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The Madison Square Garden Company (NYSE:MSG) Q4 2019 Earnings Conference Call August 20, 2019 8:30 AM ET
Ari Danes - SVP, IR & Treasury
Andy Lustgarten - President
Victoria Mink - EVP & CFO
- Ari Danes - 高级副总裁，IR和财政部
- Andy Lustgarten - 总统
- Victoria Mink - 执行副总裁兼首席财务官
Bryan Goldberg - Bank of America
Brandon Ross - BTIG
David Karnovsky - JPMorgan
David Miller - Imperial Capital
David Joyce - Evercore ISI
Brett Harriss - G-Research
- 布莱恩戈德堡 - 美国银行
- 布兰登罗斯 - BTIG
- 大卫卡尔诺夫斯基 - 摩根大通
- 大卫米勒 - 帝国首都
- 大卫乔伊斯 - Evercore ISI
- 布雷特哈里斯 - G-Research
Good morning. My name is Christie, and I'll be your conference operator today. At this time, I would like to welcome everyone to The Madison Square Garden Company Fiscal 2019 Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.
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.
早上好。 我叫克里斯蒂，今天我将成为你的会议运营商。 在这个时候，我想欢迎大家参加麦迪逊广场花园公司2019年第四季度财报电话会议。 所有线路都已静音以防止任何背景噪音。 发言者发言后，将会有一个问答环节。 [操作员说明]谢谢。
我现在想把这个电话转给麦迪逊广场花园公司投资者关系高级副总裁Ari Danes。 请继续，先生。
Thanks, Christie. Good morning and welcome to The Madison Square Garden Company's fiscal 2019 fourth quarter earnings conference call. Our President, 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 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 on 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. On Pages 5 and 6 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income or AOI, a non-GAAP financial measure. Lastly, on Pages 8 and 9 of the release, we present a reconciliation of AOI to AOI excluding the impact of ASC Topic 606, the new accounting standard for revenue recognition.
And with that, I'll now turn the call over to Andy.
谢谢，克里斯蒂。早上好，欢迎来到麦迪逊广场花园公司2019财年第四季度财报电话会议。我们的总裁Andy Lustgarten将在今天上午的电话会议上发布公司运营的最新消息。随后将与我们的执行副总裁兼首席财务官Victoria Mink一起审查我们的财务业绩。在我们准备好的评论之后，我们将打开电话提问。如果您没有今天的收益发布副本，可以在我们公司网站的“投资者”部分找到。
Thank you, Ari. Before I turn to our core business, I'd like to talk about where we stand with the Company's key strategic initiatives. We made significant progress on our plan to grow beyond our existing portfolio of assets by pioneering the next generation of entertainment with MSG Sphere, and as we execute on our vision for the state-of-the-art venues. We continue to actively pursue the proposed spin-off of our sports business; a transaction we believe would strengthen our financial flexibility and help drive long-term value creation for our shareholders.
You heard us talk previously about the merits of the proposed spin-off. We remain confident that this separation would better highlight the unique value of the Knicks and Rangers franchises. We continue to expect that the entertainment company would retain an approximate one-third equity interest in the sports company. This equity stake will be used to help fund our growth plans and for other corporate purposes and would also be available for potential tax-free exchange for entertainment company shares, while we know this is taking longer than expected, we remain firmly committed to completing this important transaction which we now anticipate will happen in the first quarter of calendar 2020. The spin-off is of course, are still subject to various closing conditions including League and final MSG Board approvals.
As I mentioned earlier, this transaction would strengthen our ability to execute on our plans for MSG Sphere, an initiative we continue to make meaningful progress off. In June, we announced that we engaged AECOM as our general contractor for MSG Sphere in Las Vegas. AECOM is known as a leading builder of stadium and entertainment facilities and we believe their experiences make them the ideal partner. In Las Vegas, we've reached significant milestones over the past several months, we completed grading, mass excavation and drilling deep foundations, and have now begun to work on shallow foundations and installation of below grade infrastructure. We've also started to building a basement walls, and stair and elevator, cores and columns.
Our goal remains to open Las Vegas venue during calendar 2021 and we are increasingly excited about the transformative nature of the MSG Sphere. Las Vegas is one of the world's top entertainment destinations, with over 40 million visitors annually, many of whom are looking for new experiences, we're going to give it to them. MSG Sphere will be an entirely new platform, unlike anything we've ever seen. Of course, we expect that will attract the type of events you see at any world-class venue; concerts, award shows, select sporting events, etcetera. However, we believe it will enable us to create entirely new forms of entertainment, some unexpected. For instance with an interior display, the size of three football fields we believe MSG Sphere will completely redefine how companies think about product launches and when you add that we're directly connected to the Sands Expo Center, we see this is a very compelling opportunity. Moreover, we do not intend to just rely on traditional content to drive the venues utilization. We plan to take a page out of Christmas Spectacular playbook with a goal of creating original attractions that showcase the venue state-of-the-art technology and run multiple times a day, a year round.
