Madison Square Garden Entertainment Corp. 10-Q

Item 1. Financial Statements MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONDENSED COMBINED BALANCE SHEETS (Unaudited) (in thousands) March 31, June 30, 2023 2022 ASSETS Current Assets: Cash, cash equivalents and restricted cash $ 122,981 $ 62,573 Accounts receivable, net 130,642 102,501 Related party receivables, current 80,463 96,938 Prepaid expenses and other current assets 74,289 79,441 Total current assets 408,375 341,453 Non-Current Assets: Property and equipment, net 637,644 696,079 Right-of-use lease assets 248,366 271,154 Goodwill 69,041 69,041 Intangible assets, net 63,801 65,439 Other non-current assets 118,506 83,535 Total assets $ 1,545,733 $ 1,526,701 LIABILITIES AND DIVISIONAL EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued and other current liabilities $ 199,796 $ 221,961 Related party payables, current 42,620 72,683 Current portion of long-term debt 16,250 8,762 Operating lease liabilities, current 38,298 39,006 Deferred revenue 258,132 202,678 Total current liabilities 555,096 545,090 Non-Current Liabilities: Long-term debt, net of deferred financing costs 643,311 654,912 Operating lease liabilities, non-current 229,501 254,114 Deferred tax liabilities, net 23,377 23,253 Other non-current liabilities 50,945 50,921 Total liabilities 1,502,230 1,528,290 Commitments and contingencies (see Note 9.) MSG Entertainment Divisional Equity (Deficit): Sphere Entertainment investment 77,365 33,265 Accumulated other comprehensive loss ( 33,862 ) ( 34,740 ) Total MSG Entertainment divisional equity (deficit) 43,503 ( 1,475 ) Nonredeemable noncontrolling interest — ( 114 ) Total liabilities and divisional equity (deficit) $ 1,545,733 $ 1,526,701 See accompanying notes to the unaudited condensed combined financial statements. 2 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONDENSED COMBINED STATEMENTS OF OPERATIONS (Unaudited) (in thousands) Three Months Ended March 31, Nine Months Ended March 31, 2023 2022 2023 2022 Revenues (a) $ 201,229 $ 193,988 $ 703,561 $ 475,150 Direct operating expenses (a) ( 115,133 ) ( 109,962 ) ( 397,398 ) ( 292,198 ) Selling, general and administrative expenses (a) ( 44,122 ) ( 47,027 ) ( 127,537 ) ( 128,725 ) Depreciation and amortization ( 14,798 ) ( 16,007 ) ( 46,369 ) ( 49,166 ) (Loss) gains, net on dispositions ( 51 ) — 4,361 — Restructuring charges ( 2,461 ) ( 5,171 ) ( 9,820 ) ( 5,171 ) Operating income (loss) 24,664 15,821 126,798 ( 110 ) Interest income (a) 2,482 1,541 5,804 5,145 Interest expense ( 13,423 ) ( 13,009 ) ( 38,055 ) ( 39,804 ) Other income (expense), net 8,070 ( 8,495 ) 6,784 ( 27,742 ) Income (loss) from operations before income taxes 21,793 ( 4,142 ) 101,331 ( 62,511 ) Income tax expense ( 73 ) — ( 804 ) — Net income (loss) 21,720 ( 4,142 ) 100,527 ( 62,511 ) Less: Net loss attributable to nonredeemable noncontrolling interest — ( 212 ) ( 553 ) ( 579 ) Net income (loss) attributable to MSG Entertainment’s stockholders $ 21,720 $ ( 3,930 ) $ 101,080 $ ( 61,932 ) Basic and diluted earnings (loss) per common share attributable to the MSG Entertainment’s stockholders $ 0.42 $ ( 0.08 ) $ 1.95 $ ( 1.20 ) _________________ (a) See Note 15. Related Party Transactions, for further information on related party arrangements. See accompanying notes to the unaudited condensed combined financial statements. 3 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONDENSED COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (in thousands) Three Months Ended Nine Months Ended March 31, March 31, 2023 2022 2023 2022 Net income (loss) $ 21,720 $ ( 4,142 ) $ 100,527 $ ( 62,511 ) Other comprehensive income (loss), before income taxes: Amortization of net actuarial loss included in net periodic benefit cost 323 371 1,063 1,114 Other comprehensive income, before income taxes 323 371 1,063 1,114 Income tax expense ( 56 ) ( 65 ) ( 185 ) ( 196 ) Other comprehensive income, net of income taxes 267 306 878 918 Comprehensive income (loss) 21,987 ( 3,836 ) 101,405 ( 61,593 ) Less: Comprehensive loss attributable to nonredeemable noncontrolling interest — ( 212 ) ( 553 ) ( 579 ) Comprehensive income (loss) attributable to MSG Entertainment $ 21,987 $ ( 3,624 ) $ 101,958 $ ( 61,014 ) See accompanying notes to the unaudited condensed combined financial statements. 4 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONDENSED COMBINED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended March 31, 2023 2022 OPERATING ACTIVITIES: Net income (loss) $ 100,527 $ ( 62,511 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 46,369 49,166 Share-based compensation expense 24,273 31,480 Amortization of deferred financing costs 2,409 5,088 Related party paid in kind interest ( 2,939 ) ( 3,111 ) Net unrealized (gain) loss on equity investments with readily determinable fair value ( 4,307 ) 28,303 Amortization of right-of-use assets 9,975 8,061 Gains, net on dispositions ( 4,361 ) — Other non-cash adjustments 83 — Change in assets and liabilities: Accounts receivable, net ( 27,890 ) ( 74,943 ) Related party receivables, net of payables ( 5,292 ) 43,976 Prepaid expenses and other current and non-current assets ( 29,938 ) ( 46,450 ) Accounts payable, accrued and other current and non-current liabilities ( 20,812 ) 50,033 Deferred revenue 56,531 38,375 Operating lease right-of-use assets and lease liabilities ( 12,287 ) ( 7,129 ) Net cash provided by operating activities $ 132,341 $ 60,338 INVESTING ACTIVITIES: Capital expenditures ( 12,187 ) ( 10,725 ) Proceeds from dispositions, net 27,904 — Proceeds (purchases) from investments 4,244 ( 250 ) Proceeds from loan receivable — 4,695 Loan to related parties ( 6,700 ) ( 6,780 ) Net cash provided by (used in) investing activities $ 13,261 $ ( 13,060 ) FINANCING ACTIVITIES : Proceeds from issuance of debt 168 — Principal repayments on long-term debt ( 6,063 ) ( 4,875 ) Net transfers to Sphere Entertainment and Sphere Entertainment’s subsidiaries ( 79,299 ) ( 145,160 ) Net cash used in financing activities $ ( 85,194 ) $ ( 150,035 ) Net increase (decrease) in cash, cash equivalents and restricted cash 60,408 ( 102,757 ) Cash, cash equivalents and restricted cash, beginning of period 62,573 318,069 Cash, cash equivalents and restricted cash, end of period $ 122,981 $ 215,312 Non-cash investing and financing activities: Capital expenditures incurred but not yet paid $ 504 $ 228 Non-cash reduction of loan receivable from related party $ 5,350 $ 4,019 See accompanying notes to the unaudited condensed combined financial statements. 5 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONDENSED COMBINED STATEMENTS OF DIVISIONAL EQUITY (DEFICIT) (Unaudited) (in thousands) Sphere Entertainment Investment Accumulated Other Comprehensive Income (Loss) Total MSG Entertainment Divisional Equity (Deficit) Nonredeemable Noncontrolling Interest Total Divisional Equity (Deficit) Balance as of December 31, 2022 $ 133,018 $ ( 34,129 ) $ 98,889 $ — $ 98,889 Net income 21,720 — 21,720 — 21,720 Other comprehensive income — 267 267 — 267 Comprehensive income — — 21,987 — 21,987 Net decrease in Sphere Entertainment Investment ( 77,373 ) — ( 77,373 ) — ( 77,373 ) Balance as of March 31, 2023 $ 77,365 $ ( 33,862 ) $ 43,503 $ — $ 43,503 Balance as of December 31, 2021 $ 358,035 $ ( 32,986 ) $ 325,049 $ 2,383 $ 327,432 Net loss ( 3,930 ) — ( 3,930 ) ( 212 ) ( 4,142 ) Other comprehensive income — 306 306 — 306 Comprehensive loss — — ( 3,624 ) ( 212 ) ( 3,836 ) Net decrease in Sphere Entertainment Investment ( 3,091 ) — ( 3,091 ) — ( 3,091 ) Balance as of March 31, 2022 $ 351,014 $ ( 32,680 ) $ 318,334 $ 2,171 $ 320,505 Balance as of June 30, 2022 $ 33,265 $ ( 34,740 ) $ ( 1,475 ) $ ( 114 ) $ ( 1,589 ) Net income (loss) 101,080 — 101,080 ( 553 ) 100,527 Other comprehensive income — 878 878 — 878 BCE disposition — — — 667 667 Comprehensive income — — 101,958 114 102,072 Net decrease in Sphere Entertainment Investment ( 56,980 ) — ( 56,980 ) — ( 56,980 ) Balance as of March 31, 2023 $ 77,365 $ ( 33,862 ) $ 43,503 $ — $ 43,503 Balance as of June 30, 2021 $ 529,500 $ ( 33,598 ) $ 495,902 $ 2,750 $ 498,652 Net loss ( 61,932 ) — ( 61,932 ) ( 579 ) ( 62,511 ) Other comprehensive income — 918 918 — 918 Comprehensive loss — — ( 61,014 ) ( 579 ) ( 61,593 ) Net decrease in Sphere Entertainment Investment ( 116,554 ) — ( 116,554 ) — ( 116,554 ) Balance as of March 31, 2022 $ 351,014 $ ( 32,680 ) $ 318,334 $ 2,171 $ 320,505 See accompanying notes to the unaudited condensed combined financial statements. 6 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) All amounts included in the following Notes to Condensed Combined Financial Statements (unaudited) are presented in thousands, except as otherwise noted. Note 1. Description of Business and Basis of Presentation Description of Business The Company is a live entertainment company comprised of iconic venues and marquee entertainment content. Utilizing the Company’s powerful brands and live entertainment expertise, the Company delivers unique experiences that set the standard for excellence and innovation while forging deep connections with diverse and passionate audiences. The Company is comprised of one reportable segment. As of March 31, 2023, there have been no changes to the reportable segment structure of the Company. See Note 1. to the Company’s audited combined financial statements and notes thereto as of June 30, 2022 and 2021 and for the three years ended June 30, 2022, 2021 and 2020 (“Audited Combined Annual Financial Statements”) included in the Company’s Information Statement, dated April 3, 2023 (the “Information Statement”), filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on April 4, 2023 for additional information regarding the details of the Company’s business. Spin-off Transaction On April 20, 2023 (the “MSGE Spinco Distribution Date”), Sphere Entertainment Co., formerly Madison Square Garden Entertainment Corp. (“Sphere Entertainment”), distributed approximately 67 % of the outstanding common stock of Madison Square Garden