MSG Sports' Q1 Loss Widens on Plummeting Media Rights Revenue

Ticker: MSGS · Form: 10-Q · Filed: 2025-10-31T00:00:00.000Z

Sentiment: bearish

Topics: Sports Entertainment, Media Rights, NBA, NHL, Financial Performance, Revenue Decline, Net Loss

Related Tickers: MSGS, SPHR

TL;DR

**MSG Sports is bleeding cash and revenue, making it a risky play as media rights deals shrink.**

AI Summary

Madison Square Garden Sports Corp. (MSGS) reported a net loss of $8.798 million for the three months ended September 30, 2025, an increase from the $7.542 million net loss in the prior-year period. Total revenues decreased significantly by 26% to $39.454 million from $53.307 million in the same quarter last year. This decline was primarily driven by a 30.6% reduction in media rights revenue, falling from $7.353 million to $5.100 million, and a 31.7% decrease in league distributions and other revenue, from $34.681 million to $23.692 million. Operating loss widened to $27.425 million from $8.273 million year-over-year. Cash and cash equivalents saw a substantial decrease, falling from $144.617 million on June 30, 2025, to $48.634 million on September 30, 2025, largely due to $84.954 million in net cash used in operating activities. Strategic changes include amendments to media rights agreements for the New York Knicks and New York Rangers on June 27, 2025, resulting in a 28% reduction for the Knicks and an 18% reduction for the Rangers, alongside the issuance of penny warrants for 19.9% of MSG Networks' equity interests to MSGS.

Why It Matters

This filing reveals a challenging quarter for MSG Sports, with significant revenue declines directly impacting profitability. The substantial reduction in media rights fees for the Knicks and Rangers, coupled with lower league distributions, signals a potential shift in the sports media landscape and could pressure future earnings. For investors, this raises concerns about MSGS's ability to generate consistent revenue, especially given its dependence on these teams. Employees might face increased scrutiny on costs, while customers could see changes in content distribution or pricing as the company navigates these financial headwinds. Competitors in the sports and entertainment sector will be watching closely for broader implications on media rights valuations.

Risk Assessment

Risk Level: high — The company reported a net loss of $8.798 million and a significant decrease in cash and cash equivalents from $144.617 million to $48.634 million in just three months. Revenues dropped by 26% to $39.454 million, primarily due to a 30.6% reduction in media rights revenue and a 31.7% decrease in league distributions, indicating fundamental business challenges.

Analyst Insight

Investors should exercise caution and consider reducing exposure to MSGS given the substantial revenue decline, widening losses, and significant cash burn. Monitor future filings closely for any signs of stabilization in media rights or new revenue streams, but for now, the outlook appears bearish.

Financial Highlights

debt To Equity
N/A
revenue
$39,454,000
operating Margin
N/A
total Assets
$1,517,402,000
total Debt
$291,000,000
net Income
-$8,798,000
eps
N/A
gross Margin
N/A
cash Position
$48,634,000
revenue Growth
-26.0%

Revenue Breakdown

SegmentRevenueGrowth
Event-related$6,007,000-1.0%
Media rights$5,100,000-30.6%
Sponsorship, signage and suite licenses$4,655,000-10.3%
League distributions and other$23,692,000-31.7%

Key Numbers

Key Players & Entities

FAQ

Why did Madison Square Garden Sports Corp.'s revenue decrease in Q1 2025?

Madison Square Garden Sports Corp.'s revenue decreased by 26% to $39.454 million in Q1 2025 primarily due to a 30.6% reduction in media rights revenue for the New York Knicks and Rangers, and a 31.7% decrease in league distributions and other revenue.

What were the key changes to the New York Knicks' media rights agreement?

The New York Knicks' media rights agreement was amended on June 27, 2025, to include a 28% reduction in the annual rights fee as of January 1, 2025, the elimination of the annual rights fee escalator, and a contract expiration date change to the end of the 2028-29 season.

How did the New York Rangers' media rights agreement change?

The New York Rangers' media rights agreement was modified on June 27, 2025, to effect an 18% reduction in the annual rights fee as of January 1, 2025, remove the annual rights fee escalator, and change the contract expiration to the end of the 2028-29 season.

What was Madison Square Garden Sports Corp.'s net loss for the three months ended September 30, 2025?

Madison Square Garden Sports Corp. reported a net loss of $8.798 million for the three months ended September 30, 2025, which is an increase from the $7.542 million net loss reported in the same period of 2024.

What is the significance of the penny warrants issued to Madison Square Garden Sports Corp.?

Concurrent with the media rights agreement amendments, MSG Networks issued penny warrants to Madison Square Garden Sports Corp. exercisable for 19.9% of the equity interests in MSG Networks. This non-cash consideration was included in the change in transaction price as a result of the modification.

