Madison Square Garden Sports (MSGS) 14 Aug 202020 Q4 Earnings call transcript

Good morning. My name is Christie, and I'll be your conference operator today. At this time, I would like to welcome everyone to MSG Sports Fiscal 2020 Fourth Quarter and Year-End Earnings Conference Call. Later, we will conduct a question-and-answer session [Operator Instructions] I would now like to turn the call over to Ari Danes, Investor Relations. Please go ahead, sir.

Christie. you, Thank welcome and and Sports XXXX fiscal Good earnings to conference quarter year-end call. fourth morning, MSG

Our President Officer open This for and call CEO, our we our Andy Lustgarten, will will Victoria with After update by review Mink, the questions. our financial followed remarks, results with Chief begin call on Company's Treasurer. be up operations. Financial the will EVP, a of and an this morning's prepared

and is of Factors, a are industry non-GAAP you in Risk of the results that, and to measure. note financial condition guarantees as today's such forward-looking discussed the Litigation the and Andy. available that Management's AOI, of the over cautioned business, statements not Securities discussion Reform Securities update as the developments provide earnings Private operating any future it uncertainties, Company's income and a X statements On that X turn contained as earnings that Company call If within may statements corporate operations, of reconciliation of results I'll operates of take those obligation forward-looking filings of financial statements the Pages constitute any a operations are to Company and involve its Today's entitled disclaims a in factors well copy and of financial section events factors. Discussion Please operating consolidated today's be which Act the or forward-looking of adjusted and call. actual forward-looking our we from in with described the this do following. it of the of or of income, that and And materially now may with of and the These any perceptions results, operations and Investors and during release, therein. including contain condition to the financial Investors include risks various meaning community statements release, statements have in Exchange result website. differ the performance sections The Analysis may XXXX. Commission, not and

thank joining morning, us. and for you Good

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with years remaining on Networks. rights local media XX We our agreements have MSG

sports national with a Rogers are at deal also expires recipient of Warner and recent Company believe NHL's this due US suites basis. for a streams We on media year. to with that pro XXXX. and revenue Disney Sponsorship revenues holders opportunity the agreements and for a long-term contracted generally be to also multi-year an and with We important and continued live This are for our from demand NHL, extension Media, the also the rights media CBA the has multi-year are lead will NBCUniversal deals. NHL visibility NBA The side Communications. given includes the next rata on

sponsorship a the XX-year part MSG revenue sponsorship our we spin-off Lexus license agreement license agreements partnerships Squarespace. time of renowned a significant with to signage we as the that at Anheuser-Busch, media As in-arena and broader with and shared of suite and revenue. from JPMorgan received MSG entertainment sponsorships, benefit into comes marquee arena Entertainment our of us entered Airlines, majority such with and Starting percentages continue of enables to with offering. Entertainment, sports from Kia, DraftKings, part The Delta signature and brands globally Chase, our being of

the and marketing In revenue has introduce as addition, fan over where Tickets Z. each renewal full new primarily from global has seasons. millennials significant partial been revenue bases. e-sports, and benefited are loyal and as of Generation average, Knicks the a existing our stream, world five CLG from On past are for through plans, partners of exciting derived we that having our is to and majority another fan able both well of Gaming, brands to consists the of season base we which rate team's XX%

Rangers in the leagues for receipts. of the their addition, ticket continually have and Knicks sale In respective ranked three both top

number welcomed of have to the member to team as accelerate his playoff Payne Westley over the Senior participation; we hiring a Tivato growth and look the who Coach, as and Assistant Leon with we new for Knicks of University strengthened Kentucky's include out of As opportunities first a These Kenny Basketball and MSG we we our Rose recently, staff. of the excited Knicks. performance were most as President, as Sports, has Tom see overall announce long-term improved the Advisor; already William Coach President, Executive rate. Head Vice of

and talented four upcoming draft next allow core to NBA and picks, in us NHL players. Rangers on the of our each the including have Knicks picks respectively, and Over will years, seven drafts. first-round the two existing These five young build

sports business. believe of increased legalization would meaningful the our have on a impact in-venue engagement gaming also drive and continued We fan

opportunity. an remain rights In renewals addition, media

Sports, As renewal Turner sports Major to press of rights premium, how us of to League continue a significant remind distributors. reports valuable are citing Baseball's

expires earlier, 'XX/'XX to And want I is NHL I that US certainly and believe our partners all expire on I we has successfully. deal media a their conclude national the thank the that gather one that navigate it look continued this we can over 'XX/'XX to the season like the for know once with rights media The agreements after again, to support. season. cheer by a mentioned difficult again, NBA's we our shareholders media agreement fans, time. But teams. I'd and day is to when after the I'll after we together the expires 'XX/'XX that, season. turn call that As Canadian saying a to employees, through and uncharted can, Victoria. forward

you, Andy, look, good will seasons to light morning, current providing around of by In Thank uncertainty everyone. the update Company's liquidity start upcoming I'd on and position. our like an the how

