The New York Knicks cashed in on strong attendance at the Garden this season—support they’ll continue to need against the defending champion Boston Celtics in the playoff semifinals. But while the Knicks’ parent company is poised to return to the second round for a third straight year, turbulence surrounding broadcaster MSG Networks dragged down revenue.
On Friday, Madison Square Garden Sports, which also owns the NHL’s New York Rangers, reported that it earned $424.2 million in revenue during the fiscal third quarter ended March 31. That’s a decrease of $5.8 million from the same period last year. MSG Sports also reported an adjusted operating income of $36.9 million during the third quarter, a decrease of $51 million compared with the same period last year.
Shares of MSG Sports (NYSE: MSGS) were trading slightly down around $190 per at midday on Friday.
The drop in revenue reflects the reduction in rights fees stemming from amendments made to Knicks and Rangers’ local media agreements with MSG Networks. The financial report provides a snapshot of how diminished broadcast money can impact sports franchises’ bottom lines amid a shift in the regional sports network landscape.
Sporticopreviously reported the Knicks will receive a 28% reduction in their annual rights fee, as part of the deal between MSG Networks and its lenders to resolve $804 million in debt that was originally due in October. The Rangers also agreed to an 18% reduction in their deal. Annual escalators were removed from the contracts of the Knicks and Rangers and their local media deals will now expire after the 2028-29 season versus 2034-35.
The Knicks, Rangers, MSG Networks and Sphere Entertainment are all controlled by the Dolan family through a pair of publicly traded companies, MSG Sports and Sphere Entertainment. “While the company is now seeing the impact of the evolving landscape for local media rights, we remain as confident as ever in the value of owning marquee professional sports franchises,” MSG Sports executive chairman and CEO Jim Dolan said in a statement.
MSG Sports attributes the income declines to a 16% increase in direct operating expenses, which jumped $43.3 million to $316.3 million during the third quarter. Besides contributing to net provisions related to league revenue sharing expenses, the Jalen Brunson-led Knicks paid a $33 million luxury tax bill and were responsible for higher team personnel compensation of $14.7 million, compared to the same period last year.
MSG Sports nonetheless offset the hit from the media rights reduction, along with lower food and beverage sales, with revenue related to ticket sales, suites, higher sponsorship fees and leaguewide distributions of increased national media rights fees. The Knicks and Rangers also played two fewer regular-season games combined compared with the same period last year.
After eliminating the Detroit Pistons on Thursday night, the third-seeded Knicks are set to face the No. 2 seed Celtics in Boston on Monday. The Celtics won all four matchups during the regular season. The Rangers, meanwhile, missed the playoffs for the first time since 2021.
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The New York Knicks cashed in on strong attendance at the Garden this season—support they’ll continue to need against the defending champion Boston Celtics in the playoff semifinals. But while the Knicks’ parent company is poised to return to the second round for a third straight year, turbulence surrounding broadcaster MSG Networks dragged down revenue.
On Friday, Madison Square Garden Sports, which also owns the NHL’s New York Rangers, reported that it earned $424.2 million in revenue during the fiscal third quarter ended March 31. That’s a decrease of $5.8 million from the same period last year. MSG Sports also reported an adjusted operating income of $36.9 million during the third quarter, a decrease of $51 million compared with the same period last year.
Shares of MSG Sports (NYSE: MSGS) were trading slightly down around $190 per at midday on Friday.
The drop in revenue reflects the reduction in rights fees stemming from amendments made to Knicks and Rangers’ local media agreements with MSG Networks. The financial report provides a snapshot of how diminished broadcast money can impact sports franchises’ bottom lines amid a shift in the regional sports network landscape.
Sportico previously reported the Knicks will receive a 28% reduction in their annual rights fee, as part of the deal between MSG Networks and its lenders to resolve $804 million in debt that was originally due in October. The Rangers also agreed to an 18% reduction in their deal. Annual escalators were removed from the contracts of the Knicks and Rangers and their local media deals will now expire after the 2028-29 season versus 2034-35.
The Knicks, Rangers, MSG Networks and Sphere Entertainment are all controlled by the Dolan family through a pair of publicly traded companies, MSG Sports and Sphere Entertainment. “While the company is now seeing the impact of the evolving landscape for local media rights, we remain as confident as ever in the value of owning marquee professional sports franchises,” MSG Sports executive chairman and CEO Jim Dolan said in a statement.
MSG Sports attributes the income declines to a 16% increase in direct operating expenses, which jumped $43.3 million to $316.3 million during the third quarter. Besides contributing to net provisions related to league revenue sharing expenses, the Jalen Brunson-led Knicks paid a $33 million luxury tax bill and were responsible for higher team personnel compensation of $14.7 million, compared to the same period last year.
MSG Sports nonetheless offset the hit from the media rights reduction, along with lower food and beverage sales, with revenue related to ticket sales, suites, higher sponsorship fees and leaguewide distributions of increased national media rights fees. The Knicks and Rangers also played two fewer regular-season games combined compared with the same period last year.
After eliminating the Detroit Pistons on Thursday night, the third-seeded Knicks are set to face the No. 2 seed Celtics in Boston on Monday. The Celtics won all four matchups during the regular season. The Rangers, meanwhile, missed the playoffs for the first time since 2021.
