Q1 2022 Madison Square Garden Entertainment Corp Earnings Call
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And thank you for standing by and welcome to the Madison Square Garden Entertainment fiscal 2021st quarter earnings Conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer.
To ask a question. During this session you will need to press star one on your telephone.
If you should require any further assistance please press star zero.
I would now like to turn the call over to Ari Danes Investor Relations. Please go ahead Sir.
Thank you.
Morning, and welcome to MSG Entertainments fiscal 2022 first quarter earnings conference call.
Our president Andy Lustgarten will begin today's call with a discussion on the company's entertainment and housing sector.
This will be followed by an update from Andrea Greenberg, President and CEO of MSG networks, our EVP and Chief Financial Officer, Mark Fitzpatrick will then review our financial results.
After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release is available in the investors section of our corporate website.
Please take note of the following.
Today's discussion may contain statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 995.
Investors are cautioned that any such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties and that actual results developments and events may differ materially from those in the forward looking statements as a result of various factors.
These include financial community perceptions of the company and its business operations financial condition and the industry in which it operates as.
As well as the factors described in the Companys filings with the Securities and Exchange Commission.
Including the sections entitled Risk factors.
And managements discussion and analysis of financial condition and results of operations contained therein.
The company disclaims any obligation to update any forward looking statements that may be discussed during this call.
On pages five and six of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income or AOI.
Non-GAAP financial measure and with that I'll now turn the call over to Andy.
Thank you Ari and good morning, everyone.
First quarter of fiscal 'twenty, two behind US we are now seeing encouraging signs that our markets are beginning to turn the corner on the challenging past 20 months.
Vaccination rates already high in the New York area continue to rise.
The Cdc's recent approval of vaccines for children to drive rates even higher.
Office occupancy, while still very well within New York City has increased significantly in the last month and a half.
Forecast to improve.
International Tourism to the U S, which has been pretty much nonexistent starting to open up this week.
And in Las Vegas, we see one of the city's biggest pre pandemic staples corporate conventions beginning to return.
We believe these milestones could help propel our business, which is already experiencing promising momentum in a number of areas.
Our menus are starting to get busy again.
And our operating without any capacity restrictions.
Concert touring is ramping up.
Connection Rangers have returned to the garden and are scheduled to play for regular season.
And the Christmas spectacular is back.
This year's run kicking off last week at radio city.
This momentum has also carried over to Tao group, which delivered another quarter of strong results.
Led by robust performance in Las Vegas.
So while we're not fully back while we are seeing is that when there are experiences that consumers find valuable they're not only going out, but they're going out and spending more than they did before the pandemic.
This has been reflected in double digit percentage increases in F&B and merchandise per caps at our events as.
As well as an average check sizes account compared to pre pandemic levels.
Since demand for premium live experiences plays to our strength, which.
Which we think will help continue to drive our business.
We're also very encouraged by the activity, we're seeing with marketing partnerships and premium hospitality as companies are back to finding ways to reconnect with consumers.
Finally, we've made important progress on our construction of MSG sphere in Las Vegas, We continue to believe we'll launch an exciting new chapter for live entertainment.
First focus on our bookings business.
While we hosted a number of concert venues in July and August as expected.
Concert touring began to truly return in mid September.
Following buying very busy October to a packed schedule for the second half.
Fiscal 'twenty two.
And while the industry as a whole has recently experienced some pandemic related cancellation.
Relations and postponements that would affect your future events schedules.
For that hour than calendar has only been modestly impacted for the balance of this fiscal year.
In fact, the number of concerts significantly ahead.
Our pace in two years ago for the second half of fiscal <unk>.
<unk>.
And this robust pipeline of concert bookings is being met by strong consumer demand as tickets continue to sell extremely well for newly announced shows with many selling out.
With regard to production.
Last season marked the first time, the Christmas spectacular was cancelled and 87 years.
Which made last week's debut of the 2021 season, all the more special.
