Q4 2022 Madison Square Garden Sports Corp Earnings Call
[music].
Good morning, Thank you for standing by and welcome to the Madison Square Garden Sports Corp, fiscal 2022 fourth quarter and year end earnings conference call. At this time, all participants are in a listen only mode.
After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again press Star one.
I'd now like to turn the call over to Ari Danes Investor Relations.
These go ahead.
Thank you operator, good morning, and welcome to MSG Sports fiscal 2022 fourth quarter and year end earnings conference call.
Our president CEO , Andy Lustgarten will begin this morning's call with an update on the company's operations.
This will be followed by a review of our financial results with Victoria Mink, Our EVP, Chief Financial Officer and Treasurer.
After our prepared remarks, we will open up the call for questions.
If you do not have a copy of today's earnings release. It is available on the investors section of our corporate website.
Please take note of the following.
Today's discussion may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1090 fives.
Any such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Please refer to the company's filings with the SEC for a discussion of risks and uncertainties.
The company disclaims any obligation to update any forward looking statements that may be discussed during this call.
On pages four and five of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income or non-GAAP financial measure and with that I'll now turn the call over to Andy.
Good morning, and thank you for joining us as we look back on fiscal 'twenty. Two we are incredibly proud of the year, we at Haile.
Highlighted by record full year financial results with revenues of over $820 million and adjusted operating income more than a $140 million.
In addition, every major revenue line exceeded results for fiscal 2019, our last full year prior to pandemic.
Sponsorship and switch to food beverage and merchandise sales and media rich.
This is a true testament to the incredible demand and enthusiasm for our iconic franchises, especially in the Knicks Rangers first of all regular season in three years the.
The garden was packed night after night with our fans, where clearly thrilled to be back supporting their teams in person.
But it's also important to remember that the environment in which we operated over the past year was far from perfect, including restrictions on international travel very low office occupancy rates in New York and the impact of both the Delta and Omicron, COVID-19 barriers and yet despite these headwinds we successfully navigated our business through these uncertainties.
We have used the last two years to enhance the way, we operate including updating our infrastructure and processes emerging and a stronger and more nimble organization with new growth strategies in place to drive our business.
And as we look ahead, we will focus on executing against these strategies and see numerous ways to grow our business both in the near and long term.
These opportunities include new ticketing and premium hospitality products, such as new courtside seating.
Valuable sponsorship inventory, including our keen jersey patches and growing Nick's international presence, increasing our focus on knowing our consumer including through social content, which drives our sponsorship business and through new and tailored merchandising offerings and at the league level further upside in media rights as national deals come up for renewal.
After a record financial results. This past year, we're already seeing our momentum carry forward and from what we can see excluding the impact of the playoffs or business is poised to deliver year over year growth across key revenue lines in fiscal 'twenty three.
Therefore, we remain confident that our ownership of two of the most renowned teams and all the professional sports positions us well to drive long term value creation for our shareholders.
Let's now turn to those franchises.
Both the Knicks and Rangers have a talented young core of developing players with most under contract for multiple years. The next until also amassed a substantial number of drastically over the next seven years further positioning the team for success in the years ahead and for the Rangers. The end of 'twenty. One 'twenty. Two season was marked by a thrilling postseason run in.
<unk> of which you can see in today's results. This included the team's first trip back to the Eastern Conference finals, since 2015, which generated one of the highest per game gape revenues ever for any NHL team and any playoff round, including the Stanley Cup finals.
Looking ahead, we know our fans are ready for played out again with all signs pointing to continued positive momentum for our business.
For example, the average combined season ticket renewal rate for the Knicks and Rangers 'twenty two 'twenty three seasons has climbed to approximately 91% while sales of season ticket packages to new members remained strong we.
We anticipate that the momentum we've seen coupled with an increase in Rangers season ticket prices. The introduction of new technologies that have increased the effectiveness of our sales process as well as.
We can take our next courtside lay out providing new floor seats will drive solid growth in ticket revenue.
