Madison Square Garden Sports Corp (MSGS) 2017 Q1 法說會逐字稿

Good morning, my name is Christy, and I'll be your conference operator today. At this time, I would like to welcome everyone to The Madison Square Garden Company FY17 first-quarter earnings conference call.

(Operator Instructions)

I would now like to turn the call over to Ari Danes, Senior Vice President of Investor Relations for The Madison Square Garden Company. Please go ahead, sir.

Thanks, Christy. Good morning, and welcome to The Madison Square Garden Company's FY17 first-quarter earnings conference call.

Our President and CEO, Doc O'Connor, will begin this morning's call with a discussion of some of the Company's recent highlights. This will be followed by a review of our financial results with Donna Coleman, our EVP and Chief Financial Officer. 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 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 1995. 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 well as the factors described in the Company's filings with the Securities and Exchange Commission, including the sections entitled Risk Factors and Management's 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.

Let me point out that the Company has renamed its non-GAAP performance measure, adjusted operating cash flow, to adjusted operating income. Importantly, there has been no change to the definition. Lastly, on page 4 of today's earnings release, we provide consolidated and combined statements of operations, and a reconciliation of operating income to adjusted operating income. I would now like to introduce Doc O'Connor, President and CEO of The Madison Square Garden Company.

Thank you, Ari. And good morning, everyone. As we begin our second year as a stand-alone live sports and entertainment company, we remain focused on delivering the very best in premium live experiences for our customers and partners, an approach that we believe will result in attractive long-term growth and asset value creation for our shareholders.

For our FY17 first quarter, we saw continued evidence that this strategy, along with the important steps we took last year to position the Company for success, is beginning to pay off. As we have previously shared with you, improving the utilization of our venues by attracting more premium events is a top priority for our Company. In FY16, we saw record concert numbers at several of our venues, driven by the strength of our markets, our world-class facilities, and our operational expertise.

That momentum has continued into FY17, as we saw a year-over-year increase in the overall number of concerts held at our venues during the first quarter. Notably, this growth was led by strong results at our two largest venues, The Madison Square Garden Arena and The Forum, as we continued to successfully execute on our strategy to deliver more multi-market and multi-night engagements, both of which were up significantly versus the prior-year first quarter.

On the multi-market front, we had great success driving acts to both The Forum and The Garden, with these two iconic venues featuring a number of the same artists, including 5 Seconds of Summer, Twenty One Pilots, Drake, and Louis C.K. Multi-night highlights from this past quarter include the continuation of our extremely popular residencies: Billy Joel at The Garden, and Jerry Seinfeld at the Beacon Theatre, as well as Adele's six-night, sold-out run at MSG, which also welcomed Justin Bieber and Radiohead for multiple sold-out shows.

This multi-market, multi-night push has continued into our second quarter. In October, Amy Schumer took the stage at both The Forum and The Garden, while last night, Kanye West treated fans to his last of six sold-out performances at The Forum. In December, The Garden will welcome back Phish for a four-night New Year's run.

Turning back to the first quarter, our venues also served as backdrops for some of the summer's most popular award shows, such as The Forum played host to the Teen Choice Awards, while The Garden welcomed the MTV Video Music Awards for the first time ever. We're also seeing additional growth from new types of content, such as eSports. During the first quarter, The Forum hosted a three-day event for the popular Activision game, Call of Duty.

This was followed last month by the League of Legends World Championship, which spent four nights at the Chicago Theatre for the tournament's quarter-finals, before moving on to two sold-out nights at The Garden for the semi-finals. We'll continue to explore ways to enhance our exposure to this growing sport.

Next week, the first UFC event ever in New York State will take place at the world's most famous arena. This highly anticipated event has already broken MSG's gate record, and we look forward to a night that is sure to become a part of The Garden's storied history. This will be followed by one of the best college basketball schedules we have ever had, featuring power-house teams Duke, Kentucky, Kansas, and Michigan State, all slated to play at The Garden in the coming weeks.

