliver solid growth in fiscal ’24 and believe we are well positioned to generate long-term value for shareholders.”
Results for the Three and Six Months Ended December 31, 2023 and 2022:
Three Months Ended Six Months Ended
December 31, Change December 31, Change
$ millions 2023 2022 $ % 2023 2022 $ %
Revenues $ 402.7  $ 355.9  $ 46.8  13  % $ 544.9  $ 502.3  $ 42.5  %
Operating Income $ 137.4  $ 113.4  $ 24.0  21  % $ 104.0  $ 102.1  $ 1.9  %
Adjusted Operating Income(1)
$ 151.0  $ 126.3  $ 24.7  20  % $ 150.2  $ 137.8  $ 12.4  %
Note: Amounts may not foot due to rounding. NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.
(1)See page 3 of this earnings release for the definition of adjusted operating income (loss) ("AOI") included in the discussion of non-GAAP financial measures.

1


Summary of Reported Results of Operations for the Fiscal 2024 Second Quarter
For the fiscal 2024 second quarter, the Company reported revenues of $402.7 million, an increase of $46.8 million, or 13%, as compared to the prior year quarter. Event-related revenues increased $44.3 million as compared to the prior year period. This primarily reflected an increase in the number of concerts and other live entertainment and sporting events held at the Company’s venues as compared to the prior year quarter and, to a lesser extent, higher per-event revenues in the current year period. Revenues from the presentation of the Christmas Spectacular production increased $17.9 million, primarily due to higher ticket-related revenues, which reflected higher per-show revenue and, to a lesser extent, nine additional performances as compared to the prior year quarter.
The increase in revenues was partially offset by a decrease in advertising sales commissions of $8.4 million in the current year period due to the termination of the Company’s advertising sales representation agreement with MSG Networks as of December 31, 2022. In addition, revenues related to the Company’s arena license agreements with the Madison Square Garden Sports Corp. (“MSG Sports”) decreased $9.8 million. This included a $7.3 million decrease in arena license fee revenues and a $2.5 million decrease in revenues subject to the sharing of economics with MSG Sports, both primarily due to nine fewer Knicks and Rangers games played at the Madison Square Garden Arena ("The Garden") in the current year period.
Fiscal 2024 second quarter direct operating expenses of $202.8 million increased $22.2 million, or 12%, as compared to the prior year quarter. This primarily reflected higher event-related expenses of $19.8 million, due to an increase in the number of events at the Company’s venues and, to a lesser extent, higher per-event expenses in the current year quarter. In addition, direct operating expenses associated with the Christmas Spectacular production increased $3.6 million as compared to the prior year quarter. The overall increase in direct operating expenses was partially offset by other net cost decreases.
Fiscal 2024 second quarter selling, general and administrative expenses of $48.4 million increased $5.1 million, or 12%, as compared with the prior year quarter. The fiscal 2024 second quarter reflects the results of the Company on a fully standalone basis. Results for the fiscal 2023 second quarter reflect the allocation of corporate and administrative costs based on the accounting requirements for the preparation of carve-out financial statements. These results do not include all of the expenses that would have been incurred by MSG Entertainment had it been a standalone company in the prior year period. This was the primary driver of the overall increase in selling, general and administrative expenses, partially offset by the impact of the Company’s transition services agreement with Sphere Entertainment.
Fiscal 2024 second quarter operating income of $137.4 million increased $24.0 million, or 21%, and adjusted operating income of $151.0 million increased $24.7 million, or 20%, both as compared to the prior year quarter. The increase in operating income was primarily due to the increase in revenues and, to a lesser extent, lower restructuring charges in the current year period, partially offset by higher direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses. The increase in adjusted operating income was primarily due to the increase in revenues, partially offset by higher direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses.
Financial Guidance
As a result of the positive momentum across its operations, the Company is increasing its fiscal 2024 guidance for revenues, operating income and adjusted operating income. The Company currently expects the following:
• Revenues of $930 million to $950 million.
• Operating income of $95 million to $105 million.
• Adjusted operating income of $170 million to $180 million(2).
An updated version of the MSG Entertainment investor presentation is now available at investor.msgentertainment.com.
About Madison Square Garden Entertainment Corp.
Madison Square Garden Entertainment Corp. (MSG Entertainment) is a leader in live entertainment, delivering unforgettable experiences while forging deep connections with diverse and passionate audiences. The Company’s portfolio includes a collection of world-renowned venues – New York’s Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall, and Beacon Theatre; and The Chicago Theatre – that showcase a broad array of sporting events, concerts, family shows, and special events for millions of guests annually. In addition, the Company features the original production, the Christmas Spectacular Starring the Radio City Rockettes, which has been a holiday tradition for 90 years. More information is available at www.msgentertainment.com.



