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With No Harry Styles, MSG Entertainment Revenue Drops 3% Year-Over-Year to $142M

today11/07/2023

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Madison Square Garden Entertainment (MSG Entertainment) had revenue of $142.2 million in the quarter ended Sept. 30, down 3% year over year, as it started its first full fiscal year as a standalone live entertainment company.

MSG Entertainment, which spun off from MSG’s Sphere and MSG Networks businesses in April, had lower event-related revenue and faced a tough comparison to the prior-year quarter. Not only did the prior-year quarter benefit from some concerts that were rescheduled due to the COVID-19 pandemic, but Madison Square Garden enjoyed a 15-show run from Harry Styles from Aug. 20 to Sept. 21, 2022, that grossed $63.1 million from 277,000 ticket sales, according to Billboard Boxscore

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The company saw “significant” merchandise spending from Styles’ fans at those shows, said Dave Byrnes, MSG Entertainment executive vp/CFO, during Tuesday’s earnings call, and per-capita merchandise spending was down last quarter as a result. Fan spending on food and beverage “was up meaningfully” in the latest quarter, however, and MSG Entertainment is seeing “strong in-venue spending from our guests,” he said. 

Strong demand for concerts, also seen in Live Nation’s latest earnings results, will help MSG Entertainment achieve a low double-digit percentage increase in event bookings this fiscal year. The company is getting help from a new generation of musicians who have graduated from smaller buildings in its portfolio to its flagship venue, Madison Square Garden. “This fiscal year, there are a number of acts, including Olivia Rodrigo, Tyler Childers and Niall Horan, who previously performed at either The Beacon [Theatre] or Radio City [Music Hall] that will soon headline the Garden for the first time in their careers,” said Byrnes. What’s more, he added, “a number of these first-time acts” are playing multiple nights and experiencing “strong ticket demand for their entire run.”

Beyond the concert business, MSG Entertainment has high expectations for its family shows. The company has 187 planned shows of its Christmas Spectacular at Radio City Music Hall, up from 181 shows in the prior fiscal year. MSG Entertainment expects paid attendance of about 1 million, bringing the holiday run back to pre-pandemic levels. In addition, Cirque du Soleil’s holiday show is returning after it took the year off in 2022, with 66 shows scheduled across The Theater at Madison Square Garden and the Chicago Theatre. 

“We’re currently on sale with more concerts at our venues than we were at this time last year for the second half of fiscal ’23,” said Byrnes, “and of those on-sales, a majority of those tickets are already sold, and sell-through on those shows is currently up [a] high single-digit percentage as compared to the second half of fiscal ’23.”

MSG Entertainment repurchased about 3.5 million shares during the quarter, including repayment of a delayed draw term loan facility from Sphere Entertainment with 1.9 million shares. About 1.6 million shares were repurchased at $31.20 per share as part of the secondary underwritten offering by Sphere Entertainment in September.

Looking forward to the full year, MSG Entertainment reaffirmed its previous guidance of revenue from $900 million to $930 million and adjusted operating income of $160 million to $170 million. It lowered guidance for operating income to $85 million to $95 million, down from $100 million to $110 million. 

Shares of MSG Entertainment fell as much as 9.8% to $27.55 on Tuesday morning before recovering to $29.09 by midday, a 4.7% decline from Monday’s closing price. 

Fiscal first quarter financial metrics:

Revenue of $142.2 million, down 3% year over year.

Operating loss of $33.4 million, up 196% year over year. 

Adjusted operating loss of $700,000, down from a $11.5 million operating profit. 

Net loss of $50.7 million, up 183% year over year.

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