Results
Madison Square Garden Sports Corp.
05/08/2026 | Press release | Distributed by Public on 05/08/2026 14:19
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this MD&A, there are statements concerning the future operating and future financial performance of Madison Square Garden Sports Corp. and its direct and indirect subsidiaries (collectively, "we," "us," "our," "MSG Sports," or the "Company"), including stated annual local media rights fees for the fiscal year ending June 30, 2026 and the potential spin-off the Company's New York Rangers ("Rangers") business (the "Rangers Distribution"). See Note 1 to the consolidated financial statements included in "Part I - Item 1. Financial Statements" of this Quarterly Report on Form 10-Q for further discussion of the Rangers Distribution. Words such as "expects," "anticipates," "believes," "estimates," "may," "will," "should," "could," "potential," "continue," "intends," "plans," and similar words and terms used in the discussion of future operating and future financial performance identify forward-looking statements. Investors are cautioned that such forward-looking statements are not guarantees of future performance, results or events and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:
•the level of our revenues, which depends in part on the popularity and competitiveness of our sports teams;
•costs associated with player injuries, waivers or contract terminations of players, coaches and other team personnel;
•changes in professional sports teams' compensation, including the impact of signing free agents and executing trades, subject to league salary caps and the impact of luxury tax;
•general economic conditions, especially in the New York City metropolitan area, including any economic downturn, recession, financial instability, impact from government shutdowns or inflation;
•the demand for sponsorship arrangements and for advertising;
•competition, for example, from other teams and other sports and entertainment options;
•changes in laws, National Basketball Association ("NBA") or National Hockey League ("NHL") rules, regulations, guidelines, bulletins, directives, policies and agreements, including the leagues' respective collective bargaining agreements (each, a "CBA") with their players' associations, salary caps, escrow requirements, revenue sharing, NBA luxury tax thresholds and media rights, or other regulations under which we operate;
•developments affecting the regional sports network industry, including the effects of such developments on MSG Networks Inc.'s ("MSG Networks") solvency and its ability to perform its obligations under its local media rights agreements with us;
•a default by our subsidiaries under their respective credit facilities;
•any NBA, NHL or other work stoppage;
•any economic, political or other actions, such as boycotts, protests, work stoppages or campaigns by labor organizations;
•geopolitical risks, including the direct and indirect impact of foreign wars and conflicts, including the conflict with Iran and related unrest in the Middle East, on international, domestic and local economies;
•the performance by our affiliates of their obligations under various agreements with the Company;
•seasonal fluctuations and other variation in our operating results and cash flow from period to period;
•the level of our expenses, including our corporate expenses;
•the acquisition or disposition of assets or businesses and/or the impact of, and our ability to successfully pursue acquisitions or other strategic transactions;
•our ability to successfully integrate acquisitions or new businesses into our operations and the operating and financial performance of strategic acquisitions and investments, including those we may not control;
•a pandemic or another public health emergency and our ability to effectively manage the impacts, including labor market disruptions;
•activities or other developments that discourage or may discourage congregation at prominent places of public assembly, including Madison Square Garden Arena ("The Garden") where the home games of the New York Knickerbockers (the "Knicks") and the Rangers are played;
•the impact of governmental regulations or laws, changes in how those regulations and laws are interpreted and the continued benefit of certain tax exemptions (including for The Garden) or tax deductions and the ability for us and Madison Square Garden Entertainment Corp. ("MSG Entertainment") to maintain necessary permits or licenses;
•operational, business, reputational, litigation and other risk if there is a security incident resulting in loss, disclosure or misappropriation of stored personal information or other breaches of our information security or if third party facilities, systems and/or software upon which we rely are interrupted or unavailable;
•the impact of any government plans to redesign New York City's Pennsylvania Station;
•changes in international trade policies and practices, including tariffs, and the economic impacts, volatility and uncertainty resulting therefrom;
•business, economic, reputational and other risks associated with, and the outcome of, litigation and other proceedings;
•financial community and rating agency perceptions of our business, operations, financial condition and the industry in which we operate;
•certain restrictions on transfer and ownership of our common stock related to our ownership of professional sports franchises in the NBA and NHL;
•whether or not we pursue and complete the Rangers Distribution and, if so, its impact on our business, financial condition and results of operations; and
•the factors described under "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 (our "2025 Form 10-K").
We disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securities laws.
All dollar amounts included in the following MD&A are presented in thousands, except as otherwise noted.