正如我之前提到的，这项交易将加强我们执行MSG Sphere计划的能力，这一举措我们将继续取得有意义的进展。 6月，我们宣布将AECOM作为拉斯维加斯MSG Sphere的总承包商。 AECOM是体育场和娱乐设施的领先建筑商，我们相信他们的经验使他们成为理想的合作伙伴。在拉斯维加斯，我们在过去的几个月里达到了重要的里程碑，我们完成了分级，大规模挖掘和钻探深基础，现在已经开始研究浅基础和下层基础设施的安装。我们还开始建造地下室墙壁，楼梯和电梯，核心和柱子。
我们的目标仍然是在2021年日历期间开设拉斯维加斯场地，我们对MSG Sphere的变革性质越来越感到兴奋。拉斯维加斯是世界顶级娱乐目的地之一，每年有超过4000万游客，其中许多人正在寻找新的体验，我们将把它给予他们。 MSG Sphere将是一个全新的平台，不同于我们所见过的任何东西。当然，我们希望这会吸引您在任何世界级场地看到的类型的活动;音乐会，颁奖典礼，选择体育赛事等。但是，我们相信它将使我们能够创造全新的娱乐形式，有些是出乎意料的。例如，内部展示，三个足球场的大小，我们相信MSG Sphere将完全重新定义公司如何考虑产品发布，当您添加我们直接连接到金沙会展中心时，我们认为这是一个非常有吸引力的机会。此外，我们不打算仅依靠传统内容来推动场馆的使用。我们计划从圣诞节壮观的剧本中挑选一页，目的是创建原始景点，展示最先进的技术，并全年每天多次运行。
From an event count perspective, we believe these attractions will result in MSG Sphere being the most highly utilized venue in our portfolio and also serve as content that we can leverage across future MSG Sphere. In addition to events, MSG Spheres groundbreaking platform will create unprecedented opportunities for companies to engage with very valuable audience, which we anticipate translating into meaningful high margin sponsorship revenue for the company and we've said from the beginning, we believe the MSG Sphere will reimagine the live experience, redefine the venue model and become a valuable long-term asset for our company.
Turning to our operations; for fiscal 2019, we generated a 5% increase in total company revenue, while overall AOI was lower on a year-over-year basis. If we take a deeper dive into the results, we see a far more compelling story. Let's start with MSG Entertainment. Our booking business had another record setting year, with a 10% increase in the number of events held at our venues, which translated into a high-single digit percentage revenue growth on an underlying basis, and while bookings results for the fiscal fourth quarter were lower year-over-year. As we look out -- our start to fiscal 2020, we are currently pacing ahead of last year at this time in terms of the number of confirmed events plus shows that have already taken place.
The Christmas Spectacular had an equally impressive year with highlights that include over 1 million tickets sold for the shows a week run, mid-single-digit percentage growth in both paid attendance and average ticket prices and the double-digit percentage increase in revenues. Rounding out the success and entertainment was ongoing revenue growth across both sponsorship and suites during fiscal 2019, a continued reflection of the value we bring to our partners. There were however items that offset these achievements, a few of which I'll touch on now.
First, as we discussed previously, TAO Group had lower results year-over-year in the first half of fiscal 2019. A portion of the decrease was pre-opening expenses related to the popular TAO restaurant in Chicago. Since the first half, we have seen improvement as the business was essentially flat year-over-year on our third quarter and return to modest growth in our fourth quarter. TAO Group has also continued to execute on its venue expansion plans, which in addition to TAO Chicago include opening a new venue in New York and Singapore. TAO Group had been a terrific strategic partner for our company, both here at the Garden where they will play a larger role this coming season in our food and hospitality offerings, as well as in Las Vegas where they're helping to create a world-class guest experience for MSG Sphere.
With regard to Obscura and Boston Calling; while AOI for both of these businesses were lower this year, as we previously discussed we are winding down Obscura's third-party business so we could focus those resources on MSG Sphere. And for Boston Calling, we've reworked our strategy which we believe will return the Boston [ph] to profitability.