(2) See appendix for a reconciliation of operating income to adjusted operating income for fiscal 2024 financial guidance.
2


Non-GAAP Financial Measures
We define adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) excluding (i) the impact of non-cash straight-line leasing revenue associated with the arena license agreements with MSG Sports, (ii) depreciation, amortization and impairments of property and equipment, goodwill and other intangible assets, (iii) share-based compensation expense or benefit, (iv) restructuring charges or credits, (v) merger, spin-off, and acquisition-related costs, including litigation expenses, (vi) gains or losses on sales or dispositions of businesses and associated settlements, (vii) the impact of purchase accounting adjustments related to business acquisitions, (viii) gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan, and (ix) amortization for capitalized cloud computing arrangement costs. We believe that given the length of the arena license agreements and resulting magnitude of the difference in leasing revenue recognized and cash revenue received, the exclusion of non-cash leasing revenue provides investors with a clearer picture of the Company's operating performance. We believe that this adjustment is beneficial for other incremental reasons as well. This adjustment provides senior management, investors and analysts with important information regarding a long-term related party agreement with MSG Sports. In addition, this adjustment is included under the Company’s debt covenant compliance calculations and is a component of the performance measures used to evaluate, and compensate, senior management of the Company. We believe that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the various operating units of our business without regard to the settlement of an obligation that is not expected to be made in cash. We eliminate merger, spin-off, and acquisition-related costs, when applicable, because the Company does not consider such costs to be indicative of the ongoing operating performance of the Company as they result from an event that is of a non-recurring nature, thereby enhancing comparability. In addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan, provides investors with a clearer picture of the Company’s operating performance given that, in accordance with U.S. generally accepted accounting principles, gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan are recognized in Operating (income) loss whereas gains and losses related to the remeasurement of the assets under the executive deferred compensation plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Other income (expense), net, which is not reflected in Operating income (loss).
We believe adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of the Company on a consolidated and combined basis. Adjusted operating income (loss) and similar measures with similar titles are common performance measures used by investors and analysts to analyze our performance. Internally, we use revenues and adjusted operating income (loss) as the most important indicators of our business performance, and evaluate management’s effectiveness with specific reference to these indicators. Adjusted operating income (loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP. Since adjusted operating income (loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. For a reconciliation of operating income (loss) to adjusted operating income (loss), please see page 5 of this release.
Forward-Looking Statements
This press release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results, developments or events may differ materially from those in the forward-looking statements as a result of various factors, including financial community perceptions of the Company and its business, operations, financial condition and the industries in which it operates and the factors described in the Company’s filings with the Securities and Exchange Commission, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein. The Company disclaims any obligation to update any forward-looking statements contained herein.

# # #
Contacts:
Ari Danes, CFA
Senior Vice President, Investor Relations, Financial Communications & Treasury
Madison Square Garden Entertainment Corp.
(212) 465-6072
Justin Blaber
Vice President, Financial Communications
Madison Square Garden Entertainment Corp.
(212) 465-6109
Grace Kaminer
Vice President, Investor Relations & Treasury
Madison Square Garden Entertainment Corp.
(212) 631-5076
Conference Call Information:
The conference call will be Webcast live today at 10:00 a.m. ET at investor.msgentertainment.com
Conference call dial-in number is 888-660-6386 / Conference ID Number 8020251
Conference call replay number is 800-770-2030 / Conference ID Number 8020251 until February 14, 2024
3