On the production side, our first-quarter results reflect the majority of this year's run of the New York Spectacular starring The Radio City Rockettes. As we discussed in August, while ticket sales were not what we had hoped for, we firmly believe that the show is terrific, and that there is a strong foundation we can build upon to drive improved results. We remain committed to the show's success, and to creating a valuable long-term asset for our Company and our shareholders.

A great example of an enduring franchise is our Radio City Christmas Spectacular. The beloved show kicks off its 84th year next Friday, and we look forward to another successful holiday-season run.

We've also seen real excitement and anticipation surrounding two of our other legendary franchises, as 2016/2017 marks the Knicks' 70th anniversary season, and the Rangers 90th anniversary season. The Knicks are led by Carmelo Anthony and Kristaps Porzingis, along with newcomers Derrick Rose, Joakim Noah, Courtney Lee, and Brandon Jennings while the Rangers added eight new players to their lineup this season, including prize rookies Jimmy Vesey and Pavel Buchnevich.

As we've previously discussed, we made changes to our ticketing policies for this year, limiting the amount of full-season tickets an individual can purchase, which gives more fans, who may not be able to afford full-season subscriptions, the opportunity to buy tickets directly from us to enjoy their teams live and in person. This is a very important change that will have a meaningful long-term impact on expanding our teams' fan bases. We're pleased with the results thus far.

As planned, we are driving a change in the mix of tickets sold, with fewer full-season subscriptions, and more sales of partial plans, and individual and group tickets. We're now virtually sold out of full-season ticket packages for both the Knicks and the Rangers, and are seeing strong across-the-board demand for our other ticket offerings. So while the mix of tickets is changing, we currently anticipate the same end result, that our teams will again play to at- or near-capacity crowds at The Garden this season.

On the sponsorship and signage front, we're confident that FY17 will be another record-setting revenue year for the Company. We're at the start of the renewal cycle for some of our signature partners, and are aware that the conventional wisdom, from people outside of MSG, has been that these partnerships were driven by The Garden transformation and, therefore, would not be sustainable. However, we're finding as we move through this process that the significant sponsorship revenue stream we created as part of the transformation is not only sustainable, but is growing.

Thanks to our innovative platforms, and the unique and valuable exposure we provide our partners, we recently announced an agreement with Anheuser-Busch on a renewed multi-year marketing partnership, which we were able to significantly expand. With the renewed agreement, Anheuser-Busch will continue to have year-round exposure at the world's most famous arena.

In addition to this, the brewing company is now the presenting partner for the one-night-only concert series at the Theater at Madison Square Garden, which kicked off the first of six shows in August with Florida Georgia Line. And, in 2017, we look forward to debuting the Bud Light Lounge, a Premiere Hospitality Space with direct views into the arena bowl. We're pleased to have reached this agreement, and look forward to continue to provide our partner with exceptional experiences and activations across our unrivaled set of sports and entertainment properties.

And as we remain focused on delivering excellence across our operations, we also continue to pursue strategic opportunities to grow our live-experience offerings. As you know, one area of growth potential for the Company is the expansion of our venue portfolio. We remain excited about bringing a world-class music and entertainment focus venue to Las Vegas, where we see a real opportunity to both gain market share and grow the overall concert market.

We've added two more world-class partners to our team, with the selection of ICON Venue Group as our project manager, and HOK as our architect, and we look forward to working with these industry leaders on creating a next-generation venue. We're continuing to make progress on our plans, including the building's design, timeline, and financing options, and we'll share more details in the months ahead.

We've also taken a number of steps to expand our presence in live festivals. In early July, we announced that we purchased a controlling interest in Boston Calling Events, the entertainment production company responsible for New England's premier music festival, Boston Calling. We continue to see significant upside potential for the festival, which in 2017 will move to a new location in Boston that more than doubles its capacity and enables the festival to expand its content offerings. We expect to have more information to share, including about the festival's programming slate early next calendar year.