As you know we scaled down the number of shows this season understanding this year would be unique due to the pandemic.
Our advanced ticket sales starting to slow.
Especially groups and internationally.
Historic historically are among the first customer segments Goodbye.
That said, leading up to the show's previewed pure performance as last week. We saw overall ticket sales increased significantly week over week for several weeks in a row.
This past week generating the highest percentage increase so far as we look forward to the show's official opening night. This evening.
In addition, some of the pandemic related factors that have impacted sales to date are now headed in the right direction helped.
Help ticket sales later in the shows run.
These include international Tourism, which began to open up this week and the recently approved vaccine for children.
A positive for our families.
We're really excited about opening up the music.
And look forward to welcoming hundreds of thousands of guests this season, which we believe is significant.
Tao group is another part of our business, that's clearly benefitting from People's desire to die.
Okay.
Our ability to ramp up operations quickly to impressive results for the second.
Markets, such as Las Vegas, even outperforming pre COVID-19 levels.
That is not yet being fully staffed is also reflected in strong margins.
Expect will normalize over time as we continue to make progress on the hiring front.
And while we also believed how will face increased competition as the industry continues to come back we feel good about the long term trajectory of the business.
<unk> acquisition of <unk> created a global powerhouse across more than 20 domestic and international markets.
I will now focus on.
The margin.
Jim has been evaluating our existing portfolio, including possible lease extensions rebranding and <unk>.
<unk> closures.
At the same time, how has also returned to focusing on its venue expansion efforts with a robust pipeline of planned openings through calendar 'twenty two.
How recently debuted a new venue in Mexico City.
With others set to follow in several markets, including Miami, Los Angeles and Las Vegas.
As you can imagine we're incredibly pleased to see people embracing the return of live entertainment.
And that includes companies, which are now re engage with the industry in meaningful ways.
There are clear signs that corporate hospitality is making its way back.
To help our partners, we took a customer friendly approach pausing their obligations for the last year through September 30.
So obviously meant minimal suite revenue in the first quarter.
At the same time, we continue to work on new sales and renewals, which are now ahead of expectations.
On a go forward run rate basis, we're pleased to say that.
<unk> revenue has returned to pre pandemic.
Our marketing partnership business has also had an exciting few months.
Last quarter, we renewed our valuable marketing partner JP Morgan Chase.
This was followed by multi year extensions with longtime partners Lexus and Anheuser Busch.
Both part of our signature roster prevent expanded by welcoming Infosys a global leader of next generation digital services, which involve a number of MSG entertainments assets, including MSG networks.
As well as MSG sports.
These deals have helps at the time.
One for our discussions with other existing.
And potentially new marketing partners, putting in a mobile sports gaming space.
Yesterday, New York State awarded licenses to nine offer.
Great.
Significantly higher number than I had initially been expected.
On the heels of this positive news. This morning, we announced our first significant partnership related to mobile sports gaming in New York with that MGM.
We've talked before about how our portfolio of assets do you easily positions us to help sports gaming operators grow their business and the nation's largest market.
Our expansion multiyear agreement with bet MGM utilizes our unique portfolio to provide the gaming operator with unparalleled exposure to millions of consumers.
This concludes our regional sports networks digital apps out of home signage and Madison Square Garden Arena.
And through our relationship with MSG Sports, the New York Knicks and Rangers franchises.
We're just getting started in terms of growing the sponsorship category.
Our discussions with other mobile sports gaming operators have also meaningful meaningfully progressed over the past several months.
And with New York State licensing process now complete that MGM is our first partner in this category.
We certainly don't expect it to be our last.
As we are increasingly cost.
Question of MSG sphere at the Venetian.
As we push towards our expected opening in calendar 2023.
Since we last spoke we have completed concrete pours for that used to own roof.
Yes.
Started installation of the steel framework that will eventually support interior led display plant.
At 160000 square feet, which is larger than three football fields important role in our ability to create immersive experiences at unparalleled scale.
Okay.
Over the next several months will continue under various venues interiors.
