Breaking Down Madison Square Garden Sports Corp. (MSGS) Financial Health: Key Insights for Investors

You might look at Madison Square Garden Sports Corp. (MSGS) and see two iconic franchises, the New York Knicks and the New York Rangers, but the financial picture for investors is more complex than just ticket sales. While the Knicks' run to the Eastern Conference Finals helped drive full-year fiscal 2025 revenue to a solid $1,039.2 million, the bottom line tells a story of significant cost pressure. Specifically, operating income plummeted by $131.2 million year-over-year, settling at just $14.8 million, largely due to higher team personnel costs and a major hit from amended local media rights agreements that saw the Knicks' fees drop by 28%. Still, the underlying demand is defintely there, with season ticket renewal rates for the 2025-26 seasons holding strong at approximately 94%, and analysts are watching the upcoming ramp-up in national media rights, which is forecast to offset that local revenue slide and potentially justify the stock's premium Price-to-Sales ratio of 5x.

Revenue Analysis

Madison Square Garden Sports Corp. (MSGS) finished fiscal year 2025 (FY2025) with a total revenue of $1,039.2 million, a modest year-over-year increase of just 1%. To be fair, that growth is defintely underwhelming, but it hides a critical shift in the revenue mix you need to understand.

The company's revenue is almost entirely driven by its two marquee assets, the New York Knicks (NBA) and the New York Rangers (NHL), which constitute the core operating segment. The slight revenue growth was a battle between strong demand for live events and a major headwind from the evolving media landscape.

Primary Revenue Sources and Shifting Dynamics

The revenue streams for Madison Square Garden Sports Corp. are split across four main categories: ticket sales, local media rights, sponsorship, and league distributions. The good news is that fan demand remains robust, but the bad news is that the local media money is shrinking.

Here's the quick math on what drove the $1,039.2 million total revenue and the 1% growth in FY2025:

• Tickets, Suites, and Sponsorship: This category saw strong increases in average regular season per-game revenues, reflecting high demand for both the Knicks and Rangers tickets and premium hospitality offerings like suites. The Knicks' run to the Eastern Conference Finals also provided a temporary boost to playoff-related revenue, but this was lower than the prior year due to fewer total combined home playoff games (nine in FY2025 versus fifteen combined in the prior year).
• Local Media Rights Fees: This is the big risk. The company amended its local media rights agreements with MSG Networks Inc., resulting in a significant reduction in annual rights fees. Specifically, the Knicks saw a 28% reduction and the Rangers an 18% reduction, starting in the fiscal 2025 fourth quarter. This structural change will be a drag on future revenue.
• League Distributions: Revenues from league distributions also saw a decrease in FY2025, further dampening the overall growth rate.

The core takeaway is simple: the teams are selling out, but the TV money is getting tougher.

Segment Contribution and Near-Term Outlook

Because Madison Square Garden Sports Corp. spun off its entertainment venues into MSG Entertainment, the vast majority of the $1,039.2 million in revenue for FY2025 is attributable to the professional sports teams-the New York Knicks and the New York Rangers. The company's financial health is directly tied to the performance and popularity of these two franchises, which is why the average season ticket renewal rate for the 2025-26 seasons is a key metric, coming in at approximately 94%.

The shift in local media rights is the most significant change in revenue streams. It forces a greater reliance on direct fan spending-tickets, sponsorships, and merchandise-to offset the lost media income. For a deeper dive into the company's strategic vision, you should review the Mission Statement, Vision, & Core Values of Madison Square Garden Sports Corp. (MSGS).

To visualize the contrasting trends within the total revenue, here is a summary of the primary revenue components and their direction in the 2025 fiscal year:

The fact that the company still managed a 1% revenue increase despite the new, lower media rights fees and fewer playoff games shows the pricing power of the Knicks and Rangers brands, but it also signals that future growth will be a grind.

Profitability Metrics

You need to look past the top-line revenue growth; Madison Square Garden Sports Corp. (MSGS) is a classic example of a high-revenue, low-margin business in professional sports. For the fiscal year 2025, the company reported a razor-thin operating margin and, critically, a net loss, which signals significant cost pressures despite strong ticket demand.

