How NBA Playoffs Impact New York Knicks’ Revenue

For the first time in a quarter century, the New York Knicks hosted an NBA Eastern Conference Finals game on Wednesday at Madison Square Garden. The sold-out crowd included A-list actors, comedians, musicians and former professional athletes. Mary J. Blige performed at halftime.

All in all, it was a major night for a franchise that hadn’t advanced this far since 2000, although the game ended in disappointing and stunning fashion. The Knicks lost the series opener to the Indiana Pacers 138-135 in overtime, blowing an eight-point lead with less than 35 seconds remaining in regulation.

The teams play again Friday night at MSG in a game that is important both from a competitive and financial perspective. The Knicks need a victory to erase the bad memories from Wednesday and ensure they will play at least one more home game this season. If the Knicks win, they will be assured of playing Game 5 next Thursday at MSG.

The math is simple: the more home games, the better, to the tune of several million dollars of revenue per game.

The Knicks did not disclose how much additional revenue the organization has generated during the playoffs run. However, Madison Square Garden Sports Corp., which owns the Knicks and the National Hockey League’s New York Rangers, saw a $71.8 million increase in playoff-related revenue for the fiscal year through June 30, 2024 compared with the previous year, according to the company’s 10-K filing with the Securities and Exchange Commission from last August.

The company attributed the increase to the Knicks playing in seven home playoff games last season and the Rangers hosting eight postseason games, up from five and three, respectively, in 2023. As such, the teams played a combined seven more home playoff games last year compared with 2023, so they averaged more than $10.2 million of revenue per additional game.

The $71.8 million increase in revenue more than offset the $27.8 million increase in playoff-related expenses. The company did not break down the revenue or expenses by team.

MSG Sports Corp. disclosed in its 10-K filing that the company benefits from playoff runs due to the increase in the number of home games the Knicks and Rangers play and “more importantly, by generating increased excitement and interest in our sports teams, which can help drive a number of our revenue streams, including by improving attendance and sponsorships, in subsequent seasons.” The Rangers did not make the playoffs this season, while Friday’s game will be the Knicks’ eighth home playoff game, the most in a postseason since they hosted eight playoff games in 2000 when they lost to the Pacers in the conference finals.

Overall, MSG Sports Corp. had just more than $1 billion in revenue during the last fiscal year that ended in June 2024, up $139.7 million or 15.7% from the previous year, meaning the extra playoff games for the Knicks and Rangers accounted for more than half of its revenue growth. The company also had $58.7 million of net income for the fiscal year, a $13.1 million or 28.8% increase from a year earlier.

For the most recent quarter, which ended on March 31, the company said it had an increase in per-game revenue for the Knicks and Rangers. Seaport Research Partners in a May 4 note calculated that the teams generated $9.865 million of revenue per game during the quarter, which was 3.2% above its estimate.

For the nine months through March 31, which includes most of the Knicks’ and Rangers’ preseason and regular season games, MSG Sports Corp. had $835.2 million of revenue, up 4.4% year-over-year. The company referred to 38.6% of its revenue ($322.2 million) as event-related via ticket sales and food, beverage and merchandise sales at MSG; 30.9% of its revenue ($257.8 million) as local and national media rights; 23.7% of its revenue ($198.3 million) as sponsorship, signage and suite licenses; and the remaining 6.8% of its revenue ($56.9 million) as league distributions and other.

Knicks See Decline In Local Media Rights Revenue

While the Knicks have benefited from a deep playoff run, they are also dealing with a reduction in local media rights with MSG Networks, which is owned by Sphere Entertainment Co. James Dolan is the CEO and executive chairman of Sphere, MSG Sports Corp. and Madison Square Garden Entertainment Corp, which owns the Garden, Radio City Music Hall and other venues. Those companies are all publicly traded on the New York Stock Exchange. The Knicks held a watch party on Wednesday for Game 1 of the conference finals at Radio City Music Hall, selling out the venue at $10 per ticket, with the proceeds going to the Garden of Dreams Foundation, a nonprofit that works closely with MSG Sports, MSG Entertainment and Sphere.

MSG Sports announced last month that the Knicks and Rangers agreed to take a 28% and 18% decrease, respectively, in local media rights revenue as part of MSG Networks’ debt restructuring plan. As part of the deal, the teams’ media rights contracts now expire at the end of the 2028-29 season. They were previously set to run through the 2034-35 season.

Morgan Stanley analysts in a May 4 research note wrote that they had anticipated a 50% decline in local media rights and noted that accepting the rights reduction “was in our view a necessary concession and arguably in the best interests of the teams. Without those concessions, it is more than possible that MSG Networks would have gone into restructuring, creating even greater downside risk to the teams’ local rights revenues and further putting its (New York) market distribution into disarray.”

The Morgan Stanley analysts added that “predicting the market value of local media rights today is difficult enough, let alone in four years. However, there is no part of the TV landscape that has been more disrupted – in terms of earnings power – than the regional sports network (RSN) business, in our view. We estimate after the recently announced rights reset, the Knicks and Rangers continue to benefit from one of the largest local media rights revenues in their respective sports.”

Still, the analysts estimate that local media rights account for only about 15% of MSG Sports’ revenue currently and projects it will represent just 12% of revenue by 2029. Meanwhile, the Knicks will see a marked increase in national media rights during that time period. The NBA’s 11-year, $76 billion contract with ABC/ESPN, NBC and Amazon Prime Video goes into effect starting next season, representing a 160% increase from its previous deal and accounting for a significant haul for the league’s 30 teams that share in that revenue.