MADISON SQUARE GARDEN ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
  Three Months Ended December 31, Six Months Ended December 31,
2023 2022 2023 2022
Revenues $ 402,666  $ 355,880  $ 544,878  $ 502,332 
Direct operating expenses (202,761) (180,603) —  (304,438) (282,265)
Selling, general, and administrative expenses (48,389) (43,301) (97,211) (83,415)
Depreciation and amortization (13,205) (15,586) (26,789) (31,571)
Gains, net on dispositions —  4,412  —  4,412 
Restructuring charges (888) (7,359) (12,441) (7,359)
Operating income 137,423  113,443  103,999  102,134 
Interest income 1,083  1,812  1,935  3,322 
Interest expense (15,049) (13,205) (29,336) (24,632)
Other income (expense), net 2,846  (2,172) (1,625) (1,286)
Income from operations before income taxes 126,303  99,878  74,973  79,538 
Income tax expense (1,054) (2,797) (395) (731)
Net income 125,249  97,081  74,578  78,807 
Less: Net loss attributable to nonredeemable noncontrolling interest —  (181) —  (553)
Net income attributable to MSG Entertainment’s stockholders $ 125,249  $ 97,262  $ 74,578  $ 79,360 
Income per share attributable to MSG Entertainment’s stockholders:
Basic $ 2.61  $ 1.88  $ 1.52  $ 1.53 
Diluted $ 2.59  $ 1.88  $ 1.52  $ 1.53 
Weighted-average number of shares of common stock:
Basic 48,029  51,768  48,955  51,768 
Diluted 48,293  51,768  49,168  51,768 

4


MADISON SQUARE GARDEN ENTERTAINMENT CORP.
ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS) TO
ADJUSTED OPERATING INCOME (LOSS)
(in thousands)
(Unaudited)

The following is a description of the adjustments to operating income in arriving at adjusted operating income as described in this earnings release:

•Non-cash portion of arena license fees from MSG Sports. This adjustment removes the impact of non-cash straight-line leasing revenue associated with the arena license agreements with MSG Sports.
•Depreciation and amortization. This adjustment eliminates depreciation and amortization of property and equipment and intangible assets in all periods.
•Share-based compensation. This adjustment eliminates the compensation expense relating to restricted stock units and stock options granted under the Company’s Employee Stock Plan, Sphere Entertainment’s Employee Stock Plan, the Company’s Non-Employee Director Plan and Sphere Entertainment’s Non-Employee Director Plan in all periods.
•Restructuring charges. This adjustment eliminates costs related to termination benefits provided to certain corporate executives and employees.
•Merger, spin-off, and acquisition-related costs. This adjustment eliminates costs related to mergers, spin-offs and acquisitions, including merger-related litigation expenses, in all periods.
•Amortization for capitalized cloud computing arrangement costs. This adjustment eliminates amortization of capitalized cloud computing arrangement costs.
•Remeasurement of deferred compensation plan liabilities. This adjustment eliminates the impact of gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan.
Three Months Ended December 31, Six Months Ended December 31,
$ thousands 2023 2022 2023 2022
Operating income $ 137,423  $ 113,443  $ 103,999  $ 102,134 
Non-cash portion of arena license fees from MSG Sports(1)
(9,120) (12,410) (9,615) (12,929)
Depreciation and amortization 13,205  15,586  26,790  31,571 
Share-based compensation (excluding share-based compensation in restructuring charges) 7,773  6,555  13,950  13,965 
Gains, net on dispositions —  (4,412) —  (4,412)
Restructuring charges 888  7,359  12,441  7,359 
Merger, spin-off, and acquisition-related costs(2)
—  —  2,035  — 
Amortization for capitalized cloud computing arrangement costs 448  29  448  104 
Remeasurement of deferred compensation plan liabilities 343  160  198 
Adjusted operating income $ 150,960  $ 126,310  $ 150,246  $ 137,798 
_________________
(1)This adjustment represents the non-cash portion of operating lease revenue related to the Company’s Arena License Agreements with MSG Sports. Pursuant to GAAP, recognition of operating lease revenue is recorded on a straight-line basis over the term of the agreement based upon the value of total future payments under the arrangement. As a result, operating lease revenue is comprised of a contractual cash component plus or minus a non-cash component for each period presented. Operating income on a GAAP basis includes lease income of (i) $15,409 and $16,238 of revenue collected in cash for the three and six months ended December 31, 2023, respectively, and $19,416 and $20,220 of revenue collected in cash for the three and six months ended December 31, 2022, respectively, and (ii) a non-cash portion of $9,120 and $9,615 for the three and six months ended December 31, 2023, respectively, and $12,410 and $12,929 for the three and six months ended December 31, 2022, respectively.
(2)This adjustment represents non-recurring costs incurred and paid by the Company for the sale of the retained interest by Sphere Entertainment Co.



