Revenues for Madison Square Garden Entertainment (MSGE) rose 24% to $642.2 million in the second quarter, bolstered by strong consumer and corporate demand for events plus a raft of cost cuts, the company reported Thursday (Feb. 9).
The company is also undergoing a complex restructuring to spin off its live entertainment business — which houses its namesake venue and the Rockette’s Christmas Spectacular production — from its business focused on MSG Sphere, the state-of-the-art Las Vegas venue currently under construction. The latter business would also house MSG Networks and (at least for now) Tao Group.
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“We are moving swiftly and anticipate completing the spin-off by the end of March,” Byrnes said on a call to discuss the financial results.
Byrnes also said that the MSG Sphere, with its 580,000 square-foot LED exosphere (the world’s largest LED screen), is expected to open in September with an as-yet-announced artist residency and potentially an “original attraction” from a leading Hollywood director. Byrnes said they expect to announce both in the coming weeks.
It is those two types of events — artist performances and films — plus advertising, sponsorship and hospitality, that MSGE hopes will help pay for the $2.175 billion price tag of building the Sphere.
MSGE had roughly $2.01 billion in debt as of the quarter ending on Dec. 31, and about $554 million in cash on hand and restricted cash.
The company announced last quarter that it was exploring areas within the company to cut costs, including letting go of staff in areas including the MSG Networks division. The severance pay and other elements related to those job reductions led to a $13.7 million charge in the quarter.
The MSG Networks segment generated $158.9 million in revenue, 1% lower than a year ago, due to higher rights fees partially offset by increasing advertising revenues.
The company’s entertainment segment generated $356.5 million, up significantly over last year on mostly sold-out events at The Garden and a full run of the Christmas Spectacular — its first in three years due to the pandemic.
Byrnes also elaborated on the company’s decision to shop around its stake in the Tao Group, saying it was time for the company to explore the opportunity to provide a significant return to its shareholders.
MSG paid $181 million for a 62.5% interest in the hospitality group in 2017 and now owns 67% of the company.
“The bidding process is extremely robust with significant interest from multiple bidders,” Byrnes said. “We’re moving forward through the process and we’ll keep you updated as we have additional news.”
The Tao Group generated $136 million in revenue, up 16% from last year when the Omicron variant of COVID-19 dampened demand for corporate holiday parties and dining out.
Additionally, MSGE filed a request on Thursday with the New York City Department of Planning to lift the time limit on Madison Square Garden’s special operating permit, which is currently set to expire on July 24. The Garden deserves to remain where it is in perpetuity, the company said in a statement, because moving it could cost $8.5 billion in public funding and improvements to the portion of Penn Station located beneath The Garden are already proceeding without the venue needing to move.
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