Introduction
This MD&A is provided as a supplement to, and should be read in conjunction with, the Company's unaudited financial statements and accompanying notes thereto included in this Quarterly Report on Form 10-Q, as well as the 2025 Form 10-K, to help provide an understanding of our financial condition, changes in financial condition and results of operations. Unless the context otherwise requires, all references to "we," "us," "our," "MSG Sports," or the "Company" refer collectively to Madison Square Garden Sports Corp., a holding company, and its direct and indirect subsidiaries through which substantially all of our operations are conducted.
The Company operates and reports financial information in one segment.
This MD&A is organized as follows:
Business Overview. This section provides a general description of our business, as well as other matters that we believe are important in understanding our results of operations and financial condition and in anticipating future trends.
Results of Operations. This section provides an analysis of our unaudited results of operations for the three and nine months ended March 31, 2026 compared to the three and nine months ended March 31, 2025.
Liquidity and Capital Resources. This section focuses primarily on (i) the liquidity and capital resources of the Company, (ii) an analysis of the Company's cash flows for the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025, and (iii) certain contractual obligations.
Seasonality of Our Business. This section discusses the seasonal performance of our business.
Recent Accounting Pronouncements and Critical Accounting Policies. This section discusses accounting pronouncements that have been adopted by the Company, if any, as well as the results of the Company's annual impairment testing of goodwill and identifiable indefinite-lived intangible assets performed during the first quarter of fiscal year 2026. This section should be read together with our critical accounting policies, which are discussed in our 2025 Form 10-K under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Recently Issued Accounting Pronouncements and Critical Accounting Policies - Critical Accounting Policies" and in the notes to the consolidated financial statements of the Company included therein.
Business Overview
The Company owns and operates a portfolio of assets featuring some of the most recognized teams in all of sports, including the Knicks of the NBA and the Rangers of the NHL. Both the Knicks and the Rangers play their home games at 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. The Company also operates a professional sports team performance center - the Madison Square Garden Training Center in Greenburgh, NY.
Factors Affecting Operating Results
General
Our operating results are largely dependent on the continued popularity and/or on-court or on-ice competitiveness of our Knicks and Rangers teams, which have a direct effect on ticket sales for the teams' home games and are each team's largest single source of revenue. As with other sports teams, the competitive positions of our sports teams depend primarily on our ability to develop, obtain and retain talented players, for which we compete with other professional sports teams. A significant factor in our ability to attract and retain talented players is player compensation. The Company's operating results reflect the impact of high costs for player salaries (including NBA luxury tax, if any) and salaries of non-player team personnel. In addition, we have incurred significant charges for costs associated with transactions relating to players on our sports teams for season-ending and career-ending injuries and for trades, waivers and contract terminations of players and other team personnel, including team executives. Waiver and termination costs reflect our efforts to improve the competitiveness of our sports teams. These transactions can result in significant charges as the Company recognizes the estimated ultimate costs of these events in the period in which they occur, although amounts due to these individuals are generally paid over their remaining contract terms. We expect to continue to pursue opportunities to improve the overall quality of our sports teams and our efforts may result in continued significant expenses and charges. Such expenses and charges may result in future operating losses although it is not possible to predict their timing or amount. Our performance has been, and may in the future be, impacted by work stoppages. See "Part I - Item 1A. Risk Factors - Economic and Business Relationship Risks -Labor Matters May Have a Material Negative Effect on Our Business and Results of Operations." in our 2025 Form 10-K.
In addition, our future performance is also dependent on general economic conditions, in particular those in the New York City metropolitan area, and the effect of these conditions on our customers. An economic downturn could adversely affect our business and results of operations as it may lead to lower demand for suite licenses and tickets to the games of our sports teams, which would also negatively affect merchandise and concession sales, as well as decrease levels of sponsorship and venue signage revenues.
Amendments to Local Telecast Rights Agreements
On June 27, 2025, the local telecast 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; and
•New York Rangers:
◦a modification to the annual rights fee to effect an 18% 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.
Concurrent with the amendments to the local telecast rights agreements, MSG Networks issued penny warrants to the Company exercisable for 19.9% of the equity interests in MSG Networks.
As a result of the amendments to the local telecast rights agreements, local telecast rights fees revenues for the three and nine months ended March 31, 2026 and 2025 have been recorded at the applicable reduced rate described above. The Company also expects to record local telecast rights fees reflecting the reduced rates described above in future periods.