Entertainment Corp., formerly MSGE Spinco, Inc. (“MSG Entertainment” or the “Company”), to its stockholders (the “MSGE Spinco Distribution”), with Sphere Entertainment retaining approximately 33 % of the outstanding common stock of MSG Entertainment (in the form of Class A common stock) (the “MSGE Retained Interest”) immediately following the MSGE Spinco Distribution. The Company owns the traditional live entertainment business previously owned and operated by Sphere Entertainment through its Entertainment business segment, excluding Sphere (which was retained by Sphere Entertainment after the MSGE Spinco Distribution Date). In the MSGE Spinco Distribution, stockholders of Sphere Entertainment received (a) one share of MSG Entertainment’s Class A common stock, par value $ 0.01 per share, for every share of Sphere Entertainment’s Class A common stock, par value $ 0.01 per share, held of record as of the close of business, New York City time, on April 14, 2023 (the “Record Date”), and (b) one share of MSG Entertainment’s Class B common stock, par value $ 0.01 per share, for every share of Sphere Entertainment’s Class B common stock, par value $ 0.01 per share, held of record as of the close of business, New York City time, on the Record Date. The Company’s combined statements of operations for the three and nine months ended March 31, 2023 and 2022 were prepared on a stand-alone basis derived from the consolidated financial statements and accounting records of Sphere Entertainment, and are presented as carve-out financial statements, because the Company was not a standalone public company prior to the MSGE Spinco Distribution. Advertising Sales Representation Agreement Termination The advertising sales representation agreement (the “Networks Advertising Sales Representation Agreement”) between the Company and Sphere Entertainment’s subsidiary, MSGN Holdings, L.P. (“MSG Networks”), pursuant to which the Company had the exclusive right and obligation to sell MSG Networks advertising availabilities for a commission, was terminated effective as of December 31, 2022. The Company recognized $ 0 and $ 8,802 of revenue from the Networks Advertising Sales Representation Agreement for the three and nine months ended March 31, 2023, respectively, and $ 9,621 and $ 17,015 of revenue for the three and nine months ended March 31, 2022, respectively. The termination of the Networks Advertising Sales Representation Agreement has impacted the operating results of the Company for the three and nine months end March 31, 2023 and will impact the operating results of the Company on a go forward basis. As a result, after December 31, 2022, the Company no longer recognizes advertising sales commission revenue or the employee costs related to the MSG Networks advertising sales agency. Basis of Presentation The Company reports on a fiscal year basis ending on June 30 th (“Fiscal Year”). In these unaudited condensed combined interim financial statements, the years ended on June 30, 2023 and 2022 are referred to as “Fiscal Year 2023” and “Fiscal Year 2022,” respectively. Certain Fiscal Year 2022 amounts have been reclassified to conform to the Fiscal Year 2023 presentation. The accompanying interim condensed combined financial statements of the Company (the “condensed combined financial statements”) were prepared on a stand-alone basis derived from the consolidated financial statements and accounting records of 7 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) Sphere Entertainment. These financial statements reflect the combined historical results of operations, financial position and cash flows of the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, the instructions of Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (“SEC”), and SEC Staff Accounting Bulletin (SAB) Topic 1-B, Allocation of Expenses and Related Disclosure in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity , and should be read in conjunction with the Company’s Audited Combined Annual Financial Statements. References to U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) in these footnotes are to the FASB Accounting Standards Codification, also referred to as “ASC.” Prior to the MSGE Spinco Distribution, separate financial statements have not been prepared for the Company and it has not operated as a stand-alone business from Sphere Entertainment. The condensed combined financial statements include certain assets and liabilities that have historically been held by Sphere Entertainment or by other Sphere Entertainment subsidiaries but are specifically identifiable or otherwise attributable to the Company. The condensed combined financial statements are presented as if the Company’s businesses had been combined for all periods presented. The assets and liabilities in the condensed combined financial statements have been reflected on a historical cost basis, as immediately prior to the MSGE Spinco Distribution, all of the assets and liabilities presented were wholly owned by Sphere Entertainment and were transferred to the Company at a carry-over basis. The condensed combined statements of operations include allocations for certain support functions that are provided on a centralized basis and not historically recorded at the business unit level by Sphere Entertainment, such as expenses related to executive management, finance, legal, human resources, government affairs, and information technology, among others. As part of the MSGE Spinco Distribution, certain corporate and operational support functions were transferred to the Company and therefore, charges were reflected in order to properly burden all business units comprising Sphere Entertainment’s historical operations. These expenses have been allocated to Sphere Entertainment on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis of combined assets, headcount or other measures of the Company or Sphere Entertainment, which are recorded as a reduction of either direct operating expenses or selling, general and administrative expenses. Management believes the assumptions underlying the condensed combined financial statements, including the assumptions regarding allocating general corporate expenses, are reasonable. Nevertheless, the condensed combined financial statements may not include all of the actual expenses that would have been incurred by the Company and may not reflect its combined results of operations, financial position and cash flows had it been a stand-alone company during the periods presented. Actual costs that would have been incurred if the Company had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. The Company is unable to quantify the amounts that it would have recorded during the historical periods on a stand-alone basis as it is not practicable to do so. See Note 15. Related Party Transactions for more information regarding allocations of certain costs from the Company to Sphere Entertainment. Sphere Entertainment uses a centralized approach to cash management and financing of operations. Cash is managed centrally with net earnings reinvested and working capital requirements met from existing liquid funds. The Company’s cash in excess of minimum liquidity requirements under the credit facilities was available for use and was regularly “swept” historically. Cash and cash equivalents were attributed to the Company for each of the periods presented, as such cash was held in accounts legally owned by the Company. See Note 10. Credit Facilities for more information regarding the Company’s debt facilities. Transfers of cash both to and from Sphere Entertainment are included as components of Sphere Entertainment investment on the condensed combined statements of divisional equity (deficit). Sphere Entertainment’s net investment in the Company has been presented as a component of divisional equity (deficit) in the condensed combined financial statements. Distributions made by Sphere Entertainment to the Company or to Sphere Entertainment from the Company are recorded as transfers to and from Sphere Entertainment, and the net amount is presented on the condensed combined statements of cash flows as “Net transfers to Sphere Entertainment and Sphere Entertainment’s subsidiaries.” In the opinion of the Company, the accompanying financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2023 and its results of operations for the three and nine months ended March 31, 2023, and 2022, and cash flows for the nine months ended March 31, 2023 and 2022. The condensed combined balance sheet as of Fiscal Year 2022 was derived from the Audited Combined Annual 8 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) Financial Statements but does not contain all of the footnote disclosures from the Audited Combined Annual Financial Statements. The results of operations for the periods presented are not necessarily indicative of the results that might be expected for future interim periods or for the full year. As a result of the production of the Christmas Spectacular Starring the Radio City Rockettes (the “ Christmas Spectacular ”), and arena license fees in connection with the use of Madison Square Garden (“The Garden”) by the New York Knicks (the “Knicks”) of the National Basketball Association (the “NBA”) and the New York Rangers (the “Rangers”) of the National Hockey League (the “NHL”), the Company generally earns a disproportionate share of its annual revenues in the second and third quarters of its fiscal year. Impact of the COVID-19 Pandemic The Company’s operations and operating results were not materially impacted by the COVID-19 pandemic during the three and nine months ended March 31, 2023, as compared to the prior year period, which was impacted by fewer ticketed events at our venues in the first half of the fiscal year due to the lead-time required to book touring acts and artists and the postponement or cancellation of select bookings at our venues (including the partial cancellation of the 2021 production of the Christmas Spectacular ) during the second and