Madison Square Garden Entertainment
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Revenues for Madison Square Garden Entertainment (MSGE) rose 24% to $642.2 million in the second quarter, bolstered by strong consumer and corporate demand for events plus a raft of cost cuts, the company reported Thursday (Feb. 9).
Speaking for the first time since publicly announcing the company is exploring a sale of its stake in Tao Group Hospitality, MSGE CFO Dave Byrnes said that revenue growth came from broad-based demand for events, hospitality, suites, sponsorship and merchandise.
The company is also undergoing a complex restructuring to spin off its live entertainment business — which houses its namesake venue and the Rockette’s Christmas Spectacular production — from its business focused on MSG Sphere, the state-of-the-art Las Vegas venue currently under construction. The latter business would also house MSG Networks and (at least for now) Tao Group.
“We are moving swiftly and anticipate completing the spin-off by the end of March,” Byrnes said on a call to discuss the financial results.
Byrnes also said that the MSG Sphere, with its 580,000 square-foot LED exosphere (the world’s largest LED screen), is expected to open in September with an as-yet-announced artist residency and potentially an “original attraction” from a leading Hollywood director. Byrnes said they expect to announce both in the coming weeks.
It is those two types of events — artist performances and films — plus advertising, sponsorship and hospitality, that MSGE hopes will help pay for the $2.175 billion price tag of building the Sphere.
MSGE had roughly $2.01 billion in debt as of the quarter ending on Dec. 31, and about $554 million in cash on hand and restricted cash.
The company announced last quarter that it was exploring areas within the company to cut costs, including letting go of staff in areas including the MSG Networks division. The severance pay and other elements related to those job reductions led to a $13.7 million charge in the quarter.
The MSG Networks segment generated $158.9 million in revenue, 1% lower than a year ago, due to higher rights fees partially offset by increasing advertising revenues.
The company’s entertainment segment generated $356.5 million, up significantly over last year on mostly sold-out events at The Garden and a full run of the Christmas Spectacular — its first in three years due to the pandemic.
Byrnes also elaborated on the company’s decision to shop around its stake in the Tao Group, saying it was time for the company to explore the opportunity to provide a significant return to its shareholders.
MSG paid $181 million for a 62.5% interest in the hospitality group in 2017 and now owns 67% of the company.
“The bidding process is extremely robust with significant interest from multiple bidders,” Byrnes said. “We’re moving forward through the process and we’ll keep you updated as we have additional news.”
The Tao Group generated $136 million in revenue, up 16% from last year when the Omicron variant of COVID-19 dampened demand for corporate holiday parties and dining out.
Additionally, MSGE filed a request on Thursday with the New York City Department of Planning to lift the time limit on Madison Square Garden’s special operating permit, which is currently set to expire on July 24. The Garden deserves to remain where it is in perpetuity, the company said in a statement, because moving it could cost $8.5 billion in public funding and improvements to the portion of Penn Station located beneath The Garden are already proceeding without the venue needing to move.
It’s a banner day for New York attorney Kurt Dominic Robertson, who is no longer persona non grata at the world’s most famous arena.
The same goes for the attorneys at Los Angeles law firm Wilshire Law Group, New York lawyer Laura Rosenberg and non-lawyer Ryan Kenneth Randall, a Las Vegas resident representing himself in a lawsuit filed against Tao Group, Facebook CEO Mark Zuckerberg and the “guy who punched me at 10:30 pm on a Saturday Memorial Day Weekend the police took into custody.”
Robertson and those others are all involved in litigation against Madison Square Garden-owned Tao Group and were barred from entering the Manhattan arena or any other MSG property under a controversial policy enacted by chairman James Dolan last year. But that all changed today when the company announced it was selling Tao Group and lifting “the adverse attorney policy for any litigation currently pending with Tao entities.” MSG paid $181 million for a 62.5% interest in the hospitality group in 2017.
“This is great news,” says attorney Kurt Robertson, who was banned from MSG properties for representing a client in a personal injury lawsuit filed against a Tao venue in Manhattan.
“When I first got the letter about the ban, I thought it was a prank,” Robertson continues. After calling MSG’s lawyers and learning that the ban was being enforced via facial recognition software, he says, “I decided I wasn’t going to test the policy” and allow himself to be made an example of by MSG security staff.
Robertson and other attorneys suing Tao are no longer barred from entering any MSG-owned property, including the Garden, Radio City Music Hall, the Beacon Theater, the Chicago Theatre and the soon-to-open Sphere in Las Vegas.
Attorneys suing other MSGE entities, along with all employees at their law firms, are still banned from entering all MSGE-owned facilities and risk being escorted off the premises by MSG staff if they are recognized by MSG’s facial recognition software.
The controversial rule, affecting an estimated 90 law firms, is currently being challenged by a number of private law firms along with Attorney General Letitia James, who voiced concern in a Jan. 24 letter that any attempts by MSG “to dissuade individuals from filing discrimination complaints or encouraging those in active litigation to drop their lawsuits so they may access popular entertainment events at the Company’s venues may violate state and city laws prohibiting retaliation.”
James also warned that “research suggests that the Company’s use of facial recognition software may be plagued with biases and false positives against people of color and women.”
MSGE stock was up about 2% in after-market trading on the news.
Josephine Vaccarello, a 25-year veteran of Madison Square Garden Entertainment Corp., has been promoted to the role of executive vp, live.
In the new role, Vaccarello will lead MSG’s live entertainment bookings business at all the company’s venues, which include New York’s Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall and Beacon Theatre. Vaccarelllo takes on the new role after serving as senior vp, MSG Live, in which she booked concerts, comedy, special events and residencies including Billy Joel, Harry Styles at Madison Square Garden and Jerry Seinfeld’s Beacon Theatre residency.
She will also be responsible for booking residencies at the MSG Sphere in Las Vegas, which is set to open in the second half of 2023. Vaccarello started at the company in 1998 as an administrative assistant.
“Throughout my 25 years at this Company, I’ve had unique opportunities to grow and evolve my career within the organization, and I’m honored to take on this elevated leadership role, particularly as MSG Entertainment expands its live entertainment business. We have a lot of big ideas for the future that will make an indelible mark on live entertainment and I’m looking forward to continuing to create iconic moments with artists for our fans in New York, Chicago and soon, Las Vegas,” Vaccarello said.
She will report to James Dolan, executive chairman and CEO of MSG Entertainment, in addition to his position as executive chairman of AMC Networks.
“Over her tenure at MSG Entertainment, Josephine has been instrumental in growing our live event business by pursuing innovative opportunities including multi-night bookings and unique residencies, and bringing unforgettable events featuring the world’s biggest artists to our venues,” Dolan said. “In this new leadership role, I am confident she will continue to raise the bar within the live entertainment industry by leveraging her unparalleled relationships and expertise across our portfolio and in booking our newest venue – the state-of-the-art MSG Sphere.”
This story was originally published on THR.com.