Knicks and Rangers Home Games at The Garden
The Company's operating results are impacted by the number of home games the Knicks and the Rangers play at The Garden during each quarter of the fiscal year. For the three months ended March 31, 2026, the Knicks and the Rangers played a combined five fewer home games at The Garden during the current year period as compared to the prior year period. For the nine months ended March 31, 2026, the Knicks and the Rangers played a combined one fewer home game at The Garden during the current year period as compared to the prior year period. The Knicks played 19 games at The Garden during the
three months ended March 31, 2026 and 39 games at The Garden during the nine months ended March 31, 2026 as compared to 23 and 40 games, respectively, during the prior year periods. As a result of the NBA Cup, the Knicks will play 43 pre/regular season home games at The Garden during the 25-26 season as compared to 44 pre/regular season home games during the 24-25 season. The Rangers played 19 games at The Garden during the three months ended March 31, 2026 and 40 games at The Garden during the nine months ended March 31, 2026 as compared to 20 and 40 games, respectively, during the prior year periods.
Results of Operations
Comparison of the three and nine months ended March 31, 2026 versus the three and nine months ended March 31, 2025
The table below sets forth, for the periods presented, certain historical financial information.
| Three Months Ended March 31, | Change | Nine Months Ended March 31, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 432,199 | $ | 424,197 | $ | 8,002 | 2 | % | $ | 875,077 | $ | 835,263 | $ | 39,814 | 5 | % | ||||||||||||||||||||||||||||||||||
| Direct operating expenses | 354,503 | 316,335 | 38,168 | 12 | % | 674,171 | 600,299 | 73,872 | 12 | % | ||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 73,699 | 74,697 | (998) | (1) | % | 200,553 | 195,184 | 5,369 | 3 | % | ||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 790 | 823 | (33) | (4) | % | 2,391 | 2,396 | (5) | - | % | ||||||||||||||||||||||||||||||||||||||||
| Restructuring charges | 1,244 | - | 1,244 | NM | 1,244 | - | 1,244 | NM | ||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | 1,963 | 32,342 | (30,379) | (94) | % | (3,282) | 37,384 | (40,666) | NM | |||||||||||||||||||||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | 733 | 1,051 | (318) | (30) | % | 1,807 | 2,605 | (798) | (31) | % | ||||||||||||||||||||||||||||||||||||||||
| Interest expense | (4,835) | (5,020) | 185 | (4) | % | (16,636) | (16,662) | 26 | - | % | ||||||||||||||||||||||||||||||||||||||||
| Miscellaneous (expense) income, net | (11,155) | (5,743) | (5,412) | (94) | % | 2,424 | (13,478) | 15,902 | NM | |||||||||||||||||||||||||||||||||||||||||
| (Loss) income before income taxes | (13,294) | 22,630 | (35,924) | NM | (15,687) | 9,849 | (25,536) | NM | ||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | (6,689) | (36,857) | 30,168 | 82 | % | (4,851) | (30,507) | 25,656 | 84 | % | ||||||||||||||||||||||||||||||||||||||||
| Net loss | $ | (19,983) | $ | (14,227) | $ | (5,756) | (40) | % | $ | (20,538) | $ | (20,658) | $ | 120 | 1 | % | ||||||||||||||||||||||||||||||||||
______________
NM - Percentage is not meaningful
Revenues
Revenues increased $8,002, or 2%, to $432,199 for the three months ended March 31, 2026 as compared to the prior year period. Revenues increased $39,814, or 5%, to $875,077 for the nine months ended March 31, 2026 as compared to the prior year period.
The net increases were attributable to the following:
| Three | Nine | |||||||||||||
| Months | Months | |||||||||||||
| Increase in revenues from league distributions | $ | 26,977 | $ | 34,151 | ||||||||||
| Increase in suite revenues | 131 | 12,036 | ||||||||||||
| (Decrease) increase in pre/regular season ticket-related revenues | (12,894) | 12,422 | ||||||||||||
| Decrease in revenues from local media rights fees | (3,981) | (28,173) | ||||||||||||
| (Decrease) increase in pre/regular season food, beverage and merchandise sales | (1,178) | 3,196 | ||||||||||||
| (Decrease) increase in sponsorship and signage revenues | (703) | 5,895 | ||||||||||||
| Other net (decrease) increase | (350) | 287 | ||||||||||||
| $ | 8,002 | $ | 39,814 | |||||||||||
The increases in revenues from league distributions for the three and nine months ended March 31, 2026 were primarily due to increased rights fees under the NBA's new national media rights agreements, which began with the 2025-26 NBA regular
season, as well as an incremental league distribution received from the NBA in the current year related to the impact of the NBA Cup on the Knicks' 2025-26 game schedule. In addition, for the nine months ended March 31, 2026, the increase was partially offset by a decrease in certain league distributions unrelated to national media rights fees.
