Good morning. Thank you for standing by, and welcome to the Madison Square Garden Sports Corp. Fiscal 2022 Fourth Quarter and Year-End Earnings Conference Call. . At this time, all participants are in a listen-only mode. After the speaker’s remarks, there will be a question-and-answer session. . I would now like to turn the call over to Ari Danes, Investor Relations. Please go ahead.

Thank you, operator. Good morning and welcome to MSG Sports Fiscal 2022 Fourth Quarter and Year-End Earnings Conference Call. Our President and CEO, Andy Lustgarten will begin this morning's call with an update on the company's operations. This will be followed by a review of our financial results with Victoria 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 4 and 5 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'll now turn the call over to Andy.

Good morning, and thank you for joining us. As we look back on fiscal 2022, we are incredibly proud of the year we had, highlighted by record full year financial results with revenues of over $820 million and adjusted operating income of more than $140 million. In addition, every major revenue line exceeded results for fiscal 2019, our last full year prior to the pandemic from tickets, sponsorship and suites, to food, beverage and merchandise sales and media rights. This is a true testament to the incredible demand and enthusiasm for our iconic franchises, especially in the nick of Rangers first full regular season in three years. The Garden was packed night after night with our fans. We are clearly thrilled to be back supporting our teams in person. But it's also important to remember that the environment in which we operated over the past year was far from perfect including restrictions on international travel, very low office occupancy rates in New York and the impact of both the Delta and Omicron COVID-19 variance. And yet, despite these headwinds, we successfully navigated our business through these uncertainties. We have used the last two years to enhance the way we operate, including updating our infrastructure and processes, emerging as a stronger and more nimble organization with new growth strategies in place to drive our business. And as we look ahead, we will focus on executing in density strategies and see numerous ways to grow our business, both in the near and long-term. These opportunities include new ticketing and premium hospitality products, such as new courtside seating, valuable sponsorship inventory including our keen jersey patches and growing and Knicks international presence, increasing our focus on knowing our consumer including through social content, which drives our sponsorship business and through new and tailored…

Thank you, Andy, and good morning, everyone. I would like to start by discussing our financial results for both the full year and fourth quarter. I will then review our balance sheet and liquidity. For fiscal 2022, we generated total revenue of $821.4 million and adjusted operating income of $142.2 million. As a reminder, fiscal 2022 marked the first full season back for the Knicks and Rangers following the onset of the COVID-19 pandemic. And we are very pleased with the strong financial performance; we continue to see across the business; including, as Andy mentioned, record high results. Now turning to our fiscal 2022 fourth quarter. Our results for the quarter continue to reflect robust demand for our teams, as they completed their 2021-2022 regular seasons followed by a strong playoff run by the Rangers. I'd remind you that the prior year quarter reflected the compressed timing of the shortened 2021 NBA and NHL regular seasons, which resulted in more home games played in the prior year period than the current year period, as well as certain revenues and expenses being recognized over a shorter time frame in the prior fiscal year. The prior year period also reflected the impact of certain capacity restrictions, as well as three Knicks playoff games as compared to the Rangers 10 this year. These factors affected the year-over-year comparability. And as a result, total revenues for the quarter were $175.2 million, as compared to $146.9 million in the prior year period. Event-related revenues represented $99.1 million in the quarter, which mainly consists of ticket, food, beverage and merchandise revenue inclusive of the playoffs, while suites and sponsorship revenues also inclusive of the playoffs represented $34.4 million. In addition, national and local media rights fees represented $31.9 million of revenue this quarter. This reflected a…

Thanks Victoria. Operator we would now like to open the call for questions.

And your first question comes from the line of Brandon Ross from Lightshed Partners. Your line is open.

Hey, Andy, it's pretty clear from your prepared remarks that sponsorship has been a big part of the revenue growth story here and frankly at MSG also. And just recently there have been some headwinds, especially with the crypto pullback. And we've seen some high-profile deals abandoned there. And then it seems like the sports betting industry is getting a little more rational. Does this any way cap your upside in sponsorship?