How much cash did Madison Square Garden Sports Corp. use in operating activities?

Madison Square Garden Sports Corp. used $84.954 million in net cash from operating activities for the three months ended September 30, 2025, contributing to a significant decrease in its cash and cash equivalents.

What are the primary risks highlighted by Madison Square Garden Sports Corp.'s Q1 2025 filing?

The primary risks highlighted include a significant decline in revenues, particularly from media rights and league distributions, a widening operating loss of $27.425 million, and a substantial decrease in cash and cash equivalents from $144.617 million to $48.634 million, indicating financial instability.

What is Madison Square Garden Sports Corp.'s current cash position?

As of September 30, 2025, Madison Square Garden Sports Corp.'s cash and cash equivalents stood at $48.634 million, a notable decrease from $144.617 million as of June 30, 2025.

What impact do the media rights changes have on Madison Square Garden Sports Corp.'s future revenue?

The media rights changes, including a 28% reduction for the Knicks and an 18% reduction for the Rangers, will likely continue to negatively impact Madison Square Garden Sports Corp.'s media rights revenue in future periods, as the annual rights fee escalator was also eliminated.

Who is the Chief Operating Decision Maker for Madison Square Garden Sports Corp.?

The Chief Operating Decision Maker (CODM) for Madison Square Garden Sports Corp. is its Executive Chairman and Chief Executive Officer, who reviews total company operating results to assess overall performance and allocate resources.

Risk Factors

Industry Context

Madison Square Garden Sports Corp. operates within the highly competitive professional sports and media rights landscape. Key revenue drivers include media rights, league distributions, and event-related income. The industry is characterized by significant team valuations, substantial media rights deals, and increasing reliance on digital and streaming platforms. Trends include evolving fan engagement strategies and the impact of collective bargaining agreements on league economics.

Regulatory Implications

The company is subject to regulations governing sports leagues (NBA, NHL) and media broadcasting. Amendments to media rights agreements and potential future regulatory changes in sports broadcasting or league operations could impact revenue streams and operational flexibility. Compliance with financial reporting standards (GAAP) is also a critical regulatory aspect.

What Investors Should Do

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Key Dates

Glossary

CODM
Chief Operating Decision Maker (The CODM's evaluation of total company operating results for performance assessment and resource allocation dictates the company's single reporting segment.)
ASC Subtopic 606
Accounting Standards Codification for Revenue from Contracts with Customers (Governs how revenue is recognized, including how modifications to contracts, like the media rights agreements, are accounted for and how non-cash consideration (penny warrants) is valued.)
Penny Warrants
Options to purchase a company's stock at a very low price, often issued as a sweetener or incentive. (MSG Networks issued these to MSGS as part of the media rights agreement amendments, representing a non-cash consideration that affects the transaction price.)
Accumulated Deficit
The cumulative net losses of a company since its inception that have not been offset by net income. (A significant accumulated deficit of $146.410 million contributes to the company's negative total stockholders' equity.)
Treasury Stock
Stock that a company has repurchased from the open market. (The company holds a substantial amount of treasury stock at a cost of $151.524 million, which reduces total equity.)
Right of First Refusal
A contractual right that gives a party the option to enter into a business transaction before the owner can enter into that transaction with a third party. (Included in the amended media rights agreements for the Rangers and Knicks, giving MSG Networks priority if those rights are to be transferred.)
Operating Lease Liabilities
Obligations arising from leases classified as operating leases under accounting standards. (Represents significant future payments for leased assets, totaling $883.598 million ($54.233 million current + $829.365 million noncurrent) as of September 30, 2025.)
Deferred Revenue
Revenue that has been received by the company but not yet earned. (A substantial increase in current deferred revenue ($330.587 million) indicates significant future obligations to provide services or goods.)

Year-Over-Year Comparison

Compared to the prior year period, Madison Square Garden Sports Corp. experienced a significant downturn in financial performance. Total revenues dropped by 26% to $39.454 million, driven by substantial declines in media rights and league distributions. This revenue contraction led to a wider net loss of $8.798 million and a significantly increased operating loss of $27.425 million. The company's cash position also deteriorated sharply, with cash and cash equivalents falling by $95.983 million in the quarter due to heavy operating cash outflows. New risks have emerged due to contractual amendments impacting media rights revenue and the issuance of equity warrants.