Sure.
Okay.
Okay.
And by reiterating that the ramp up we're seeing across our entertainment business reflects the strong desire of people to be together, especially for premium live experiences.
There is still work to do there are still challenges.
Equally positioned to fill the demand.
We're headed in fiscal 'twenty two.
And as we get back to doing what we love.
Yes.
We're also incredibly excited about the progress we've made on MSG sphere.
At the beginning of our company's next chapter with.
That.
I will now turn the call over to Andrew.
Thank you Andy and good morning.
With the recent start of the NBA and NHL regular seasons.
We've seen strong interest from viewers and advertisers for our live professional product, which features five teams across both Lee.
As the seasons continue we hope to build on the success, we had last year, which included double digit percentage ratings increases for a number of our team.
All time high levels of viewership and engagement on our streaming App MSG go.
Robust advertiser demand for our programming.
Our content has played a big part in our ability to renew our affiliate agreements, including most recently with horizon <unk> one of our largest affiliates.
Several others.
And while we are certainly disappointed with our current Comcast situation, which has impacted approximately 10% of our subscribers.
Stan ready to negotiate a fair and reasonable deal.
Can you to innovate with programming designed to broaden our viewership and increase overall engagement.
To that end to capitalize on the introduction.
Chin of mobile sports gaming in Connecticut, which will soon be followed by New York, We have launched an original block.
Entertaining and energetic sports betting content.
During athletes expert and other personalities.
This includes <unk> and programs that better half an hour and the betting exchange, which Airbus, Quebec Monday.
Well focus shale adds with <unk>.
Posted by former.
And Matthias <unk>.
Our sports betting operators.
Now includes sandals.
Caesars.
MGM and that $3 65, and traditional spot size as well as with the number.
<unk> and game integrations and other unique content.
Okay.
It's clear that sports gaming operators are recognizing the value we deliver as we've already secured from this category a substantially higher level of advertising commitments for fiscal 2002 as.
Paired with our last fiscal year.
We also continue to see growth in other sectors that have become an increased focus for us <unk>.
Including technology companies web based services and brands that have thrived over the past two years.
Is it 'twenty one 'twenty two seasons, we welcomed a number of new partners, including Tictoc door Dash and Infosys.
And have seen a significantly increased presence on our air from existing partners, such as Amazon and Verizon.
As we look ahead, we know the media landscape is evolving.
However, we also know that live local professional sports remains some of todays most valuable programming and we continue to explore new ways to offer and monetize our content, including with the direct to consumer product.
We are confident that our long history of innovation will service well as we look to capitalize on these future opportunities all with the continued goal of driving value.
Our partners advertisers and viewers.
With that I will turn the call opening remark.
Thank you Andrew.
Let me start by reviewing our.
Our first quarter financial performance.
Now include the MSP network segment.
Note that while the acquisition was completed on July nine MSG networks results are included.
All periods presented.
In the fiscal first quarter, we generated total revenue of $294 5 million and adjusted operating income of $10 3 million.
In the entertainment segment generated $34 2 million revenue, which primary reflects live event starting to ramp up in mid September.
The segment had an adjusted operating loss of $71 4 million last call we have been strategically hiring.
Our energy segment to support the ramp up of live event and MSG sphere as content development plan.
This hiring is reflected in higher segment SG&A expenses in the quarter.
Turning to MSG networks.
Segment generated $141 $5 million in revenue and $55 8 million and adjusted operating income in the quarter.
And let's see network year over year results were impacted by a number of items such as higher accruals for potential affiliate fee rebates and lower advertising as the prior year quarter benefited from the timing of the NHL returning to play and the Islanders appearance in the playoffs.
And finally, the Cao group generated revenues of $119 5 million.
And adjusted operating income of $26 2 million as reopening momentum continued in key markets such as Las Vegas.
Alright.
In terms of.
Capital expenditures.
$137 million of Capex in the fiscal first quarter, primarily related to the construction of MSCI.