The enthusiasm from our fans extends beyond just the tickets in their hands and the demonstrated that all season at the garden, we saw it in double digit percentage increases versus fiscal 19 levels in food beverage and merchandise per cap spending with results hitting season highs I'm Henrik Lundqvist special retirement at the arena and during the <unk>.
Rangers playoffs right there.
They also showed it and their desire to engage with our teams outside the garden for example across both teams social media channels. We added over 1 million net new followers. This year as we continue to focus on creating compelling content to directly connect with and grow our audience the growth in followers on our social media platforms also Korea.
It's valuable additional inventory for our marketing partners.
We also saw fans' enthusiasm reflected in strong viewership across traditional media.
For example, the Rangers Penguins opening round playoff series on TNT and TBS was the most watched NHL first round cable broadcast on record.
A remarkable stat that doesn't even take into account that the series simultaneously delivered robust ratings on MSG networks local broadcast.
And the impressive ratings continues as the Rangers Lightning series in June was the most watched eastern conference finals since 2013.
But this rating strength wasn't just limited to the playoffs across both leagues the demand for premium sports content was evident the entire season.
The NBA is average regular season viewership was reported to be up 19% versus last season and was the most watched regular season since 2018 19.
And in the first year of the Nhl's, New U S National Media rights deal with Disney and Warner Media average viewership for the lead in U S was up 16% as compared to last season, making it the NHL highest since the 16 17 seasons.
As we have previously discussed the nhl's new agreements align the leaves with two of the leaders and sports programming, which is clearly needed an increasing viewership and further raising the NHL profile.
In recent weeks, new media rights agreements across various leagues have been announced.
Serving as further evidence of the popularity and importance of premium live sports content.
This includes major league soccer, which landed a 10 year global deal with Apple Formula One.
Which reached a significant renewal with ESPN and.
And cricket Indian Premier League, all of which are reportedly multiples of the prior media rights agreements.
As a reminder, the Nba's U S deals with Disney and Warner Media, one through the 'twenty 'twenty four 'twenty five season, and with National media rights across professional sports continuing to increase in value. We remain bullish on the opportunity ahead for the NBA.
Turning to marketing partnerships.
Fiscal 2022 ushered in robust activity from both existing and new partners as companies Reengage with our assets and brands coming out of the pandemic driving our marketing partnerships business to a record level.
The year was highlighted by successful renewals across our slate of key partners from Anheuser Busch Tequila as well as our expansion into new categories. This includes our partnerships with Infosys and Benjamin Moore as well as our push into mobile sports gaming following its legalization in New York State.
In partnership with MSG Entertainment, we were Swift in strategic informing three expansion deals with bet MGM Caesars sports book in dressings.
In fiscal 'twenty, three will benefit as we will see the full run rate impact of this new category for the first time in our results.
These partnerships demonstrate the unparalleled exposure, we offered to companies trying to reach consumers in the New York market.
And as the league's open up new sponsorship inventory. We are confident we will continue to do the same with current and future partners.
Whether it's the Nhl's Jersey patch and digitally enhanced dashboards, where the NBA expanding the number of international partners. A team can have these are compelling opportunities and we will be measured in our approach to the sales process.
In the past year, we have also demonstrated the strength of our premium hospitality offerings.
Our mining companies as they returned to corporate entertaining, but there is no experience like a live game experience at the garden.
In partnership with MSG Entertainment, we saw strong suite renewal rates and new sales activity driving record sweet revenues and with the average usage of our suites for Knicks and Rangers games exceeding pre pandemic levels in the last few months of the season, we are confident in our outlook heading into next season.
As we look ahead to fiscal 'twenty, three with new sponsorship opportunities coming to market and corporate entertaining expecting to make a more complete return. We anticipate continued growth in these revenue lines in the year ahead.
We also expect to see positive effects of our business.
From the Rangers outstanding run in the playoffs, whether through improved consumer and corporate demands, we anticipate benefits to ticket sponsorship and suite sales.
Since we last spoke we continue to be reminded of the significant value that persists for Mark Keith professional sports teams.
This includes in the last three months record majority ownership transactions in the English Premier League with the Chelsea Football Club and then the NFL with the Denver Broncos and since the Bronco sales, Florida Cove has published the latest NFL team valuations with the average scheme valuation above $4 billion up 18% from last year's rapport.