从事件计数的角度来看，我们相信这些吸引力将导致MSG Sphere成为我们产品组合中利用率最高的场所，同时也是我们可以在未来MSG Sphere中利用的内容。除了活动，MSG Spheres开创性平台将为公司创造前所未有的机会，让我们与非常有价值的观众互动，我们预计这将为公司带来有意义的高利润赞助收入，我们从一开始就说，我们相信MSG Sphere将会重新构想现场体验，重新定义场地模式，成为公司宝贵的长期资产。
谈谈我们的运作;对于2019财年，我们公司总收入增长了5％，而总体AOI同比下降。如果我们深入研究结果，我们会看到一个更引人注目的故事。让我们从MSG娱乐开始吧。我们的预订业务创下了另一个创纪录的年度，我们场馆举办的活动数量增加了10％，在基础的基础上转化为高单位数百分比的收入增长，而第四季度的预订结果是同比下降。当我们看到 - 我们从2020财年开始时，我们目前正在按照已确认事件的数量加上已经发生的节目的数量，在此之前飙升。
首先，正如我们之前所讨论的，TAO集团在2019财年上半年的业绩同比较低。减少的部分是与芝加哥流行的TAO餐厅相关的开业前费用。自上半年以来，我们看到了改善，因为第三季度业务与去年同期基本持平，并在第四季度恢复适度增长。 TAO集团还继续执行其场地扩建计划，除了TAO芝加哥之外，还包括在纽约和新加坡开设新场地。 TAO集团一直是我们公司的一个极好的战略合作伙伴，无论是在花园里，他们将在今年的食品和酒店产品中发挥更大的作用，在拉斯维加斯，他们正在帮助创造一个世界 - MSG Sphere的客户体验。
关于Obscura和Boston Calling;虽然今年这两项业务的AOI都较低，正如我们之前所讨论的那样，我们正在逐步减少Obscura的第三方业务，因此我们可以将这些资源集中在MSG Sphere上。而对于波士顿电话会议，我们已经重新制定了我们的战略，我们认为这将使波士顿[ph]恢复盈利。
Now turning to MSG Sports; for fiscal 2019, we saw growth across a number of categories including league distributions, local media rights and suite license fees. We also saw solid growth in our sports booking business as we had a particularly successful year in attracting Marquee sporting events or venues. However, there are items that offset this growth in sports. The team performance of the Knicks and Rangers has weighed on our -- per game revenues for tickets food, beverage and merchandise sales. We were also impacted by higher team personnel costs including a player waiver earlier this year, as well as higher marketing costs as we spend more to support our in-game sales.
Looking ahead, we continue to strengthen both teams with long-term goal of building championship caliber franchises. The Rangers hence in next season with several key additions, including the number two overall pick Kaapo Kakko, the lead forward Artemi Panarin and defenseman Jacob Trouba. Meanwhile, the Knicks have continued to build on their young core with the number of -- with a number of additions, including the number three overall trade pick Duke star, RJ Barrett along with free agents such as Julius Randle, Marcus Morris and Bobby Portis.
We look forward to the new season with both teams. With respect to sponsorships with another year of growth, with an increase in entertainment, while sports revenue was flat with the prior year which we again contribute to the team performance. There were a number of new partnerships that contributed to our growth, including one with Montefiore Health System, Verizon and Hulu. This year we also marked the start of our multi-year marketing partnership with PepsiCo and as we recently shared, we completed a multiyear renewal with longstanding partner Ticketmaster on both the sponsorship and ticketing fronts.
In addition to everyone -- everything we've talked about with regard to our segments on a total company basis, we are also impacted by higher SG&A expenses including ongoing investment in personnel as we move forward with our growth plans as well as costs associated with the proposed sports spin-off. So in summary, while fiscal 2019 had many moving parts, there was much to be excited about in terms of the underlying results of our business and our long-term prospects. At entertainment, we see an opportunity to continue growing important areas such as booking and productions while at sports we see broad based upside potential, especially as both the Knicks and Rangers improve their performance over time. We have also made significant progress in readying our company for its next chapter and expect fiscal 2020 to be an important year as we work to complete our sports spin-off and as our MSG Sphere in Las Vegas begins to take shape.
With that I will turn the call over to Victoria.
展望未来，我们将继续加强两支球队的长期目标，即建立冠军级别的特许经营权。游骑兵因此在下个赛季有几个关键的补充，包括第二顺位选秀Kaapo Kakko，前锋Artemi Panarin和防守队员Jacob Trouba。与此同时，尼克斯队继续以他们的年轻核心数量为基础 - 增加了一些，包括排名第三的交易选择杜克明星，RJ巴雷特以及朱利叶斯·兰德尔，马库斯·莫里斯和鲍比·波蒂斯等自由球员。
我们期待两队的新赛季。关于赞助与另一年的增长，娱乐的增加，而体育收入与上一年持平，我们再次为团队业绩做出贡献。有许多新的合作伙伴关系促进了我们的发展，其中包括Montefiore Health System，Verizon和Hulu。今年我们还标志着我们与百事公司的多年营销合作伙伴关系的开始，正如我们最近分享的那样，我们与赞助商和票务领域的长期合作伙伴Ticketmaster完成了多年的续订。
除了每个人 - 我们在公司总体基础上谈论我们的细分市场时，我们也受到更高的SG＆A费用的影响，包括我们继续推进增长计划以及与拟议的体育分拆。总而言之，虽然2019财年有许多活动部分，但从我们业务的基本业绩和长期前景来看，还有很多令人兴奋的事情。在娱乐方面，我们看到了继续发展预订和制作等重要领域的机会，而在体育运动中我们看到了广泛的上升潜力，特别是随着时间的推移，尼克斯队和流浪者队的表现都有所改善。我们在准备公司的下一章方面取得了重大进展，并期望2020财年成为重要的一年，因为我们正在努力完成我们的体育分拆以及我们在拉斯维加斯的MSG球体开始成型。
Thank you, Andy, and good morning, everyone. Before I discuss our fourth quarter financial performance, I'd like to take a moment to discuss the update we provided on costs for our Las Vegas venue in this morning's earnings release. We disclosed that in May, our Board of Directors approved a preliminary construction budget of $1.2 billion. In addition, as part of the contractual process of setting the incentive benchmark for establishing AECOM's fees, AECOM has provided us with an initial proposal that together with additional core technology and soft costs results in a project cost estimate of $1.7 billion.