5


MADISON SQUARE GARDEN ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS (unaudited)
(in thousands)
December 31,
2023
June 30,
2023
ASSETS
Current Assets:
Cash, cash equivalents, and restricted cash $ 37,572  $ 84,355 
Accounts receivable, net 101,955  63,898 
Related party receivables, current 41,318  69,466 
Prepaid expenses and other current assets 69,408  77,562 
Total current assets 250,253  295,281 
Non-Current Assets:
Property and equipment, net 626,172  628,888 
Right-of-use lease assets 310,219  235,790 
Goodwill 69,041  69,041 
Intangible assets, net 63,801  63,801 
Other non-current assets 100,789  108,356 
Total assets $ 1,420,275  $ 1,401,157 
LIABILITIES AND RETAINED EARNINGS (DEFICIT)
Current Liabilities:
Accounts payable, accrued and other current liabilities $ 197,256  $ 214,725 
Related party payables, current 52,677  47,281 
Long-term debt, current 16,250  16,250 
Operating lease liabilities, current 35,539  36,529 
Deferred revenue 236,349  225,855 
Total current liabilities 538,071  540,640 
Non-Current Liabilities:
Long-term debt, net of deferred financing costs 605,685  630,184 
Operating lease liabilities, non-current 310,952  219,955 
Deferred tax liabilities, net 24,070  23,518 
Other non-current liabilities 43,544  56,332 
Total liabilities 1,522,322  1,470,629 
Commitments and contingencies
Deficit:
Class A Common Stock (a)
455  450 
Class B Common Stock (b)
69  69 
Additional paid-in-capital 25,339  17,727 
Treasury stock at cost (4,365 and 840 shares outstanding as of December 31, 2023 and June 30, 2023, respectively) (140,512) (25,000)
Retained earnings (deficit) 45,881  (28,697)
Accumulated other comprehensive loss (33,279) (34,021)
Total deficit (102,047) (69,472)
Total liabilities and deficit $ 1,420,275  $ 1,401,157 
_________________
(a) Class A Common Stock, $0.01 par value per share, 120,000 shares authorized; 45,487 and 45,024 shares issued as of December 31, 2023 and June 30, 2023, respectively.
(b) Class B Common Stock, $0.01 par value per share, 30,000 shares authorized; 6,867 shares issued as of December 31, 2023 and June 30, 2023, respectively.
6


MADISON SQUARE GARDEN ENTERTAINMENT CORP.
SELECTED CASH FLOW INFORMATION
(in thousands)
(Unaudited)
Six Months Ended
December 31,
2023 2022
Net cash provided by operating activities $ 105,232  $ 69,336 
Net cash (used in) provided by investing activities
(62,731) 22,390 
Net cash used in financing activities (89,284) (553)
Net (decrease) increase in cash, cash equivalents, and restricted cash
(46,783) 91,173 
Cash, cash equivalents, and restricted cash, beginning of period 84,355  62,573 
Cash, cash equivalents, and restricted cash, end of period $ 37,572  $ 153,746 



































































7


MADISON SQUARE GARDEN ENTERTAINMENT CORP.
APPENDIX
FISCAL 2024 FINANCIAL GUIDANCE
ADJUSTMENTS TO RECONCILE OPERATING INCOME TO
ADJUSTED OPERATING INCOME
(in millions)

Fiscal Year 2024
Operating income $95 - $105
Non-cash portion of arena license fees from MSG Sports (25)
Depreciation and amortization 55
Share-based compensation 30
Restructuring charges 13
Merger, spin-off and acquisition-related costs 2
Adjusted operating income $170 - $180
































8
EX-99.2 3 msge2q24investorpresenta.htm EX-99.2 msge2q24investorpresenta
FEBRUARY 2024


 
2 FORWARD LOOKING STATEMENTS AND MARKET DATA Madison Square Garden Entertainment Corp. (the "Company“ or “MSG Entertainment”) has filed with the Securities and Exchange Commission an Annual Report on Form 10-K for the year ended June 30, 2023 (the “Annual Report”) and Quarterly Reports on Form 10 -Q for the quarters ended September 30, 2023 and December 31, 2023 (the “Quarterly Reports”). The Annual Report and the Quarterly Reports contain extensive disclosure about the Company and its business, including selected historical financial information and risk factors that an investor should consider before deciding whether to invest in securities of the Company. This presentation may contain statements that constitute forward looking statements within the meaning of the Private Securit ies Litigation Reform Act of 1995. Such statements include, but are not limited to, certain expectations, goals, projections, and benefits. Words or phrases “expects,” “anticipates,” “believes,” “estimates,” “may,” “will,” “should,” “could,” “potential,” “continue,” “intends,” “pla ns,” and similar words and terms used in the discussion of future operating and future financial performance identify forward looking statemen ts. Investors are cautioned that any such forward looking statements are not guarantees of future performance or results and are subject to kno wn and unknown risks, uncertainties and other factors. Actual results, developments or events may differ materially from those in th e forward looking statements as a result of various factors, including, but not limited to, the performance of the Company and its business and operations, its financial condition, factors affecting the industries in which it operates and the factors described in the Annual Report, th e Quarterly Reports and the Company’s subsequent filings with the Securities and Exchange Commission, including the sections titled “Risk Factors ” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein. Forward looking st atements speak only as of the date they are made. The Company disclaims any obligation to update or revise any forward -looking statements contained herein, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or for any other reason, except to the extent required by law. Investors should not place undue reliance on such forward -looking statements and should not regard the inclusion of such statements as representations by the Company that its plans and objectives will b e achieved or realized. Investors are further advised to consult any further disclosures by the Company in its subsequent filings with the Securities and Exchange Commission. Market Data This presentation also contains market data and other information based on industry publications, reports by market research firms or published independent sources. Some market data and information is also based on the Company's good faith estimates, which ar e derived from management's knowledge of its industry and such independent sources.