Through September.
Project to date contraction costs incurred were approximately $976 million.
Which includes a $121 million of accrued costs that were not paid as of September 30.
And is net of the state.
$65 million.
Received from the Las Vegas Sands.
As a reminder, we previously disclosed the Kaufmann cost estimate of the MSG sphere in Las Vegas.
Of approximately $1 86 5 billion.
And we will continue to aggressively manage costs work towards the planned opening in <unk>.
<unk> 2023.
With that I will now turn the call back over to Ari.
Thanks, Mark can we open up the call for questions. Please.
Ladies and gentlemen at this time, if you would like to ask a question. Please press Star then the number one Justin.
Your first question comes from the line of Brandon Ross with Mike said partners Brandon Your line is open.
Hey, guys. Good morning, I wanted to start with MSG networks.
And there's been a lot of discussion around the future of <unk>.
<unk> business lately obviously.
Obviously, you have the Comcast drop and there's been public posturing from Sinclair and the leaks and was wondering if you could just talk broadly about your DTC vision for MSG networks first of all what rights do you even have and then.
How are you going to balance your need to maximize revenues.
<unk> desire for lower rates and the leagues and teams goals of maximizing distributions.
And the eyeballs on their product how do you solve that puzzle.
It's certainly a delicate ecosystem with a whole host of constituents and we have our affiliates we have hired.
We have other distributors, we are fans and sponsors.
But we believe these constituents.
In fact recognize the value of our programming, which is why we are confident that we're going to work together to find an appropriate model that balances all of these constituents interests.
And we think that as we go through this process there'll be opportunities that come from that for us.
We've talked before about how the viewing experience is transforming.
Selling some.
Lean back experience to a lean forward experience.
That interactive games to that sports betting on the horizon on the horizon and they are all as we've seen from what we've been doing.
They are all driving engagement and viewership.
So we think that all of that's a value creating opportunity for us that we're already beginning to see.
Our network business. This fiscal is set up to see a substantial increase in advertising revenue in part due to what's happening in the <unk>.
Mobile gaming space.
And as you say direct to consumer is another developing opportunity there are millions and millions of homes in our region that don't receive our networks. So finding a way to serve that science is obviously of interest to us.
And we've been actively talking with our partners about different DTC models, we could deploy.
All that said over the last 12 months, we've grown our database by over 25% with an eye towards deeper consumer insights and developing a more direct relationship with our customers.
We've also conducted research to <unk>.
Better understand what our customers might want including various pricing options that.
That we're having.
Help us formulate the best.
Okay.
As to your left.
One of your questions on right as we've said in the past.
We have the flexibility in both our rights and affiliate agreements to offer a direct to consumer product.
We're working on a renewal of our agreements right now with the NBA and NHL, which as we've said where we have successfully renewed many many times in the past.
Okay.
And we're confident that we'll continue to have the digital rights that give us the ability to take MSG networks direct to consumer so, yes, well things are certainly evolving.
We believe that unbalanced.
<unk> business will remain incredibly valuable.
And well continue to.
We generate significant cash flow growing satellite.
Okay, and then maybe.
Andy.
Tao group performed massively above 2019, if you look at the numbers can you expand on what Youre seeing there and if you think that's sustainable and how much hakan on contributed to the mix and if all those synergies are in I mean overall, we looked at.
This quarter can this be a $100 million OE business.
Thanks Brendan.
So yes, we are very pleased with <unk> results. This actually the past two quarters.
But I think it's clearly driven by what we see everywhere right now People's pent up demand pent up demand to come together and drive demand to celebrate and pent up demand been doing in the way of premium excellent.
So they feel safe and I think the dialogue is on mergers agree.
An example of one of those types of business.
And people, who can really willing to pay for it we see it in our check size as we see it across the business.
I will say and I've said this before we do think we're benefiting right now from some reduced staffing levels.
Reduced competition at the beginning.
Mhm to come into some of our markets, but that's not to say we are going from no competition to full competition. There is already competition occurring.