Filing Stats: 4,518 words · 18 min read · ~15 pages · Grade level 16.2 · Accepted 2025-10-31 07:34:42

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Consolidated Balance Sheets as of September 3 0 , 2025 (unaudited) and June 30, 20 25 1 Consolidated Statements of Operations for the three months ended Se ptember 30 , 2025 and 2024 (unaudited) 3 Consolidated Statements of Comprehensive Loss for the three months ended September 30 , 2025 and 2024 (unaudited) 4 Consolidated Statements of Cash Flows for the three months ended September 30 , 2025 and 2024 (unaudited) 5 Consolidated Statements of Equity for the three months ended September 30 , 2025 and 2024 (unaudited) 6

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 25

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 34

Controls and Procedures

Item 4. Controls and Procedures 34

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 35

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35

Exhibits

Item 6. Exhibits 36 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) September 30, 2025 June 30, 2025 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 48,634 $ 144,617 Restricted cash 8,642 8,571 Accounts receivable, net of allowance for doubtful accounts of $ 0 as of September 30, 2025 and June 30, 2025 42,618 25,855 Net related party receivables 26,684 3,582 Prepaid expenses 102,500 43,417 Other current assets 17,615 25,053 Total current assets 246,693 251,095 Property and equipment, net of accumulated depreciation and amortization of $ 54,446 and $ 53,635 as of September 30, 2025 and June 30, 2025, respectively 28,728 28,962 Right-of-use lease assets 758,422 760,456 Indefinite-lived intangible assets 103,644 103,644 Goodwill 226,523 226,523 Investments 73,515 54,720 Deferred tax assets, net 43,268 34,821 Other assets 36,609 12,753 Total assets $ 1,517,402 $ 1,472,974 See accompanying notes to consolidated financial statements. 1 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED BALANCE SHEETS (Continued) (in thousands, except per share data) September 30, 2025 June 30, 2025 (Unaudited) LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 5,201 $ 9,336 Net related party payables 4,394 4,807 Debt 24,000 24,000 Accrued liabilities: Employee-related costs 56,551 98,924 League-related accruals 156,564 196,567 Other accrued liabilities 5,794 13,093 Operating lease liabilities, current 54,233 52,618 Deferred revenue 330,587 164,178 Total current liabilities 637,324 563,523 Long-term debt 267,000 267,000 Operating lease liabilities, noncurrent 829,365 841,050 Other employee-related costs 77,257 82,178 Deferred revenue, noncurrent 634 662 Total liabilities 1,811,580 1,754,413 Commitments and contingencies (see Note 11) Madison Square Garden Sports Corp. Stockholders' Equity: Class A Common Stock, par value

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) All amounts included in the following Notes to Consolidated Financial Statements are presented in thousands, except per share data or as otherwise noted. Note 1. Description of Business and Basis of Presentation Description of Business Madison Square Garden Sports Corp. (together with its subsidiaries, collectively, "we," "us," "our," "MSG Sports," or the "Company") owns and operates a portfolio of assets featuring some of the most recognized teams in all of sports, including the New York Knickerbockers ("Knicks") of the National Basketball Association ("NBA") and the New York Rangers ("Rangers") of the National Hockey League ("NHL"). Both the Knicks and the Rangers play their home games in Madison Square Garden Arena ("The Garden"). The Company's other professional sports franchises include two development league teams — the Hartford Wolf Pack of the American Hockey League and the Westchester Knicks of the NBA G League. These professional sports franchises are collectively referred to herein as the "sports teams" or the "teams." The Company also operates a professional sports team performance center — the Madison Square Garden Training Center in Greenburgh, NY. The Company operates and reports financial information in one segment. The Company's decision to organize as one operating segment and report in one segment is based upon its internal organizational structure; the manner in which its operations are managed; and the criteria used by the Company's Executive Chairman and Chief Executive Officer, its Chief Operating Decision Maker ("CODM"), to evaluate segment performance. The Company's CODM reviews total company operating results to assess overall performance and allocate resources. The Company was originally incorporated in Delaware on March 4, 2015 as an indirect, wholly-owned subsidiary of MSG Networks Inc. ("MSG Networks"). All the outstanding common stock of the Company was distributed to MSG N

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Note 2. Accounting Policies Principles of Consolidation The consolidated financial statements of the Company include the accounts of Madison Square Garden Sports Corp. and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of the accompanying Financial Statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of accounts receivable, other current assets, goodwill, intangible assets, other long-lived assets, fair value of investments, deferred tax valuation allowance, tax accruals, and other liabilities. In addition, estimates are used in revenue recognition, revenue sharing expense (net of escrow), luxury tax expense, income tax expense (benefit), performance and share-based compensation, depreciation and amortization, litigation matters and other matters. Management believes its use of estimates in the Financial Statements to be reasonable. Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management's best judgment at a point in time and, as such, these estimates may ultimately differ from actual results. Changes in estimates resulting from weakness in the economic environment or other factors beyond the Company's control could be material and would be