 
3 NON-GAAP FINANCIAL MEASURES We define adjusted operating income (loss) (“AOI”), which is a non -GAAP financial measure, as operating income (loss) excluding (i) the impact of non- cash straight-line leasing revenue associated with the Arena License Agreements with Madison Square Garden Sports Corp. ("MSG Sp orts"), (ii) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets, (iii) share -based compensation expense, (iv) restructuring charges or credits, (v) merger, spin-off and acquisition-related costs, including merger related litigation expenses, (vi) gains or losses on sales or dispositions of businesses and associated settlements, (vii) the impact of purchase accounting adjustments related to busi ness acquisitions, (viii) gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan, and (ix) amortization for capitalized cloud computing arrangement costs. We believe that given the length of the Arena License Agreements and resulting magnitude of the difference in leasing revenue recognized and cash revenue received, the exclusion of non-cash leasing revenue provides investors with a clearer picture of the Company's operating performance. Management believes that this adjustment is beneficial for other incremental reasons as well. This adj ustment provides senior management, investors and analysts with important information regarding a long-term related party agreement with MSG Sports. In addition, this adjustment is included under the Company's debt covenant compliance calculations and is a component of the performance measur es used to evaluate, and compensate senior management of the Company. We believe that the exclusion of share -based compensation expense or benefit allows investors to better track the performance of our business without regard to the settlement of an obligation that is not expected to be made in cash. We eliminate merger, spin-off and acquisition-related costs, when applicable, because the Company does not consider such costs to be indicative of the ongoing operating performance of the Company as they result from an event that is of a non-recurring nature, thereby enhancing comparability. In addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the ex ecutive deferred compensation plan, provides investors with a clearer picture of the Company's operating performance given that, in accordance with GAAP, gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan are recognized in Operating (income) loss whereas gains and losses related to the remeasurement of the assets under the executive deferred compensation plan, which are equal t o and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Other income (expense), net, which is not reflected in Operating income (loss). We believe AOI is an appropriate measure for evaluating the operating performance of the Company on a consolidated and combin ed basis. AOI and similar measures with similar titles are common performance measures used by investors and analysts to analyze our performanc e. Internally, we use revenues and AOI as the most important indicators of our business performance, and evaluate management’s effectiveness with specific reference to these indicators. AOI should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss) , cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with U.S. generally accepted accountin g principles (“GAAP”). Since AOI is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar m easures with similar titles used by other companies. For a reconciliation from Operating Income (U.S. GAAP Basis) to AOI please refer to the appen dix within this presentation.


 
4 LEGENDARY BRANDS ICONIC VENUES COMPELLING OPPORTUNITIES


 
OVERVIEW OF MSG ENTERTAINMENT SPIN-OFF ◼ On April 20, 2023, MSG Entertainment (NYSE: MSGE) was spun-off by Sphere Entertainment Co. ◼ ~67% of shares were distributed to shareholders, while 33% were retained by Sphere Entertainment Co. ◼ As of September 22, 2023, Sphere Entertainment Co. no longer owns any of the Company’s Class A common stock ◼ Spin-off created a pure-play live entertainment company, poised to benefit from strong demand for shared experiences 5


 
6 KEY INVESTMENT HIGHLIGHTS PROFITABLE BUSINESS POISED FOR GROWTH ENDURING POPULARITY OF CHRISTMAS SPECTACULAR WORLD-CLASS ENTERTAINMENT VENUES SUBSTANTIAL PRESENCE IN NEW YORK MARKET POTENTIAL FOR ONGOING RETURN OF CAPITAL