We think AECOM's estimate is too high, and as part of the contractual process, we are reviewing and challenging our contractors estimates and assumptions. We believe as a result of this process that we will be successful in achieving significant cost reductions. Now turning to our fourth quarter results, on a reported basis MSG generated total revenues of $263.6 million and an adjusted operating loss of $34.9 million excluding the impact of the new revenue recognition accounting standard we would have generated total revenues of $326.2 million, an increase of 3%, and AOI of positive $3.7 million, an increase of $5 million, both as compared with the prior year quarter.
At MSG Entertainment revenues of $174 million decreased 6% the largest driver of the decrease was lower event related revenues from concerts with a decrease at the Garden and Forum, partially offset by growth at the Beacon and Chicago theaters. In addition, we had a decrease in revenues for the Boston Calling festival, along with lower suite license fees, due to the new revenue accounting standard while segment revenues were also impacted by the wind down of Obscura's third-party business. These decreases were partially offset by higher TAO Group revenues and higher sponsorship and signage revenues.
Fourth quarter AOI of $1.1 million decreased by $7.1 million primarily due to the decrease in revenues partially offset by lower direct operating expenses. The decrease in direct operating expenses was primarily due to lower event-related expenses from concerts and to a lesser extent, lower venue operating costs as well as lower expenses for Obscura Digital and the Boston Calling festival. This was partially offset by higher TAO Group expenses. Excluding the impact of the new accounting standard entertainment revenues for the fourth quarter would have been $180.9 million, a decrease of 3% and AOI would have been $3.6 million, a decrease of $4.6 million, both as compared to the prior year quarter.
At MSG Sports; revenues of $90 million decreased 32%, this was primarily due to the new revenue recognition standard which significantly impacted most of our revenue lines. This was partially offset by higher event related revenues from other live sporting events. While fourth quarter revenues at MSG Sports were impacted by ASC Topic 606 on a full-year basis, the impact of the new accounting standard was negligible. MSG Sports AOI in the fourth quarter decreased by $16.5 million to a loss of $5.7 million, which primarily reflects the decrease in revenues partially offset by lower direct operating expenses. The decrease in direct operating expenses was primarily due to lower net provisions for certain team personnel transactions as we recorded significant expense in the prior year quarter. In addition, we had lower team personnel compensation costs with the overall decrease in expenses, partially offset by higher event-related expenses from other live sporting events. Excluding the impact of the new accounting standard MSG Sports revenues for the fourth quarter would have been $145.7 million, an increase of 10%, and AOI would have been $30.4 million, an increase of $19.6 million, both as compared to the prior year quarter.
在MSG Sports; 9,000万美元的收入减少了32％，这主要是由于新的收入确认标准对我们的大部分收入线产生了重大影响。其他现场体育赛事的事件相关收入增加，部分抵消了这一点。虽然MSG Sports的第四季度收入受到ASC Topic 606全年的影响，但新会计准则的影响可以忽略不计。 MSG Sports AOI第四季度减少了1650万美元，亏损570万美元，这主要反映了收入减少部分被直接运营支出减少所抵消。直接经营费用减少的主要原因是某些团队人员交易的净拨备减少，因为我们在去年同期录得重大开支。此外，我们的团队人员薪酬成本较低，总体支出减少，部分被其他体育赛事的事件相关费用所抵消。剔除新会计准则的影响，第四季度MSG Sports的收入为1.457亿美元，增长10％，AOI为3040万美元，与去年同期相比增加了1,960万美元。
Corporate and other adjusted operating loss of $30.3 million increased $10.1 million year-over-year, primarily due to higher professional fees and higher employee compensation and related benefits. Looking ahead to fiscal 2020, we expect to see increased expenses in our corporate and other line. This reflects additional investment in personnel, content and technology to help drive our MSG Sphere initiatives.
Now turning to our balance sheet, as of June 30 total unrestricted cash and cash equivalents and short-term investments were approximately $1.2 billion. In addition, there have been no borrowings made under either our $150 million New York Rangers revolving credit facility or our $215 million New York Knicks credit facilities. In May, we refinanced TAO Group's debt to a 40 -- a new $40 million term loan and a new revolving credit facility, $15 million of which was drawn down as part of the refinancing. In addition, we put into place a $49 million subordinated loan with MSG as the lender to TAO Group. The original $110 million term loan was put in place at the time of our acquisition of a 62.5% equity interest in TAO Group. This refinancing provides for significantly lower annual interest expense and principal payments giving TAO Group enhanced flexibility to pursue its expansion plans.
With that I will now turn the call back over to Ari.
