Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Madison Square Garden Entertainment Corp (MSGE, Financial) reported a record number of concerts at the Garden for the fiscal first quarter.
- The Christmas Spectacular advanced ticket sales are outperforming last year, with additional performances added due to high demand.
- New marketing partnerships have been announced with companies like Lenovo, Motorola, and Verizon, indicating strong corporate interest.
- The company has seen strong sales and renewal activity for premium hospitality offerings, including suites.
- MSG Entertainment expects to deliver a mid- to high single-digit percentage increase in adjusted operating income for fiscal '25.
Negative Points
- Concert-related revenues were lower year-over-year due to a shift from promoted events to rentals and fewer concerts at theaters.
- There has been a recent slowdown in concert bookings, with a noted scarcity of supply for arena-level shows in the spring.
- Food, beverage, and merchandise per capita spending at concerts decreased modestly year-over-year.
- The company anticipates additional expenses due to the decision to bring sponsorship sales back in-house.
- Revenues for the fiscal first quarter decreased compared to the prior year, reflecting declines in entertainment offerings and food, beverage, and merchandise categories.
Q & A Highlights
Q: Mike, you mentioned some slowing in concert bookings. Can you discuss the causes and provide updated thoughts on bookings for the Garden and theaters for the next quarter and the remainder of the year?
A: Bookings have slowed due to several factors, including a spike in cancellations and a shortage of supply, especially in the spring. At the Arena level, we face tough year-over-year comparisons due to extra shows last year. Theaters are seeing modest declines in bookings, but we expect improvement in the fourth quarter. Overall, we believe this slowdown is temporary, with a positive outlook for fiscal '26.
Q: Can you elaborate on ticket sale trends for the Christmas Spectacular and the opportunity to add more shows? Also, how does the booking pipeline look for family shows and other sporting events?
A: Christmas Spectacular ticket sales are up 15% year-over-year, and we have added two shows. We may add more if demand continues. For family shows, we have a busy schedule, including Annie and Riverdance. Special events and marquee sports, like college basketball and UFC, show strong momentum, indicating a robust pipeline beyond concerts.
Q: Could you discuss the swing factors affecting the new AOI guidance and the impact of shifting sponsorship sales in-house?
A: The main factors influencing AOI guidance include concert bookings pacing and incremental overhead from bringing sponsorship sales in-house. Upsides include strong performance in the Christmas Spectacular and special events. We expect modest year-over-year growth in sponsorship revenues, with potential for acceleration as we manage sales internally.
Q: Why did you part ways with Oak View Group, and how will sponsorship sales be managed going forward?
A: We decided to bring sponsorship sales back in-house after a year with Crown Properties Collection, believing it benefits us long-term. We have seen traction with new deals and renewals, and expect modest growth in sponsorship sales for fiscal '25, with potential for acceleration in the future.
Q: What is the long-term outlook for the supply growth at the Garden, considering more artists are becoming arena performers faster?
A: We leverage our portfolio of venues to guide artists from theaters to the arena, creating a pipeline for long-term growth. This strategy has been successful, with several artists moving up to arena performances. We believe this approach will continue to drive supply growth at the Garden.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