 
OUR PORTFOLIO 7


 
8 90 YEARS OF THE CHRISTMAS SPECTACULAR STARRING THE RADIO CITY ROCKETTES 35 YEAR DEALS TO HOST HOME GAMES FOR NEW YORK KNICKS & RANGERS 5 ICONIC VENUES ACROSS NEW YORK AND CHICAGO ~900 LIVE EVENTS IN FISCAL 2023 5.5+ MILLION GUESTS IN FISCAL 2023


 
MADISON SQUARE GARDEN “The World’s Most Famous Arena” #1 grossing venue of its size in the world1 ~21,000 seat maximum capacity 91BI LLBOARD MAGAZINE AS OF YEAR END 2023


 
10 THE THEATER AT MADISON SQUARE GARDEN Versatile venue in central New York City location ~5,600 seat maximum capacity RADIO CITY MUSIC HALL #1 grossing venue of its size in the world1 New York City and national landmark ~6,000 seat maximum capacity 1BI LLBOARD MAGAZINE AS OF YEAR END 2023


 
111BI LLBOARD MAGAZINE AS OF YEAR END 2023 BEACON THEATRE #3 grossing venue of its size in the world1 Iconic rock and roll landmark venue ~2,800 seat maximum capacity THE CHICAGO THEATRE Top 10 grossing venue of its size in the world1 Chicago landmark ~3,600 seat maximum capacity


 
12 CHRISTMAS SPECTACULAR STARRING THE RADIO CITY ROCKETTES Own the Radio City Rockettes and Christmas Spectacular brands 90 years of New York’s cherished holiday tradition


 
13 VALUABLE REAL ESTATE HOLDINGS O U R V E N U E S VENUE MARKET SIZE NEW YORK CITY ~1.1M SQ. FT. BUILDING NEW YORK CITY PART OF THE GARDEN CHICAGO ~73K SQ. FT. BUILDING VENUE MARKET SIZE EXPIRATION NEW YORK CITY ~577K SQ. FT. BUILDING 20381 NEW YORK CITY ~57K SQ. FT. BUILDING 20362 O W N E D LE A S E D 1RADIO CI TY MUSIC HALL’S LEASE EXPIRES IN 2038 WITH AN OPTION TO RENEW FOR AN ADDITIONAL TEN YEARS 2BEACON THEATRE’S LEASE EXPIRES IN 2036 WITH AN OPTION TO RENEW FOR AN ADDITIONAL TEN YEARS


 
14 OUR BUSINESS


 
SUBSTANTIAL PRESENCE IN NEW YORK CITY METRO AREA T H E E N T E R T A I N M E N T C A P I T A L O F T H E W O R L D 15 1NEW-YORK-NEWARK (UNITED STATES CENSUS BUREAU) 2NYC & COMPANY FY23 FACT SHEET 3FORTUNE 500 COMPANIES BY REGION REPORT 2022 4TRACKED BY NIELSEN RESEARCH 52023 POLLSTAR CONCERT MARKET RANKINGS (AS OF JANUARY 2024) #1 CONCERT MARKET IN THE U.S.5 23 MILLION+ POPULATION1 RANKED #1 OF 210 DESIGNATED MARKET AREAS4 61 MILLION+ ANNUAL TOURISTS2 HOME TO GREATEST # OF FORTUNE 500 COMPANIES3


 
UNMATCHED EXPERIENCES • World-class facilities and operations • Leveraging innovative technology ARTIST-FIRST APPROACH • Talent-friendly venues and service • Exclusive recurring programming • Exploring new event types ESTABLISHED RELATIONSHIPS • Deep industry connections • Promoter agnostic • Large and growing proprietary customer database • Increase venue utilization • Improve revenue and engagement across assets • Enable tailored offerings and cross- promotion to drive sell-through 16 • Grow per-event revenue and profitability • Drive repeat visitation to increase sell-through OPPORTUNITIES ESTABLISHED LEADER IN LIVE ENTERTAINMENT U N I Q U E A P P R O A C H D R I V E S B O O K I N G S U C C E S S