third quarters of the fiscal year. See Note 1. Description of Business and Basis of Presentation in the Company’s Audited Combined Annual Financial Statements for additional information regarding the impact of the COVID-19 pandemic on the Company’s business. It is unclear to what extent COVID-19 concerns, including new variants, could result in new government- or league-mandated capacity, other restrictions, vaccination/mask requirements, or impact the use of and/or demand for our venues, demand for our sponsorship and advertising assets, deter our employees and vendors from working at our venues (which may lead to difficulties in staffing) or otherwise materially impact our operations. Note 2. Summary of Significant Accounting Policies A. Principles of Combination All significant intracompany transactions and balances within the Company’s condensed combined businesses have been eliminated. Certain historical intercompany transactions between Sphere Entertainment and the Company have been included as components of Sphere Entertainment investment in the condensed combined financial statements, as they are considered effectively settled upon effectiveness of the MSGE Spinco Distribution and were not historically settled in cash. Certain other historical intercompany transactions between Sphere Entertainment and the Company have been classified as related party, rather than intercompany, in the condensed combined financial statements as they were historically settled in cash. Expenses related to corporate allocations from the Company to Sphere Entertainment prior to the MSGE Spinco Distribution, are considered to be effectively settled in the condensed combined financial statements at the time the transaction is recorded, with the offset recorded against Sphere Entertainment investment. See Note 15. Related Party Transactions, for further information on related party arrangements. The Company disposed of its controlling interest in Boston Calling Events, LLC (“BCE”) on December 2, 2022 and these condensed combined financial statements reflect the results of operations of BCE until its disposition. See Note 3. Dispositions, for details regarding the disposal. B. Use of Estimates The preparation of the accompanying condensed combined financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the provision for credit losses, goodwill, intangible assets, other long-lived assets, deferred tax assets, pension and other postretirement benefit obligations and the related net periodic benefit cost, and other liabilities. In addition, estimates are used in revenue recognition, performance and share-based compensation, depreciation and amortization, litigation matters and other matters. Management believes its use of estimates in the financial statements to be reasonable. Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances 9 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and, as such, these estimates may ultimately differ from actual results. Changes in estimates resulting from weakness in the economic environment or other factors beyond the Company’s control could be material and would be reflected in the Company’s condensed combined financial statements in future periods. C. Significant Accounting Policies The following is an update to the Company’s Summary of Significant Accounting Policies disclosed in the Company’s Audited Combined Annual Financial Statements: Earnings (Loss) Per Common Share Basic earnings (loss) per common share (“EPS”) is based upon net income (loss) available to common stockholders divided by the weighted-average number of common shares outstanding during the period. On the MSGE Spinco Distribution Date, 51,768 common shares of the Company, inclusive of 17,021 common shares related to the MSGE Retained Interest, were outstanding as of April 20, 2023. This share amount is being utilized for the calculation of basic earnings (loss) per share for both the three and nine months ended March 31, 2023 and 2022 because the Company was not a standalone public company prior to the MSGE Spinco Distribution. In addition, the computation of diluted earnings per share equals the basic earnings (loss) per common share calculation since there was no stock trading information available to compute dilutive effect of shares issuable under share-based compensation plans needed under the treasury method in accordance with ASC Topic 260, Earnings Per Share . D. Recently Issued and Adopted Accounting Pronouncements Recently Issued Accounting Pronouncements No recently issued accounting pronouncements are expected to materially impact the Company's financial statements. Recently Adopted Accounting Pronouncements In October 2021 , the FASB issued Accounting Standards Update (“ ASU ”) No. 2021-08, Accounting for Contract Assets and Contract Liabilities From Contracts With Customers . This ASU requires that the acquiring entity in a business combination recognize and measure contract assets and contract liabilities acquired in accordance with ASC Topic 606. This standard was adopted by the Company in the first quarter of Fiscal Year 2023. The adoption of this standard had no impact on the Company’s condensed combined financial statements. Note 3. Dispositions Disposition of Our Interest in Boston Calling Events The Company entered into an agreement on December 1, 2022 to sell its controlling interest in BCE (the “BCE Disposition”). The transaction closed on December 2, 2022, resulting in a total gain on sale of $ 8,744 , net of transaction costs. BCE meets the definition of a business under SEC Regulation S-X Rule 11-01(d)-1 and FASB ASC Topic 805 — Business Combinations . This disposition does not represent a strategic shift with a major effect on the Company’s operations, and as such, has not been reflected as a discontinued operation under FASB ASC Subtopic 205-20 — Discontinued Operations . The gain on the BCE Disposition was recorded in (Loss) gains, net on dispositions in the condensed combined statements of operations. Disposition of Corporate Aircraft On December 30, 2022, the Company sold its owned aircraft for $ 20,375 . In connection with the sale, the Company recognized a loss of $ 4,383 , net of transaction costs. The loss on the aircraft disposition was recorded in (Loss) gains, net on dispositions in the condensed combined statements of operations. Note 4. Revenue Recognition Contracts with Customers See Note 2. Summary of Significant Accounting Policies and Note 4. Revenue Recognition, included in the Company’s Audited Combined Annual Financial Statements for more information regarding the details of the Company’s revenue 10 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) recognition policies. All revenue recognized in the condensed combined statements of operations is considered to be revenue from contracts with customers in accordance with ASC Topic 606, except for revenues from the arena license agreements that require the Knicks and the Rangers to play their home games at The Garden (the “Arena License Agreements”), leases and subleases that are accounted for in accordance with ASC Topic 842. Disaggregation of Revenue The following tables disaggregate the Company’s revenue by major source based upon the timing of transfer of goods or services to the customer for the three and nine months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Event-related and entertainment offerings (a) $ 102,314 $ 90,899 Sponsorship, signage and suite licenses (b) 59,724 55,609 Other (c) 7,174 16,994 Total revenues from contracts with customers 169,212 163,502 Revenues from Arena License Agreements, leases and subleases 32,017 30,486 Total revenues $ 201,229 $ 193,988 Nine Months Ended March 31, 2023 2022 Event-related and entertainment offerings (a) $ 443,992 $ 268,391 Sponsorship, signage and suite licenses (b) 167,113 113,565 Other (c) 25,637 31,881 Total revenues from contracts with customers 636,742 413,837 Revenues from Arena License Agreements, leases and subleases 66,819 61,313 Total revenues $ 703,561 $ 475,150 ___________ (a) Event-related and entertainment offerings revenues are recognized at a point in time. (b) See Note 2. Summary of Significant Accounting Policies and Note 4. Revenue Recognition, included in the Company’s Audited Combined Annual Financial Statements for further details on the pattern of recognition of sponsorship, signage, and suite license revenues. (c) Primarily consists of (i) revenues from sponsorship sales and representation agreements with Madison Square Garden Sports Corp. (“MSG Sports”) and (ii) advertising commission revenues recognized under the Networks Advertising Sales Representation Agreement. The Networks Advertising Sales Representation Agreement was terminated as of December 31, 2022, as discussed in Note 1. Description of Business. 