Thanks, Brandon. So let's take a step back for a second. So I think when you talk about crypto, it doesn't make up a large part of our sponsorship business. We have two really strong partners. They were new that came in last year, but it's not a very large part of our whole portfolio. So we feel pretty good there. But when I think about crypto, I actually don't think about crypto alone, I think about the NFT space and key and really more so blockchain and the technology that come from that. So when I think about that of the category, I don't know what's coming out of blockchain. There's a lot of companies that are emerging and new technologies that I think is going to benefit our business, but that actually takes another step back. If we went back two years, no one would have thought about crypto as part of our sponsorship book. And so what I have seen is there's new -- there's always new categories coming into this business to your point sports betting was one that didn't exist three years ago four years ago, which I think we've done very well. And I'll come back to sports betting in a second. But when you think about the way the cyclicality of this business is, there's always a category that you either that comes into fashion or comes out of fashion. And I think we do a great job of capitalizing. And on top of that the leagues have done a really excellent job of opening up new inventory, which give us the opportunity to even further capitalize. So, whether it be the Jersey sponsorship on the Knicks side, the NHL adding Jersey sponsorship, adding digital enhanced dashboards, the NBA opening up international, which we think is a really big opportunity really opening international allowing us to have 10 new partners and we're really thinking about that. So, we think there's ability to go into new categories or new inventory. I'll tell you as we think on the horizon, marijuana and CBD are now in legal in New York and the New Jersey market. While they're not permitted by the leagues I could see that being an opportunity. So, I think there's further growth really here in this business. We feel really good about it. To your question about sports gaming we think that we've got three great partners. We think that we've done a very good job of working with them and turning out how to grow that business and we think it's going to continue to a very strong part of our portfolio. And I will mention that last year it was only a partial year. so this year you will see the full year impact in our results as we go into the future.

Great. Thank you much.

Your next question comes from the line of Ben Swinburne from Morgan Stanley. Your line is open.

Thank you. Hey, good morning Andy. I wanted to ask about sort of the outlook over the next kind of 12, 24 months in a couple of ways. One clearly we can hear the enthusiasm for the business in your voice, but there's some concern I think in the market that the consumer spending we're seeing for a lot of events is sort of inflated or elevated based on pent-up demand. And as we lap these trends a year from now, growth will decelerate. I know you don't have a crystal ball but you see more than we do. So, I'd love to hear your thoughts on that particularly as it relates to New York? And then kind of a similar line of question on the corporate side. Can you just remind us as you think about suites and sponsorship kind of the typical duration of those contracts and your opportunity to reprice those as you sort of go to market in a marketplace that's really strong right now relative to maybe the last couple of years?

Sure. Happy to. So, let me -- let's just start where I think -- we can start at the beginning. I'm very proud and I think it's come across on how we've navigated our way through the last two years, which have been incredibly difficult to operate in for a lot sports entertainment business, especially here in New York where our venue was largely closed. So, what we did was we took the opportunity to really think about our infrastructure, I talked about that before how could we operate more efficiently. We've made investments in technology, which allows us to sell better more effectively and drive our revenue. And then we've also put in a whole set as I mentioned earlier a set of growth strategies. And I feel really strong about these that allow us to capitalize on our base business and then continue to drive forward. We have a very strong ballast of long-term agreements that provide us a real level of -- a certain level of certainty in our business. And then as we think through some of these growth initiatives, I feel good about where we take the business over the next 12 to 24 months regardless of what the market is. And so let's just start with what we're seeing -- and I mentioned this earlier, but I'll say it again. Currently, we're already at a 91% renewal on a combined basis and we're still continuing to sell. That's based on particular renewals from last year. We see we have an increase of Rangers ticket pricing both on our base business, the renewed as well as any new tickets that we sell and that's both across Knicks and Rangers. We used our opportunity during COVID when the Knicks came back to the playoffs, every single…

Thanks Andy. Operator: Your next question comes from the line of David Karnovsky from JPMorgan. Your line is open.

Hi thank you. Just one for Victoria, wondering if you could update us on, how you're looking at capital allocation is debt pay down the priority or do you see room for our repurchases over the next year? And how do you think about the right leverage for the business overtime? Thanks.