The core takeaway is that while the New York Knicks (NBA) and New York Rangers (NHL) are immensely valuable assets, their profitability is consistently suppressed by player compensation and league-mandated expenses like the NBA luxury tax. You're buying into asset appreciation, not high cash flow yield.

Here is the quick math for the fiscal year ended June 30, 2025:

The reported revenues of $1,039.2 million for FY 2025 were up slightly-just 1% year-over-year-but the operating income of $14.8 million saw a massive drop of $131.2 million compared to the prior year. This is the single most important trend to watch: revenue growth is not translating to profit growth. The net result was a net loss of $22.4 million, which means the company spent more than it earned after all expenses, interest, and taxes were accounted for. To be fair, many professional sports teams operate at a net loss, prioritizing asset value over annual cash profit.

Operational Efficiency and Cost Management

The primary drag on Madison Square Garden Sports Corp.'s profitability is not a lack of demand-suite and ticket revenues are strong-but rather the high and rising cost base. The operational efficiency challenge is centered on team personnel costs and league revenue sharing (a mechanism leagues use to promote competitive balance, or competitive parity).

The Gross Profit Margin, while not explicitly published for the full year, is heavily suppressed by direct operating expenses, mainly player salaries and related costs. This is where the money goes. The major hits to profitability in fiscal 2025 included:

• Higher team personnel compensation.
• Increased net provisions for the NBA luxury tax.
• Reductions in local media rights fees, with Knicks fees cut by 28% and Rangers fees by 18%, effective January 1, 2025, due to amendments with MSG Networks.

These expenses are less about poor management and more about the cost of fielding competitive teams in high-salary cap leagues like the NBA. The Knicks' playoff run to the Eastern Conference Finals in FY2025 boosted per-game revenues, but that success also came with higher team-related costs and league-mandated payments.

Comparison with Industry Averages

When you compare Madison Square Garden Sports Corp.'s 1.42% operating margin to the broader sports industry, the difference is stark. For context, the NFL's Dallas Cowboys, a privately owned but highly profitable comparison, reported an operating income of $629 million on revenues of $1.234 billion in 2025, yielding an operating margin of approximately 51.0%. That is a massive difference.

This comparison highlights the structural difference: the NFL model, with its massive national media deals and fewer games, drives significantly higher operating margins for its franchises than the NBA or NHL model, which relies more heavily on local media and gate revenue. Madison Square Garden Sports Corp. is in a highly profitable market, but the league economics constrain its operating profit. If you want to dive deeper into who's holding this stock despite the low margins, check out Exploring Madison Square Garden Sports Corp. (MSGS) Investor Profile: Who's Buying and Why?

Your next step should be to model the impact of the reduced local media rights fees on the fiscal year 2026 forecast, as the full-year effect of those 2025 amendments will hit the income statement.

Debt vs. Equity Structure

The financial structure of Madison Square Garden Sports Corp. (MSGS) is unusual and demands a closer look, as the company operates with a significant negative shareholder equity position. This is a crucial point for any investor to understand, as it results in a highly leveraged profile despite the relatively modest size of its core debt facilities.

For the fiscal year ended June 30, 2025, the company's Debt-to-Equity (D/E) ratio stood at an extreme $\mathbf{-4.21}$. To be fair, this negative ratio is largely a function of the accounting for intangible assets (like the value of the teams) versus liabilities, but it defintely signals financial stress. The median D/E ratio for the broader Media - Diversified industry is typically around $\mathbf{0.27}$, so MSGS's negative figure is a major outlier.

Here's the quick math on the company's debt levels for the fiscal year 2025:

• Total Debt (Including Capital Leases): The most comprehensive figure for total debt on the balance sheet as of June 2025 was approximately $\mathbf{\$1.18}$ billion USD.
• Core Revolving Debt: The company's primary borrowings, which exclude major operating lease liabilities, totaled $\mathbf{\$291}$ million at the end of the fiscal year. This was split between $\mathbf{\$267}$ million for the New York Knicks' secured revolving credit facility and $\mathbf{\$24}$ million advanced from the NHL.
• Total Stockholders' Equity: The balance sheet showed a negative equity of approximately $\mathbf{\$-294}$ million as of September 2025.

The large gap between the $\mathbf{\$1.18}$ billion total debt figure and the $\mathbf{\$291}$ million core debt is mostly explained by the inclusion of operating lease liabilities (like the arena license agreements) in the total liabilities used to calculate the negative equity and the D/E ratio. This kind of off-balance sheet financing is common in real estate-heavy businesses, but it still represents a fixed obligation.

