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Good morning. Thank you for standing by, and welcome to the Madison Square Garden Sports Corp. Fiscal 2026 Second Quarter Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers' remarks, there will be a question and answer session. I would now like to turn the call over to Ari Daines, Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to Madison Square Garden Sports Corp. Fiscal 2026 Second Quarter Earnings Conference Call. Our Chief Operating Officer, Jamaal T. Lesane, will begin this morning's call with an update on the company's strategy and operations. This will be followed by a review of our financial results with Victoria M. Mink, our EVP, Chief Financial Officer, and Treasurer. After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release, it is available in the Investors section of our corporate website. Please take note of the following. Today's discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Please refer to the company's filings with the SEC for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. On Pages four and five of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income or AOI, a non-GAAP financial measure. And with that, I now turn the call over to Jamaal.

Thank you, Ari, and good morning, everyone. For the fiscal 2026 second quarter, Madison Square Garden Sports Corp. generated revenues of approximately $403 million and adjusted operating income of approximately $30 million. These results reflect positive momentum in key operating areas with per game revenues across all in-game categories including ticketing, suites, sponsorship, and food, beverage, and merchandise up as compared to the fiscal 2025 second quarter. These results also reflect higher national media rights fees as a result of the NBA's new national media deals, the impact of our amended local media rights agreements with MSG Networks, and our continued investment in our teams. As we look ahead with the ongoing momentum we see across our business, we remain well-positioned to drive long-term value for our shareholders. Now let's discuss our operations in more detail. This year, fan enthusiasm for our teams continues to be evident in results across our business. The Knicks and Rangers combined season ticket renewal rate this season was approximately 94%. In addition, we've been focused on optimizing pricing and mix of individual and group sales to maximize revenues for each game. As a result, we saw a year-over-year increase in per game ticketing revenue in the fiscal second quarter, which also reflects the increase in mixed season ticket prices following the team's exciting playoff run last year. This year, we've also been celebrating the Rangers' centennial season, with multiple generations of fans and former Rangers players joining us at the Garden for a number of curated theme nights to highlight the history of our storied franchise. This celebration will culminate with the Rangers' 100th anniversary capstone game in November. This special season has included two new additions to our merchandise collection: a centennial jersey that honors our 100 years of history, and a separate jersey that commemorates our participation in the NHL's annual winter classic, as worn by the players in that game. In addition, we have also introduced a number of other new merchandise offerings for both the Knicks and Rangers this year. We continue to partner with unique brands such as KISS and New Yorker Nowhere, for exclusive retail offerings that have been resonating with fans. In fact, when the Knicks' new kit collection launched in November, and the Ranger Centennial Collection debuted at the Garden in October, single game merchandise sales were amongst our highest in each team's history. With the help of these efforts, we saw higher food, beverage, and merchandise per cap spending during the quarter, as compared to the prior year period. Enthusiasm for the Rangers' centennial season has also extended to our marketing partnerships business. In September, the company announced a significant multiyear agreement with Game Seven. That included naming the multiplatform sports and entertainment brand, which was co-founded by Rangers great Mark Messier, as the first-ever jersey patch partner of the Rangers. Game Seven is now featured on our home, away, and centennial jerseys this year and was the presenting partner of one of the Rangers' recent centennial season theme nights. Momentum in our marketing partnerships business has also been highlighted by a number of other announcements so far this fiscal year. Over the last several months, we signed new multiyear partnerships with PwC and Polymarket and reached multiyear renewals with Anheuser-Busch and Infosys. In terms of premium hospitality, we continue to see strong new sales and renewal activity for suites at the Garden. In addition, we are seeing the benefit of incremental revenue this year from several Lexus level suites that were recently renovated. Our progress in these categories puts us on track for growth across both marketing partnerships and premium hospitality in fiscal 2026. Turning to media rights, as I mentioned earlier, the NBA's new national media deals with Disney, NBCUniversal, and Amazon began this season, which is reflected in today's results. In addition, our results reflect the Knicks and Rangers' amended local media rights agreement with MSG Networks. As a reminder, those amendments included 18% reductions in annual rights fees payable to the Knicks and Rangers respectively, which were effective January 1, 2025, along with an elimination of annual rights fee escalators. Looking ahead, ending next week, we will be proud to watch a number of Rangers compete in the 2026 Olympic Winter Games for their home countries. And on the basketball side, the Knicks have been carrying on the momentum from last year's playoff run. As you know, in fiscal 2025, the team welcomed Abu Dhabi's Department of Culture and Tourism as its new jersey patch partner. Building on this relationship, and global enthusiasm for the team, the Knicks visited Abu Dhabi for two preseason games in October. In addition, the first several months of the season were capped off by the Knicks winning the league's third annual in-season competition, the NBA Cup, in December. Coming up, we are looking forward to watching Jalen Brunson and Karl-Anthony Towns participate in the 2026 NBA All-Star Game. So in summary, our business, with its strong underlying fundamentals, continues to benefit from robust consumer and corporate demand. And we remain as confident as ever in the value of owning two iconic sports franchises. With that, I'll now turn the call over to Victoria.