Another important growth strategy for the Company has been the exploration of adjacencies that complement our existing business and broaden our portfolio of premium live experiences, and we continue to pursue opportunities on this front. In summary, after a successful FY16, we continue to see evidence that our efforts to strengthen and grow our live sports and entertainment businesses are generating positive results for our Company, and we remain confident that we are taking the necessary steps to ensure that the Company is positioned to drive attractive long-term growth and asset value creation. With that, I will now turn the call over to Donna, who will take you through our financial results.

Thank you, Doc, and good morning, everyone. For the FY17 first quarter, the Company generated total revenues of $181.7 million, an increase of 21%, and adjusted operating income of $1.6 million, down $22.1 million on a reported basis.

Let me remind you that while results for the FY17 first quarter reflect MSG's financial results on a stand-alone basis, prior-year quarter results reflect the allocation of corporate, general, and administrative costs based on accounting requirements for the preparation of carve-out financial statements. As a result, FY16 first-quarter results do not reflect all of the actual expenses that the Company would have incurred had it been a stand-alone public company for that quarter. Had MSG operated as a stand-alone public company for the prior-year first quarter, we estimate that expenses would have been higher by approximately $10 million.

With that said, let's now go through our reported segment result as compared with the prior-year period. At MSG Entertainment, revenues of $110.7 million increased 44%. The increase was primarily due to higher overall event-related revenues at our venues, and to a lesser extent, revenues for the New York Spectacular production.

With respect to the New York Spectacular, we ran the show 56 times during our first quarter, versus none in the prior-year quarter. As a reminder, we shifted the timing of the show this calendar year to run from June to August, versus March to May last year.

MSG Entertainment generated an adjusted operating loss for the quarter of $1.1 million, as compared to adjusted operating income of $3.1 million in the year-ago period. The decrease in adjusted operating income primarily reflects the direct loss related to the New York Spectacular and higher SG&A expenses, largely offset by higher event-related direct contribution and lower venue operating costs.

At MSG Sports, first-quarter revenues of $71 million decreased 3%. The decrease in revenues was mainly due to lower professional sports teams' ticket-related revenue in food, beverage, and merchandise sales, both primarily due to one fewer Rangers pre-season game, and two fewer Liberty regular-season games versus the prior-year period. This decrease was primarily offset by higher suite rental fee revenue, ad sales commission, and professional sports team sponsorship and signage revenues, and local media-rights fees from MSG Networks.

MSG Sports' first-quarter adjusted operating income decreased by $9 million to $15.4 million. The decrease was primarily due to higher direct operating expenses, lower revenues, and higher selling, general, and administrative expenses. The increase in direct operating expenses was primarily due to a $5 million provision for a team personnel transaction which occurred during the quarter, and higher net provisions for NBA and NHL revenue sharing expense. This increase was partially offset by lower other team operating expenses, team personnel compensation, and expenses associated with food, beverage, and merchandise sales.

Lastly, other adjusted operating loss increased by $9 million to a loss of $12.7 million in the FY17 first quarter. This increase primarily reflects higher employee compensation and related benefits, the Company being subject to New York State and City capital tax in the FY17 first quarter, and higher professional fees. We would again note that for both the MSG Entertainment and MSG Sports segments, as well as for other unallocated costs, SG&A expenses for the prior-year first quarter do not include all of the actual expenses that the Company would have incurred had it been a stand-alone public company during that period.

Turning to our balance sheet, as of September 30, total unrestricted cash and cash equivalents was approximately $1.3 billion. In addition, on September 30, the New York Knicks entered into a five-year, $200 million secured senior revolving credit facility, and a one-year, $15 million unsecured credit facility, both of which are available to fund working capital needs, and for general corporate purposes, including providing MSG with a liquidity backstop behind our substantial cash balance. There have been no borrowings made on either facility to date.

