So it is a little early here. But while early, we’re already seeing encouraging signs for special events compared to last year, strong interest from corporates, upfronts, award shows. And lastly, for marquee events, we’re expecting another robust year for college sports and boxing. We recently announced the annual Jimmy V Classic at The Garden, which takes place in December. So overall, we’re feeling really good about our bookings calendar for fiscal ’24 as we sit here today.
Ben Swinburne: That’s very helpful. I probably should have started by taking you for the guidance and the investor deck, it’s helpful disclosure. My follow-up is really on the per cap strength, which for anyone who’s been in The Garden has probably personally experienced the merch stores. We have seen some softness in places like theme parks and other areas of consumer spending that kind of surged out of the pandemic and then have kind of normalize and even gone backwards a little bit. I know you’re not seeing it, but I’d just love, given your experience in the business, if you could talk about whether you’re looking out for that as you move through this year and the comps get tougher? Or do you think there’s something unique about what consumers are experiencing in your venues that suggest there’s sort of an underlying secular tailwind to the consumer spending growth on F&B and merch and things like that? Thank you.
Dave Byrnes: Got it. First off, we’re not seeing any slowdown. The trends have been really strong for us and continue to do that exactly that. But we continue to feel really good about demand in ’24, as you’ve mentioned, that’s reflected in our guidance. So, for us specifically, we’re not seeing any signs of consumer slowdown. If you just look at July, just for the first month of this fiscal compared to July of last year, we saw increases in the number of tickets sold to our concerts and higher F&B and merch per cap spending. Trying to think what else we could add — including recent data, there’s been strong number of sellouts. Some of our recent sellouts in June and July have been very strong: Dave Chapelle, The Eagles, The 1975, Matt Rife, John Oliver and Seth Meyers amongst others.
And we mentioned the Spectacular is up 40% compared to last year. So very generally, the early indicators for us continue to be really positive for ’24, and we’re not really seeing any slowdown in terms of consumer demand or spend.
Ben Swinburne: Great. Thank you so much.
Dave Byrnes: You’re welcome, Ben.
Operator: Your next question comes from the line of Devin Brisco from Wolfe Research. Your line is open.
Devin Brisco: Thanks. I have a couple of questions on margins. Inflation is slowing and some of your peers have talked about cost per fan trending down year-over-year at indoor music venues. I’m curious if you’re seeing a similar improvement in expense trends. And if you could help us think through the puts and takes to margins in 2024? And related to that, what kind of incremental margins should we be thinking about? And is there a margin level that you’re targeting longer term?
Dave Byrnes: Sure, Devin. Over the long term, we do feel AOI margin improvements as a real opportunity for us. This reflects a number of important components. First, we expect strong multiyear growth across key revenue categories for us, bookings, the Christmas Spectacular, suites, marketing partnerships, each of these carry attractive contribution margins for us. On your question on direct expenses, we did see some pressure coming out of the pandemic in venue labor and F&B cost of goods, those have largely subsided. And we’re doing everything we can. We’ve implemented recent technologies to help reduce our operating costs while still providing an improved guest experience, digital ticket scanners, self-checkout terminals, things along those lines.
And on the SG&A side, we feel our overhead that we currently have in place is sufficient to support the continued growth in our business. So this creates the opportunity for operating leverage and margin expansion for us over time. If you look at our guidance for ’24, it implies robust underneath growth in revenue — underlying growth in revenues and AOI for the year, but no significant change in margin per se. There are some important facts to consider there. First, we have two significant non-recurring events to grow over in ’24 versus ’23. We had the NCA Regionals in ’23 and the League of Legends World Championship. Both of those were very profitable events for us. And in addition, our ’24 guidance includes the impact of our new corporate office lease, which runs through 2046 and we’re required to straight line the rent expense over the term of the agreement as compared to the actual cash outlay, which will lag the rent expense for some time.
It’s a notable year-over-year increase in rent expense. So if you take these items together, it’s roughly $20 million of headwind in AOI for us in ’24. And then normalizing for these items, our underlying AOI growth for fiscal ’24 is even more robust and really reflects the inherent operating leverage that we have in our model.