11 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) In addition to the disaggregation of the Company’s revenue by major source based upon the timing of transfer of goods or services to the customer disclosed above, the following tables disaggregate the Company’s combined revenues by type of goods or services in accordance with the required entity-wide disclosure requirements of ASC Subtopic 280-10-50-38 to 40 and the disaggregation of revenue required disclosures in accordance with ASC Subtopic 606-10-50-5 for the three and nine months ended March 31, 2023 and 2022. Three Months Ended March 31, 2023 2022 Ticketing and venue license fee revenues (a) $ 45,547 $ 46,867 Sponsorship and signage, suite, and advertising commission revenues (b) 78,504 79,631 Food, beverage and merchandise revenues 43,021 36,344 Other 2,140 660 Total revenues from contracts with customers 169,212 163,502 Revenues from Arena License Agreements, leases and subleases 32,017 30,486 Total revenues $ 201,229 $ 193,988 Nine Months Ended March 31, 2023 2022 Ticketing and venue license fee revenues (a) $ 291,404 $ 172,844 Sponsorship and signage, suite, and advertising commission revenues (b) 215,812 161,046 Food, beverage and merchandise revenues 124,711 78,032 Other 4,815 1,915 Total revenues from contracts with customers 636,742 413,837 Revenues from Arena License Agreements, leases and subleases 66,819 61,313 Total revenues $ 703,561 $ 475,150 _________________ (a) Amounts include ticket sales, including other ticket-related revenue, and venue license fees from the Company’s events such as (i) concerts, (ii) the presentation of the Christmas Spectacular and (iii) other live entertainment and sporting events. (b) Amounts include (i) revenues from sponsorship sales and representation agreements with MSG Sports and (ii) advertising commission revenues recognized under the Networks Advertising Sales Representation Agreement. The Networks Advertising Sales Representation Agreement was terminated as of December 31, 2022, as discussed in Note 1. Description of Business. Contract Balances The following table provides information about contract balances from the Company’s contracts with customers as of March 31, 2023 and June 30, 2022: March 31, June 30, 2023 2022 Receivables from contracts with customers, net (a) $ 139,719 $ 106,664 Contract assets, current (b) $ 7,548 $ 5,503 Deferred revenue, including non-current portion (c) $ 258,347 $ 203,256 ________________ (a) Receivables from contracts with customers, net, which are reported in Accounts receivable, net and Related party receivables, current in the Company’s condensed combined balance sheets, represent the Company’s unconditional rights to consideration under its contracts with customers. As of March 31, 2023 and June 30, 2022, the Company’s receivables from contracts with customers above included $ 9,077 and $ 4,163 , respectively, related to various related parties. See Note 15. Related Party Transactions for further details on related party arrangements. (b) Contract assets, current, which are reported as Prepaid expenses and other current assets in the Company’s condensed combined balance sheets, primarily relate to the Company’s rights to consideration for goods or services transferred to 12 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) customers, for which the Company does not have an unconditional right to bill as of the reporting date. Contract assets are transferred to accounts receivable once the Company’s right to consideration becomes unconditional. (c) Deferred revenue primarily relates to the Company’s receipt of consideration from customers in advance of the Company’s transfer of goods or services to the customers. Deferred revenue is reduced and the related revenue is recognized once the underlying goods or services are transferred to a customer. Revenue recognized for the three and nine months ended March 31, 2023 relating to the deferred revenue balance as of June 30,2022 was $ 21,196 and $ 175,326 , respectively. Transaction Price Allocated to the Remaining Performance Obligations As of March 31, 2023, the Company’s remaining performance obligations were approximately $ 485,000 , of which 39 % is expected to be recognized over the next two years and an additional 41 % of the balance is expected to be recognized in the following two years . This primarily relates to performance obligations under sponsorship and suite license agreements that have original expected durations longer than one year and for which the consideration is not variable. In developing the estimated revenue, the Company applies the allowable practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less. Note 5. Restructuring Charges During Fiscal Year 2023, Sphere Entertainment implemented a cost reduction program which resulted in the recording of termination benefits for a workforce reduction of certain executives and employees. The Company recorded restructuring charges of $ 2,461 and $ 9,820 , net of contributory credits from the Company to Sphere Entertainment for the Company’s corporate employees, for the three and nine months ended March 31, 2023, respectively. Restructuring charges are inclusive of $ 0 and $ 2,293 of share-based compensation expenses for the three and nine months ended March 31, 2023, respectively. As of March 31, 2023 and June 30, 2022, the Company had a restructuring accrual of $ 6,036 and $ 3,210 , respectively, shown in accounts payable, accrued and other current liabilities and divisional equity (deficit). For Fiscal Year 2022, Sphere Entertainment underwent organizational changes to further streamline operations. These measures included termination of certain executive and management level functions. The Company recorded restructuring charges of $ 5,171 , net of contributory credits from the Company to Sphere Entertainment for the Company’s corporate employees, for the three and nine months ended March 31, 2022. Restructuring charges are inclusive of $ 1,612 of share-based compensation expenses for the three and nine months ended March 31, 2022. Note 6. Equity Investments With Readily Determinable Fair Value As of March 31, 2023, the Company held investments of (i) Townsquare Media, Inc. (“Townsquare”) and (ii) DraftKings Inc. (“DraftKings”): • Townsquare is a media, entertainment and digital marketing solutions company that is listed on the New York Stock Exchange (“NYSE”) under the symbol “TSQ”. • DraftKings is a fantasy sports contest and sports gambling provider that is listed on the NASDAQ Stock Market (“NASDAQ”) under the symbol “DKNG”. The fair value of the Company’s investments in Class A common stock of Townsquare and Class A common stock of DraftKings is determined based on quoted market prices in active markets on the NYSE and NASDAQ, respectively, which are classified within Level I of the fair value hierarchy. As a holder of Class C common stock of Townsquare, the Company is entitled to convert at any time all or any part of the Company’s shares into an equal number of shares of Class A common stock of Townsquare, subject to restrictions set forth in Townsquare’s certificate of incorporation. 13 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) The carrying fair value of these investments, which are reported under Other non-current assets in the accompanying condensed combined balance sheets as of March 31, 2023 and June 30, 2022, are as follows: March 31, 2023 June 30, 2022 Townsquare Class A common stock $ 4,665 $ 4,776 Townsquare Class C common stock 21,000 21,499 DraftKings common stock 12,397 10,146 Total Equity Investments with Readily Determinable Fair Value $ 38,062 $ 36,421 The following table summarizes the realized and unrealized (loss) gain on equity investments with readily determinable fair value, which is reported in Other income (expenses), net for the three and nine months ended March 31, 2023 and 2022: Three Months Ended Nine Months Ended March 31, March 31, 2023 2022 2023 2022 Unrealized gain (loss) — Townsquare $ 2,406 $ ( 1,732 ) $ ( 609 ) $ 129 Unrealized gain (loss) — DraftKings 5,104 ( 6,956 ) 4,916 ( 28,432 ) Gain from shares sold — DraftKings 214 — 1,703 — Total realized and unrealized gain (loss) $ 7,724 $ ( 8,688 ) $ 6,010 $ ( 28,303 ) Supplemental information on realized gain: Shares of common stock sold — DraftKings 29 — 229 — Cash proceeds from common stock sold — DraftKings $ 550 $ — $ 4,369 $ — Note 7. Property and Equipment, Net As of March 31, 2023 and June 30, 2022, property and equipment, net consisted of the following: March 31, June 30, 2023 2022 Land $ 62,768 $ 62,768 Buildings 998,231 995,965 Equipment 334,555 323,741 Aircraft (a) — 38,090 Furniture and fixtures 29,308 28,976 Leasehold improvements 105,877 105,877 Construction in progress 1,240 3,139 Total Property and equipment $ 1,531,979 $ 1,558,556 Less: accumulated depreciation and amortization (a) ( 894,335 ) ( 862,477 ) Property and equipment, net $ 637,644 $ 696,079 ________________ (a) On December 30, 2022, the Company completed the disposition of a corporate aircraft (see Note 3. Dispositions), which resulted in a reduction of gross assets of $ 38,090 and related accumulated depreciation of $ 13,689 . Depreciation and amortization expense on property and equipment was $ 14,798 and $ 45,615 for the three and nine months ended March 31, 2023, respectively, and $ 15,760 and $ 48,425 , for the three and nine months ended March 31, 2022, respectively. Note 8. Goodwill and Intangible Assets As of March 31, 2023 and June 30, 2022, the carrying amount of goodwill was $ 69,041 . During the first quarter of Fiscal Year 2023, the Company performed its annual impairment test of goodwill and determined that there was no impairment of goodwill 14 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) identified as of the impairment test date. The Company’s indefinite-lived intangible assets as of March 31, 2023 and June 30, 2022 were as follows: March 31, June 30, 2023 2022 Trademarks $ 61,881 $ 61,881 Photographic related rights 1,920 1,920 Total indefinite-lived intangible assets $ 63,801 $ 63,801 During the first quarter of Fiscal Year 2023, the Company performed its annual impairment test of indefinite-lived intangible assets and determined that there were no impairments of indefinite-lived intangibles identified as of the impairment test date. The Company’s intangible assets subject to amortization are as follows: March 31, 2023 Gross Accumulated Amortization Net Other intangibles (b) $ 4,217 $ ( 4,217 ) $ — Total amortizable intangible assets $ 4,217 $ ( 4,217 ) $ — June 30, 2022 Gross Accumulated Amortization Net Trade names (a) $ 2,530 $ ( 2,169 ) $ 361 Festival rights (a) 8,080 ( 6,926 ) 1,154 Other intangibles 4,217 ( 4,094 ) 123 Total amortizable intangible assets $ 14,827 $ ( 13,189 ) $ 1,638 ________________ (a) On December 2, 2022, the Company completed the BCE Disposition (see Note 3. Dispositions) which resulted in a reduction of gross assets and accumulated amortization related to festival rights and trade names, associated with the BCE Disposition. (b) The Other intangibles were fully amortized. Amortization expense for intangible assets was $ 0 and $ 754 for the three and nine months ended March 31, 2023, respectively, and $ 247 and $ 741 for the three and nine months ended March 31, 2022, respectively. Note 9. Commitments and Contingencies Commitments See Note 13. Commitments and Contingencies, included in the Company’s Audited Combined Annual Financial Statements for details on the Company’s off balance sheet commitments. The Company’s off-balance sheet commitments as of June 30, 2022 included a total of $ 21,422 of contractual obligations. During the nine months ended March 31, 2023, the Company’s off-balance sheet commitments increased by a total of $ 6,478 of contractual obligations offset by an immaterial decrease in marketing partnerships agreement-related commitments. The increase in contractual obligations primarily relates to future performances at The Garden. See Note 10. Credit Facilities for details of the principal repayments required under the Company’s various credit facilities. Delayed Draw Term Loan Facility On April 20, 2023, a subsidiary of the Company, MSG Entertainment Holdings, LLC (“MSG Entertainment Holdings”), entered into a delayed draw term loan facility (the “DDTL Facility”) with Sphere Entertainment. Pursuant to the DDTL Facility, MSG Entertainment Holdings has committed to lend up to $ 65,000 in delayed draw term loans to Sphere Entertainment on an unsecured basis until October 20, 2024. As of the date of this filing, Sphere Entertainment has not yet drawn upon the DDTL Facility. 