In terms of the Company's share repurchase program, during the first quarter we repurchased approximately 406,000 shares for $72.3 million, at an average price of about $178 per share, under a 10b5-1 program which expired on September 30. This brings the total purchases under our current authorization to 1.085 million shares for $178 million at an average price of about $164 per share. This amount represents approximately 4.4% of total shares outstanding. With that I will now turn the call back over to Ari.

Thanks, Donna. Christy, can we open up the call for questions?

(Operator Instructions)

And your first question comes from John Janedis, with Jefferies.

Thank you.

Doc, just to follow up on your prepared remarks, you've been diligent in expanding upon the number of concerts and multi-night shows. What capacity do you have to continue this current level of growth? And what is the contribution margin for adding those incremental shows?

I'm sorry; what was the last part of the question?

What is the contribution margin for adding incremental shows.

Okay. First of all, we believe that we have a lot of capacity for higher utilization and more events at all of our venues. But particularly, we see a great deal of capacity at The Forum, which doesn't have resident sports teams. We're seeing great event utilization numbers at The Forum currently, and into the next set of quarters. And across the board, we're seeing great demand for live events at all of our venues, and, frankly, across the industry. And that helps us with utilization and efficiency.

We saw that trend play out last year, last fiscal year, and that fiscal year saw record numbers at nearly all of our venues. We're seeing that trend continue, and, frankly, expand in 2017, as you can see by our first quarter numbers. And that increased utilization comes from success on a number of different fronts, some of which I said in the prepared remarks. We're having great success at this multi-night, multi-market event strategy: as I mentioned, Adele, Drake, Kanye West, Louis C.K. And we're seeing that continue and accelerate in coming quarters.

We're seeing success in expanding our content categories. I mentioned eSports in the prepared remarks. Those were two important events at The Forum and The Garden: UFC coming to The Garden in a few weeks, for the first time ever in New York State; that's an expansion as well. We're seeing more special events, like the VMAs and the Teen Choice Awards.

And again, we have some interesting and exciting possibilities coming up in the next few quarters, and we're succeeding as a company in creating new events. The One Night Only series that I mentioned in the prepared remarks is an example of that. We're going to see an acceleration of our ability to create new live events across the board. So all of that demand and all of that growth speaks to our strategy of expanding our new venue portfolio as well.

That's helpful, thanks.

Donna, one quick one: did you say that the 10b5-1 expired, and if so, did you re-up it?

Yes, it expired on September 30. And we're really, right now currently assessing and evaluating how we want to execute on the share repurchase program going forward. The 10b5-1 allowed us to make progress while we still pursued some of our growth activities. So right now, we're looking at it and evaluating how we want to move forward.

All right. Thank you.

Your next question comes from Brandon Ross of BTIG.

Good morning. One for Doc, and one for Donna.

For Doc: wanted to get your latest thoughts on the role you may have in the Penn Station renovation? I think Governor Cuomo recently again spoke to the possibility of acquiring the Theater at MSG. Do you believe that's still in play? And our reading of the New York City zoning regulations are, that if you are involved in the Penn Station renovation it could unlock significant air rights for you, maybe as much as double them. Are we reading that correctly?

And then for Donna: in the quarter you added a revolver against the Knicks. Why the Knicks? And after living without a credit line at MSG, why did you decide to add one now? Thanks.

I'll address the first part of that question. You know we support the governor and his vision for Moynihan Train Station, and a renovated Penn Station. And as we've said before, we're receptive to a plan that would have us commit our theater as part of the Penn Station renovation, provided we get, in return, fair market value for our theater, strategically and financially. As for our various concepts of monetizing our air rights, really not going to speculate on that at this moment in time, and don't have a comment on the transit bonus, as you say.

And I'll address the second part of your question. In general, we feel it's very prudent to have additional liquidity backstop available for working capital and general corporate purposes. I think we saw the opportunity today to leverage our strong balance street and also to capitalize on the bank relationships that we cultivated during last year's spin transaction. And those items enabled us to get a five-year revolver at very attractive terms and conditions. So we entered into a five-year revolver. You know, we don't know what the market for liquidity access will be going forward, and we thought this was the right timing.