现在转向我们的资产负债表，截至6月30日，总的无限制现金和现金等价物以及短期投资约为12亿美元。此外，根据我们1.5亿美元的纽约游骑兵循环信贷额度或2.15亿美元的纽约尼克斯信贷额度，没有借款。 5月份，我们将TAO集团的债务再融资至40 - 新的4000万美元定期贷款和新的循环信贷额度，其中1500万美元作为再融资的一部分提取。此外，我们还向MSG作为TAO集团的贷方提供了4900万美元的次级贷款。在收购TAO集团62.5％的股权时，最初的1.1亿美元定期贷款已到位。此次再融资使年度利息支出和本金支付显着降低，使TAO集团有更大的灵活性来实施其扩张计划。
Thanks, Victoria. Christie, can we open up the call for questions.
[Operator Instructions] And your first question is from Bryan Goldberg of Bank of America Merrill Lynch.
Thanks. Thanks for the extra color on the Las Vegas Sphere opportunity. I was wondering, if you could dig a little into earnings power implications. Historically, it's been our observation that you've been able to generate double-digit cash on cash returns on capital projects like the transformation of the Garden and the Forum and I'm just wondering, given the size of the Las Vegas budget. Do you see a similar path towards double-digit returns on this level of spend or is there a different return profile we should have in mind? And then I have a quick follow-up.
谢谢。 感谢Las Vegas Sphere机会的额外色彩。 我想知道，如果你可以挖掘一下盈利能力的影响。 从历史上看，我们观察到你已经能够在资本项目上获得两位数的现金回报，如花园和论坛的转型，我只是想知道，考虑到拉斯维加斯预算的规模。 您是否看到在这个支出水平上达到两位数回报的类似路径，或者我们应该考虑不同的回报情况？ 然后我快速跟进。
Bryan, thanks for question. So let's -- I talked about it before, but I'll -- let me talk about it again in a little more detail. We believe this project, it's going to revolutionize live entertainment. We think that like any other venue it has the base levels of revenue, it has the ability to book concerts, it has the ability to book some sporting events just like any other venue, but then it has the ability to book co-host of new types of performances, those that we create through our traction business that we're going to run multiple times a day. And for the corporate events, it's going to be the host of anybody looking to launch a product, we're hopefully anybody looking at the launch a product and this will be the place to tell your story, and it will be a place where a sponsors need to reach these multi-million number of the fans coming to experience love story that's been told.
The attraction business is something that doesn't exist, we're going to be taking people places where they've never gone before both experiencing at visually as well as feeling it, smelling it and hearing it and we think that this is going to create a whole new hosts of revenue that no other venue or no other -- no one else has and we really think this is going to be a killer.
布莱恩，谢谢你的提问。所以，让我们 - 我之前谈过它，但我会 - 让我再详细谈谈它。我们相信这个项目，它将彻底改变现场娱乐。我们认为，与任何其他场所一样，它具有基本的收入水平，它有能力预订音乐会，它有能力像任何其他场地一样预订一些体育赛事，但它有能力预订共同主持人新型的表演，我们通过牵引业务创造的，我们将每天多次运行。对于企业活动，它将成为任何想要推出产品的人的主机，我们希望任何人都可以看到推出产品，这将是一个讲述你的故事的地方，它将成为一个赞助商需要接触这些数百万的粉丝来体验爱情故事。
吸引力的商业是不存在的东西，我们将把人们去过的地方从未去过，无论是在视觉上还是感受到它，闻到它并闻到它，我们认为这将是创造一个全新的收入来源，没有其他地方或其他地方 - 没有其他人拥有，我们真的认为这将是一个杀手。
Okay, thanks. And then I guess it's kind of like a housekeeping item, with respect to the incentive benchmark that you disclosed that you're negotiating with AECOM, when do you expect to land on a final benchmark figure, and is this an item you intend to disclose going forward.
好的谢谢。 然后我想这有点像一个家务项目，就你所披露的与AECOM谈判的激励基准而言，你何时希望获得最终基准数据，这是你打算透露的项目 往前走。
Brian, it's Victoria. So the incentive benchmark has a tremendous amount of detail and information, a lot of estimates and assumptions. So at this point, we're in the middle of the contractually mandated period over which we can negotiate this incentive benchmark. So at this point, we think it could run into the fall. It also could be extended further and, of course, we will see when that's resolved with the appropriate disclosure would be at that time.
布莱恩，这是维多利亚。 因此，激励基准具有大量的细节和信息，大量的估计和假设。 所以在这一点上，我们正处于合同规定期限的中间，我们可以通过谈判达成这一激励基准。 所以在这一点上，我们认为它可能会陷入衰退。 它也可以进一步扩展，当然，我们将看到何时通过适当的披露来解决这个问题。
All right, thank you very much.
Thank you. Your next question is coming from Brandon Ross.
Hi guys, thanks for taking the questions. First, there is a pretty wide gulf between your $1.2 billion Spheres estimate and a AECOM's $1.7 billion. Maybe you could tell us what -- what gives you the confidence that the project will come in closer to your projection than theirs -- are there is may be specific cost areas that their projections seem too high. And then I have a follow-up.
