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MSG reports weaker-than-expected Q4

“Lower event-related revenues” impact earnings in Q4, but MSG expects “important” fiscal year 2020 with progress of Sphere arenas and sports spin-off business

By Anna Grace on 20 Aug 2019

MSG posts Q4 results

image © Ajay Suresh/Flickr

The Madison Square Garden Company (MSG) today (20 August) reported financial results for the fourth quarter and fiscal year 2019, showing a 5% increase in revenue year-on-year alongside widening losses.

For the final quarter of 2019, MSG generated revenues of US$263.6 million, a 17% decrease from last year’s Q4. Operating losses for the quarter were up 81% from last year at $79.9m, as compared to $44.2m in 2018.

Overall, quarterly losses equated to $3.08 per share, exceeding analysts’ earnings per share (EPS) estimations of a $2.61 loss on each. MSG’s share price decreased by $22 (7%) to $270 following the report.

The company’s market capitalisation, which grew by almost 40% between mid-2017 and mid-2019, stands at $6.42 billion at time of press, as opposed to $6.65bn at the half-year point.

MSG’s entertainment division saw revenues dip by 6% to $174m in Q4, which the company puts down to “lower event-related” earnings at the company’s venues, which include New York’s Madison Square Garden (20,789-cap.) and the Forum (17,505-cap.) in Los Angeles, as well as a decrease in revenue from Boston Calling festival.

“Ongoing demand for our sports and entertainment assets helped drive a number of operational highlights in fiscal 2019″

The company was also affected by the switch to a new accounting standard for revenue recognition, ASC Topic 606, which changes the time at which certain revenues and sports team-related expenses are recognised within the fiscal year.

MSG’s year-long operating losses stand at $13.9 million, in comparison to operating income of $23.1m in 2018. However, revenues are up 5% from 2018 at US$1.6 billion, which the company contributes to growth in both its entertainment and sporting segments.

“Ongoing demand for our sports and entertainment assets helped drive a number of operational highlights in fiscal 2019, including continued growth in bookings, productions, suites, marketing partnerships and media rights,” says MSG executive chairman and chief executive James Dolan.

“Looking ahead, we remain confident in the strength of our core businesses and expect fiscal 2020 to be an important year as we work to complete the proposed sports spin-off and begin to usher in the company’s next chapter, with MSG Sphere in Las Vegas starting to take shape.”

“Significant progress” has been made on the construction of the 18,000-seat arena in Las Vegas, which MSG hopes will open in 2021. The futuristic Sphere concept will also form the basis for MSG’s first non-US venue, which will be located in Stratford, London.

Photo: Ajay Suresh/Flickr (CC BY 2.0) (cropped)

 


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