The increase in suite revenues for the three months ended March 31, 2026 was primarily due to higher net sales of suite products, offset by the Knicks and the Rangers playing a combined five fewer home games at The Garden during the current year period as compared to the prior year period. The increase in suite revenues for the nine months ended March 31, 2026 was primarily due to higher net sales of suite products.
The decrease in pre/regular season ticket-related revenues for the three months ended March 31, 2026 was primarily due to the Knicks and the Rangers playing a combined five fewer home games at The Garden during the current year period as compared to the prior year period, partially offset by higher average per-game revenue. The increase in pre/regular season ticket-related revenues for the nine months ended March 31, 2026 was primarily due to higher average per-game revenue, partially offset by the Knicks and the Rangers playing a combined one fewer home game during the current year period as compared to the prior year period.
The decrease in revenue from local media rights fees for the three months ended March 31, 2026 was primarily due to a reduction in local telecast rights fees due to a decrease in the number of games exclusively available to MSG Networks during the current fiscal year as compared to the prior fiscal year. The decrease in revenue from local media rights fees for the nine months ended March 31, 2026 was primarily due to reduced local telecast rights fees as a result of amendments to the Knicks' and the Rangers' local telecast rights agreements with MSG Networks entered into in the fourth quarter of fiscal year 2025, and a reduction in local telecast rights fees due to a decrease in the number of games exclusively available to MSG Networks during the current fiscal year as compared to the prior fiscal year. Stated annual local media rights fees, subject to adjustments in certain circumstances, including if the Company does not make available a minimum number of games in the year, after consideration of the local telecast rights amendments are $139,237 for the fiscal year ending June 30, 2026 as compared to $162,939 in stated annual local media rights fees for the fiscal year ended June 30, 2025.
The decrease in pre/regular season food, beverage and merchandise sales for the three months ended March 31, 2026 was primarily due to the Knicks and the Rangers playing a combined five fewer home games at The Garden during the current year period as compared to the prior year period, partially offset by higher average per-game revenue. The increase in pre/regular season food, beverage and merchandise sales for the nine months ended March 31, 2026 was primarily due to higher online sales of merchandise and higher average per-game revenue. Merchandise sales for the three and nine months ended March 31, 2026 included the positive impact of new Rangers' jersey launches.
The decrease in sponsorship and signage revenues for the three months ended March 31, 2026 was primarily due to the Knicks and the Rangers playing a combined five fewer home games at The Garden during the current year period as compared to the prior year period, partially offset by higher net sales of existing sponsorship and signage inventory. The increase in sponsorship and signage revenues for the nine months ended March 31, 2026 was primarily due to higher net sales of existing sponsorship and signage inventory.
Direct operating expenses
Direct operating expenses increased $38,168, or 12%, to $354,503 for the three months ended March 31, 2026 as compared to the prior year period. Direct operating expenses increased $73,872, or 12%, to $674,171 for the nine months ended March 31, 2026 as compared to the prior year period.
The net increases were attributable to the following:
| Three | Nine | |||||||||||||
| Months | Months | |||||||||||||
| Increase in team personnel compensation | $ | 18,787 | $ | 37,581 | ||||||||||
| Increase in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax | 15,421 | 25,981 | ||||||||||||
| Increase (decrease) in net provisions (credits) for certain team personnel transactions | 5,357 | (680) | ||||||||||||
| Increase in other team operating expenses | 2,189 | 8,745 | ||||||||||||
| Decrease in operating lease costs associated with the Knicks and the Rangers playing home games at The Garden | (3,300) | - | ||||||||||||
| (Decrease) increase in pre/regular season expense associated with merchandise sales | (286) | 2,245 | ||||||||||||
| $ | 38,168 | $ | 73,872 | |||||||||||
The increases in team personnel compensation for the three and nine months ended March 31, 2026 were primarily due to changes in the Knicks and the Rangers rosters.
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Increase | 2026 | 2025 | Increase | |||||||||||||||||||||||||||||||||
| Net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax | $ | 69,332 | $ | 53,911 | $ | 15,421 | $ | 121,310 | $ | 95,329 | $ | 25,981 | ||||||||||||||||||||||||||
The increases in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax for the three and nine months ended March 31, 2026 were primarily due to higher provisions for league revenue sharing expense (net of escrow and excluding playoffs) and higher NBA luxury tax expense, partially offset by the net impact of adjustments to prior seasons' revenue sharing expense (net of escrow).