嗨，大家好，谢谢你提出问题。 首先，在12亿美元的Spheres估计和AECOM的17亿美元之间存在相当大的差距。 也许你可以告诉我们什么 - 什么让你相信项目将比他们更接近你的预测 - 是否有可能是他们的预测看起来太高的特定成本领域。 然后我有一个后续行动。
Yes, sure, Brandon. So as I had just -- in answering Bryan question is indicating, and there is a tremendous amount of detail and estimates and assumptions, but let me just take a step back. The $1.2 billion cost estimate was for budgeting and forecasting purposes and it was based on schematic designs at that time. The $1.7 billion is based on an estimate from the contractor for fee setting purposes and it's part of a cost plus contract, with the contractor of course is incentivized to propose a higher cost estimate as it gives them a more favorable benchmark, but as we stated we think the estimate is too high, and we are in this process of reviewing and challenging those assumptions. We also plan to value engineer aspects of the project to further reduce costs. So we do believe as a result of both of these efforts that we'll be successful in achieving significant cost reductions. As an aside, there are a number of other benefits to a cost plus contract for example, we pay the cost of the actual materials and labor plus a negotiated percentage fee, which means we don't pay an estimated or fixed amount that typically includes a substantial cushion for the contractor, we're also able to negotiate a more -- play a more vigilant role in the negotiation process, which we believe will maximize the quality of the work and help manage the projects costs. Now this includes having full transparency into the selection of the negotiation with all of the labor and materials utilized by the subcontractors, so we -- we think this is going to be a very detailed process and that's why we are -- we believe there'll be some significant savings.
是的，当然，布兰登。正如我刚才所做的那样 - 在回答布莱恩的问题时指出，并且有大量的细节，估计和假设，但让我退后一步。 12亿美元的成本估算用于预算和预测目的，它基于当时的原理图设计。 17亿美元是根据承包商的费用设定估算而来的，它是成本加合同的一部分，承包商当然会被激励提出更高的成本估算，因为它给了他们更有利的基准，但正如我们所说的那样我们认为估计过高，我们正处于审查和挑战这些假设的过程中。我们还计划重视项目的工程方面，以进一步降低成本。因此，我们相信，通过这两项努力，我们将成功实现显着的成本削减。另外，成本加合同还有许多其他好处，例如，我们支付实际材料和人工的成本加上协商的百分比费用，这意味着我们不支付通常包括的估计或固定金额对承包商来说，我们还可以进行更多的协商 - 在谈判过程中发挥更加警惕的作用，我们相信这将最大限度地提高工作质量并帮助管理项目成本。现在这包括完全透明地选择与分包商使用的所有劳动力和材料的谈判，所以我们 - 我们认为这将是一个非常详细的过程，这就是为什么我们 - 我们相信那里'这将是一些重大的节省。
Great. And then just earlier in the call, you said that -- the time -- I think you said the timing of the spend would be pushed to calendar Q1 of '20, is there a specific reason or any more color that you could give for that?
非常好。 然后就在电话会议的早些时候，你说 - 时间 - 我想你说花费的时间会被推到20年的第一季度，是否有一个特定的原因或任何你可以给的颜色 那？
So look -- we acknowledge, it's taken a little longer than we would have liked. We're fully committed to moving it forward, and it's just a process and we're working our way through it, but don't read into anything further than we're working our way through this process and where will -- we are anticipating have it done in first quarter.
所以看 - 我们承认，它花了比我们想要的更长的时间。 我们完全致力于推进它，这只是一个过程，我们正在努力通过它，但不要读到比我们在这个过程中工作的更多的东西，我们在哪里 期待在第一季度完成。
Great, thanks guys.
Thank you. Your next question is from David Karnovsky of JPMorgan.
谢谢。 您的下一个问题来自摩根大通的David Karnovsky。
Hi, good morning. Just following up on the Spheres, the numbers you've given of $1.2 million to $1.7 million, can we assume that range is also appropriate to apply to the London Sphere and assuming that is the case, can you just update us on the overall financing for the projects? Thanks.
早上好。 刚刚关注球体，您给出的数字为120万美元到170万美元，我们可以假设该范围也适用于伦敦球体并假设情况如此，您能否就整体融资情况向我们提供最新信息 对于这些项目？ 谢谢。
So, on the London Sphere with -- it will be largely similar to the Vegas Sphere but not identical, we are very focused as we talked about -- that have the internal or be replicable. So that we can share content across venues and leverage -- leverage that part of the business, so that we can drive utilization of both venues, but we're also very early in our design. It's a smaller piece of land and there will be things that are not identical and so we don't much -- we don't have a lot further in terms of cost estimates for London at this time.
