NY Knicks: Madison Square Garden posts ugly financial results

As a publicly traded company, Madison Square Garden Entertainment, and its recent spin-off MSG Sports provide a glimpse into the coronavirus impact on professional sports.

As expected, with Madison Square Garden forced to shut its doors to sports and entertainment events due to the coronavirus pandemic that has ravaged New York City, the most recent financial results of Madison Square Garden Entertainment tell a grim tale.

Madison Square Garden Entertainment (MSGE) posted its first financial filing on Monday since being split into a separate company from MSG Sports in April.

The results for the third quarter ending March 31, 2020 provide a rare glimpse into the operations of a professional sports company in the face of a global pandemic.

Most teams are privately owned, and lack transparency in financial reporting. As leagues and players negotiate new collective bargaining agreements within a darkened economic landscape in the shadow of COVID-19, team finances will come under more scrutiny and demand for reporting by players and fans.

According to MSGE’s third quarter results, revenues decreased 20% compared to the prior year period. The company stated they have recognized minimal revenue due to COVID-related impacts.

“As a result of these COVID-related impacts, MSG Entertainment is currently recognizing minimal revenue. And while the Company is also realizing lower expenses due to reduced event-related costs and a decrease in discretionary spending – in areas such as advertising and promotion – these cost reductions do not offset the loss in revenue.”

MSG Entertainment includes a wide variety of entertainment venues from Madison Square Garden, to Hulu Theater at MSG, to Radio City Music Hall and Beacon Theatre, as well as The Chicago Theatre. A new venue in Las Vegas, named MSG Sphere at The Venetian, is currently under construction, with a planned 2021 opening now delayed.

MSG Sports reported their third quarter results last week. The company consists of the sports teams owned by James Dolan, including the New York Knicks and New York Rangers, as well as two development league teams, and esports teams through Counter Logic Gaming.

MSG Sports revenues for the third quarter ending March 31, included only three weeks of the time from which the NBA has been shutdown due to the pandemic. However, revenues decreased 18% compared to the previous year period.

A recent analyst projection shows a stark decline for the recently spun-off company over the next calendar year. According to Jefferies analyst report published Monday (h/t New York Post), MSG Sports revenue will fall by 35% by June 30, 2021.

Revenues are not expected to recover until 2021-22, according to the report.