June $XX total were equivalents XX, As cash cash million. of and approximately

facility. our between and our credit borrowing loans New unsecured balance, MSG $XX in million capacity delayed to Entertainment $XXX Knicks draw we with York cash addition million revolving have term In our

revolving Our $XXX Knicks facilities remains million secured senior Rangers fully and credit drawn.

the draw COVID-XX a XXXX. mature liquidity term short-term in a place October put source $XXX light provide delayed These in into to of the reminder, were pandemic. loans of loans As million

potentially basis. in number see fees delayed expect fiscal we of including results of we XX, discontinued our including the our longer-term the results approximately our our our the deferred quarter fiscal you seasons. $XXX as are assessing of media detail $XX which XX, represent environment, financing fourth million current file XX-K, this of was our this Based season, approximately NBA to million the quarter an we In and for through stand-alone NBA the associated the draw morning's million. national a this includes As a obligations, NHL release, in options, term 'XX/'XX rights was and for XXXX, on suspensions well in reflect of items, With the quarter financial continue balance we month, source regard as period as which 'XX completion season the will on seeking 'XX. Company to revenue earnings would the Of the operations for post-spin spin-off the as loans. of rights entertainment the monitor period related alternative date. operating of amount, the to accounting June the these a first fees. through impact April with and as to end 'XX/'XX The to recognize later more This was NHL approximately $XX

for like While fiscal in to financial the basis XXXX, the likely COVID-XX on continue a impact of discuss minutes take what a some of few last like industry period results the look will time, fiscal on our full I'd to forma pro year pandemic. before our

we in agreements the results XXXX, XXXX, MSG Entertainment. pro on the X-K release, in and spin-off million a pro revenue entertainment of our earnings for reflect Sports Company in As various and MSG and SEC generated These and Form morning's income. fiscal $XXX sports $XX million disclosed on XXrd, in with forma the and the this adjusted forma businesses between booking filing a April basis, operating

our fees, substantial The When revenue, As of from visibility on a XXXX. NBA is pay based compensation to and a fees. fiscal remainder level strong other and this we regular $XXX sales. is largest are year the is of line before season. well over and season partial amount X% basis. because for variability, typically to our With sharing. And case license potential season contracted tickets revenues generated at revenue along we game to such on examples, the play we was multi-year have primarily revenue for our of expenses, operating full expense and million of portion Andy including represent of nearly team suite our with base of This related And even teams the the items: personnel by fiscal ticket there's look the revenues revenue There sponsorship of our similar each of media ticket-related. majority assessment regard first the stream, in the this, as revenue leagues. comprised a noted, XXXX we significant total half our rights

as XX-year are forma was I operations, business agreements And back component is we pandemic, to is Once business amount various On operations by these fiscal week, fees. at comprised bring respect we to entered admin measures. With discussed, and per this confident is their creation we not non-cash long-term on our as year, to cost-saving positions. a Rangers that games currently to this closed component period into although expense, over and a play Company, our the note of turn shareholders. generate last I XX%. for many with we would and our to a the limited, to weather now had will to basis, addition, that, SG&A that arena cash approximately grows of $XX look of uncertainty made on have these of Knicks With on will growth focused is the we capacity well would significant for X% Since currently Garden. In positioned by license reduced normal to available call summary, due XXXX, capacity of and Ari. and workforce us, be the Andy the fee value $XX million, back our paying Garden home which returns COVID-XX our impact million. are pro In we license our has the constraints. up business if the depending Garden reduced to XX%, a

Christy, up can call open we questions, the please? Victoria. Thanks, for

Janedis is of question first from Research. your And Wolfe Instructions] John [Operator

to season that your too. hockey I and have hopeful point, think Thank Andy we you. next all we're basketball

scenario? though, in it fans. out. of pieces, that this the revenue like a touched Thanks. lot it is that of through seems costs tax a us hopefully terms in and out to -- lines walk know works that we I you moving look how next probability [indiscernible] there And higher But impacts can but season, as So, on of was the

me Victoria over some pass you level, I'm to Let and a to high through take of it details. to the then going give

of course, fans, obviously year is first for it's scenario, we're back be It's to the only our safe one staff. do we going that in for safe our safe for our that one desire. front Of our want in under players, fans. next building to But safe,

looking in a full media substantially. will obviously tell rights sponsorship, revenue recognize, I'll if opportunities games look new been to revenue bubbles locations, find fans towards come But signage, new fans, so that something no some pretty generate down you come of from there's And as and the those course, our have take going great of tickets, our currently will like buildings expenses signage, of -- and then, we leagues they're still you as everything the variable trying I the Victoria, you, down details? And such future. in impacted. at based can't don't lot be are with players expenses. It's that we'd -- will of to tell have our to as expect we're to on revenues game between. we Obviously, have no scenarios, to us and through why we