Thank you, Jamaal. And good morning, everyone. Results for the fiscal second quarter reflect preseason play and the start of the 2025-2026 regular seasons for the Knicks and Rangers. During this period, we hosted 39 pre and regular season games across both teams as compared to 35 games last year, which positively impacted our results for the quarter. This timing benefit will reverse over the second half of the fiscal year. For the fiscal 2026 second quarter, total revenues were $403.4 million as compared to $357.8 million in the prior year period, which reflected the impact of more home games at the Garden versus the prior year as well as increases across every key revenue category on a per game basis. Event-related revenues of $167.2 million, which mainly consists of ticket, food, beverage, and merchandise revenue, increased 20% year over year, while suites and sponsorship revenues of $98.5 million increased 24% year over year. National and local media rights fees of $122.3 million decreased 4% year over year. This primarily reflected the impact of our amended local media rights agreements with MSG Networks, which was partially offset by higher national media rights fees due to the NBA's new national media rights deals. Adjusted operating income increased $9.4 million to $29.7 million, primarily due to the increase in revenues partially offset by higher direct operating expenses. The increase in direct operating expenses primarily reflected higher team personnel compensation and corresponding luxury tax, higher revenue sharing expenses, net of escrow, as well as other cost increases. This was partially offset by the absence of net provisions for certain team personnel transactions recognized in the prior year quarter. I would also note that AOI for our fiscal 2026 second quarter includes $9.9 million of noncash Arena operating lease costs as compared to $9.3 million in the prior year period. Turning to our balance sheet, in November, we refinanced the Knicks and Rangers senior secured revolving credit facilities. These refinancings improved our average borrowing rate and extended each facility's maturity for a new five-year term ending in November 2030. In addition, total capacity under the Knicks revolving credit facility was increased by $150 million to $425 million with no change to borrowings outstanding. These refinancings demonstrate both the quality of our asset and the confidence in the long-term outlook for both our teams and leagues. At the end of the quarter, our cash balance was approximately $81 million and our debt balance was $291 million. This was comprised of $267 million under the Knicks senior secured revolving credit facility and $24 million advanced from the NHL. So in summary, we remain confident in the trajectory of our business and our ability to drive long-term value for our shareholders. I will now turn the call back over to Ari.

Thanks, Victoria. Operator, can we now open the call for questions?

Thank you. We will now begin the question and answer session. If you would like to withdraw your question, simply press 1 again. Your first question comes from the line of David Karnovsky from JPMorgan. Your line is open.

Hi. Doug Wardlaw on for David. I just want to ask you, given your current cash and debt balances, can you update us on how you're thinking about any potential capital returns? And should we think of this largely contingent on playoff runs for the teams? Thank you.

Hi, Doug. Thanks for the question. So, yeah, we take all variables into account when, you know, thinking through and determining how we allocate capital. Now with that said, our long-term capital allocation priorities, you know, they remain the same. You know, first, it's to maintain appropriate liquidity to fund our operations and invest in our core business. You know, second, we want to make sure we have a strong balance sheet. Now as of December 31, there were no changes to our outstanding borrowings. But, you know, as part of our recent refinancings, we've improved our rates including lowering commitment and borrowing rates for the Rangers, and extended each facility's maturity for a new five-year term. You know, in addition, we increased the borrowing capacity under the Knicks revolver by $150 million to $425 million in keeping with the NBA's recent increase to the debt limit for teams. So and we always consider opportunities that make strategic and financial sense, you know, and think these refinancings give us enhanced financial flexibility. You know? And third, we plan to be opportunistic about other uses of our cash flow. I would not rule out a return to capital program in the future.

Your next question comes from the line of Steven Chikutz from Citi. Your line is open.

Hi. Thanks for taking my question. I was wondering if you could comment if a minority interest sale remains a potential option.

Good morning, Steve, and thanks for the question. We don't have any news with respect to a minority interest sale. We are confident in the value of our teams. We are cognizant of recent reported transactions in the marketplace. And those transactions serve as confirmation of our belief that these are scarce valuable assets and we don't think that that value is appropriately reflected in our current stock price. So we would never rule out the possibility of a minority stake sale. But as I said, we have nothing to report at this time.

Got it. That's helpful. And then just one more, if I may. Was wondering how you're thinking about the potential impact of the upcoming changes to the tax deductibility of compensation that's set to begin in 2027?