 
THE ENDURING POPULARITY OF THE CHRISTMAS SPECTACULAR 9 0 Y E A R S O F N E W Y O R K ’ S C H E R I S H E D H O L I D A Y T R A D I T I O N 1FY 2021 PRODUCTION CANCELLED DUE TO THE IMPACT OF COVID -19 AND FY 2022 PRODUCTION RUN ENDED EARLY DUE TO OMICRON COVID -19 VARIANT 17 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 Number of Shows 204 212 215 209 210 205 204 197 200 210 199 0 101 181 193 1 1 1 1.0 1.0 1.1 1.0 1.0 1.0 1.1 1.0 1.0 1.1 1.1 0.4 0.9 1.0 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY22 FY23 FY24 PAID ATTENDANCE IN MILLIONS $84 $82 $95 $90 $93 $101 $102 $109 $114 $128 $130 $56 $132 $149 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY22 FY23 FY24 TOTAL REVENUE $ IN MILLIONS 1


 
ORIGINAL NBA T E A M “ORIGINAL S IX" N H L T E A M 3 5 Y E A R D E A L S S T A R T I N G I N F Y 2 0 2 1 3% ANNUAL ESCALATORS1 88 PRE / REGULAR SEASON GAMES PER YEAR ARENA LICENSE AGREEMENTS INCLUDE ADDITIONAL REVENUE AND PROFIT-SHARING BETWEEN THE COMPANY AND MSG SPORTS2 VALUABLE LONG-TERM ARENA LICENSE AGREEMENTS WITH MSG SPORTS M A D I S O N S Q U A R E G A R D E N S E R V E S A S H O M E T O M A R Q U E E S P O R T S F R A N C H I S E S 18 1FOR ARENA LICENSE FEES UNDER THE ARENA LICENSE AGREEMENTS WITH MSG SPORTS 2INCLUDES SUITES, FOOD, BEVERAGE AND MERCHANDISE AND SHARED SPONSORSHIP AND SIGNAGE ASSETS A R E N A L I C E N S E F E E C A S H P A Y M E N T S $ I N M I L L I O N S $23 $24 $34 $46 $61 $17 $18 $25 $34 $46 $40 $42 $59 $80 $107 FY22 FY23 FY35 FY45 FY55 Knicks Rangers


 
STRONG MARKETING PARTNERSHIP TRACK RECORD S P O N S O R S H I P R E L A T I O N S H I P S D E L I V E R C O M P E L L I N G V A L U E INNOVATIVE MARKETING PARTNERSHIP OFFERINGS • Sought-after entertainment brands • Significant exposure in NYC • Cross-selling opportunities with MSG Sports VALUABLE MULTI-YEAR PARTNERSHIPS • Signature and Marquee partners represent majority of sponsorship revenue ATTRACTIVE GROWTH OPPORTUNITIES • Utilizing integrated approach to renew existing partners • Targeting emerging and underpenetrated verticals • New relationship formed with Oak View Group and Crown Properties Collection in September 2023 19


 
58 LEXUS LEVEL SUITES CAESARS SPORTSBOOK LOUNGE EXCEPTIONAL HOSPITALITY OFFERINGS D E L I V E R I N G F I R S T - C L A S S E X P E R I E N C E S 18 INFOSYS LEVEL SUITES 20 23 EVENT LEVEL SUITES1 SUITE SIXTEEN THE HUB LOFT WIDE ARRAY OF PREMIUM PRODUCTS • Over 100 premium hospitality offerings • Range of exclusive private spaces, first-class amenities and premier seating locations PRIME POSITIONING IN NEW YORK CITY • Primarily licensed to corporate customers • Multi-year agreements for majority of suites • Partnership with MSG Sports offers access to premium live sporting events POISED FOR GROWTH • Strength of product and content offerings bolsters ongoing renewal and new sales activity • Plan to explore enhancing and expanding offerings, creating new monetization opportunities • Two new event-level suite offerings opened in FY24 1I ncludes 22 event-level su i tes and one event - level club offer ing


 
21 FINANCIAL OVERVIEW


 
22 ARENA LICENSE AGREEMENTS2 8% SPONSORSHIP, SIGNAGE, & SUITES1 31% FOOD, BEVERAGE & MERCHANDISE 18% FISCAL 2023 REVENUE $851M 1INCLUDES ADVERTISING SALES COMMISSIONS REVENUE ($8.8M) UNDER THE ADVERTISING SALES REPRESENTATION AGREEMENT WITH MSG NETWORKS , WHICH WAS TERMINATED AS OF DECEMBER 31, 2022. 2INCLUDES OTHER REVENUE FROM LEASES AND SUBLEASES DIVERSIFIED REVENUE BASE F I S C A L 2 0 2 3 R E P O R T E D R E V E N U E M I X TICKETING & VENUE LICENSE FEES 42%