The actual net provisions for league revenue sharing expense (net of escrow and excluding playoffs) for the 2025-26 seasons may vary significantly from the recorded provisions based on actual operating results for each league and all teams within each league for the season and other factors.
Net provisions (credits) for certain team personnel transactions were as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 |
Increase (Decrease) |
2026 | 2025 |
Increase (Decrease) |
|||||||||||||||||||||||||||||||||
| Player trades | $ | 4,739 | $ | (786) | $ | 5,525 | $ | 4,739 | $ | 6,800 | $ | (2,061) | ||||||||||||||||||||||||||
| Waivers/contract terminations | (35) | - | (35) | 2,347 | 833 | 1,514 | ||||||||||||||||||||||||||||||||
| Season-ending injuries | - | 133 | (133) | - | 133 | (133) | ||||||||||||||||||||||||||||||||
| Net provisions (credits) for certain team personnel transactions | $ | 4,704 | $ | (653) | $ | 5,357 | $ | 7,086 | $ | 7,766 | $ | (680) | ||||||||||||||||||||||||||
Other team operating expenses primarily consist of expenses associated with day-to-day operations, including variable day-of-event costs incurred at The Garden, team travel, player insurance, and league assessments. The increases in other team operating expenses for the three and nine months ended March 31, 2026 were primarily due to higher average per-game expenses. In addition, for the three months ended March 31, 2026, the increase was partially offset by the Knicks and the Rangers playing a combined five fewer home games at The Garden during the current year period as compared to the prior year period.
The decrease in operating lease costs associated with the Knicks and the Rangers playing home games at The Garden for the three months ended March 31, 2026 was a result of the Knicks and the Rangers playing a combined five fewer home games at The Garden during the current year period as compared to the prior year period.
Recognition of operating lease costs is recorded on a straight-line basis over the term of the applicable agreement based upon the value of total future payments under the arrangement. Operating lease costs associated with the Knicks and the Rangers playing home games at The Garden includes (i) $20,185 and $41,249 of expense paid in cash for the three and nine months ended March 31, 2026, respectively, and $21,747 and $40,048 of expense paid in cash for the three and nine months ended March 31, 2025, respectively, and (ii) a non-cash expense of $9,896 and $20,223 for the three and nine months ended March 31, 2026, respectively, and $11,633 and $21,424 for the three and nine months ended March 31, 2025, respectively.
The decrease in pre/regular season expense associated with merchandise sales for the three months ended March 31, 2026 was primarily due to the Knicks and the Rangers playing a combined five fewer home games at The Garden during the current year period as compared to the prior year period, partially offset by higher average per-game revenue. The increase in pre/regular season expense associated with merchandise sales for the nine months ended March 31, 2026 was primarily due to higher online sales of merchandise and higher average per-game revenue. Merchandise sales for the three and nine months ended March 31, 2026 included the positive impact of new Rangers' jersey launches.
Selling, general and administrative expenses
Selling, general and administrative expenses primarily consist of (i) administrative costs, including compensation, costs under the Services Agreement with MSG Entertainment (the "Services Agreement"), professional fees, and operating lease costs, (ii) fees related to the Sponsorship Sales and Service Representation Agreements, and (iii) sales and marketing costs. Selling, general and administrative expenses generally do not fluctuate in line with changes in the Company's revenues and direct operating expenses.
Selling, general and administrative expenses for the three months ended March 31, 2026 decreased $998, or 1%, to $73,699 as compared to the prior year period primarily driven by lower professional fees of $7,183 and lower other general and administrative expenses, partially offset by higher employee compensation and related benefits of $7,528, primarily due to executive management transition costs of $6,939 recognized in the current year period.
Selling, general and administrative expenses for the nine months ended March 31, 2026 increased $5,369, or 3%, to $200,553 as compared to the prior year period primarily driven by (i) higher employee compensation and related benefits of $10,632, including executive management transition costs of $6,939 recognized in the current year period, (ii) higher costs related to the Services Agreement of $2,523 and (iii) higher other general and administrative expenses. The increase was partially offset by lower professional fees of $9,167.
Restructuring charges
Restructuring charges for the three and nine months ended March 31, 2026 were $1,244 due to termination benefits provided as part of a voluntary exit program the Company implemented during the three months ended March 31, 2026. There were no restructuring charges for the three and nine months ended March 31, 2025.
Operating income (loss)
Operating income for the three months ended March 31, 2026 decreased $30,379, or 94%, to $1,963 as compared to the prior year period primarily due to higher direct operating expenses, partially offset by higher revenues.