We feel really good about the upside in the future of this business savings, but they are continuing to focus on it.
There will be further.
Synergies across marketing cross promotion.
Sharon databases procurement purchasing.
And introduction of Corp.
We think theres still a lot of opportunity in front of us.
And it comes not only from our current stores.
Whereas but our future stores to our expansion plan.
This team is really the best and I think the best in the industry are among the best if not the best.
We just recently opened up Mexico City, we have plans to open up a few other markets coming soon.
<unk> immediately increased house footprint and added a number of international markets and the ability to region has got growth for years to come and we've already begun to see it go.
So we feel really good about bringing these two businesses together.
We feel really good about this business.
Renovation once again I feel like.
It's been going on for decades, but.
Can you just address the risk of relocation.
And on the flipside, if there's potential upside to the air rights or may be used for the Hulu theater.
In the renovation.
Sure absolutely so.
Last week Governor household.
Okay.
Unveil our plans for the redevelopment of Penn station and the surrounding area.
We think it will significantly improve this year.
Area, which is adjacent to the garden.
We've been working with the Governor and we've been working to bring to stay back and she has really done an excellent job.
We fully support her efforts.
And we look forward to continuing to work with her on many things to come that are currently in progress and in their vision.
So I will say, though we expect to continue hosting memorial events right here, where the gardens garden's current location.
And to your point about air rights or Hulu Theater look these are very valuable piece of assets in our portfolio, both strategically and financially.
And I do think there will be a time to monetize but I will say I don't think that time is tomorrow or next week.
But we are closely watching the developments around sanitation and lend opportunity presents will make that makes sense, both strategically and financially we will take that opportunity to create value. So thank you.
Thanks, a lot.
Your next question.
It looked like some of the lead model.
Interested in creating our own DTC platform.
That could combine in market and out of market Street, Megan just given your mix in <unk> 2035, I think can you remind us what protections do you have.
<unk> Street, new product did come to the market and then at the same time would you see room to potentially participate.
On OTT product that NBA and NHL could also.
Yeah, I'll answer that one I mean, the NBA and NHL has always recognized.
<unk> are a very important part of their overall ecosystem.
And we've through our IR.
Our team worked in partnership with both leagues.
Sure over the years that there is a continued robust stability for us to offer a regional to continue going forward.
As I've said many times.
Precluded us from launching a direct to consumer product.
And we will continue to explore and mine.
I don't that are beneficial for all involved.
As I indicated in the first.
First question.
But we are confident that working with our lead and our distributors and our sponsors.
Alright.
Thanks.
Beyond just the ability to earn.
So exploit direct to consumer along with our current linear distribution.
Okay.
Betting operators in the space.
David I think that's more than double what we talked about on the last earnings call.
Wanted your thoughts on the fixed market dynamic news for you in terms of the number.
Pardon me, if you could potentially take on and then that would mean for the overall importance of their assets.
Operators look to gain market share.
So let me start by saying, what I've said, many times before them, but I'm going to continue to say it because I think it's incredibly important before we even talked about the revenue opportunity.
Sports gaming and what its impact is on viewership and fan engagement and we think this is going to bear fruit not only.
Today, but for years to come.
<unk>.
And then Andrew you hit on it a little bit as we talked as you talked about the interest in <unk>.
Consumers through MSG go right. So this is going to play out in many places that said we are talking about what it is today. So the state originally talked about housing a minimum of four operators yes.
Yesterday announced nine obviously for US this is a great opportunity more competition.
A more competitive environment operators, we're going to we're going to have to aggressively market themselves to find the consumers raise awareness and draw their customers right.
Alright, and Thats, where we come in.
I think that our brands have unmatched unmatched presence in New York market value for partners fixed up.
Assets, including entertainment.
Calvin is.
As Andrei mentioned before MSG networks linear networks and our outdoor signage.
Our relationship across industry sports with the Knicks and Rangers and this just this drove us to signing our first agreement with MGM.