Recent Debt and Equity Actions

Madison Square Garden Sports Corp. has been active in managing its debt and balancing its capital structure in late 2025, focusing on extending team-level liquidity and simplifying its media relationship. This is a smart move to secure long-term financing.

In a very recent move in November 2025, the company refinanced its team-level debt, pushing out maturity dates to November 6, 2030. The Knicks' senior secured revolving credit facility was refinanced, maintaining an outstanding balance of $\mathbf{\$267}$ million while increasing the total facility size to $\mathbf{\$425}$ million. Plus, the New York Rangers secured a new facility of up to $\mathbf{\$250}$ million. This refinancing provides a five-year runway for a substantial portion of the company's core debt, which is a major stability factor.

In terms of balancing debt and equity, the company has been trying to generate equity value through its media assets. As part of a debt restructuring for its local media rights partner, MSG Networks, the Knicks and Rangers amended their rights agreements (which included a reduction in rights fees). In exchange for this, MSGS received penny warrants exercisable for $\mathbf{19.9\%}$ of the equity interests in MSG Networks. This action effectively swaps a reduction in near-term revenue for a stake in the long-term equity of the media partner, a strategic play to grow the value of its non-team assets. You can read more about the company's long-term strategy here: Mission Statement, Vision, & Core Values of Madison Square Garden Sports Corp. (MSGS).

The bottom line is that while the financial health rank from a firm like GuruFocus is a poor $\mathbf{3}$ out of 10, largely due to the negative equity, the recent refinancing actions show management is proactively managing its debt maturity schedule. The core debt is manageable and secured at the team-level, but the huge negative equity position means the company is heavily reliant on the high valuation of its intangible assets (the teams) to offset its liabilities.

Liquidity and Solvency

You're looking at Madison Square Garden Sports Corp. (MSGS) to see if they can cover their near-term bills, and the short answer is: they rely heavily on future revenue streams, not cash on hand. The company's liquidity position for the fiscal year ended June 30, 2025, shows a structural reliance on ticket sales and media rights, which is common for sports franchises, but it still flags a classic working capital risk.

The key liquidity ratios are low. The Current Ratio (Current Assets divided by Current Liabilities) for MSGS in FY 2025 stood at only 0.45 ($251.095 million / $563.523 million). This means for every dollar of liability due in the next twelve months, the company only holds about 45 cents in readily available assets to cover it. The Quick Ratio (which excludes inventory, though MSGS has virtually none) is also 0.45, confirming that liquid assets are insufficient to meet current obligations without drawing on other resources or future sales.

Here's the quick math on their short-term position:

This negative $312.428 million in working capital is a trend for MSGS. It's largely driven by a high level of deferred revenue-money collected in advance for future season tickets and sponsorships. This isn't a cash problem right now, but a timing issue: the cash is already in the bank, but it's matched by a liability to deliver future games and services. Still, a low ratio means they have little cushion if a major unexpected expense hits or if ticket renewals defintely slow down.

Looking at the cash flow statement for FY 2025, the picture is more stable, which is a significant strength that offsets the low ratios. The company generated $91.607 million in net cash from operating activities (CFO). This positive cash flow from core business-Knicks and Rangers games, media rights, and events-is what provides the real liquidity to service short-term debts.

The cash flow trends are clear:

• Operating Cash Flow (CFO): A strong, positive inflow of $91.607 million, though slightly down from the prior year's $92.131 million. This is the lifeblood.
• Investing Cash Flow (CFI): A modest outflow of ($6.920 million). This is mostly for capital expenditures (CapEx), which is low for a business that owns long-lived, high-value assets like sports teams.
• Financing Cash Flow (CFF): An outflow of ($26.406 million). This is primarily for debt reduction or share repurchases, showing the company is managing its capital structure.

The main liquidity concern is the structural working capital deficit, but the strength is the consistent cash generation from operations. The positive net cash increase of $58.281 million for the year, bringing the cash balance to $153.188 million, shows they are building their cash reserves, which is a great sign. The key action here is to monitor the renewal rates for season tickets and sponsorships, as that is the engine driving the cash flow. You can learn more about the long-term strategy here: Mission Statement, Vision, & Core Values of Madison Square Garden Sports Corp. (MSGS).