15 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) The DDTL Facility will mature and any unused commitments thereunder will expire on October 20, 2024. Borrowings under the DDTL Facility will bear interest at a variable rate equal to either, at the option of Sphere Entertainment, (a) a base rate plus an applicable margin, or (b) Term SOFR plus 0.10 %, plus an applicable margin. The applicable margin is equal to the applicable margin under the National Properties Facilities (as defined below), plus 1.00 % per annum. Subject to customary borrowing conditions, the DDTL Facility may be drawn in up to 6 separate borrowings of $ 5,000 or more. The DDTL Facility is prepayable at any time without penalty and amounts repaid on the DDTL Facility may not be reborrowed. If drawn, Sphere Entertainment will have the option to make any payments of principal, interest or fees under the DDTL Facility either in cash or by delivering to MSG Entertainment Holdings shares of MSG Entertainment Class A common stock. If Sphere Entertainment elects to make any payment in the form of MSG Entertainment Class A common stock, the amount of such payment would be calculated based on the dollar volume-weighted average trading price for MSG Entertainment Class A common stock for the 20 trading days ending on the day on which Sphere Entertainment made such election. Sphere Entertainment shall only be permitted to use the proceeds of the DDTL Facility (i) for funding costs associated with its Sphere initiative and (ii) in connection with refinancing of the indebtedness under certain senior secured credit facilities by and among MSG Networks, MSGN Eden, LLC, Regional MSGN Holdings LLC, and certain subsidiaries of MSG Networks pursuant to a credit agreement as amended and restated on October 11, 2019. The DDTL Facility contains certain representations and warranties and affirmative and negative covenants, including, among others, financial reporting, notices of material events, and limitations on asset dispositions restricted payments, and affiliate transactions. Legal Matters The Company is a defendant in various lawsuits. Although the outcome of these lawsuits cannot be predicted with certainty (including the extent of available insurance, if any), management does not believe that resolution of these lawsuits will have a material adverse effect on the Company. Note 10. Credit Facilities See Note 14. Credit Facilities, included in the Company’s Audited Combined Annual Financial Statements for more information regarding the Company’s credit facilities. The following table summarizes the outstanding balances under the Company’s credit facilities as of March 31, 2023 and June 30, 2022: March 31, 2023 June 30, 2022 Principal Current Portion National Properties Term Loan Facility $ 16,250 $ 8,125 Other debt — 637 Current portion of long-term debt $ 16,250 $ 8,762 March 31, 2023 June 30, 2022 Principal Unamortized Deferred Financing Costs Net Principal Unamortized Deferred Financing Costs Net Non-current Portion National Properties Term Loan Facility $ 629,687 $ ( 13,644 ) $ 616,043 $ 641,875 $ ( 16,063 ) $ 625,812 National Properties Revolving Credit Facility 27,100 — 27,100 29,100 — 29,100 Other long-term loan 168 — 168 — — — Long-term debt, net of deferred financing costs $ 656,955 $ ( 13,644 ) $ 643,311 $ 670,975 $ ( 16,063 ) $ 654,912 National Properties Facilities General. On June 30, 2022, MSG National Properties, LLC (“MSG National Properties”), Sphere Entertainment Group, LLC 16 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) (formerly known as MSG Entertainment Group, LLC and referred to herein as “Sphere Entertainment Group”) and certain subsidiaries of MSG National Properties entered into a credit agreement with JP Morgan Chase Bank, N.A., as administrative agent and the lenders and L/C issuers party thereto (as amended, the “National Properties Credit Agreement”), providing for a five-year , $ 650,000 senior secured term loan facility (the “National Properties Term Loan Facility”) and a five-year , $ 100,000 revolving credit facility (the “National Properties Revolving Credit Facility” and, together with the National Properties Term Loan Facility, the “National Properties Facilities”). As of March 31, 2023 outstanding letters of credit were $ 7,992 and the remaining balance available under the National Properties Revolving Credit Facility was $ 64,908 . Interest Rates. Borrowings under the current National Properties Facilities bear interest at a floating rate, which at the option of MSG National Properties may be either (a) a base rate plus an applicable margin ranging from 1.50 % to 2.50 % per annum, determined based on the total leverage ratio of MSG National Properties and its restricted subsidiaries (the “National Properties Base Rate”), or (b) Term SOFR plus an applicable margin ranging from 2.50 % to 3.50 % per annum, determined based on the total leverage ratio of MSG National Properties and its restricted subsidiaries (the “National Properties SOFR Rate”). The National Properties Credit Agreement requires MSG National Properties to pay a commitment fee ranging from 0.30 % to 0.50 % in respect of the daily unused commitments under the National Properties Revolving Credit Facility. MSG National Properties is also required to pay customary letter of credit fees, as well as fronting fees, to banks that issue letters of credit pursuant to the National Properties Credit Agreement. The interest rate on the National Properties Facilities as of March 31, 2023 was 7.41 %. Principal Repayments. Subject to customary notice and minimum amount conditions, the Company may voluntarily repay outstanding loans under the National Properties Facilities and terminate commitments under the National Properties Revolving Credit Facility, at any time, in whole or in part, subject only to customary breakage costs in the case of prepayment of Term SOFR loans. The principal obligations under the National Properties Term Loan Facility are to be repaid in quarterly installments beginning with the fiscal quarter ending March 31, 2023, in an aggregate amount equal to 2.50 % per annum ( 0.625 % per quarter), stepping up to 5.00 % per annum ( 1.25 % per quarter) in the fiscal quarter ending September 30, 2025, with the balance due at the maturity of the facility on June 30, 2027. The principal obligations under the National Properties Revolving Credit Facility are due at the maturity of the facil ity. Under certain circumstances, MSG National Properties is required to make mandatory prepayments on loans outstanding, including prepayments in an amount equal to the net cash proceeds of certain sales of assets or casualty insurance and/or condemnation recoveries (subject to certain reinvestment, repair, or replacement rights), subject to certain exceptions. Covenants. The National Properties Credit Agreement includes financial covenants requiring MSG National Properties and its restricted subsidiaries to maintain a specified minimum liquidity level, a specified minimum debt service coverage ratio and specified maximum total leverage ratio. The minimum liquidity level is set at $ 50,000 , and is tested based on the level of average daily liquidity, consisting of cash and cash equivalents and available revolving commitments, over the last month of each quarter over the life of the National Properties Facilities. The debt service coverage ratio covenant began testing in the fiscal quarter ending December 31, 2022, and is set at a ratio of 2 :1 before stepping up to 2.5 :1 in the fiscal quarter ending September 30, 2024. The leverage ratio covenant begins testing in the fiscal quarter ending June 30, 2023. It is tested based on the ratio of MSG National Properties and its restricted subsidiaries’ consolidated total indebtedness to adjusted operating income, with an initial maximum ratio of 6 :1, stepping down to 5.5 :1 in the fiscal quarter ending June 30, 2024 and 4.5 :1 in the fiscal quarter ending June 30, 2026. As of March 31, 2023, MSG National Properties and its restricted subsidiaries were in compliance with the covenants of the National Properties Credit Agreement. In addition to the financial covenants discussed above, the National Properties Credit Agreement and the related security agreement contain certain customary representations and warranties, affirmative and negative covenants and events of default. The National Properties Credit Agreement contains certain restrictions on the ability of MSG National Properties and its restricted subsidiaries to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the National Properties Credit