The year to demonstrate.
The value, we can deliver to a partner.
But I will say it is nonexclusive and we do it and we do not expect this to be the only partner.
In active discussions with additional operators, we're very selective about who would be our partner in the number.
But I will I want to emphasize that we are increasingly confident confident about how impactful. This category will be for our company and just adding Patty Andy's comments at networks.
<unk> operators are already clearly recognizing the value we deliver.
Delivered today.
And as I mentioned during his during our prepared remarks.
We continue to work with a growing list of these operators today.
We have a partnership.
Networks side, obviously with that MGM sandal with Caesars with that 365 as Andy indicated additional opex.
Opportunities beyond that.
Different opportunities that will come in the future.
Your next question comes from.
The line of John <unk> with Wolfe Research.
Thanks, I've got one for Mark and one for Andy from market given the Comcast situation can you give us an update on any potential covenant to our compliance issues at the networks related to the term loan and then Anthony can you give us the expectation on how the Christmas show is going to perform relative to historical norms maybe.
On a personal basis, how impactful as slower tourism.
Is that the majority of guests.
International travel restrictions being lifted did that come at a time, where it's going to be difficult to capture given typical lead times like these that holiday travel budgets.
Greg This is mark I'll jump in and answer your first question and then hand it over to Andy.
There is no recourse to the parent company.
As the loan was issued by a subsidiary of MSG Entertainment.
A little background on alone there is currently approximately $1 billion.
Outstanding and immature.
Further in October 2024.
Subject to two key financial covenants maximum leverage of five five times and minimum interest coverage of two times. The main governing covenant is the leverage the leverage ratio.
We have the ability to net up to $175 million in cash at the borrower towards the leverage covenant.
With that I'll turn it over to Andy.
So Chris the Christmas show interest Mitek to accurately so we just.
We had a preview period as last weekend and the opening of this evening.
Thrilled to have the show back.
It was difficult for us to I will take a year off after 87 years.
On.
<unk>.
So we knew coming into this year. This is going to be not the typical year dividend impact of the pandemic.
So we reduced our number of shows as we headed into the year compared to a typical year.
Now that we see.
Factors, but when we lost.
Or especially international.
And our groups.
And the reason the groups is a lot of them are tightening into children's children show unknown position, where we were going to be with the vaccine and rules.
<unk>.
So we had to make some.
Decisions I will say the last each week has improved sales and improved prior to the following week.
And every day has been stronger than the day before so typically Mondays are not our strong I'd say, we had a very strong Monday of sales yesterday.
But Q.
Can I have the run off these next few weeks.
Those weeks.
Typically have been where our group sales have gone into especially schools, which really were in buyers. This period, we are starting to hear about schools coming of interest but again.
They need to take a few weeks they need to plan they need to get themselves set so.
We're hoping this could be helpful Post Thanksgiving.
When this is when most of our tickets get sold so exciting excitement seems to be building.
<unk>.
And we have seen some compressed in last minute buying which is also completely consistent with Broadway.
So and the other thing Thats an interesting point is our ticket yields have means remains strong.
And better than what we were expecting.
So while this year will not be our typical year.
To hit our 2019 numbers, we are wells that we are still very interest.
Happy and excited to welcome hundreds of thousands of guests to season.
I do think this is the first sign of of coming back and we do believe that in a long term very strongly in this business.
Thanks, Andy.
Our next question comes from the line of David Katz with Jefferies.
Hi, Good morning, this is Chris Sandra asking on behalf of David.
Thank you for taking my question I just have one on the sphere.
How do you see or foresee any challenges.
Apply chain and how are you managing the risk there.
Alright, Thanks for your question.
Just I'll start off by saying when you think about the sphere and the complaint.
Flexi associated with it we've been actually managing our supply chain since day one.
And I think as we mentioned in our prepared remarks, we are on track to open in 2023 and don't see anything changing in the near term.
I think as we mentioned on our last call we have accelerated the purchase of higher risk items, including securing the majority of our structural steel for the project.
