The Company's Origins and Growth

Madison Square Garden Entertainment Corp. (MSGE) is a leading live entertainment company that owns and operates iconic venues and produces marquee entertainment content. With a rich history spanning over a century, the company has established itself as a premier destination for world-class events, captivating audiences across the globe.

MSGE's roots can be traced back to the early 1800s, when Madison Square Garden first opened its doors in 1879. Over the decades, the company has undergone numerous transformations, evolving from a single venue to a diversified live entertainment powerhouse. In 2023, MSGE was spun off from Sphere Entertainment Co., becoming an independent publicly traded company on April 21, 2023.

The company's portfolio of iconic venues includes the legendary Madison Square Garden, Radio City Music Hall, the Beacon Theatre, and The Chicago Theatre, among others. These renowned destinations have hosted some of the most legendary performers, sporting events, and cultural experiences, cementing MSGE's reputation as a premier live entertainment destination. In addition to these venues, MSGE also owns and operates The Theater at Madison Square Garden.

MSGE's commitment to excellence is evident in its significant investments in its properties. In 2013, the company completed a $1 billion top-to-bottom renovation of Madison Square Garden without any subsidies from the city or state. This extensive renovation modernized the iconic venue and enhanced the overall experience for guests, further solidifying Madison Square Garden's status as a world-class entertainment destination.

Beyond venue management, MSGE has diversified its operations to include an entertainment and sports bookings business. This division showcases a wide variety of concerts, family shows, special events, and sporting events, contributing to the company's robust and diverse entertainment offerings.

Financial Strength and Operational Efficiency

MSGE's financial performance has been impressive, with the company reporting annual revenues of $959.26 million and net income of $144.30 million for the fiscal year 2024. The company's annual operating cash flow was $111.27 million, and annual free cash flow was $87.08 million, demonstrating strong cash generation capabilities.

For the most recent quarter (Q2 2025), MSGE reported revenue of $407.42 million, representing a 1% increase year-over-year. This growth was primarily driven by higher revenues from the Christmas Spectacular production and arena license fees, partially offset by lower concert revenues. Net income for the quarter stood at $75.89 million.

The company's strong balance sheet, with $55.22 million in cash, cash equivalents, and restricted cash as of December 31, 2024, underscores its financial stability and flexibility. MSGE has a $650 million senior secured term loan facility and a $150 million revolving credit facility, of which $131.17 million was available as of December 31, 2024.

Liquidity

The company's operational efficiency is evident in its key financial ratios. As of December 31, 2024, MSGE reported a current ratio of 0.54 and a quick ratio of 0.53, indicating a healthy liquidity position. The debt-to-equity ratio stood at 105.44, reflecting the company's capital structure and leverage.

Diversified Revenue Streams and Resilient Business Model

MSGE's revenue streams are diversified, with the company generating income from various sources. The company reports its revenues in three main categories:

1. Revenues from Entertainment Offerings: This includes revenues from ticketing and venue license fees, as well as revenues from sponsorship, signage, suite, and advertising commissions. For the three months ended December 31, 2024, these revenues were $318.28 million, slightly down from $318.29 million in the prior year period.

2. Food, Beverage, and Merchandise Revenues: This category includes sales of food, beverage, and merchandise during events held at MSGE's venues. For the three months ended December 31, 2024, these revenues were $59.32 million, up from $58.75 million in the prior year period.

3. Arena License Fees and Other Leasing Revenue: This revenue stream includes rental fees related to the Arena License Agreements with MSG Sports for the Knicks and Rangers to play their home games at Madison Square Garden, as well as sublease income. For the three months ended December 31, 2024, these revenues were $29.82 million, up from $25.63 million in the prior year period.

This diversification allows the company to mitigate risks and navigate changing market conditions effectively.

The company's business model has proven to be resilient, as evidenced by its ability to withstand challenges posed by the COVID-19 pandemic. MSGE's quick adaptation to new safety protocols and its focus on delivering innovative virtual and hybrid entertainment experiences have enabled the company to maintain its market position and continue to serve its loyal fan base.

Iconic Productions and Marquee Events

MSGE's portfolio includes the world-renowned Christmas Spectacular Starring the Radio City Rockettes, a beloved holiday tradition that has captivated audiences for over 90 years. The production's consistent revenue growth and strong attendance figures demonstrate the enduring appeal of MSGE's iconic content. In the 2024 holiday season, the Christmas Spectacular set new records:

• 200 total performances, up from 193 in the previous season

• Approximately 1.1 million tickets sold, achieving the show's strongest sell-through rate in 25 years
• Over $170 million in total revenue, a new record for the production

Beyond the Christmas Spectacular, the company has a robust pipeline of marquee events, including the Tony Awards, Saturday Night Live's 50th anniversary special, and a diverse range of concerts, sporting events, and family shows that cater to a wide variety of audience preferences.

Commitment to Innovation and Expansion

MSGE's dedication to innovation is reflected in its ongoing efforts to enhance the fan experience and explore new revenue-generating opportunities. The company's investments in technology, such as the implementation of dynamic pricing strategies and the expansion of its digital ticketing platforms, have enabled it to optimize revenue and engage with its customers more effectively.

Furthermore, MSGE has demonstrated a strategic focus on expanding its geographical footprint, with plans to leverage its expertise and brand recognition to explore opportunities in new markets. The company's ability to replicate its successful business model in different regions will be a key driver of its long-term growth.

Navigating Challenges and Seizing Opportunities

While MSGE has faced its share of challenges, such as the impact of the COVID-19 pandemic and the evolving competitive landscape, the company has demonstrated its resilience and adaptability. The company's proactive response to these challenges, including cost-cutting measures and the diversification of its revenue streams, has allowed it to maintain its financial stability and continue to deliver value to its shareholders.

Looking ahead, MSGE is well-positioned to capitalize on the growing demand for live entertainment experiences. The company's strong brand recognition, world-class venues, and innovative content offerings position it as a leader in the industry, poised to seize new opportunities and drive long-term growth.

Financial Outlook and Guidance

MSGE remains optimistic about its financial performance and growth prospects. The company has reiterated its guidance for mid to high single-digit Adjusted Operating Income (AOI) growth for the full fiscal year 2025. This positive outlook is supported by strong demand across MSGE's portfolio, led by the record-breaking results of the Christmas Spectacular production.

While the company continues to face a tough year-over-year comparison for concert bookings at Madison Square Garden, management expects a solid year of concerts at the arena. Looking ahead to fiscal 2026, MSGE is seeing positive signs in its bookings, with The Garden pacing up for the first quarter compared to the record prior year period.

It's worth noting that MSGE's reported AOI growth for the fiscal 2025 second quarter would have been 4% excluding $3.1 million in executive management transition cash costs incurred during the period.

Conclusion

Madison Square Garden Entertainment Corp. (MSGE) is a remarkable live entertainment company with a rich history, a diversified revenue model, and a proven track record of operational excellence. The company's iconic venues, marquee events, and commitment to innovation have solidified its position as a premier destination for audiences worldwide. With strong financial performance, a resilient business model, and a clear growth strategy, MSGE is well-positioned to navigate the evolving industry landscape and deliver sustained success in the years to come.