Agreement, including the following: (i) incur additional indebtedness; (ii) create liens on certain assets; (iii) make investments, loans or advances in or to other persons; (iv) pay dividends and distributions or repurchase capital stock (which will restrict the ability of MSG National Properties to make cash distributions to the Company); (v) repay, redeem or repurchase certain indebtedness; (vi) change its lines of business; (vii) engage in certain transactions with affiliates; (viii) amend their respective organizational documents; (ix) merge or consolidate; and (x) make certain dispositions. Guarantors and Collateral. As of March 31, 2023, all obligations under the National Properties Facilities were guaranteed by Sphere Entertainment Group and MSG National Properties’ existing and future direct and indirect domestic subsidiaries, other 17 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) than the subsidiaries that own The Garden and certain other excluded subsidiaries (the “Subsidiary Guarantors”). In connection with the MSGE Spinco Distribution, on April 18, 2023, the National Properties Credit Agreement was amended to change the parent guarantor from Sphere Entertainment Group to MSG Entertainment Holdings, the direct parent of MSG National Properties. All obligations under the National Properties Facilities, including the guarantees of those obligations, are secured by certain of the assets of MSG National Properties and the Subsidiary Guarantors (collectively, “Collateral”) including, but not limited to, a pledge of some or all of the equity interests held directly or indirectly by MSG National Properties in each Subsidiary Guarantor. The Collateral does not include, among other things, any interests in The Garden or the leasehold interests in Radio City Music Hall and the Beacon Theatre. Interest payments and loan principal repayments made by the Company under the National Properties Credit Agreement were as follows: Interest Payments Loan Principal Repayments Nine Months Ended March 31, Nine Months Ended March 31, 2023 2022 2023 2022 National Properties Term Loan Facility $ 35,283 $ 34,917 $ 6,063 $ 4,875 The carrying value and fair value of the Company’s financial instruments reported in the accompanying condensed combined balance sheets are as follows: March 31, 2023 June 30, 2022 Carrying Value (a) Fair Value Carrying Value (a) Fair Value Liabilities: National Properties Facilities $ 673,037 $ 666,307 $ 679,100 $ 679,100 Other debt 168 168 637 637 Total Long-term debt 673,205 666,475 679,737 679,737 ________________ (a) The total carrying value of the Company’s financial instruments as of March 31, 2023 and June 30, 2022 is equal to the current and non-current principal payments for the Company’s credit agreements excluding unamortized deferred financing costs of $ 13,644 and $ 16,063 , respectively. The Company’s long-term debt is classified within Level II of the fair value hierarchy as it is valued using quoted indices of similar instruments for which the inputs are readily observable. Note 11. Pension Plans and Other Postretirement Benefit Plans Sphere Entertainment sponsors several pension, savings and postretirement benefit plans including the defined benefit pension plans (“Pension Plans”), postretirement benefit plan (“Postretirement Plan”), The Madison Square Garden 401(k) Savings Plan and the MSG Entertainment Group, LLC Excess Savings Plan (collectively, the “Savings Plans”), and The Madison Square Garden 401(k) Union Plan (the “Union Savings Plan”). Certain of these Pension Plans and the Postretirement Plan, such as the Cash Balance Plan and Excess Plans, historically included participants of the Company as well as Sphere Entertainment and MSG Sports (“Shared Plans”). Other plans, such as the Union Plan, only included participants of the Company and not of MSG Sports and Sphere Entertainment (“Direct Plan”). See Note 15. Pension Plans and Other Postretirement Benefit Plans, included in the Company’s Audited Combined Annual Financial Statements for more information regarding these plans. Defined Benefit Pension Plans and Postretirement Benefit Plan For the historical periods, Sphere Entertainment was the legal sponsor of the Pension Plans and Postretirement Plan. For purposes of the condensed combined financial statements, it was determined that these plans’ assets and liabilities were attributable to the Company. Therefore, the condensed combined financial statements reflect the full impact of the Shared Plans 18 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) and the Direct Plan on both the condensed combined statements of operations and condensed combined balance sheets. The pension expense and liabilities related to employees of other Sphere Entertainment businesses participating in the Shared Pension Plans and Postretirement Plan were immaterial for the three and nine months ended March 31, 2023 and 2022. The following table presents components of net periodic benefit cost for the Pension Plans and Postretirement Plan included in the accompanying condensed combined statements of operations for the three and nine months ended March 31, 2023 and 2022. Service cost is recognized in direct operating expenses and selling, general and administrative expenses. All other components of net periodic benefit cost are reported in Other income (expense), net. Pension Plans Postretirement Plan Three Months Ended March 31, Three Months Ended March 31, 2023 2022 2023 2022 Service cost $ 30 $ 25 $ 8 $ 9 Interest cost 927 928 11 12 Expected return on plan assets ( 1,504 ) ( 1,504 ) — — Recognized actuarial loss 314 355 9 16 Net periodic (benefit) cost $ ( 233 ) $ ( 196 ) $ 28 $ 37 Pension Plans Postretirement Plan Nine Months Ended March 31, Nine Months Ended March 31, 2023 2022 2023 2022 Service cost $ 90 $ 75 $ 24 $ 27 Interest cost 2,781 2,784 33 36 Expected return on plan assets ( 4,512 ) ( 4,512 ) — — Recognized actuarial loss 1,036 1,066 27 48 Net periodic (benefit) cost $ ( 605 ) $ ( 587 ) $ 84 $ 111 Contributions for Qualified Defined Benefit Pension Plan Sphere Entertainment sponsors a non-contributory, qualified defined benefit pension plan covering certain of its union employees (the “Union Plan”). During the three and nine months ended March 31, 2023, the Company did not make any contributions to the Union Plan. Defined Contribution Plans For the three and nine months ended March 31, 2023 and 2022, expenses related to the Savings Plans and Union Savings Plan included in the accompanying condensed combined statements of operations are as follows: Three Months Ended Nine Months Ended March 31, March 31, 2023 2022 2023 2022 Savings Plans $ 1,367 $ 1,069 $ 3,553 $ 3,005 Union Savings Plan $ 371 $ 24 $ 409 $ 45 19 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) Note 12. Share-based Compensation Certain employees of the Company have historically participated in the share-based compensation plans of Sphere Entertainment (“Sphere Entertainment Employee Stock Plans”). Only the expenses for the awards provided to the Company’s direct employees, net of expenses related to the Company’s corporate employees who participate in the plans that were charged to Sphere Entertainment, are recorded in the condensed combined financial statements. See Note 16. Share Based Compensation, included in the Company’s Audited Combined Annual Financial Statements for more information on these plans. Share-based compensation expense was recognized in the condensed combined statements of operations as a component of direct operating expenses or selling, general and administrative expenses. The share-based compensation expense recorded by the Company, in the periods presented, includes the expenses associated with the employees attributable to the Company, net of contributory credits from the Company to Sphere Entertainment for the Company’s corporate employees. The following table summarizes the Company’s share-based compensation expense: Three Months Ended Nine Months Ended March 31, March 31, 2023 2022 2023 2022 Share-based compensation (a) $ 8,014 $ 10,401 $ 24,273 $ 31,480 Intrinsic value of awards vested $ — $ — $ 2,867 $ 2,422 ________________ (a) The balances shown includes $ 0 and $ 2,293 which was reclassified to Restructuring charges in the condensed consolidated statements of operations for the three and nine months ended March 31, 2023, respectively, and $ 1,612 for the three and nine months ended March 31, 2022, as detailed in Note 5. Restructuring Charges. As of March 31, 2023, there was $ 6,401 of unrecognized compensation cost related to unvested RSUs and PSUs held by the Company’s direct employees. The cost is expected to be recognized over a weighted-average period of approximately 1.65 years. Award Activity RSUs During the nine months ended March 31, 2023 and 2022, 66 and 59 RSUs were granted, respectively, and 40 and 22 RSUs vested, respectively. PSUs During the nine months ended March 31, 2023 and 2022, 60 and 55 PSUs were granted, respectively, and 11 and 8 PSUs vested, respectively. Note 13. Stockholders’ Equity Share Repurchase Program On March 29, 2023, the Company’s Board of Directors authorized a share repurchase program to repurchase up to $ 250,000 of the Company’s Class A Common Stock. Under the authorization, shares of Class A Common Stock may be purchased from time to time in open market or private transactions, block trades or such other manner as the Company may determine (including through repayment by Sphere Entertainment of the DDTL Facility with shares of the Company’s Class A Common Stock) in accordance with applicable insider trading and other securities laws and regulations. The timing and amount of purchases will depend on market conditions and other factors. No shares have been repurchased to date. 20 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) Note 14. Accumulated Other Comprehensive Loss The following table details the components of accumulated other comprehensive loss: Pension Plans and Postretirement Plan Three Months Ended March 31, Nine