Valuation Analysis

You're looking at Madison Square Garden Sports Corp. (MSGS) and asking the right question: Is this stock overvalued or undervalued? The direct takeaway is that traditional valuation metrics suggest the stock is expensive, even 'un-valuable,' but the market is pricing in the significant intangible value of its core assets-the New York Knicks and the New York Rangers.

The company's valuation is driven by the scarcity and brand equity of its teams, not its near-term earnings. This is a classic case where a simple price-to-earnings (P/E) ratio doesn't tell the whole story, so you have to look deeper. Honestly, you can't use a P/E ratio when the company is losing money.

The Problem with Traditional Multiples

For the fiscal year 2025, Madison Square Garden Sports Corp. is expected to remain unprofitable, giving us a negative Earnings Per Share (EPS) of around -$0.93 for the trailing twelve months (TTM) ended September 2025. This means the standard P/E ratio is not applicable (N/A).

The Price-to-Book (P/B) ratio is also highly distorted, sitting at a negative -17.83 for the 2025 fiscal year. Here's the quick math: A negative P/B ratio happens because the balance sheet has a negative book value (liabilities exceed tangible assets), but the market capitalization is still over $5.1 billion. The market is telling you that the value of the teams-the intangible asset-is far greater than the balance sheet suggests.

• P/E Ratio (FY 2025): N/A (Negative EPS)
• P/B Ratio (FY 2025): -17.83 (Implies significant intangible value)

Enterprise Value and Price Trends

The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is another metric that looks wildly high, clocking in at 345.46 for the 2025 fiscal year. This extreme multiple is due to the company's very low EBITDA-around $3.564 million for FY 2025-compared to its large Enterprise Value (EV) of over $6.1 billion. A typical healthy company has an EV/EBITDA in the single to low double digits, so this is defintely a red flag if you only look at the number.

Looking at the stock price trend, Madison Square Garden Sports Corp. has traded between $173.26 and $237.99 over the last 52 weeks. As of mid-November 2025, the stock price is around $215.95, reflecting a slight decline of -1.33% over the past year. This volatile but generally upward-trending range shows the market is still willing to pay a premium for the asset base.

Analyst Consensus and Actionable Insight

Madison Square Garden Sports Corp. does not pay a regular dividend, with the TTM dividend yield at 0.00%, which is common for companies focused on reinvesting in their core assets or whose value is tied to appreciation, not income. The analyst community generally sees upside, with a consensus rating of 'Buy' or 'Moderate Buy.' The average 12-month price target from analysts is around $260.50, suggesting a potential upside of about 20.6% from the current price.

The stock is not cheap by traditional metrics, but the analyst consensus suggests the market hasn't fully priced in the long-term appreciation of the teams. If you're interested in the drivers behind this valuation, you should be Exploring Madison Square Garden Sports Corp. (MSGS) Investor Profile: Who's Buying and Why?

Next Step: Start a scenario analysis on a potential spin-off or sale of a minority stake in one of the teams, as that is the real catalyst for this stock.

Risk Factors

You own two of the most valuable franchises in professional sports, the New York Knicks and the New York Rangers, but owning premier assets doesn't make you immune to financial headwinds. Madison Square Garden Sports Corp. (MSGS) faces a dual challenge: a structural shift in its media revenue and the ever-escalating cost of talent. To be clear, the biggest near-term risk is the evolving local media landscape, which has already hit the balance sheet.

The Local Media Rights Headwind

The most pressing financial risk is the dramatic reduction in local media rights fees, a direct result of amendments to the agreements with MSG Networks Inc. (MSG Networks) in fiscal 2025. This isn't a small adjustment; it's a permanent structural change to a key revenue stream.

• Knicks' annual rights fees were cut by 28%.
• Rangers' annual rights fees were cut by 18%.
• The amendments also eliminated annual rights fee escalators, capping a future growth mechanism.

Here's the quick math: in fiscal year 2025, Madison Square Garden Sports Corp. reported total revenues of $1,039.2 million, but the local media rights fees were already decreasing, contributing to a drop in operating income by $131.2 million to just $14.8 million for the year. Your mitigation strategy here is the penny warrants, exercisable for 19.9% of the equity interests in MSG Networks, which provides a strategic, long-term offset to the lost cash flow.