And the Dallas Cowboys, leading the list is a new record high of $7 6 billion were eager to see the next publication of the NBA and NHL team evaluations and believe these recent examples continue to highlight the untapped value of our assets relative to where our stock currently trades.
Before closing today I'd like to take a moment to thank our fans partners employees and shareholders for playing a vital role in our journey. This year as we work to drive our business to record highs as.
As we look to fiscal 2023 and beyond we see ample growth opportunities building off the existing strength in our business and the new growth strategies, we've put in place.
Leaving us confident in the future of our company and our ability to generate long term value for our shareholders with that I'll now turn the call over to Victoria.
Thank you Andy and good morning, everyone.
I would like to start by discussing our financial results for both the full year and fourth quarter I will then review our balance sheet and liquidity for.
For fiscal 2022, we generated total revenue of $821 4 million and adjusted operating income of $142 $2 million.
As a reminder, fiscal 2022 marked the first full season back for the Knicks and Rangers following the onset of the COVID-19 pandemic.
And we are very pleased with the strong financial performance, we continue to see across the business, including as Andy mentioned record high results.
Now turning to our fiscal 2022 and fourth quarter.
Our results for the quarter continued to reflect robust demand for our teams as they completed their 'twenty. One 'twenty two regular season, followed by a strong playoff run by the Rangers.
I would remind you that the prior year quarter reflected the compressed timing of the shorten 2021, NBA and NHL regular seasons.
This resulted in more home games played in the prior year period, and the current year period.
As well as certain revenues and expenses being recognized over a shorter timeframe than the prior fiscal year.
Prior year period also reflected the impact of certain capacity restrictions as well as three next play off games as compared to the Rangers 10 this year.
Factors affected the year over year comparability.
And as a result total revenues for the quarter were $175 $2 million as compared to $146 $9 million in the prior year period.
Event related revenues represented $99 $1 million in the quarter, which mainly consist of tickets food beverage and merchandise revenue inclusive of the play offs, while suites and sponsorship revenues also inclusive of the play offs represented $34 $4 million.
In addition, national and local media rights fees represented 31 $9 million of revenue. This quarter. This reflected a $47 million decrease as compared with the prior year period, primarily due to the impact of the compressed timing of the shorten the NBA and NHL 2021 seasons and the <unk>.
Prior year period.
This was partially offset by the impact of the Nhl's, New U S media rights deals, which began at the beginning of the 'twenty one 'twenty two season as well as contractual rate increases on our local media rights and the Nba's National media deals.
As a reminder, the prior year period also included the recognition of the NHL expansion fee associated with the Seattle cracking.
Adjusted operating income improved $39 million to $33 $2 million, primarily due to the increases in revenues a decrease in SG&A expenses and to a lesser extent lower direct operating expenses.
The decrease in SG&A expenses was primarily due to the absence of severance related to team executives recognized in the fourth quarter of fiscal 2021.
Which was partially offset by higher playoff related and other expenses as compared to the prior year period.
The decrease in direct operating expenses included lower team personnel compensation and other team operating expenses, both primarily due to the compressed timing of the 2021 seasons.
These decreases were partially offset by higher revenue sharing expense net of escrow, reflecting a return to normal levels compared to a net credit in the prior year period as well as an increase in playoff related expenses.
As we look ahead, we believe our business is poised to deliver growth across key revenue lines in fiscal 'twenty three.
While we expect our ally to also reflect higher team operations expenses, including legal related costs.
Turning to our balance sheet.
At the end of the quarter, we had $250 million of total debt outstanding comprised of $220 million under the Knicks senior secured revolving credit facility and $30 million advanced from the NHL.
Our quarter end cash balance of approximately $91 million represented a net increase of $41 $8 million compared to our March 31st balance of $49 2 million.
Our cash and debt balances both reflect $65 million of repayments on the Rangers senior secured revolving credit facility during the period, which brought our total debt pay down in fiscal 2000 $22 million to $135 million and eliminated all outstanding balances under the Rangers facility.