Operating income (loss) for the nine months ended March 31, 2026 reflected an operating loss of $3,282 and operating income (loss) for the nine months ended March 31, 2025 reflected operating income of $37,384. The decrease was primarily driven by higher direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses, partially offset by higher revenues.
Interest income
Interest income for the three months ended March 31, 2026 decreased $318, or 30%, to $733 as compared to the prior year period.
Interest income for the nine months ended March 31, 2026 decreased $798, or 31%, to $1,807 as compared to the prior year period.
Interest expense
Interest expense for the three months ended March 31, 2026 decreased $185, or 4%, to $4,835 as compared to the prior year period.
Interest expense for the nine months ended March 31, 2026 decreased $26 to $16,636 as compared to the prior year period.
Miscellaneous (expense) income, net
Miscellaneous (expense) income, net for the three months ended March 31, 2026 and 2025 reflected net expense of $11,155 and $5,743, respectively. The decrease in miscellaneous (expense) income, net relates to changes in fair value in the Company's investments.
Miscellaneous (expense) income, net for the nine months ended March 31, 2026 reflected net income of $2,424 and miscellaneous (expense) income, net for the nine months ended March 31, 2025 reflected net expense of $13,478. The increase in miscellaneous (expense) income, net relates to changes in fair value in the Company's investments.
Income taxes
See Note 17 to the consolidated financial statements included in "Part I - Item 1. Financial Statements" of this Quarterly Report on Form 10-Q for a discussion of the Company's income taxes.
Changes in tax regulations could limit the availability of tax benefits or deductions that the Company expects to claim or otherwise increase the taxes imposed on the Company's operations. For example, to the extent the expansion of Section 162(m) of the U.S. Internal Revenue Code, which will become effective for the Company's fiscal year ending June 30, 2028, reduces
the amount of tax deductions available to us, our income tax expense would increase, which would reduce our net income, all of which could have a significant impact on our business and results of operations. See "Item 1A. Risk Factors-Operational Risks-We Are Subject to Governmental Regulation, Which Can Change, and Any Failure to Comply With These Regulations May Have a Material Negative Effect on Our Business and Results of Operations" in our 2025 Form 10-K.
Adjusted operating income (loss)
The Company evaluates performance based on several factors, of which the key financial measure is operating income (loss) excluding (i) depreciation, amortization and impairments of property and equipment, goodwill and other intangible assets, (ii) share-based compensation expense or benefit, (iii) restructuring charges or credits, (iv) gains or losses on sales or dispositions of businesses, (v) the impact of purchase accounting adjustments related to business acquisitions, and (vi) gains and losses related to the remeasurement of liabilities under the Company's Executive Deferred Compensation Plan, which is referred to as adjusted operating income (loss), a non-GAAP measure.
Management believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the Company's business without regard to the settlement of an obligation that is not expected to be made in cash. In addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the Company's Executive Deferred Compensation Plan provides investors with a clearer picture of the Company's operating performance given that, in accordance with GAAP, gains and losses related to the remeasurement of liabilities under the Company's Executive Deferred Compensation Plan are recognized in Operating income (loss) whereas gains and losses related to the remeasurement of the assets under the Company's Executive Deferred Compensation Plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Miscellaneous income (expense), net, which is not reflected in Operating income (loss).
The Company believes adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of the Company. Adjusted operating income (loss) and similar measures with similar titles are common performance measures used by investors and analysts to analyze the Company's performance. The Company uses revenues and adjusted operating income (loss) measures as the most important indicators of its business performance and evaluates management's effectiveness with specific reference to these indicators.
Adjusted operating income (loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP. Since adjusted operating income (loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. The Company has presented the components that reconcile operating income (loss), the most directly comparable GAAP financial measure, to adjusted operating income (loss).
The following are the reconciliations of operating income (loss) to adjusted operating income for the three and nine months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | Change | Nine Months Ended March 31, | Change | |||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 1,963 | $ | 32,342 | $ | (30,379) | (94) | % | $ | (3,282) | $ | 37,384 | $ | (40,666) | NM | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 790 | 823 | 2,391 | 2,396 | ||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | 6,613 | 3,900 | 17,645 | 14,159 | ||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring charges | 1,244 | - | 1,244 | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Remeasurement of deferred compensation plan liabilities | (302) | (134) | 1,177 | 973 | ||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted operating income | $ | 10,308 | $ | 36,931 | $ | (26,623) | (72) | % | $ | 19,175 | $ | 54,912 | $ | (35,737) | (65) | % | ||||||||||||||||||||||||||||||||||
______________
NM - Percentage is not meaningful
For the three months ended March 31, 2026, adjusted operating income decreased $26,623, or 72%, to $10,308 as compared to the prior year period. The decrease in adjusted operating income was primarily due to higher direct operating expenses, partially offset by higher revenues and lower selling, general and administrative expenses.
