Madison Square Garden Sports Corp. (MSGS) shares climbed on Thursday after the company posted fiscal fourth-quarter results that blew past Wall Street's expectations, thanks largely to the New York Knicks' NBA championship run. The stock was up nearly 3% at $426.25, hitting a fresh 52-week high.

For the quarter ended June 30, the company reported diluted earnings of $1.16 per share, easily topping the 59-cent analyst consensus. Revenue came in at $278.75 million, well above the $221.26 million analysts had penciled in. That's a 37% jump from the $203.96 million the company brought in during the same period last year, and it helped swing the company to an operating profit.

Championship Run Lifts Quarterly Revenue

The Knicks' march to the 2025-26 NBA title was the big driver. Playoff-related revenue jumped by $66.9 million, fueled by higher average revenue per playoff game and stronger merchandise sales during the championship run. In the prior-year quarter, the Knicks had advanced to the Eastern Conference Finals, but this year they went all the way.

On the earnings call, management said playoff revenue reached $182 million, up from $115.2 million a year earlier. The Knicks hosted nine playoff games in both periods, but this time around, average revenue per game hit about $20.2 million, including a big boost from non-game-day merchandise sales.

Event-related revenue, which covers tickets, food, beverage, and merchandise, rose 43% to $200.7 million. Suites, sponsorship, and signage revenue increased 23% to $39.1 million. National and local media rights fees totaled $27.7 million, essentially flat year over year.

League distribution revenue added $7.2 million, helped by higher national media rights fees under the NBA's new agreements. Sponsorship and signage revenue grew by $1.7 million, while food, beverage, and merchandise sales rose by $1.5 million on higher average per-game revenue.

Local media rights fees, however, declined by $3.5 million after amendments to the Knicks' and Rangers' agreements with MSG Networks and fewer games aired exclusively on the network.

Operating Profit Rebounds Sharply

The company reported operating income of $32.2 million, a $54.7 million improvement from the $22.6 million operating loss a year earlier. Adjusted operating income hit $39.6 million, compared with an adjusted operating loss of $16.8 million in the prior-year quarter.

Net income totaled $28.3 million, a sharp turnaround from the $1.8 million net loss in the year-ago quarter.

Higher revenue drove the improvement, though expenses also climbed. Direct operating expenses rose 3% to $159.5 million, including $49.2 million in higher playoff-related expenses, as well as increases in team personnel compensation and other operating costs.

Selling, general, and administrative expenses increased 21% to $85.4 million, which included $13.4 million in playoff-related costs and $2.9 million tied to the proposed Rangers spin-off.

Championship Momentum Could Carry Into 2027

The Knicks set new NBA records for per-game gate revenue during the playoffs. The team also recorded its highest-ever single day of merchandise sales within 24 hours of winning the title.

Management said sponsorship revenue more than doubled year over year during the postseason, and they expect the championship to help sell even more sponsorships in fiscal 2027.

Looking ahead, the company expects revenue growth across all in-arena categories in fiscal 2027. But management also cautioned that higher team compensation, NBA luxury tax, and revenue-sharing expenses will weigh on results.

Rangers Spin-Off Targeted for October

The company is moving forward with its plan to spin off the Rangers business from the Knicks. Madison Square Garden Sports expects to complete the transaction by the end of October, subject to conditions including board approval.

Management said the separation would create two publicly traded companies, giving each business greater strategic and financial flexibility. They also said they wouldn't rule out a future minority stake sale in either team, though there's nothing to report right now.

For the full fiscal 2026, revenue increased 11% to $1.154 billion. Operating income rose 95% to $28.9 million, while adjusted operating income increased 54% to $58.7 million.

The company ended June with $164.5 million in cash and cash equivalents and $258.5 million in total debt. Net cash provided by operating activities totaled $62.7 million for fiscal 2026.

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