With regards to liquidity as of June 30, we had $396 million of liquidity comprised of $91 million of unrestricted cash and cash equivalents and $305 million in borrowing capacity under the team's revolving credit facilities.
Based on the momentum, we're seeing heading into fiscal 2023 and with the opportunities to drive long term growth, we remain confident in the trajectory of our business.
With that I will now turn the call back over to Ari.
Thanks, Victoria, Operator, we would now like to open the call for questions.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
And your first question comes from the line of Brandon Ross from Light shed partners. Your line is open.
Hey, Andy.
It's pretty clear from your prepared remarks that sponsorship has been a big part of the revenue growth story here and frankly at MSG. He also and.
Just recently there have been some headwinds, especially with the crypto pulled back and we've seen some high profile deals abandoned there and then it seems like the sports betting industry is getting a little more rational.
Is this any way cap your upside and sponsorship.
Thanks Brandon.
So.
Let's take a step back for a second so.
I think when you talk about crypto it doesn't make up a large part of our sponsorship business. We have two really strong partners.
There were new that came in last year, but it is.
Not a very large part of our whole portfolio. So we feel pretty good there, but when I think about crypto I actually don't think about crypto alone I think about the NFC space.
And a key and really more so blockchain and the technologies that come from that so when I think about that as a category.
I don't know, what's coming out of block chain. There's a lot of companies that are emerging or new technologies that I think there is going to benefit our business.
But that actually takes another step back if you went back two years no one would've thought about crypto as part of our sponsorship book and so what I have seen is there is new there's always new categories coming into this business to.
To your point sports betting was one that didn't exist.
Three years ago, four years ago, which I think we've done very very well and then I'll come back to sports betting in a sector second but when you think about the way. The cyclicality of this business is there's always a category that either that comes into fashion or comes out of fashion.
And I think we do a great job of capitalizing and on top of that the leagues have done a really excellent job of opening up new inventory, which give us the opportunity to even further capitalized so whether it be the jersey sponsorship on the Nic side, the NHL, adding jersey sponsorship, adding digital enhanced dashboards, the NBA opening up international which we think there.
Big opportunity to really opening international, allowing us to have 10 new partners.
Really thinking about that.
So we think there is there is ability to go into new categories or new inventory I'll tell you as we think on the horizon.
Marijuana in CBD are now in legal in New York, and the New Jersey market, while they're not permitted by the leaf I could see that being an opportunity. So I think there is further growth.
Really here in this business, we feel really good about it to.
To your question about sports gaming.
Think that the.
We've got three great partners, we think.
We've done a very good job of working with them and figuring out how to grow that business.
We think it's going to continue to do to very strong part of our portfolio and I will mention that last year. It was only a partial year. So this year you will see the full year impact in our results as we go into the future.
Great. Thanks, so much.
So like.
Your next question comes from the line of Ben Swinburne from Morgan Stanley . Your line is open.
Thank you Hey, good morning, Andy I wanted to ask about.
The outlook over the next kind of 12 to 24 months and a couple of ways, one and clearly we can hear the enthusiasm for the business in your voice, but there is there is some concern I think in the market that the consumer spending we're seeing for a lot of events is sort of inflated or elevated based on pent up demand and as we lap. These trends a year from now growth will decelerate I know you don't have a crystal.
Of all but you see more than we do so I'd love to hear your thoughts on that particularly as it relates to New York and then kind of a similar line of question on the corporate side can you just remind us as you think about suites and sponsorship kind of the typical duration of those contracts and your opportunity to reprice those as you sort of go to market.
In a marketplace. That's that's really strong right now relative to maybe the last couple of years.
Sure happy to.
So let me, let's just start where I think you can start to be getting I'm very proud of I think it's come across and how we've navigated our way through the last two years, which have been incredibly difficult to operate in for a large sports entertainment business, especially here in New York or venue was largely close so well.
What we did was we took the opportunity to really think about our infrastructure I talked about that before how can we operate more efficiently.
We've made investments in technology also allows us to sell better more effectively and drive our revenue.
Sure.