Sure. Hi, Steve. You know, we continue to assess the impact of changes in tax regulations. You know? But as a reminder, you know, it becomes effective for our company the year ended June 30, 2028. But at this time, we just have nothing further to share.

Got it. Thank you.

Your next question comes from the line of David Joyce from Seaport. Your line is open.

Thank you. Could you please provide an updated outlook on the evolving RSN and local media rights landscape? Granted, you've got, you know, a flat arrangement now with MSG Networks. But in some other sports, you know, some of those rights have been, you know, getting clawed back by the leagues. Just wondering what you're seeing and what your thoughts are on the landscape. Thank you.

Good morning, David. Yeah. Look. As you referenced, the RSN clearly continues to evolve, and we are, as I said, a few moments ago, we're cognizant of what goes on in the marketplace. Yeah. In that case, we continue to believe in the value of local media coverage. Especially when you consider in a large market like New York and the Tri-State area, where our fans continuously look for unique content that is tailored to them. And that, in turn, helps drive fan engagement. And, you know, we do have we have a great partner in that respect in MSG Networks who helps us to deliver that tailored local content to our fans. As a reminder, and I mentioned this earlier, our amended agreements with MSG Networks run through the end of the 2028-2029 season. And so we remain focused on maintaining that important connection we have with both MSG Networks and our local fans. And so, yeah, we'll continue to monitor the changes impacting the RSN industry. But we also remain confident in our position as a rights holder for two marquee sports franchises.

Great. Thank you.

Your next question comes from the line of Peter Supino from Wolfe Research. Your line is open.

Hi. Good morning. I wonder if you would talk about the Rangers. Obviously, we were all hoping for a better result on the ice, and I wonder if you could share with us if that will possibly impact the financials going forward, whether from the postseason, missing the playoffs, etcetera? Thanks.

Sure. Good morning. Thanks for the question. Let me tackle that in two parts. The second part, you mentioned the financials. Look. As you can see with our results today, our business remains strong. During the quarter, we saw growth in all in-game revenue categories on a per game basis. That includes ticketing, where we have passionate fan bases who show up and cheer on their teams. That includes sponsorship and premium hospitality, where our results this year reflect the benefit of multiyear deals as well as strong renewal and new sales activity. And that includes strength in per cap spending at The Garden, where we have seen merchandise sales days amongst the highest in each team's history so far this year. Now with respect to the playoffs, you know, there are two immediate markers in the playoff run. The first is, of course, the valuable incremental home games. And then the second is that we historically have raised even ticket prices if one of our teams makes the playoffs. And so we are, of course, monitoring the standings, but as we stand here today, we are fully focused on making this as successful a season as possible. And whether that's welcoming multiple generations of Rangers fans and alumni players to honor 100 years of Rangers hockey, as we do tonight, or celebrating the Knicks' double overtime win as we did last night, we are looking forward to continuing the celebrations for the rest of the season.

Thank you.

Thanks, Peter. We'll take one more caller.

Certainly. Your final question comes from the line of Joseph Robert Stauff from Susquehanna. Your line is open.

Jamaal, I was wondering if you could provide an update maybe on the opportunities from here for sponsorship growth and further suite upgrades.

Sure. Happy to, Joe, and good morning. Seeing good momentum in both areas of the business. Starting with marketing partnerships, we've had a number of new deals and renewals so far this fiscal year, which include, as I mentioned earlier, the multiyear extensions with Anheuser-Busch and Infosys, and new multiyear deals with PwC and Polymarket. And, you know, I can't say enough about our new partnership with Game Seven, the multiplatform sports entertainment brand that was co-founded by Rangers great Mark Messier. You know, that jersey patch inventory is premium inventory for us. And to sell our first-ever jersey patch, in a historic season to Game Seven, just feels so synergistic for us. And it's been a thrill partnering with Mark and Isaac Chera and the rest of the Game Seven team in that regard. And then in terms of premium hospitality, after a record year of revenue in fiscal 2025, we continue to see robust demand from corporate partners. This has resulted in strong suite renewals and new sales. And from that, we capitalized on that momentum by renovating, in partnership with MSG Entertainment, several Lexus level suites ahead of this 2025-2026 season, and we are seeing the benefits of those renovations this year. And that, Joe, is in keeping with our goal of both improving the guest experience while also creating incremental revenue opportunities for our business. So overall, we're seeing positive momentum and we are currently on track for growth in both marketing partnerships and premium hospitality this fiscal year. Thank you.

And that concludes our question and answer session. I will now turn the call back over to Ari Daines for closing remarks.

Thanks for joining us. We look forward to speaking with you all on our next earnings call.