 
FISCAL 2024 REVENUE $930M-$950M ADJUSTED OPERATING INCOME1 $170M-$180M FISCAL 2024 FINANCIAL GUIDANCE OPERATING INCOME1 $95M-$105M 23 KEY DRIVERS OF FISCAL 2024 GUIDANCE IMPROVING VENUE UTILIZATION • Low double-digit percentage growth in events in bookings business BUILDING ON THE SUCCESS OF CHRISTMAS SPECTACULAR • Increased sell-through, average ticket yield and number of shows GROWING PREMIUM HOSPITALITY • Robust new sales and renewal activity • Two new event-level suite offerings introduced AGREEMENTS WITH MSG SPORTS • Contractual annual escalators in arena license fees • Growth in revenues subject to sharing of economics with MSG Sports2 NOTE: M REPRESENTS DOLLARS IN MILLIONS 1PLEASE REFER TO SLIDE NUMBER 3 FOR OUR DISCUSSION ON NON -GAAP FINANCIAL MEASURES AND THE APPENDIX FOR A RECONCILIATION FROM OPER ATING INCOME (U.S. GAAP BASIS) TO AOI 2INCLUDES SUITES, FOOD, BEVERAGE AND MERCHANDISE AND SHARED SPONSORSHIP AND SIGNAGE ASSETS


 
BALANCE SHEET SNAPSHOT P O T E N T I A L F O R O N G O I N G R E T U R N O F C A P I T A L 24 TOTAL DEBT OUTSTANDING5 $634M CASH AND CASH EQUIVALENTS6 $35M NET DEBT $599M NET DEBT LEVERAGE7 3.3x – 3.5x CAPITAL ALLOCATION PRIORITIES • Focus on debt paydown and opportunistic return of capital to shareholders • $140M Class A Shares repurchased since April 20231 • $110M remaining under share repurchase authorization WELL POSITIONED FOR CASH GENERATION • FY2024 AOI Guidance $170M-$180M2 • FY2024 estimated net interest payments $50M3 • Capital expenditure plans primarily maintenance-related4 • Minimal cash taxpayer through FY2026 NOTE: M REPRESENTS DOLLARS IN MILLIONS 1INCLUDES (A) $75M SHARE REPURCHASES FROM SPHERE ENTERTAINMENT CO. AND (B) THE REPAYMENT OF THE $65M DELAYED DRAW TERM LOAN FACIL I TY, INCLUDING ACCRUED FEES AND INTEREST, FROM SPHERE ENTERTAINMENT CO. WITH SHARES OF CLASS A COMMON STOCK 2PLEASE REFER TO SLIDE NUMBER 3 FOR OUR DISCUSSION ON NON -GAAP FINANCIAL MEASURES AND THE APPENDIX FOR A RECONCILIATION FROM OPERATING INCOME (U.S. GAAP BASIS) TO AOI 3NET OF INTEREST INCOME 4RENOVATIONS OF THE GARDEN, BEACON THEATRE, AND RADIO CI TY MUSIC HALL WERE COMPLETED IN 2013, 2009, AND 1999, RESPECTIVELY 5TOTAL DEBT OUTSTANDING AT 12/31/23 6UNRESTRICTED CASH AND CASH EQUIVALENTS AT 12/31/23 7NET DET LEVERAGE I S CALCULATED USING PROJECTED FI SCAL 2024 AOI GUIDANCE RANGE


 
25 APPENDIX


 
26 PROJECTED FY2024 OPERATING INCOME (U.S.GAAP) $95M-$105M Non-cash portion of Arena License fees from MSGS $(25)M Depreciation and Amortization $55M Share-based compensation $30M Restructuring charges $13M Merger, spin-off and acquisition-related costs1 $2M PROJECTED FY2024 ADJUSTED OPERATING INCOME2 $170M-$180M APPENDIX F Y 2 0 2 4 G U I D A N C E R E C O N C I L I A T I O N O F O P E R A T I N G I N C O M E T O A D J U S T E D O P E R A T I N G I N C O M E NOTE: M REPRESENTS DOLLARS IN MILLIONS 1REPRESENTS NON-RECURRING COSTS INCURRED AND PAID BY THE COMPANY FOR THE SALE OF THE RETAINED INTEREST BY SPHERE ENTERTAINMENT CO . IN SEPTEMBER 2023 2PLEASE REFER TO SLIDE NUMBER 3 FOR OUR DISCUSSION ON NON -GAAP FINANCIAL MEASURES.


 
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