Months Ended March 31, 2023 2022 2023 2022 Balance at beginning of period $ ( 34,129 ) $ ( 32,986 ) $ ( 34,740 ) $ ( 33,598 ) Other comprehensive income (loss): Amounts reclassified from accumulated other comprehensive loss (a) 323 371 1,063 1,114 Income tax expense ( 56 ) ( 65 ) ( 185 ) ( 196 ) Other comprehensive income (loss), net of income taxes 267 306 878 918 Balance at end of period $ ( 33,862 ) $ ( 32,680 ) $ ( 33,862 ) $ ( 32,680 ) ________________ (a) Amounts reclassified from accumulated other comprehensive loss represent the amortization of net actuarial loss and net unrecognized prior service credit included in net periodic benefit cost, which is reflected under Other income (expense), net in the accompanying condensed consolidated statements of operations (see Note 11. Pension Plans and Other Postretirement Benefit Plans). Note 15. Related Party Transactions Given that the MSGE Spinco Distribution did not occur until after March 31, 2023, the transactions described below, unless otherwise indicated, were in place with Sphere Entertainment as of March 31, 2023, and continued with the Company following the MSGE Spinco Distribution. As of March 31, 2023, members of the Dolan family, including trusts for the benefit of members of the Dolan family (collectively, the “Dolan Family Group”), for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, collectively beneficially owned 100 % of the Sphere Entertainment’s outstanding Class B common stock and approximately 5.5 % of Sphere Entertainment’s outstanding Class A common stock (inclusive of options exercisable within 60 days of March 31, 2023). Such shares of Sphere Entertainment’s Class A common stock and Class B common stock, collectively, represent approximately 72.4 % of the aggregate voting power of Sphere Entertainment’s outstanding common stock. Pursuant to the MSGE Spinco Distribution on April 20, 2023, Sphere Entertainment distributed approximately 67 % of the outstanding common stock of the Company to its stockholders, with one share of the Company’s Class A Common Stock issued for every share of Sphere Entertainment’s Class A common stock held as of the Record Date, and one share of the Company’s Class B Common Stock issued for every share of Sphere Entertainment’s Class B common stock held as of the Record Date, and retained approximately 33 % of the Company’s outstanding common stock. Members of the Dolan family are the controlling stockholders of the Company, Sphere Entertainment (including its subsidiaries MSG Networks Inc. and TAO Group Hospitality, which was subsequently sold on May 3, 2023), MSG Sports, and AMC Networks Inc. (“AMC Networks”). See Note 19. Related Party Transactions to the Company’s Audited Combined Annual Financial Statements for a description of the Company’s current related party arrangements. There have been no material changes in such related party arrangements except as described below and in Note 1. Description of Business and Basis of Presentation. 21 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) From time to time the Company enters into arrangements with 605, LLC (“605”). James L. Dolan, the Company’s Executive Chairman, Chief Executive Officer and a director, and his spouse, Kristin A. Dolan, own 50 % of 605. Kristin A. Dolan is also the founder and Non-Executive Chairman of 605. 605 provides audience measurement and data analytics services to the Company and its subsidiaries in the ordinary course of business. Sphere Entertainment’s audit committee approved the entry into one or more agreements with 605 to provide certain data analytics services to the Company for an aggregate amount of up to $ 1,000 . In August 2022, a subsidiary of Sphere Entertainment entered into a three-year agreement with 605, valued at approximately $ 750 , covering several customer analysis projects per year in connection with events held at our venues, which was assigned to the Company in connection with the MSGE Spinco Distribution. The Company expects to engage 605 to provide additional data analytics services in the future. Pursuant to this arrangement, the Company recognized $ 68 and $ 204 of expense for the three and nine months ended March 31, 2023, respectively, and as of March 31, 2023, $ 68 has been recognized in Prepaid expenses and other current assets. MSG Sports has made market rate interest-bearing advances to the Company in connection with the construction of new premium hospitality suites at The Garden. The advances will be repaid (including interest) through cash receipts from the licenses for each new suite. As of March 31, 2023, MSG Sports had advanced $ 168 to the Company in connection with the arrangement. This advance has been recognized in Long-term debt, net of deferred financing costs in the accompanying condensed consolidated balance sheets. As of June 30, 2022 , the Company had $ 637 of notes payable with respect to a loan received by BCE from its noncontrolling interest holder. There were no notes payable as of March 31, 2023 as a result of the BCE Disposition. Revenues and Operating Expenses The following table summarizes the composition and amounts of the transactions with the Company’s affiliates. The significant components of these amounts are discussed below. These amounts are reflected in revenues and operating expenses in the accompanying condensed combined statements of operations for the three and nine months ended March 31, 2023 and 2022: Three Months Ended March 31, Nine Months Ended March 31, 2023 2022 2023 2022 Revenues $ 41,594 $ 49,259 $ 96,805 $ 96,415 Operating expenses (credits): Revenue sharing expenses $ 7,353 $ 5,791 $ 15,639 $ 12,187 Reimbursement under Arena License Arrangements ( 8,911 ) ( 10,047 ) ( 18,761 ) ( 19,097 ) Cost reimbursement from MSG Sports ( 9,789 ) ( 9,159 ) ( 28,781 ) ( 28,888 ) Corporate allocations to Sphere Entertainment ( 40,794 ) ( 32,343 ) ( 114,761 ) ( 106,628 ) Other operating expenses, net 327 541 3,682 4,701 Total operating expenses (credits), net (a) $ ( 51,814 ) $ ( 45,217 ) $ ( 142,982 ) $ ( 137,725 ) ____________________ (a) Of the total operating expenses, net, $( 804 ) and $( 1,329 ) for the three and nine months ended March 31, 2023, respectively, and $( 4,427 ) and $( 7,458 ) for the three and nine months ended March 31, 2022, respectively, are included in direct operating expenses in the accompanying condensed combined statements of operations, and $( 51,010 ) and $( 141,653 ) for the three and nine months ended March 31, 2023, respectively, and $( 40,790 ) and $( 130,267 ) for the three and nine months ended March 31, 2022, respectively, are included in selling, general and administrative expenses. Revenues The Company recorded $ 31,163 and $ 64,312 of revenues under the Arena License Agreements for the three and nine months ended March 31, 2023, respectively. In addition to the Arena License Agreements, the Company’s revenues from related parties primarily reflected sponsorship sales and service representation agreements of $ 7,079 and $ 15,643 , and merchandise sharing revenues of $ 2,160 and $ 4,451 with MSG Sports during the three and nine months ended March 31, 2023, respectively. The Company recorded revenues under the Networks Advertising Sales Representation Agreement of $ 0 and $ 8,802 for the three and nine months ended March 31, 2023, respectively. The Company also earned sublease revenue from related parties of $ 716 22 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) and $ 2,100 during the three months and nine months ended March 31, 2023, respectively. The Company recorded $ 29,616 and $ 58,797 of revenues under the Arena License Agreements for the three and nine months ended March 31, 2022, respectively. In addition, the Company recorded revenues under sponsorship sales and service representation agreements of $ 7,027 and $ 14,206 and merchandise sharing revenues of $ 1,548 and $ 3,000 with MSG Sports during the three and nine months ended March 31, 2022, respectively. The Company recorded revenues under the Networks Advertising Sales Representation Agreement of $ 9,621 and $ 17,015 for the three and nine months ended March 31, 2022, respectively. The Company also earned sublease revenue from related parties of $ 736 and $ 1,958 during the three and nine months ended March 31, 2022, respectively. Operating Expenses Revenue sharing expenses Revenue sharing expenses include MSG Sports’ share of the Company’s in-venue food and beverage sales and certain venue signage agreements. Reimbursements under Arena License Arrangements Fees recognized by the Company under the Arena License Agreements with MSG Sports for use of The Garden are reported as operating lease revenues in accordance with ASC Topic 842. In addition, the Company records credits to direct operating expenses as a reimbursement under the Arena License Agreements. Cost reimbursement from MSG Sports Per the Services Agreement with MSG Sports, the Company’s corporate overhead expenses that are charged to MSG Sports are primarily related to centralized functions, including information technology, security, accounts payable, payroll, tax, legal, human resources, insurance and risk management, investor relations, corporate communications, benefit plan administration and reporting, and internal audit. Corporate allocations to Sphere Entertainment As part of the MSGE Spinco Distribution, certain corporate and operational support functions were transferred to the Company and therefore, charges were reflected in order to properly burden all business units comprising Sphere Entertainment’s historical operations. Allocations of corporate overhead and shared services expense to Sphere Entertainment from the Company were recorded for corporate and operational functions based on direct usage when identifiable, with the remainder allocated on a pro rata basis of combined assets, headcount or other measures of the Company or Sphere Entertainment, which is recorded as a reduction of either direct operating expenses or selling, general and administrative expense. The aforementioned allocations for certain support functions that are provided on a centralized basis and not historically recorded at the business unit level by Sphere Entertainment related to departments such as executive management, finance, legal, human resources, government affairs, and information technology, among others. In addition, corporate allocations to Sphere Entertainment include charges to MSG Networks under the services agreement with MSG Networks. Other operating expenses, net The Company and its related parties enter into transactions with each other in the ordinary course of business. Amounts charged to the Company for other transactions with its related parties are net of amounts charged by the Company to the Knickerbocker Group, LLC, an entity owned by James L. Dolan, the Executive Chairman, Chief Executive Officer and a director of the Company, for office space and the cost of certain technology services. In addition, other operating expenses primarily include net charges relating to (i) reciprocal aircraft arrangements between the Company and each of Q2C and CFD, (ii) time sharing and/or dry lease agreements with MSG Sports, AMC Networks and Brighid Air, and (iii) commission under the group ticket sales representation agreement with MSG Sports. The reciprocal aircraft arrangement between the Company and Q2C and the related aircraft support services arrangement between them was no longer effective as of December 21, 2021. 