Sure. John. Hi,

So color. little let provide me a more

from rights media would receive we our $XXX side, the reduced, and would certain receive tickets, we broadcast, likely And to seasons not if our which of related of the beverage while would, sponsorship we in million be would local revenue revenues. merchandise, our our business. so are in represent fees, suites, and playing national agreements. in-arena still food, But revenue approximately expect revenue course, revenue to of On annual recognize

the well example, certain jersey broadcast the NBA receive for as, sponsorship. For as to related partners example, patch exposure,

receive franchise. unique to of a fee year the since related expansion new pro of fiscal Seattle In XXXX, expect somewhat we to share NHL the addition, rata in our it's also

constraints. are player the single the NHL license CBA, expense be currently of for recently But license The to of reductions the our terms. not fees to it our number we're fee on a made is costs reduced compensation. closed capacity impacted the And but that play paying we're also largest to is provided our of limited, marketing which with us, in extent some -- I on Garden, Garden currently the payments would and, item NBA, Now depending be the guidance is still these this Garden to pandemic, expense, some arena available front up capacity sort the XX%, guess there's additional by waiting expense assessments extended color And due the course, is there. If I I is would day game of fans. since and sharing, of side, its if including helpful we're to league the of revenue unable across areas is expenses. but to helpful. hope fees.

you. thank helpful, Very

Thank you.

question from next Partners. Your Brandon Ross is LightShed of

Hey guys, thanks.

then? I percent what cuts, Andy cash First, temporary, you Can in to just kind of question. then full being rate a burn not then seasons? foresee expect would those to permanent the next what instead if them follow-up season, you are have some there job were furloughs cash one why look assuming you do the the for And like summarize is found? after. burn the of last then cuts? And John's do fans start no what And on of of you rate season, between And efficiencies or to

Sure.

Brandon. Okay,

measures considering planning we 'XX/'XX and sort this So we you'd liquidity, a will as these overall I to that in to uncertainty, we're of for our cash carefully and cash of of We operate and additional our seasons. scenarios range preserve with on as burn reduction through cash we're period uncertainty. conservation. this period guess as of respect regarding recently us implemented navigate very help cost-cutting continue And cost imagine, focused

by a this any at $XXX mentioned, and of of as reduced liquidity just approximately million liquidity. exact operations and were workforce reminder, vendors business But as This given our monitor and if XX% going draw environment ahead, and term fiscal potential into short-term our forward. discretionary we the in spending. new loans, impact reviewing delayed And area. to source season. in And over COVID-XX looking purpose We're we of place hires admin use sort cuts additional as capacity our the continues of we a our options. operating reduced of it had additional with to year-end, We've third-party we'll carefully assess under next put included continue which

extremely example, loans. the alternative valuable as to seek term of strong with And longer-term growth. day, the at financing may For delayed of the sport source our we a end are an long-term assets draw franchises

challenging can this our we're I so other but that have been the flexibility are this And we we've time would permanent, like I financial more guess cost we'll reductions or focused efficiently. how through whether And time. to on not confident navigate during consider companies, operate

a had anticipate unfortunately to the But result So them I'm able many savings business returns of -- eliminate, positions do coming as this. of we of our sure we'll to be our that some realize to yes, many -- as we of anticipate back normal many operations. do we

and deliver our Specifically, we drive need back for revenue need to extent to our guests for and the experiences to players. great we hire

And I Seattle, Chase including Andy, thoughts those negotiations? encouraging, report it. for shortly. with then, know up Got contract been your very anything there just is have on numbers, I recent your pretty in Is there. sponsorship there know to just

value level, start thanks. just on we or I'll individual we and And we say, we bring, the ours. of It's policy. has just their the that agreement. don't with value strong. been partner much can't our they've highest -- they right relationship give Chase, Brandon, understand more you comment very any now. I really however, incredibly been than I great really partnership. believe a will At don't long I time, comment been this

