Revenue declined almost $85 million for the New York Knicks and Rangers in the third quarter, as pandemic restrictions on fans gutted ticket, concession and merchandise sales, according to the latest financial report by Madison Square Garden Sports, the parent of the two franchises.
MSG Sports, which also owns a handful of minor league teams and real estate that contribute a small amount to overall financials, disclosed it took in $183 million in the three months up to March 31, compared to $267.6 million in the same period in 2020, the last before COVID-19 restrictions eliminated fan attendance. The absence of fans cost a total of $129.5 million in lost suite, ticket, merchandise and concession sales, but—in a sign of the importance of media fees—some of that was offset by gains of $22.8 million in local media rights from MSG Networks, a separately traded company. An increase in league distributions of $22.5 million was recorded too, mainly because of the shift of the NBA and NHL seasons due to the pandemic.
MSG Sports was able to post a net income of $5.5 million in the quarter, a reversal from a $118 million net loss in the year-ago period. The profits came in part from a drop of almost $55 million in NBA luxury tax and revenue sharing the Knicks sidestepped due to the pandemic. The company also benefitted from one-time decreases in corporate expenses stemming from MSG Sports becoming an independently traded business last year. Company executives sounded a note of optimism that the worst may be behind them.
“On a broader scale, the importance and value of live sports content was once again reaffirmed with the NHL’s recent national media rights agreements. And looking ahead, the recent legalization of mobile sports gaming in New York presents a meaningful opportunity for fan engagement, sponsorship and the value of our teams,” said CEO Andrew Lustgarten in the earnings press release. Management is not holding the traditional conference call with Wall Street analysts this quarter.
For the nine months ended March 31, MSG Sports sales were down $342 million to about $269 million, with an overall net loss of $64 million. MSG Sports is the only publicly traded entity that provides a glimpse into NBA and NHL team financials. Overall financial figures aren’t split out between the basketball and hockey franchises, however.
With the easing of the pandemic, the outlook for the teams is improving, with New York City moving toward expanding fan attendance to 30% of capacity with a goal of returning to normal mid-summer. Investor reaction was muted to the release, with MSG Sports shares slightly lower in early trading Wednesday, to $182 a share.
MSG’s sister companies, publicly traded MSG Entertainment, which owns the arena and other live events properties, and MSG Networks, which holds the regional sports network, are merging in a deal not involving the sports teams directly.