Thanks, Brandon. Christy we'll take the next caller.

Your next question comes from Alexia Quadrani, JPMorgan.

Hi. This is David Karnovsky, on for Alexia.

Just following up on your comments on sponsorship. Is there room going forward to add more verticals to your sponsorship portfolio? Or is the growth really about working with current partners on a more immersive experience? And then as a follow up, would there be any impact to your sponsor relationship with DraftKings should that company merge with FanDuel?

When you say verticals, I assume you mean categories?

Yes.

Yes. We do believe there's real opportunity to expand our category offerings and sponsorship and are actively involved in that process on a day-to-day basis, and we're seeing real potential in doing so. But in general, I would say, we talked this morning about the value and the demand that we're seeing with our live experiences across the board in sports and entertainment. They serve as a really valuable platform for our sponsors. So as we expand our live offerings, we think that, that will only lead to further potency in this area. So growth can happen both in terms of new categories as well as expanding and growing our existing relationships. But there are a number of unsold major categories that we can get into at our various venues. We can always create and increase premium inventory.

I said on the call that we started our renewal cycles with some of our signature partners. We renewed Anheuser-Busch, as I said, and significantly expanded upon that. In the coming days, we will be announcing the renewal and expansion of a second signature partnership. So we are seeing, now, a pattern of the ability to extend and significantly expand our existing partnerships, which we're quite excited about, and that trend will continue.

On the second part of your question, regarding DraftKings and FanDuel merger, at this point it's only a potential merger, and it's speculation as to whether it will actually happen. So we're not going to speculate now on potential impacts of that.

Okay, thank you.

Your next question comes from Ben Mogil, from Stifel.

Hi, good morning, and thanks for taking my questions. So, a couple for Doc.

When you look at the New York City Spectacular and it's got some ongoing operating losses, how much patience do you feel is appropriate for some of those losses? And thoughts on why you want to be in the producing business as opposed to the venue management landlord business that you were talking a lot about earlier in the prepared remarks?

Well, as I said, we are disappointed in the results from our first numbers, but we don't think they are entirely indicative of our long-term prospects. So I think we do have patience in building a second franchise here. We were launching an almost entirely new show, in a new time period altogether, to largely a new audience. We think that we succeeded from a content and a creative standpoint; audiences loved the show. Overwhelmingly, they said they wanted to see it again. Critics were positive. And as we speak, we're tweaking the show to make it even better.

But building a second franchise takes time, which speaks to the patience issue. We learned a lot over the run last summer, and what we learned will definitely improve our efforts in the coming summer. We think that, with an improved sales effort, and an improved marketing group at the company, behind what is now a known commodity, and the lessons learned from last summer, we think our results will show great improvement. That doesn't mean to say we're not -- we're cognizant of the risks; we don't take them lightly. But we will continue to look for ways to improve the show both from a content standpoint, but also from an operating standpoint.

And the benefits, the larger question -- we have, with the Knicks, the Rangers, and the Christmas Spectacular, we have plenty of evidence to show that when you're both a content owner and a venue operator, that there is tremendous profitability associated with that. So the point is, in trying to make a second franchise with the Rockettes is to add to that equation.

Okay. Thank you. That's fair enough.

And then on the Town Square investments, curious why you went the public company route, and invested at the public company level, which obviously has a lot of radio exposure? And why you didn't just directly invest in the operating business -- the live entertainment part of Town Square, in the direct operating business, and probably have the chance for more operational synergies and direct access to that segment's cash flow? I'm curious why you went the holdco, more diversified route, as opposed to the operating company direct route?

Well, direct investment in their live business was not an option for us, so our investment was both, I think as I said previously, both opportunistic and strategic. So, opportunistic, because, we were able to invest in this public company at a very, very attractive price for us. Strategic, because, each of the companies have unique assets and expertise in the live space, and are very complementary in many ways, and in the fact that we all connect to diverse and passionate audiences.