Operational and Financial Volatility

The core business has two major operational risks: the cost of talent and the unpredictable nature of playoff revenue. The NBA luxury tax and general team personnel compensation are rising, increasing direct operating expenses. This is an industry-wide trend, but it directly pressures your margins. For example, the increase in direct operating expenses was a primary driver for the Q4 2025 operating loss of $22.6 million.

Also, the financial health is highly sensitive to team performance. The Q4 2025 revenue decline was partly due to having fewer home playoff games-nine for the Knicks compared to a combined fifteen in the prior year quarter-which shows how volatile playoff-related revenues are. You can't defintely budget for a deep playoff run every year.

The balance sheet also shows some pressure. As of September 30, 2025, the company's cash and cash equivalents dropped to $48.6 million from $144.6 million just three months prior, primarily due to $85.0 million used in operating activities. Plus, the high debt balance of $291 million is a financial risk that needs careful management, especially with total liabilities sitting at $1.81 billion. You can dive deeper into who is holding this stock and why by Exploring Madison Square Garden Sports Corp. (MSGS) Investor Profile: Who's Buying and Why?

Still, the underlying demand is strong. Management is mitigating some of this by focusing on per-game revenue growth for tickets, sponsorship, and suites, and they've locked in a combined average season ticket renewal rate of approximately 94% for the 2025-2026 seasons.

Next Step: Finance: draft a 13-week cash view by Friday to monitor the liquidity position against the Q1 2026 cash burn rate.

Growth Opportunities

Madison Square Garden Sports Corp. (MSGS) is navigating a challenging media rights environment, but its future growth is defintely anchored by the enduring value of its iconic franchises and a clear push into digital revenue streams.

While fiscal year 2025 saw a net loss of approximately $22.44 million and operating income plummet to just $14.8 million, analyst consensus still forecasts a 'Buy' rating with an average price target of $260.5, suggesting a significant upside. Here's the quick math: the company's full-year revenue for fiscal 2025 was $1.0392 billion, a modest 1% increase, but projections for the next fiscal year put revenue at $1.07 billion, reflecting a return to growth despite the current headwinds. The core business demand is simply very strong.

The company's strategy is focused on diversifying its revenue beyond traditional ticket sales and local media rights, which have been impacted by contract amendments. The key growth drivers are centered on digital transformation and tapping into high-growth markets like sports betting and international fan engagement.

• Digital and Fan Experience: The company is investing in technology, including a target for 80% adoption of AI-driven fan personalization tools by 2030. This is about converting fan passion into higher-margin digital revenue.
• Sports Betting Revenue: A clear strategic initiative is to capture revenue from the legalized sports betting market, with a target of $20 million per year in sports betting-related revenue.
• Global Market Expansion: MSGS is looking to the international sports media market, which is expected to reach $494.9 billion by 2025, with an estimated potential for $42.6 million in international brand licensing revenue.
• Strategic Partnerships: New deals, like the multi-year marketing partnership with GAME 7 for the New York Rangers' first-ever jersey patch, secure diversified, long-term sponsorship income.

The biggest competitive advantage for Madison Square Garden Sports Corp. is its irreplaceable position in the nation's largest media market and the legendary status of its core assets, the New York Knicks and New York Rangers.

That brand loyalty translates directly to revenue resilience. The combined average season ticket renewal rate for both teams is approximately 94% for the 2025-2026 seasons, which is an incredible moat against market volatility. Furthermore, the company's ownership of the Madison Square Garden Arena in Manhattan is a premium venue asset that few competitors can match. This is a business built on scarcity.

For a deeper dive into the company's recent performance and balance sheet, you can review this analysis: Breaking Down Madison Square Garden Sports Corp. (MSGS) Financial Health: Key Insights for Investors.

Competitive Advantage Snapshot (Based on Core Assets)

What this estimate hides is the volatility tied to team performance; a deep playoff run significantly boosts revenue, as seen by the Knicks' Eastern Conference Finals appearance highlighting fiscal 2025 results. Still, the long-term value of these premier franchises remains clear.

Next Step: Finance: Model the potential impact of the $20 million sports betting revenue target on the fiscal 2026 adjusted operating income by the end of the month.