August 19, 2021

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It’s only a matter of hours until you can load up “Madden 22” for the first time. How many of you are getting on the sticks tonight?

MSG Sports Quarterly Revenue Up Despite Full-Year Losses

Wendell Cruz-USA TODAY Sports/Design: Alex Brooks

Madison Square Garden Sports Corp. reported fourth-quarter and fiscal 2021 earnings on Thursday.

Full-year revenue fell to $415.7 million compared to $603.3 million the year prior. Operating losses were $78.4 million compared to $93.9 million in fiscal 2020. 

Home of the New York Knicks and Rangers, the company attributes the loss in revenue to the shortened 2020-2021 seasons and mandated capacity restrictions.

Quarterly numbers, however, bounced back. Fourth-quarter revenue reached $146.9 million, a significant increase from the negative $7 million reported during the same period last year.

  • League distributions jumped $82.8 million.
  • Media rights fees from MSG Networks rose $29.3 million.
  • Sponsorship and signage revenue was up $16.7 million.
  • Regular-season ticket-related revenue increased by $10.4 million.
  • Making the playoffs brought in $15.2 million.

Morgan Stanley is a strong believer in the MSG Sports stock. The firm’s equity analysts say it’s trading at a “38% discount to the private market value of its marquee franchises.” They’ve insinuated that investors are essentially getting the Rangers for free.

President and CEO Andrew Lustgarten is optimistic about the future too, highlighting “sell-out games and robust local ratings” for the Knicks and Rangers, and the move back to a full 82-game NBA season.

MLB Owners Propose $100M Salary Floor

Jayne Kamin-Oncea-USA TODAY Sports/Design: Alex Brooks

In the first in-person meeting this year between MLB and its players association, baseball owners proposed a novel idea: a salary floor.

The owners’ concept would introduce a $100 million payroll minimum for MLB’s 30 teams and a lower luxury tax threshold, per The Athletic.

The current system introduces a 20% tax on payrolls over $210 million. The owners’ proposal would lower the threshold to $180 million, raise the tax to 25%, and introduce additional tiers at higher levels.

Funds from the tax would go to smaller-market teams, as they do now.

  • Seven teams have projected 2021 payrolls below $100 million.
  • Eight others would currently exceed a hypothetical threshold of $180 million.

The MLBPA has sought to incentivize teams to spend more and would likely resist a lower luxury tax threshold. 

The players have pushed proposals that would allow them to reach free agency sooner. MLB players typically play their first three years at league-minimum salaries, followed by three years under team control with salaries dictated or informed through the arbitration process.

This leads to many scenarios in which salaries do not correlate with production.

American League MVP frontrunner Shohei Ohtani is making $4.25 million this year — almost exactly league average ($4.2 million). Breakout phenom Vladimir Guerrero Jr. is making a league-minimum $605,400.

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Nvidia Revenue Hits Record $6.51B in Q2

Nvidia/Design: Alex Brooks

Nvidia announced record-setting revenue for the quarter ending Aug. 1, even though sales of its cryptocurrency chip fell short of expectations.

The chip maker’s total revenue leaped to $6.51 billion, up 68% from last year and 15% from last quarter — beating Wall Street estimates. Its CMP crypto chip was responsible for $266 million, below the $400 million goal set in May.

Gaming, however, continues to be a bright spot for the California-based company.

  • Gaming revenue reached a record $3.06 billion, up 85% year-over-year.
  • Its GeForce RTX 3080 Ti and GeForce RTX 3070 Ti graphics cards were released to much fanfare and frustration over limited supply.

The PC hardware developer has experienced huge growth even as semiconductors are hard to come by for companies across the globe. Its cards are attractive to computer gamers for their high performance and also appeal to crypto miners’ need for computing power.

Nvidia was set to acquire British semiconductor and software company Arm for $40 billion — but the acquisition may be blocked by U.K. regulators.

The company expects to set another record next quarter with $6.80 billion in total revenue.

Conversation Starters

Conversation Starters

  • If you didn’t get a chance to read Front Office Sports in the AM, no worries. The Leadoff covered this morning’s newsletter about the thriving outdoor activity business, a new European streaming service, and Fila’s and Tencent’s latest earnings. Click here to listen.
  • Two-time Formula 1 champion Fernando Alonso’s brand Kimoa has been acquired by Revolution Brands International. 
  • The NCAA is investigating University of Nebraska’s football program amid allegations that Cornhuskers staff and coach Scott Frost improperly used analysts and consultants, and held off-campus workouts during the pandemic ban.
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Market Movers

Market Movers

U.S. stocks were mixed on Thursday. Here’s a look at how sports-related stocks performed:

Up:

Madison Square Garden Sports Corp. (NYSE: MSGS) gained 1.71%

Big 5 Sporting Goods Corporation (NASDAQ: BGFV) gained 1.67%

Foot Locker, Inc. (NYSE: FL) gained 1.34%

Down:

Allied Esports Entertainment (NASDAQ: AESE) dropped 6.81%

Rush Street Interactive, Inc. (NYSE: RSI) dropped 6.78%

Dave & Buster’s Entertainment, Inc. (NASDAQ: PLAY) dropped 6.42%

(Note: All as of market close on 8/19/21)

What to Watch

What to Watch

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