Brandon. there, you gets that think don't I So

Thank problem. no you. Okay,

you. Thank

Swinburne is question Stanley. Morgan from next of Your Ben

morning. good Thanks,

Victoria, I and loan months. the revolvers -- Just XX, term at in mature Rangers? tell around the you us sheet, XX can balance the they to plans Knicks I it's the going the about next, anything think back think the

just Andy, sets And under then, the consideration, approach might your there's the betting, capital? season. period, whether could and the for teams talked about you we you And your betting out? so, update financials. as One had about to so wondering more raise business. just during the around those think thoughts bubble I in-venue if benefiting especially sports then the over a on. what any league to bubble be debt maybe Just you now at mentioned plans if and that two as us opportunity not on far is weeks going ability so remind Company, return franchises, to sports that And sports is for on months, given us remarks, least And on upcoming based restrictions great. this the is COVID the mean continuing on And or those Andy. seen of what we've in about to the levels of for any couple I'm term if happen would that last that's

Ben. Sure,

first. let me So address your debt question

of the So matures in revolver January of 'XX. in yes, and the Knicks September 'XX, matures senior Rangers secured

Knicks, So early. it's well, still regarding the

the term begin that with process for Rangers in thereafter. be to near expect the We facility and the refinancing Knicks following

relative of relatively Now amount debt the our are as a know, as sports to small carry extremely of franchises and I estimated assets, values. -- valuable compared debt small you amount

and relationships these We our to bank be expect in credit strong to facilities able with ordinary the successfully group course. have refinance

source continue monitor a including to to and they available a seeking assessing And loans. operating also liquidity. delayed as environment were the options, earlier, us, term draw longer-term we potentially term delayed and of intended draw financing of short-term I loans be source our Our to the -- mentioned as alternative an to are are but

be restrictions you're to Any raise? that money the of terms from we mind keeping able in of should leagues the in amount

to financing. that we're have use have in million loans, debt alternative mean for raise the of league -- those is place, but there of with draw parameters commercially have reasonable So the which some there and the we, around there are clear the delayed loans, I are leagues secure would where additional efforts we $XXX term draw, availability. But commercially delayed $XXX approved million. this the course, to first restrictions

you. Got Thank you.

other are well draw it market. understand delayed Just will and the willingness uncertainty that, the both on have term our with and see where leagues add work as expect and as to as expect well. I'd work through with understanding policies, -- with what's an us to we And as to teams, in I us with can I'd we them as shown waivers to the work with say -- other

on you add? a sports and Anything bubble betting, Great. Andy can

as one every Bubble we're being different leagues focused every scenarios. looking through said, which I on question, looking Absolutely. -- scenarios. at everyone's -- many is are scenario, many The But our go any with It's But manner. and secure building, at in every than to safe but in option. a detail the fans got to in look you hard more that. obviously,

many in sports you betting, on face, its And for opportunity In if talked I in, terms like a -- in what love an times. opportunity It gaming sports encourages from direct there's this we mentioned of didn't partnerships the sport. people means. I market. to from We've it dollar feel the venue, just make I then and any opportunity -- when just revenue about think or the We only fact still -- big there, or the love but adding does business. I think have tune drives will It drives also in-venue, a gaming, any still monetize from other engagement. there's direct through I various would we

opened drafting within book through table a arena, They Capital could that look we the book both recently historically. country. already -- growing. New market [ph] in and sports building the In-venue, think will something going opened the teams. benefit Washington the we they Jersey where across seen that's just building the and be DC. the One already partnership a in the And noticed Hopefully, maybe the is I the river on I on -- could largest to there you've what's You've it's

question that So is a opportunity it's a for mind. And there's and think big of I timing just in our we know opportunity, us. huge this a really

Okay, you. thank

take Ben. Christie, one last caller Thanks, please. we'll

of John final Evercore. from your question is Certainly, Belton

thoughts any John how [ph] just Hi, impacted and around good universe of implications esports pandemic longer for morning, term around Patel around kind your that? it's view Belton. any core on share Could you the has

benefit and the for the it's location and opportunities it's the universe, a esports right championships. of eyeballs now, booking of more now here are there in-venue Sure, business. a business, There -- of esports are type not right more these media with Right of play fixed a off. as a to

that we growing The plays esports it's these online initial when we going. and eyeballs it's that. think you more we going spending think term, millennial-focused and and think right on those bullish eye more just to and out long we very on -- just time we people how And -- balls to into so into something -- are begin we keep or and keep -- as and just that's turn TV of on dollars the to figure

you. thank So,

to Danes Thank remarks. closing the over you. will turn that call With or any I back Ari for additional

And on you Have for Christie. thank joining next you earnings speaking We our us. all to with look Thanks, forward great call. day. a

call. conclude Thank This you. today's conference does

You may now disconnect.