For the nine months ended March 31, 2026, adjusted operating income decreased $35,737, or 65%, to $19,175 as compared to the prior year period. The decrease in adjusted operating income was primarily due to higher direct operating expenses partially offset by higher revenues.
Liquidity and Capital Resources
Overview
Our primary sources of liquidity are cash and cash equivalents, cash flow from operations and available borrowing capacity under our credit facilities. On November 6, 2025, the Company amended and extended the 2021 Knicks Credit Agreement and the 2021 Rangers Credit Agreement. See Note 13 to the consolidated financial statements included in "Part I - Item 1. Financial Statements" of this Quarterly Report on Form 10-Q for a discussion of the 2025 Knicks Credit Agreement, the 2025 Rangers Credit Agreement, and the Rangers NHL Advance Agreement (each as defined therein).
Our principal uses of cash include the operation of our businesses, working capital-related items, the repayment of outstanding debt, repurchases of shares of the Company's Class A Common Stock, dividends, if declared, and investments.
As of March 31, 2026, we had $107,039 in Cash and cash equivalents. In addition, as of March 31, 2026, the Company's deferred revenue obligations were $78,250, net of billed, but not yet collected deferred revenue. This balance is primarily comprised of obligations in connection with tickets and suites.
We regularly monitor and assess our ability to meet our net funding and investing requirements. The decisions of the Company as to the use of its available liquidity will be based upon the ongoing review of the funding needs of the business, management's view of a favorable allocation of cash resources, and the timing of cash flow generation. To the extent the Company desires to access alternative sources of funding through the capital and credit markets, restrictions imposed by the NBA and NHL and potentially challenging U.S. and global economic and market conditions could adversely impact its ability to do so at that time.
We believe we have sufficient liquidity, including approximately $107,039 in Cash and cash equivalents as of March 31, 2026, along with $433,000 of additional available borrowing capacity under existing credit facilities (as of March 31, 2026), to fund our operations and satisfy any obligations for the foreseeable future.
Financing Agreements and Stock Repurchases
See Note 13 and Note 15 to the consolidated financial statements included in "Part I - Item 1. Financial Statements" of this Quarterly Report on Form 10-Q for discussions of the Company's debt obligations and various financing agreements, and the Company's stock repurchases, respectively.
Contractual Obligations
The Company did not have any material changes in its contractual obligations since the end of fiscal year 2025 other than activities in the ordinary course of business.
Cash Flow Discussion
The following table summarizes the Company's cash flow activities for the nine months ended March 31, 2026 and 2025:
| Nine Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net loss | $ | (20,538) | $ | (20,658) | ||||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | 24,207 | 21,038 | ||||||||||||
| Changes in working capital assets and liabilities | 1,343 | 41,504 | ||||||||||||
| Net cash provided by operating activities | 5,012 | 41,884 | ||||||||||||
| Net cash used in investing activities | (2,027) | (5,349) | ||||||||||||
| Net cash used in financing activities | (49,134) | (26,406) | ||||||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (46,149) | $ | 10,129 | ||||||||||
Operating Activities
Net cash provided by operating activities for the nine months ended March 31, 2026 decreased by $36,872 to $5,012. The decrease was primarily due to changes in working capital assets and liabilities, partially offset by the change in net loss adjusted for non-cash items. The changes in working capital assets and liabilities were primarily driven by (i) a decrease in deferred revenue of $79,029 primarily due to the timing of collection of ticket-related revenues, (ii) a higher increase in prepaid expenses and other assets of $18,874 primarily due to a higher increase in contract assets related to the Company's local media rights agreements and (iii) an increase in net related party receivables of $14,051 primarily due to the timing of collections related to the Company's Arena License Agreements.
These changes were partially offset by (i) a higher increase in accrued and other liabilities of $42,337 primarily due to higher accruals for employee compensation and league revenue sharing (net of escrow) in the current year period, partially offset by the impact of NBA luxury tax payments in the the current year period and lower accruals for income taxes in the current year period and (ii) a lower increase in accounts receivable, net, of $25,555 primarily due to the timing of collections from MSG Networks related to the Company's local media rights agreements.
Investing Activities
Net cash used in investing activities for the nine months ended March 31, 2026 decreased by $3,322 to $2,027 as compared to the prior year period primarily due to lower capital expenditures in the current year period and a distribution from an equity method investee in the current year period.