In addition, where possible we've identified alternative manufacturers and delivery methods for certain components, such as semiconductors to minimize any potential delays, but I think overall, we've done a good job managing our supply chain and making sure. We continue to be on track for our 2023 opening.
Got it thank you very much.
We have time for one last question.
Your last question comes from the line of Ben Swinburne with Morgan Stanley.
Thanks, Good morning.
Andy could you tell talk a little bit more about how you think that that MGM relationship evolves.
So how much.
How much bigger the business could be if we look two to three years out just as you bring in additional partners and if you guys can help us at all think about where that revenue is going to show up.
Ross your segments that would also be helpful.
And then I just wanted to follow up on the conversation on streaming rights again, Jim mentioned that Youre still have any impact on expense growth I think we typically see expenses grow kind of in the.
Escalator level, but I don't know if because of the focus on streaming there might be some volatility that we should be looking to as you. Thank you.
Thanks, Brian.
So as I mentioned.
All across all parts of our business.
Okay.
Start.
The simplest adverts.
Advertising on MSG network.
Integrations and games.
But then more more so across our fixed assets. So we're able to provide something.
I don't think a mobile operator to reach on their own which is fixed land based.
Hard.
Hard reach of the consumer ability to connect directly with the consumer.
To really provide both a loyalty program. So think about our Calvin as we have 60 venues in five continents think about the arena and premium areas in seating.
Think about.
Our just our ability to.
Even reach outside of sports to other types of dining in concert. So we're able to provide a really robust offering to our partner for let them to really drive their business.
We clearly have a valuable collection of assets and we think that we really blank at the New York market in the Greater New York market in a way nobody else in the industry.
Cross online.
Linear networks media.
Web and in person.
And finally, the other piece of it.
<unk> that we have that is extremely important to our partners as our data knowing our customer we do it better than anyone else and we.
Continuing and we provided to our partner and the ability to go back and forth and really build their business. So we think it's a tremendous opportunity in terms of across our assets. Obviously there is.
A piece of the business that is built through <unk> network, there will be a piece that comes through the arena, depending on where it's fixed what type of.
Activations, we provide sponsorship gets shared between the teams and the arena as well so it's shared between MSG sports and a mystery entertainment.
And we will be part of it obviously that goes to the teams for official branding plus.
I will say that this is a very robust deal and we expect we feel very good about this category and what we're going to be able to drive from it.
And on any potential expense.
As Andy just indicated there is significant offsetting revenue opportunities.
If you just think about networks and Andy touched on a few of these assets.
Opportunities in addition to just our traditional spot inventory.
We could and are looking to launch new products and services.
Centered around sports gaming.
Including Mary <unk> game content.
We have more programming and production opportunities as we indicated we've just launched a suite of new sports betting shows that will air on Sundays during the football season and prior to our pregame programming so in prime.
Dealership spot frantic content opportunities there is a whole host of that.
<unk> cast opportunities we've done some of that in the past, we will look to do more of that with some of the partners that we've outlined.
During the season, hopefully and just general integrations, we have a free to play App.
Chico streaming app, which is performing.
Wonderfully this year compared to prior seasons. So we see this as just on the network side alone as as being a tremendous opportunity for growth.
Yes, I guess that makes sense, Andy I actually specifically I don't know about the streaming rights that you said I think you said you were in negotiations with the NBA and NHL and renewal on it.
Big enough to impact expense growth at the networks.
As you look forward.
Yes, I wouldn't I wouldn't expect any considerable expense growth related to those rights as I said in the past we've had the right with the NBA and NHL offer direct to consumer.
Our pharmacy networks direct to consumer.
Got it thank you.
Thank you.
I would now like to turn the call back over to Ari Danes for any closing remarks.
Thank you all for joining US we look forward to speaking with you on our next earnings call have a great day.
Goodbye.
Ladies and gentlemen. This concludes today's conference call you may now disconnect.
Thank you.
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