And then we've also put in a whole set of I mentioned earlier, a set of growth strategies and I feel really strong about these that allow us to capitalize on our base business and then continue to drive forward.
We have a very strong ballast of long term agreements to provide us a real level of.
Certain level of certainty in our business and then.
As we think through some of these growth initiatives.
I feel good about where we're able to take the business over the next 12 to 24 months, regardless of what the market is and so let's just start with what we're seeing and I mentioned this earlier, but I'll say it again currently we're already at a 91% renewal on a combined basis and we're still continuing to sell that's based on ticket renewals from last year.
We see it we have an increase of Rangers ticket pricing both on our base business.
<unk> as well as any new tickets that we sell and that's both across Knicks and Rangers.
We used our opportunity.
During COVID-19.
When the <unk> came back to the playoffs every single game, we are looking and focusing on our <unk>.
How many seats do we have in the building where do we sit in the building and what we did was we said well wait a second let's go and think about exactly how we've laid out our our configuration and we worked with the league and we found a whole new set by modifying our configuration and changing where the scores table oz and moving a few things around we worked at a league and were found a whole new set of first and second row.
Inventory that didn't exist before so we think that's another opportunity for growth and we think premium, especially in this business is.
Incredibly valuable.
And we're going to continue to look think about other premium opportunity.
In terms of our sponsorship front, we think there is a tremendous amount of runway here.
<unk>, we will see the first full year of our betting impact this year, the multi multiple deal zero deals.
We think there's ability for us to capitalize on an NHL Jersey patch on the digital enhanced dashboards, which are new sets of board, allowing consumers are advertisers to reach their fans.
In a better fashion when the teams on the road.
And there we think there is new inventory continuing to leave and have been really fabulous about thinking about innovating around the business.
<unk>.
On our media right fees those are contractual both at the national level as well as the local level and we've talked about as the NBA and renewals come up we feel bullish about our opportunity given what we're seeing in the sports rights business, including today.
The Big 10 result announcements are what's being reported.
<unk>.
And we really really focusing on consumer knowing them better how do we reach them better.
Through short form content through merchandise, we've created new package.
We're very focused on merchandising with things such as kipp, creating our new.
Nick's Jersey, Jeff stable, creating a little.
Ranger capsule to sell and venue. So we think there's lots of things that we can continue to do like to us that will continue to drive consumer demand.
And we feel really strong and lastly, obviously with the Rangers playoff run.
What its impact on multi year demand, we think will also buoyed the business and help drive our business forward. So we think there's a lot of growth and we look forward to the next 12 to 24 months.
Thanks, Andy.
Your next question comes from the line of David Karnofsky from J P. Morgan Your line is open.
Hi, Thank you just one for Victoria I'm wondering if you could update us on how you're looking at capital allocation is debt pay down until the priority or do you see room for that to.
Our repurchases over the next year and how do you think about the right leverage for the business over time. Thanks.
Sure Hi, David.
As we think about our capital allocation policies I break it down into it we have really three priorities.
First is to maintain the appropriate liquidity to fund our operations and to invest in our core business.
As an example, you heard me mention a little bit earlier that in this upcoming fiscal year, we expect higher team operation expenses, and some higher lease related expenses.
An example of that.
The impact of our current roster, yes, we were well below the NBA salary cap last year.
Yes, so I would note that for the upcoming season. The NBA salary cap is increasing right. It's increased from $112 $4 million to a $123 7 million.
And the NHL as well as some others.
More modest increase but it is going from $81 $5 million to $82 five so in these areas that we're looking to.
To focus on and fund our operations and make investments in that core business.
Second priority in our mind is just to keep a strong balance sheet as we've discussed and as you mentioned this includes our focus on paying down debt just stem.
To recap this fiscal year, that's what we've continued to gain.
We did another $65 million paydown on a range of facility in the quarter brought our total debt pay down for the full fiscal year to $135 million and eliminated all of the outstanding balances under the arrangements facility. So.
And we know the two variance we saw this year Delta and Omicron. It's just another reminder, that the environment really can be unpredictable and it's important that we mean maintain the flexibility that we're going to we may need in the near term and then the third priority of course, we would.