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Note 3. Revenue Recognition Contracts with Customers All revenue recognized in the consolidated statements of operations is considered to be revenue from contracts with customers. For the three months ended September 30, 2025 and 2024, the Company did not have any impairment losses on receivables or contract assets arising from contracts with customers. Disaggregation of Revenue The following table disaggregates the Company's revenues by type of goods or services in accordance with the disclosure requirements set forth in Accounting Standards Codification ("ASC") Subtopic 280-10-50-38 to 40 and the disaggregation of revenue required disclosures in accordance with ASC Subtopic 606-10-50-5 for the three months ended September 30, 2025 and 2024: Three Months Ended September 30, 2025 2024 Event-related (a) $ 6,007 $ 6,085 Media rights (b) 5,100 7,353 Sponsorship, signage and suite licenses 4,655 5,188 League distributions and other 23,692 34,681 Total revenues from contracts with customers $ 39,454 $ 53,307 _________________ (a) Consists of (i) ticket sales and other ticket-related revenues, and (ii) food, beverage and merchandise sales at The Garden. (b) Consists of (i) local media rights fees from MSG Networks, (ii) revenue from the distribution through league-wide national media contracts, and (iii) other local radio rights fees. On June 27, 2025, the media rights agreements between subsidiaries of MSG Networks, on the one hand, and New York Knicks, LLC ("Knicks LLC") and New York Rangers, LLC ("Rangers LLC"), on the other hand, were amended, as follows: New York Knicks: A modification to the annual rights fee to effect a 28 % reduction as of January 1, 2025; an elimination of the annual rights fee escalator; and a change to the contract expiration date to the end of the 2028-29 season, subject to a right of first refusal in favor of MSG Networks; New York Rangers: A modifi

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Contract Balances The timing of revenue recognition, billings and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheets. The following table provides information about contract balances from the Company's contracts with customers as of September 30, 2025 and June 30, 2025: September 30, June 30, 2025 2025 Receivables from contracts with customers, net (a) $ 42,688 $ 25,214 Contract assets, current (b) 4,929 14,095 Deferred revenue, including non-current portion (c), (d) 331,221 164,840 _________________ (a) Receivables from contracts with customers, net, which are reported in Accounts receivable, net and Net related party receivables in the accompanying consolidated balance sheets, represent the Company's unconditional rights to consideration under its contracts with customers. As of September 30, 2025 and June 30, 2025, the Company's receivables reported above included $ 466 and $ 0 , respectively, related to contracts with customers that are related parties. See Note 15 for further details on these related party arrangements. (b) Contract assets, current, which are reported as Other current assets in the accompanying consolidated balance sheets, primarily relate to the Company's rights to consideration for goods or services transferred to the customer, for which the Company does not have an unconditional right to bill as of the reporting date. Contract assets are transferred to accounts receivable once the Company's right to consideration becomes unconditional. (c) Deferred revenue, including the non-current portion, primarily relates to the Company's receipt of consideration from customers, inclusive of sales tax collected, or billing customers in advance of the Company's transfer of goods or services to those customers. Deferred revenue is reduced and the related revenue is recognized once the underlying goods

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Note 4. Computation of Earnings (Loss) per Common Share The following table presents a reconciliation of earnings (loss) allocated to common shares and a reconciliation of weighted-average shares used in the calculations of basic and diluted earnings (loss) per common share attributable to the Company's stockholders ("EPS") and the number of shares excluded from diluted earnings (loss) per common share, as they were anti-dilutive. Three Months Ended September 30, 2025 2024 Net loss allocable to common shares, basic and diluted (numerator): Net loss $ ( 8,798 ) $ ( 7,542 ) Less: Dividends to other-than-common stockholders (a) 16 8 Net loss allocable to common shares, basic and diluted (numerator): $ ( 8,814 ) $ ( 7,550 ) Weighted-average shares (denominator): Weighted-average shares for basic EPS 24,116 24,049 Dilutive effect of shares issuable under share-based compensation plans — — Weighted-average shares for diluted EPS 24,116 24,049 Weighted-average shares excluded from diluted EPS 80 92 Basic loss per common share attributable to Madison Square Garden Sports Corp.'s stockholders $ ( 0.37 ) $ ( 0.31 ) Diluted loss per common share attributable to Madison Square Garden Sports Corp.'s stockholders $ ( 0.37 ) $ ( 0.31 ) _________________ (a) Dividends to other-than-common stockholders consists of forfeitable rights to dividends declared and payable to holders of the Company's unvested restricted stock units and performance restricted stock units. Note 5. Team Personnel Transactions Direct operating and selling, general and administrative expenses in the accompanying consolidated statements of operations include a net provision or credit for transactions relating to the Company's sports teams for waiver/contract termination costs, player trades and season-ending injuries ("Team personnel transactions"). Team personnel transactions were a net provision of $ 2,382 and $ 833

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