Sure, Hi David. So as we think about our capital allocation policies I break it down we have really three priorities. First, is to maintain the appropriate liquidity to fund our operations and to invest in our core business, right? Yes. As an example you heard me mention a little bit earlier that in this upcoming fiscal year we expect higher team operation expenses and some higher lead related expenses. Yes. An example of that is our, the impact of our current roster. We were well below the NBA salary cap last year. And so I would note that for the upcoming season the NBA salary cap is increasing, right? It's increased from $112.4 million to $123.7 million. And the NHL as well, it's a more modest increase but it's going from $81.5 million to $82.5 million. So in these areas that we're looking to, continue to focus on and fund our operations and make investments in that core business. The second priority in our mind is just to keep a strong balance sheet. As we've discussed and as you mentioned, we -- this includes our focus on paying down debt just to recap this fiscal year that's what we've continued to do. We did another $65 million pay down on the Rangers facility in the quarter brought our total debt pay down for the full fiscal year to $135 million and it eliminated all of the outstanding balances under the Rangers facility. And we know the two variants we saw this year Delta and Omicron it's just another reminder that the environment really can be unpredictable and important that we maintain the flexibility that we're going to -- that we may need in the near-term. And then the third priority, of course, we would consider other uses of our free cash flow including a return of capital. But at this time we just don't have any specific plans to share.

Very helpful. Thanks.

Your next question comes from the line of Devin Brisco from Wolfe Research. Your line is open.

Thanks for taking my question. With the Rangers advancing to the Eastern Conference Finals which helped contribute to an already strong quarter, could you parse out what the playoffs impact was by segment or play off around in the quarter? And what is the strong playoff run historically meant for future performance in terms of ticketing sponsorship suites or any other tailwinds to your business?

Thank. So I think I'm going to start with -- I'll start answering then I'll ask to Victoria for fill in a little bit more. But so, at the highest level obviously we're extremely proud of the Rangers post-season run. We have a great news and we feel very strong about our profit going forward. And I think we see it from the fans enthusiasm both during the playoffs and as well as how they've been acting so far as we look going into this year. So historically, whenever there is a proceed to run especially long co-season run what you see in the following years is, what's the effect on demand for tickets both on renewals, selling new folds and individuals. And obviously individuals were able to then be more effective on dynamically pricing to capture further upside. Mentioned our renewal rates, the combined rate is already 91% between the two teams and still rising. In addition, we've -- when we do have a platform, we're able to -- we modify our seats and ticket price for the following year. So, we're starting to see that benefit as we look forward into this year and the following years. But what it really does is it also creates new fans. And so, it's hard to put exact data around this but the best data I think about is what we were able to do on our social media. So, we've been very focused on driving social media and knowing our consumer. We added about 320,000 new social followers last year in the Rangers, but almost over half of that around half of that came just during the playoff front. Those are new fans that -- or new people really engage with our business that we will see buying tickets, buying merchandise, coming to our games and consuming our product. So, we feel good about what that's going to do to our business. And of course, that all of happens in the same when we think about our suite renewals. As those come up, we've got more demand and ability to price those efficiently and find a larger market for it. Corporates need to be part of the best of entertainment here in New York City and I hope we'll deliver it. And we see that with our partners. So as partners come up marketing partners come up, we're able to think about price differently. We were able to mark our inventory to different levels and so, we think there is flow on for that. So, it's great in the quarter or the year that it happens and it's great for follow on years as well. Victoria, do you want to add in a little bit more detail into this quarter?

Sure. So of course, as Andy mentioned we couldn't be more proud of the Rangers of strong play off from. So just to give a little recap and a little more color, we hosted 10 playoff games at the Garden in the fourth quarter. And as you can see in our results these games provided a significant boost to revenues and AOI. First, part of that comes from tickets. Our tickets are priced at a significant premium to our regular season games. And just a sort of a notable mention here, we generated one of the highest per game gate revenue ever for any NHL team in any playoff round including the Stanley Cup finals. And of course, the excitement in the arena translates to strong F&B and merchandise sales which was all great. And I think as I mentioned on our last call each home playoff game in the first round was expected to generate AOI of more than about $1.5 million and as we went deeper into the post season that per game AOI increased meaningfully as our ticket prices rose. So, in the quarter our playoff-related revenues were $64.8 million as compared to $15.2 million in the prior year period which reflected the three mix home playoff games last year. So, this translates to approximately $6.5 million, in per game revenues. And with about $3 million in per game direct expenses, it results in a net $3.5 million per game on average, which is of course is skewed higher towards the later rounds. I do -- I will note though, this does exclude some of our marketing administrative costs that we would incur, in connection with our playoffs participation.