So we felt that our investment in this public company better aligns our interest in that space. And since we've concluded this investment, we've started to work together to explore some of those very opportunities, and they include new live content, new festivals, and, frankly, with their radio portfolio, very numerous cross-promotional opportunities. I guess I would say in general that, taking minority investments in companies like this is not the centerpiece of our capital allocation strategy. It was, as I said, opportunistic and strategic.

Thanks, Ben. Christy, we'll take the next caller.

Your next question comes from Michael Morris, with Guggenheim Securities.

Thank you, good morning guys.

I'm hoping you can help us think a bit more about how the greater venue utilization can further benefit the business over time, specifically on the sponsorships and the suite rentals. First of all, on the sponsorships, do you anticipate, or is there a reason not to think that there would be a direct relationship between attendance and utilization and the value that you're delivering to your sponsorship partners? And therefore, the pricing power that you would have as you renegotiate those sponsorships? Is there a direct relationship between attendance and your pricing power there? And what time frame does it take to recognize that?

And then on the suite rentals, I think you did multi-year deals post the Transformation. Where are we in the cycle there? Are we getting closer to those coming up for renewal? Should there be a direct relationship between the utilization and the value that you're able to extract on the pricing there? Thanks.

Yes, I think in general, when it comes to both marketing partnerships and suites, there is absolutely a direct correlation between attendance, between number of events, between the premium quality of those events, and the value of those marketing partnerships; or as you add, our suite inventory. There's definitely a direct correlation, and that's why we are seeing these tremendous expansions with our existing partnerships. We're seeing a great deal of demand from the corporate community to access our portfolio of live events and venues. So I think exactly what you're saying is driving our success and the value in these areas.

As to suite renewals, it is absolutely identical to our marketing partnerships program. You have tremendous demand in the marketplace because, not only the quantity and diversity of the events in our venues, particularly Madison Square Garden, but also the quality of it. We're succeeding on all fronts in terms of not only increasing the number, but the quantity. We are just beginning to enter the cycle of suite renewals. And we're seeing that demand, and we're very confident in our ability to, like our marketing partnerships, extend and expand those relationships.

Thanks for that.

And with respect to the suite renewals, I can't imagine you want to be too specific, but could you help us at all with whether they tend to be lumpy? Do most of them come up at once? Or is it relatively spread out? How should we think about the timing of those renewals coming through?

It's relatively spread out. The terms of these relationships vary across the board. Like I said, we're seeing great demand in the marketplace for them. We're confident in our ability to extend relationships where they exist and expand upon them.

Great. Thanks, Doc.

Your next question comes from Ryan Fiftal, with Morgan Stanley.

Thank you. Good morning. I have three quick ones, if I can.

So first, I'm not sure if I missed it in the prepared remarks, but on the Christmas show, can you talk to about how pre-sales are tracking there versus last year? And then, I'll just ask them all upfront, second on the Knicks and Rangers ticket mix changes: do you expect selling smaller packages to be accretive or dilutive to your average ticket prices?

And then last, for Donna, you mentioned a city and state capital tax. Is that new? And if so can you help us size that? Thank you.

I'll take the first two.

Okay.

On Christmas, it's just a little premature for us to talk about our sales at this point. We feel very good about where we are, but it's premature to speculate on overall performance at this moment in time. On Knicks and Rangers, yes, indeed; we very much did change our mix of tickets. We have actually reduced the number of full-season ticket packages in favor of more partial plans, more individual tickets for sale, and more group offerings. As I said in the prepared remarks, that is about giving our fans greater opportunity to experience the Knicks and the Rangers. And yes, that plan is intended to be accretive to our revenue in these sectors and it's proving itself to be so thus far.

I'll address the capital tax. After the spin we were in a tax-loss position in New York State. And since New York State wants to get their taxes whether or not you have income, they levy upon you a capital tax, which is based on a number of factors. Unfortunately, under GAAP, you need to put the cost of that capital tax into your adjusted operating income; it's not an income tax per se. So it goes kind of above the line and not below the line. So it is new for us this year.