<unk>, our other uses of our free cash flow, including a return of capital but at this time, we just don't have any specific plan.
Sure.
Yes.
Very helpful. Thanks.
Your next question comes from the line of Devin Briscoe from Wolfe Research. Your line is open.
Thanks for taking my question with the Rangers advancing to the Eastern Conference finals, which helped contribute to an already sharp quarter could you parse out with the playoffs impact was by segment or playoff round in the quarter and what is the strong playoff run historically men for future performance in terms of ticketing sponsorship.
Suites or any other tailwind to your business.
Thanks, So I think I'm going to start with I'll start answering then I'll pass to Victoria for filling a little bit more but.
So.
At the highest level, obviously, we're extremely proud of disruptive Rangers postseason run.
We have a great news and we feel very strong about our.
Prospects going forward.
And I think we see it from the fans' enthusiasm both during the playoffs and as well as with how they've been acting so far as we look going into this year.
So historically whenever there as opposed to even run, especially a longer season run.
Would you see in following years as.
Whats the effect on demand for tickets, both on renewals selling new foals and individuals and obviously individuals were able to then be more effective on dynamically pricing to capture further upside.
I mentioned, our renewal rates the combined rate is already 91% between the two teams and still rising.
In addition, we've when we do have a playoff run we're able to we modify our season ticket prices for the following year. So we're starting to see that benefit as we look forward into this year and following years.
But what it really does is it also creates new fans and so it's hard to put exact data around this but the best data I can think about is what we were able to do our social media. So we've been very focused on driving social media, knowing our consumer we added about 320000, new social followers last year on the Rangers, but almost over half of that around half of that.
It came just during the playoffs front those are new fans or new people really engage with our business that we will see buying tickets buying merchandise coming to our games consuming our products. So we feel good about what that's going to do to our business and.
And of course that all happens.
It happens in the same when we think about our suite renewals.
Those come up we've got more demand an ability to price those refresh sufficient presciently and final larger market for corporates need to be part of the best of the entertainment here in New York City, and I Hope, we deliver it and.
And we see that with our partners so as partners come up.
Operating partners come up we're able to think about price differently, we were able to mark our inventory to different levels.
So we think there is flow on for that so it's great from the quarter of the year that it happens and it's great for follow on years as well.
We want to have a little bit more detail onto this quarter.
Sure.
So of course as Andy mentioned, we couldnt be more proud of the right range of strong playoff run. So just to just to give a little recap in a little more color. We hosted 10 playoff games at the garden and the fourth quarter and as you can see in our results. These gains provided a significant boost to revenues and AOI.
Yes.
Part of that comes from tickets at our tickets are priced at a significant premium to our regular season games.
Yes.
Just sort of a notable mentioned we generated one of the highest per game gape revenues ever for any NHL team and any playoff round, including the Stanley Cup finals.
Of course, the excitement in the arena translates to strong F&B and merchandise sales.
Which resolved right.
As I mentioned on our last call each home playoff game in the first round was expected to generate.
I have more than about $1 5 million and as we went deeper into the postseason that per game AOI increased meaningfully as our ticket pricing growth.
So in the quarter, our playoff related revenues were $64 8 million as compared to $15 2 million in the prior year period.
Which reflected the three next home play off games last year.
This translates to approximately $6 $5 million in per game revenues and with about $3 million in per game direct expenses. It results in a net $3 $5 million per game on average which is of course, they are skewed higher towards the later rounds.
I do I will note, though this does exclude some of our marketing administrative costs that we would incur in connection with our playoff participation.
Great I appreciate the color.
My second question is now that gambling in New York has been legalized for going on eight months, you've had some time to partner with major sports betting companies in your ratings are really strong.
Just NBA and NHL ratings, a shuttle costs elite could you speak to the increase in engagement, you're seeing across your existing fanbase or buy new fans due to gambling and how much of the sports betting opportunity are you.
Monetizing at this point and how do you see that evolving from here.
Sure. Thank you.
I will note and you actually had a few of the key points. So.
As what I would respond it's still early it's only eight months into the run and.