Great. I appreciate the color. My second question is, now that gambling in New York has been legalized for going on eight months. You've had some time to partner with major sports betting companies and your ratings are really strong, and just NBA and NHL ratings are strong across the lead. Could you speak to the increase in engagement, you've seen across your existing fan base or by new fans due to gambling? And how much of the sports betting opportunity, are you monetizing at this point? And how do you see that evolving from here?

Sure. Thank you. Well, I'll note, you actually hit a few of the key points so as well, I respond it's still early it's only eight months into the run. And when you think about engagement, the first point of engagement to me is ratings and people coming to our events. So both of those are up. It's very hard to parse exactly, what's driven by what factor. But as I take a more macro point of view, the New York market, is clearly very large for gaming. We have three great partners. There has definitely been some hesitancy, by certain both publicly and by other partners about the tax rate. And so we think that, we could see as over time, if the tax rates have changed to see even further investment and further interest in this market by our partners. But when I again, take a more macro point of view and say where is sports betting been much more developed, if you go to Europe, or you go to other sports that have been in grain for a long time, you see more in-game bets. You see more immediate betting and you see it. And those are the things that actually when I take over a long period of time, I've always talked about yes, I'm excited about what this does for revenue directly from marketing partner, but what it does for consumer engagement that comes from small micro bets, that are more quick bets about what's going to happen next. So you look at sports like Tennis, which is one of the better betting sports in parts of the world. There's so many points of places for people to bets, they're further engagement. I think that we're going to see that here both in the NBA and the NHL as well as other sports here in the US, as it develops further. And as the technology moves along, we'll see more of those types of actions which will drive even further engagement. So I think it's been a great - I think it's gone very well as we've launched. I think our partners have been very happy, with how we've been able to help drive their business. And I think that there's further growth in this industry especially, if there is changes in regulation such as kiosks and tax rate. So we feel very good here.

Thanks.

Thanks, Devin. Operator, we have time for one last caller.

Your final question comes from the line of Farshid Javar from Jefferies. Your line is open.

Thanks, for squeezing me in here. You briefly touched on this a little bit, but with broader tailwinds in the NBA for international sponsors, can you maybe elaborate more on what that specific space looks like for the company?

Sure, absolutely. So, again I think both leagues have done an amazing job of prior to COVID thinking about new categories and new inventory, but really during COVID and coming out of it how do we think about leading and pushing our business. So one of the things that the NBA has done is there's always the opportunity to have two partners internationally. And what that means is, besides China and Canada, the ability to have a partner activate in international markets. The issue is when you only add two is – the truth is we didn't spend a ton of time focused on trying to find the partners. So now the NBAs raised it to 10 partners. And so what we've done is – and let me take a step up and I say wait, we have a lot of international experience here within MSG. I came from the NBA. I ran global strategy. I have a ton of experience doing international, our President of Business Operations here is David Hopkinson, he came from before this. He's got Real Madrid, where he was the Head of Global Head of Partnerships. So, tremendous international experience and so when we think about this, we say, well, this is a great opportunity for twofold. One, it allows us to find either domestic partners who are trying to activate internationally or where I think we're going to see further upside is new international partners. And those partners can either be focused in their home markets, until we could give you give up even a category, and have a domestic partner in a category, and have an international partner in the category, or an international partner that's actually trying to find its way to the US and unless you're out there talking to them,…

I appreciate the color. That's all for me. Thank you.

And this ends our Q&A session Mr. Ari Danes. I turn the call back over to you for some final closing remarks.

Thank you all for joining us. We look forward to speaking with you on our next earnings call. Have a good day.

Good-bye.

This concludes today's conference call. Thank you for your participation. You may now disconnect.