Financing Activities
Net cash used in financing activities for the nine months ended March 31, 2026 increased by $22,728 to $49,134 as compared to the prior year period primarily due to higher principal repayments under the Company's credit facilities in the current year period and payments for financing costs in the current year period.
Seasonality of Our Business
The Company's dependence on revenues from its NBA and NHL sports teams generally means that it earns a disproportionate share of its revenues in the second and third quarters of the Company's fiscal year, which is when the majority of the sports teams' games are played.
Recent Accounting Pronouncements and Critical Accounting Policies
Recent Accounting Pronouncements
See Note 2 to the consolidated financial statements included in "Part I - Item 1. Financial Statements" of this Quarterly Report on Form 10-Q for discussion of recent accounting pronouncements.
Critical Accounting Policies
The following discussion has been included to provide the results of our annual impairment testing of goodwill and identifiable indefinite-lived intangible assets performed during the first quarter of fiscal year 2026. There have been no material changes to the Company's critical accounting policies from those set forth in our 2025 Form 10-K.
Goodwill
The carrying amount of goodwill as of March 31, 2026 was $226,523. Goodwill is tested annually for impairment as of August 31st and at any time upon the occurrence of certain events or changes in circumstances. The Company performs its goodwill impairment test at the reporting unit level, which is the same as or one level below the operating segment level. The Company has one operating and reportable segment, and one reporting unit for goodwill impairment testing purposes.
The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would not need to perform a quantitative impairment test for that reporting unit. If the Company cannot support such a conclusion or the Company does not elect to perform the qualitative assessment, quantitative assessment is performed by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The estimates of the fair value of the Company's reporting units are primarily determined using discounted cash flows and comparable market transactions. These valuations are based on estimates and assumptions including projected future cash flows, discount rates, determination of appropriate market comparables and the determination of whether a premium or discount should be applied to comparables. Significant judgments inherent in a discounted cash flow analysis include the selection of the appropriate discount rate, the estimate of the amount and timing of projected future cash flows and identification of appropriate continuing growth rate assumptions. The discount rates used in the analysis are intended to reflect the risk inherent in the projected future cash flows. The amount of an impairment loss is measured as the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The Company elected to perform the qualitative assessment of impairment for the Company's reporting unit for the fiscal year 2026 impairment test. These assessments considered factors such as:
•macroeconomic conditions;
•industry and market considerations;
•market capitalization;
•cost factors;
•overall financial performance of the reporting unit;
•other relevant company-specific factors such as changes in management, strategy or customers; and
•relevant reporting unit specific events such as changes in the carrying amount of net assets.
The Company performed its most recent annual impairment test of goodwill during the first quarter of fiscal year 2026, and there was no impairment of goodwill. Based on this impairment test, the Company concluded it was not more likely than not that the fair value of the reporting unit was less than its carrying amount.
Identifiable Indefinite-Lived Intangible Assets
Identifiable indefinite-lived intangible assets are tested annually for impairment as of August 31st and at any time upon the occurrence of certain events or substantive changes in circumstances. The following table sets forth the amount of identifiable indefinite-lived intangible assets reported in the accompanying consolidated balance sheet as of March 31, 2026:
| Sports franchises | $ | 102,564 | |||
| Photographic related rights | 1,080 | ||||
| $ | 103,644 | ||||
The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. In the qualitative assessment, the Company must evaluate the totality of qualitative factors, including any recent fair value measurements, that impact whether an indefinite-lived intangible asset other than goodwill has a carrying amount that more likely than not exceeds its fair value. The Company must proceed to conducting a quantitative analysis, if the Company (i) determines that such an impairment is more likely than not to exist, or (ii) forgoes the qualitative assessment entirely. Under the quantitative assessment, the impairment test for identifiable indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. For all periods presented, the Company elected to perform a qualitative assessment of impairment for the indefinite-lived intangible assets. These assessments considered the events and circumstances that could affect the significant inputs used to determine the fair value of the intangible asset. Examples of such events and circumstances include:
•cost factors;
•financial performance;
•legal, regulatory, contractual, business or other factors;
•other relevant company-specific factors such as changes in management, strategy or customers;
•industry and market considerations; and
•macroeconomic conditions.
The Company performed its most recent annual impairment test of identifiable indefinite-lived intangible assets during the first quarter of fiscal year 2026, and there were no impairments identified. Based on this impairment test, the Company concluded it was not more likely than not that the fair value of the indefinite-lived intangible assets was less than their carrying amount.
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