When you think about engagement the first point of engagement, Jimmy as ratings and people coming to our event. So both of those are up.
Very hard to parse exactly what's driven by what factor, but as I take a more macro point of view.
The New York market is clearly very large for gaming we have three great partners.
There has definitely been some hesitancy by certain.
Both publicly and by other partners about the tax rate and.
So we think that we could see.
Over time, if the tax rates to change this even further investment in further interest in this market by our partners.
Again, and take a more macro point of view and say where is it where its sports betting been much more developed we go to Europe or you go to.
Other sports that have been in grain for a long time, you see more in game that you see more immediate that and Youll see and those are the things that actually when I take over long periods of time I've always talked about yes, I'm excited about what this does for revenue directly from marketing partner, but what it does for consumer engagement that comes from small and micro.
<unk> that or more.
Rick Betts about.
What's going to happen next so you look at sports like tenants, which is one of the better.
Betting sports and other parts of the world.
Theres so many points of places for people to better their further engagement.
I think that we're going to see that here both in the NBA and NHL as well as other sports from here in the U S. As the as it develops further and as the technology moves along.
We will see more of those types of actions, which will drive given further engagement.
I think it's been a great I think we've done very well as we launched.
I think I think our partners have been very happy with how we've been able to help drive their business and I think that there is further growth in this industry, especially if theres changes in regulations such as kiosks.
And tax rate so.
We feel very good here.
Thank you.
Thanks, Deb and operator, we have time for one last caller.
Your final question comes from the line of <unk> from Jefferies. Your line is open.
Thanks for thanks for squeezing me in here.
You briefly touched on this a little bit but with broader tailwind in the NBA for international sponsors can you maybe elaborate more on what that specific space looks like for the company.
Sure absolutely so.
Again, I think both leagues have done an amazing job of.
Prior to the call over to Covid.
Thinking about new categories, and new inventory, but really during COVID-19 and coming out of it how do we think about leading and pushing our business. So one of the things that the NBA is done.
There will always be opportunity you have two partners internationally and what that means is outside besides China and Canada. The ability to have a partner activate in international markets. The issue with when you only had two is the truth is we didn't spend a ton of time focused on trying to find the partners. So now the NBA has raised it to <unk>.
Partners and so what we've done is and let me take a step back when I say way.
We have a lot of international experience here within MSG I came from the NBA.
I ran global strategy I have a ton of experience doing international our president of business operations here as David Hopkinson. He came from before this was a real Madrid, where he was the head of global head of partnerships, so tremendous international experience.
So when we think about this we say well this is a great opportunity for twofold. One it allows us to find either domestic partners, who are trying to activate internationally or where I think we're going to see further upside is new international partners and those partners can either be focused in their home markets.
And so we could give me up even a category and have a domestic partner in our category and have an international partner in a category.
Or an international partner, that's actually trying to find its way to the U S and unless you're out there talking to them and showing talking about your business Youre.
Youre not going to find it and so now that we can have 10 partners, it's actually worth investing around it. So we have hired.
A couple of people who are very early we are only focused on finding international partners and with David.
David Hopkinson in mind my experience I think theres, a real ability to grow this business and as we grow this business to take us to really put the knicks.
New York is a lifestyle brand that we could take into those international markets. So we will have opportunities to growth to broaden our exposure broaden our reach and broaden our films.
So we really we think this is a great opportunities, obviously going to take a little while to harvest is not immediate.
<unk>.
And actually the last one more point that I should add is if you look at some of the largest or the largest jersey patch deals those have all come from international.
Buyers were trying to reach the U S and so I'm, even further enthused as I think about the future of the Jersey patch opportunity.
Given the ability for us to invest around the international to go find partners. So this is this is a real.
This will be a real driver of our business long term it will take a little to get there, but it'll be a great driver.
Okay.
Alright I appreciate the color that's all for me. Thank you.
And this ends our Q&A session. Mr. Ari Danes I turn the call back over to you for some final closing remarks.
Thank you all for joining US we look forward to speaking with you on our next earnings call have a good day goodbye.
This concludes today's conference call. Thank you for your participation you may now disconnect.
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