因此，在伦敦球体上 - 它将大致类似于拉斯维加斯球体但不完全相同，我们在谈论时非常专注 - 具有内部或可复制。 因此，我们可以跨场地分享内容和利用 - 利用业务的这一部分，以便我们可以提高两个场地的利用率，但我们也很早就开始设计。 这是一块较小的土地，并且会有不同的东西，因此我们并不多 - 我们目前在伦敦的成本估算方面没有太多进一步的优势。
Yes, and David, on some of the second part of your question, the entertainment company is going to start with over $1 billion of cash on hand which we have just about $1 billion on our balance sheet now, plus another $100 million or so in British pounds. So with the proposed spin-off, we also have the approximate one-third equity interest in the sports company. So we believe that's going to provide the company with significant financial flexibility to pursue these growth plans and as we said before, we will always explore additional ways to further strengthen our financial flexibility, if we believe that makes sense for the company.
是的，大卫，在你的问题的第二部分，娱乐公司将开始手头有超过10亿美元的现金，我们现在在资产负债表上只有10亿美元，另外还有1亿美元左右。 英镑。 因此，在拟议的分拆中，我们还拥有该体育公司约三分之一的股权。 因此，我们相信这将为公司提供显着的财务灵活性以实现这些增长计划，正如我们之前所说，如果我们认为对公司有意义，我们将始终探索进一步加强财务灵活性的其他方法。
Okay. And then just on TAO you called out higher revenues versus I think flat last quarter. Can you just break down that performance, a little bit, how much of this is driven by new venues relative to your existing locations. And then I think last quarter you had mentioned working with TAO management to operate the business more efficiently. Can you just update where you are in that process. Thanks.
好的。 然后就在TAO上你提出了更高的收入而不是我上个季度的平均水平。 您能否稍微分解一下这个性能，有多少是由相对于您现有位置的新场地驱动的。 然后我想上个季度你曾提到与TAO管理层合作以更有效地运营业务。 您能否只是更新您在该过程中的位置。 谢谢。
Sure. Yes, so we're pleased. I mean, the TAO group returned to overall growth in the fourth quarter. We don't break out the profitability of the various businesses, but I can tell you that TAO generated a revenue increase of $4.6 million on a year-over-year basis in the fourth quarter, and just as a reminder, we report TAO Group's results on a three month lag. Yes, but when we think about the different mix on an overall basis, a lot of the revenue would drive on the $4.6 million was due to the opening of the TAO Chicago in September. So we've been really pleased with that -- with that venue, which has been somewhat offset by the impact of closing one venue after a 15-year run and another venue in New York area that was underperforming. So, a bit of a mix there, but I think overall, we have been working closely with the TAO management group, and I think that they really focused in its --certainly starting to show in the results, which are certainly trending better than they were earlier this fiscal year.
当然。是的，所以我们很高兴。我的意思是，TAO集团在第四季度恢复了整体增长。我们没有突破各种业务的盈利能力，但我可以告诉你，TAO在第四季度的收入同比增加了460万美元，并且提醒一下，我们报告TAO集团的结果三个月滞后。是的，但是当我们从整体上考虑不同的组合时，由于9月份TAO芝加哥的开业，很多收入将推动460万美元。所以我们对此感到非常满意 - 在那个场地，这已经被一个15年后关闭一个场地的影响和纽约地区表现不佳的另一个场地的影响所抵消。那么，有点混合，但我认为总的来说，我们一直与TAO管理团队密切合作，我认为他们真的专注于它 - 当然开始在结果中显示，这肯定比趋势更好他们在本财政年度早些时候。
Thank you. Your next question is from David Miller of Imperial Capital.
谢谢。 你的下一个问题来自Imperial Capital的David Miller。
Couple of questions. Andy, once the spin happens for Q1 of next year, what are your personal plans in terms of which side you expect to lead? And then I have a couple of follow-ups. Thanks.
几个问题。 Andy，一旦明年第一季度出现这种情况，你的个人计划是什么？ 然后我有几个跟进。 谢谢。
We're still working through management structures of both entities. Jim being our Chairman and CEO, and we're working through the rest right now.
Okay. And then Victoria, I'm just still trying to parse out whether the miss on the sports line is due to Topic 606 or just lower suite revenue for the teams, the narrative, would you guys for a long time had been that just with the loyalty of the fan base, the suites we're always sold out regardless of key performance, but it feels like that's shifted a bit. I'm wondering if you agree with that or if this -- if this is all due to Topic 606. Thanks.
好的。 然后维多利亚，我还在试图解析体育界的错过是由于主题606还是团队的低收入，这个叙述，你们很长一段时间以来都是 对于粉丝群的忠诚度，无论关键性能如何，套房我们总是售罄，但感觉有点偏移了。 我想知道你是否同意这个或如果这个 - 如果这完全归因于主题606.谢谢。
Sure. So, David, I mean Topic 606 has just been a theme throughout this entire year, unfortunate on a quarter-on-quarter base. It's just created so much noise, so and we're fortunate that this will be the last quarter of that noise but I will say on the -- if you exclude 606 and we look at the suites in Q4, they were basically flat and you obviously think some of the product was impacted by team performance a little bit, but on a full-year basis we did it mid-single-digit increases in our total suite revenue across the company. So I think we continue to be pleased with that, but obviously we look forward to an improving teams in fiscal '20.