Thanks, Ryan. Christy, we'll take the next caller.

Your next question comes from David Joyce with Evercore ISI.

Thank you.

I was wondering if you could help us think about the flow-through of step-ups in the NBA TV rights after this season. Is it seasonal, or is it straight line through the season? And then secondly, if we could think about the summer's New York Spectacular show. You've taken some write-downs in the past on that, whenever you changed the show around. Was there anything taken related to that this quarter? I'm answering my own question by saying, I don't think so, since your AOI was pretty solid. But if you could just help us with that. Thank you.

Okay. I'll address your first question, on the NBA. We are now able to enjoy our 1/30 share of the increase in the NBA national media rights revenue. It is spread from November -- throughout the season from November through April. And I would just remind you that, related to the increase in revenue, there is also a significant increase in player compensation costs, which is primarily a result of the increase in the league's salary cap, which went from $70 million last season to $94 million this season. And we also expect to see an increase on revenue sharing amongst the teams. But net-net of all of that, we expect that this will have a positive impact on us as a company.

David, what was your second question?

If you could talk about any charges you may have taken related to New York Spectacular this summer since the tickets, the sales were a little bit light. Or has that already been behind you from some other charges? And what sort of incremental expense to do any show revamps might there be?

On the show revamps, I think that Doc mentioned in his prepared remarks that we have some tweaks, but that's probably all we expect for this year's show. Again, as Doc mentioned, we think we have a terrific show. We are committed to the show's success. There is nothing that happens that would have triggered any sort of write-off or impairment. And of course we continually assess the carrying amounts of our deferred production assets but at this point there's nothing to do.

Thanks, David. Christy, we'll take the next caller.

Your next question comes from Amy Yong, with Macquarie.

Thanks and good morning.

I was wondering if you could comment on your sponsorship and advertising opportunity, as you grow this West Coast presence and become more -- you have a greater geographic reach? Some of your new sponsorship and advertising agreements, do they contemplate the greater geographic footprint that you now have? Thank you.

Our current partnerships and our agreements are for the venue portfolio that exists today. So that, as we come online with Las Vegas, that will be a new sales effort, and will be new inventory and new revenue for the Company. So none of our existing agreements contemplate new venue expansion as part of the revenue streams that exist. So I believe I'm answering your question in saying that, any new venue that comes online, Las Vegas or any other, would represent new revenue streams.

Thanks, Amy. Christy we'll take one last caller.

Your final question is coming from David Miller, with Loop Capital Markets.

Yes, hey guys. Congratulations on the stellar results. Donna, just two questions for you.

You took a $5 million provision for a, quote, team personnel transaction in the quarter. I assume that has to do with the New York Knicks. If you could just expound on that and just provide some detail, I'd appreciate it. And then I just want to make sure I have my facts straight on the Vegas opportunity. So my understanding is that, Las Vegas Sands is going to kick in the land for free, in return for a 50-year lease agreement at no cost to you. They're also going to kick in $75 million towards CapEx. Any granularity on your CapEx commitment, from your side, in terms of the building of a new arena? Thanks a lot.

Okay. I'll let Donna deal with the first part of your question, but as it pertains to Las Vegas, I can confirm that your understanding of Sands' participation in this agreement is what you said. The land is contributed for free, and they are contributing $75 million in CapEx. As for our CapEx contribution, it's too early to say. We are still in design process. So we are not prepared to talk about what the cost might be associated with delivering the design that we are in right now.

As to your question on the $5 million, yes, you're correct. We had a player trade that required a $5 million write-off, but we really don't give any more details than that.

Thank you. With that, I'll hand the floor back over to Ari Danes, for any additional or closing remarks.

Thank you for joining us. We look forward to speaking with you on our second-quarter earnings call. Have a good day.

Thank you. This does conclude today's conference call. You may now disconnect.