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Local media rights fees decreased $18.6 million as compared to the prior year period, primarily due to a reduction in expected local media rights fees for the 2024-25 season as a result of proposed amendments to the Knicks' and Rangers' local media rights agreements with MSG Networks, which were announced on April 25, 2025 and are discussed in further detail in the Other Matters section of this earnings release.

Food, beverage and merchandise sales decreased $2.5 million as compared to the prior year period, primarily due to lower average per-game revenue, lower online sales of merchandise and the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter. Merchandise sales in the fiscal 2024 third quarter included the positive impact of new Rangers' jersey launches.

Sponsorship and signage revenues increased $8.9 million as compared to the prior year period, primarily due to higher net sales of existing sponsorship and signage inventory, partially offset by the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter.

Suite revenues increased $3.4 million as compared to the prior year period, primarily due to higher net sales of suite products, partially offset by the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter.

Revenues from league distributions increased $2.4 million as compared to the prior year period, primarily due to higher national media rights fees.

Ticket-related revenues increased $0.5 million as compared to the prior year period, primarily due to higher average Knicks and Rangers per-game revenue, partially offset by the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter.

Direct operating expenses of $316.3 million increased $43.3 million, or 16%, as compared to the prior year period. This increase was primarily driven by higher net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax of $33.8 million and higher team personnel compensation of $14.7 million, both as compared to the prior year period. These increases were partially offset by lower net (credits) provisions for certain team personnel transactions of $2.8 million, lower operating lease costs under the arena license agreements with Madison Square Garden Entertainment Corp. ("MSG Entertainment") of $2.0 million, as well as other cost decreases.

Selling, general and administrative expenses of $74.7 million decreased $1.7 million, or 2%, as compared to the prior year period. This decrease was primarily driven by (i) lower employee compensation and related benefits of $12.4 million, mainly due to executive management transition costs recognized in the prior year period, partially offset by (ii) higher professional fees of $7.6 million, (iii) higher costs related to the Company's services agreement with MSG Entertainment of $1.8 million, and (iv) higher operating lease costs of $1.4 million.

Operating income of $32.3 million decreased $47.4 million, or 59%, and adjusted operating income of $36.9 million decreased $51.8 million, or 58%, both as compared to the prior year period, primarily due to the increase in direct operating expenses and, to a lesser extent, the decrease in revenues.

Other Matters
On April 24, 2025, New York Knicks, LLC and New York Rangers, LLC entered into a Transaction Support Agreement (the "Transaction Support Agreement") with Sphere Entertainment Co., MSG Networks and certain subsidiaries of MSG Networks, pursuant to which the teams agreed to support certain proposed transactions to reduce and restructure MSG Networks' debt (collectively, the "Proposed Transactions"). As part of this debt restructuring, the teams agreed to certain amendments to the Knicks' and Rangers' local media rights agreements, effective as of January 1, 2025, as follows: (i) 28% and 18% reductions in annual rights fees for the Knicks and Rangers, respectively; (ii) an elimination of annual rights fee escalators; and (iii) a change to the contract expiration dates to the end of the 2028-29 seasons, subject to a right of first refusal in favor of MSG Networks. The Transaction Support Agreement also contemplates the issuance by MSG Networks of penny warrants to the Company exercisable for 19.9% of the equity interests in MSG Networks. The Proposed Transactions, including the proposed amendments to the local media rights agreements, are subject to the execution of definitive documentation, which is expected to be completed on or before June 27, 2025.     

About Madison Square Garden Sports Corp.
Madison Square Garden Sports Corp. (MSG Sports) is a leading professional sports company, with a collection of assets that includes the New York Knicks (NBA) and the New York Rangers (NHL), as well as two development league teams – the Westchester Knicks (NBAGL) and the Hartford Wolf Pack (AHL). MSG Sports also operates a professional sports team performance center – the MSG Training Center in Greenburgh, NY. More information is available at www.msgsports.com.

Non-GAAP Financial Measures
We define adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) excluding (i) depreciation, amortization and impairments of property and equipment, goodwill and other intangible assets, (ii) share-based compensation expense or benefit, (iii) restructuring charges or credits, (iv) gains or losses on sales or dispositions of businesses, (v) the impact of purchase accounting adjustments related to business acquisitions, and (vi) gains and losses related to the remeasurement of liabilities under the Company's Executive Deferred Compensation Plan. Because it is based upon operating income (loss), adjusted operating income (loss) also excludes interest expense (including cash interest expense) and other non-operating income and expense items. 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. In addition, we believe that the exclusion of gains and losses related to the remeasurement of liabilities under the Company's 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 ("GAAP"), gains and losses related to the remeasurement of liabilities under the Company's Executive Deferred Compensation Plan are recognized in Operating (income) loss whereas gains and losses related to the remeasurement of the assets under the Company's 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 Miscellaneous 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 our Company. 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 earnings 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 and events may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the Company and its business, operations, financial condition and the industry 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.  

MADISON SQUARE GARDEN SPORTS CORP.
ADJUSTMENTS TO RECONCILE OPERATING INCOME TO
ADJUSTED OPERATING INCOME
(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:

• Depreciation and amortization. This adjustment eliminates depreciation, amortization and impairments of property and equipment, goodwill and other intangible assets in all periods.

• Share-based compensation. This adjustment eliminates the compensation expense related to restricted stock units and stock options granted under the Company's employee stock plan and non-employee director plan in all periods.

• Remeasurement of deferred compensation plan liabilities. This adjustment eliminates the impact of gains and losses related to the remeasurement of liabilities under the Company's executive deferred compensation plan.

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SOURCE Madison Square Garden Sports Corp.