当然。 所以，David，我的意思是Topic 606在这整年都是一个主题，不幸的是季度基数。 这只是创造了如此多的噪音，所以我们很幸运，这将是噪音的最后四分之一，但我会说 - 如果你排除606，我们看看第四季的套房，他们基本上是平的，你 很明显，有些产品会受到团队绩效的影响，但在全年的基础上，我们在整个公司的总套件收入中实现了单位数增长。 所以我认为我们仍然对此表示满意，但显然我们期待在20财年改善团队。
Thank you. Your next question is from -- I'm sorry, go ahead.
谢谢。 你的下一个问题来自 - 对不起，请继续。
Okay, Christie, we will take the next caller.
Your next question is from David Joyce of Evercore ISI.
您的下一个问题来自Evercore ISI的David Joyce。
Thank you. A couple of questions related to the Spheres, can you help us think about the phasing of the construction costs for Las Vegas and assuming London's cost is going to be in the same range, where are you on the process of getting the final approvals and really coming off with the budget there. Thank you.
谢谢。 有关Spheres的几个问题，你能否帮助我们考虑拉斯维加斯的建筑成本分阶段，并假设伦敦的成本将在同一范围内，你在哪里获得最终的批准和真正的 那里有预算。 谢谢。
Sure. Let me take the first part of that question, David. So, as we disclosed in the earnings release inception to-date we spent $109 million on this core construction costs, and we expect to see those cost ramping-up and our cash outflow ramping over the next few years until the opening in calendar 2021.
当然。 让我谈谈那个问题的第一部分，大卫。 因此，正如我们在迄今为止的盈利发布中所披露的那样，我们在这项核心建设成本上花费了1.09亿美元，我们预计这些成本将在未来几年内逐渐增加，现金流出将在2021年的日历开盘前增加。
In terms of timing with London. So, we are in the middle of our planning application process, we've submitted it in March. We expect to hear the termination by the end of calendar 2019, but that could continue and become subject to further discussions with the planning authority; and once we assume, we will receive planning permission, we will then get further into design and eventually construction as quickly as we can, but there is clearly some work to be done.
在与伦敦的时间安排方面。 因此，我们正处于规划申请流程的中间，我们已在3月份提交了申请流程。 我们希望在2019年年底之前听到终止，但这可能会继续，并且需要与规划部门进一步讨论; 一旦我们假设，我们将获得规划许可，然后我们将尽快进入设计并最终建设，但显然还有一些工作要做。
Okay. And on the funding options for the Spheres, do you have any -- more tangible sense of the structure of monetizing that -- the third of the stake in the teams?
好的。 对于Spheres的资金选择，您是否有任何 - 更明确的货币化结构感 - 团队中的第三个股份？
So, it's just -- we're not -- we have nothing more to report at this time on that. Well, I'm sorry, I can't give you more, but...
所以，它只是 - 我们不是 - 我们此时没有更多的报道。 好吧，对不起，我不能给你更多，但......
All right, thank you.
Thank you. Your next question is…
We'll take one last caller. Thanks.
Your final question is from Brett Harriss of G-Research.
Hi, thanks for taking the question. Just -- first a quick one, any update on the filing of the Form-10 for the separation. I guess, what are the gaining factors for that document at this point. And then just secondly, anything more you can see in the timing on the finalization of the construction cost for the Vegas Sphere, I guess, given the project already started, when do you expect to have a final cost estimate. Thank you.
嗨，谢谢你提出这个问题。 只是 - 首先是快速的，关于提交表格10进行分离的任何更新。 我想，此时该文件的获取因素是什么。 然后再说一下，你可以在拉斯维加斯球体建筑成本最终确定的时间看到更多的东西，我想，鉴于该项目已经开始，你预计什么时候会有最终的成本估算。 谢谢。
Sure, Brett. We continue to work on the Form-10 and the various appropriate SEC filings as we move towards the proposed spin-off. I mean, now with our filing of our 10-K for The Madison Square Garden Company later today, we would expect to be doing our confidential filing in the next coming few months but in accordance with our timeline. And then as far as the overall Sphere costs, I don't think there is much to add beyond what I've previously addressed in the call.
当然，布雷特。 随着我们向拟议的分拆工作迈进，我们将继续致力于表格10和各种适当的美国证券交易委员会备案。 我的意思是，现在我们今天晚些时候向麦迪逊广场花园公司提交了10-K，我们希望在未来几个月内按照我们的时间表进行保密备案。 然后就整个Sphere的成本而言，我认为除了我之前在电话会议中提到的内容之外，还有很多东西需要补充。
Okay, thank you.
We have no further questions at this time, I will now turn the call over to Ari Danes for any additional or closing remarks.
Thank you all for joining us. We look forward to speaking with you on our next earnings call. Have a good day.
谢谢大家加入我们。 我们期待在下次财报电话会议上与您交谈。 祝你有美好的一天。
Thank you. This does conclude today's conference call. You may now disconnect.
谢谢。 这确实结束了今天的电话会议。 您现在可以断开连接。
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