23 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) Loans Receivable from Sphere Entertainment The Company’s captive insurance entity, Eden Insurance Company, Inc. (“Eden”), entered into a loan agreement with Sphere Entertainment (the “Eden Loan Agreement”), under which Eden granted Sphere Entertainment an unsecured loan bearing interest at a rate of LIBOR plus 350 basis points with a principal amount not exceeding $ 60,000 . This loan is in the form of a demand promissory note, payable immediately upon order from Eden. As of March 31, 2023 and June 30, 2022, Eden had an outstanding loan receivable from Sphere Entertainment of $ 53,634 and $ 56,060 , respectively, inclusive of accrued interest. During the three and nine months ended March 31, 2023 and 2022, Eden declared dividends to Sphere Entertainment through a reduction of the loan receivable from Sphere Entertainment. During the three and nine months ended March 31, 2023 and 2022, no interest or principal payments were received by Eden and instead the accrued but unpaid interest was added to the outstanding principal amount of the loan. The cash flows related to this loan receivable are reflected as investing activities, as these balances represent amounts loaned by the Company to Sphere Entertainment. The Company recorded related party interest income of $ 1,121 and $ 2,925 related to the Eden Loan Agreement during the three and nine months ended March 31, 2023, respectively. The Company recorded related party interest income of $ 352 and $ 1,413 related to the Eden Loan Agreement during the three and nine months ended March 31, 2022, respectively. The loan payable to the Company held by Sphere Entertainment under the Eden Loan Agreement was assigned by Sphere Entertainment to the Company in connection with the MSGE Spinco Distribution, and will be eliminated in consolidation by the Company for periods subsequent to the MSGE Spinco Distribution. On May 23, 2019, the Company entered into a subordinated credit agreement with TAO Group Sub-Holdings, LLC (“TAOG Sub-Holdings”), a wholly-owned subsidiary of Sphere Entertainment (the “TAO Subordinated Credit Agreement”), under which the Company granted TAOG Sub-Holdings a $ 49,000 subordinated loan. This loan had a maturity date of August 22, 2024. On June 15, 2020, the TAO Subordinated Credit Agreement was amended to provide an additional $ 22,000 of borrowing capacity and subsequently, the Company provided additional proceeds of $ 19,000 under the TAO Subordinated Credit Agreement. There are no mandatory repayments of principal until the maturity date. Subject to customary notice and minimum amount conditions, TAOG Sub-Holdings can voluntarily prepay outstanding loans under the TAO Subordinated Credit Agreement at any time, in whole or in part, without premium or penalty. Interest is due monthly in cash or paid-in-kind based on the terms of the TAO Senior Credit Agreement. On June 9, 2022, Sphere Entertainment paid the full outstanding principal amount of this TAO Subordinated Credit Agreement. The Company recorded related party interest income of $ 1,105 and $ 3,506 related to the TAO Subordinated Credit Agreement during the three and nine months ended March 31, 2022, respectively. Cash Management Sphere Entertainment uses a centralized approach to cash management and financing of operations. The Company’s and Sphere Entertainment’s other subsidiaries’ cash was available for use and was regularly “swept” historically. Cash and cash equivalents were attributed to the Company for each of the periods presented, as such cash was held in accounts legally owned by the Company. Transfers of cash both to and from Sphere Entertainment were included as components of Sphere Entertainment’s Investment on the condensed combined statements of divisional equity (deficit). The main components of the net transfers to Sphere Entertainment are cash pooling/general financing activities, various expense allocations to/from Sphere Entertainment, and receivables/payables from/to Sphere Entertainment deemed to be effectively settled upon the distribution of the Company by Sphere Entertainment. Sphere Entertainment Investment Certain significant balances and transactions among the Company and Sphere Entertainment and its subsidiaries, which include allocations of corporate general and administrative expenses, share-based compensation expense and other historical intercompany activities, are recorded as components of divisional equity (deficit), except for the transactions noted above related to historically cash-settled loans between the Company and Sphere Entertainment. The changes in Sphere Entertainment Investment also include financing activities for capital transfers, cash sweeps, and other treasury services. As part of this activity, cash balances are swept to Sphere Entertainment regularly as part of the Sphere Entertainment cash management policy. 24 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) Related Party Transactions after the MSGE Spinco Distribution In connection with the MSGE Spinco Distribution, the Company and Sphere Entertainment entered into arrangements with respect to, among other things, transition services. Additionally, on April 20, 2023, MSG Entertainment Holdings entered into the DDTL Facility with Sphere Entertainment. Pursuant to the DDTL Facility, MSG Entertainment Holdings has committed to lend up to $ 65,000 in delayed draw term loans to Sphere Entertainment on an unsecured basis until October 20, 2024. As of the date of this filing, Sphere Entertainment has not yet drawn upon the DDTL Facility. Note 16. Additional Financial Information The following table provides a summary of the amounts recorded as cash, cash equivalents, and restricted cash: March 31, 2023 June 30, 2022 Cash and cash equivalents $ 122,731 $ 58,102 Restricted cash 250 4,471 Total cash, cash equivalents and restricted cash $ 122,981 $ 62,573 The Company’s cash, cash equivalents and restricted cash are classified within Level I of the fair value hierarchy as it is valued using observable inputs that reflect quoted prices for identical assets in active markets. The Company’s restricted cash includes cash deposited in escrow accounts. The Company has deposited cash in an interest-bearing escrow account related to credit support, debt facilities, and collateral to workers compensation and general liability insurance obligations. Prepaid expenses and other current assets consisted of the following: March 31, 2023 June 30, 2022 Prepaid expenses $ 56,927 $ 65,065 Current contract assets 7,548 5,503 Inventory (a) 3,231 2,752 Notes and other receivables 797 322 Other 5,786 5,799 Total prepaid expenses and other current assets $ 74,289 $ 79,441 _________________ (a) Inventory is mostly comprised of food and liquor for venues. Accounts payable, accrued and other current liabilities consisted of the following: March 31, 2023 June 30, 2022 Accounts payable $ 18,712 $ 11,241 Accrued payroll and employee related liabilities 54,950 88,501 Cash due to promoters 84,975 78,428 Accrued expenses 41,159 43,791 Total accounts payable, accrued and other current liabilities $ 199,796 $ 221,961 25 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED) Other income (expense), net includes the following: Three Months Ended Nine Months Ended March 31, March 31, 2023 2022 2023 2022 Gains from shares sold — DraftKings $ 214 $ — $ 1,703 $ — Net unrealized loss on equity investments with readily determinable fair value 7,510 ( 8,688 ) 4,307 ( 28,303 ) Other 346 193 774 561 Total other income (expense), net $ 8,070 $ ( 8,495 ) $ 6,784 $ ( 27,742 ) Income Taxes During the nine months ended March 31, 2023 and 2022, the Company received income tax refunds, net of payments, of $ 2,031 and $ 10,281 , respectively. Note 17. Subsequent Events The Company licenses Suite Sixteen to TAO Group Hospitality, a former related party and subsidiary of Sphere Entertainment, in exchange for license fee payments. On May 3, 2023, TAO Group Hospitality was sold by Sphere Entertainment and the lounge license agreement was extended for an additional four years through September 2028. On April 20, 2023, Sphere Entertainment distributed approximately 67 % of the outstanding common stock of the Company, to its stockholders in the form of Class A Common Stock, with Sphere Entertainment retaining approximately 33 % of the outstanding common stock of the Company immediately following the MSGE Spinco Distribution. See Note 1. Description of Business and Basis of Presentation for more information regarding the MSGE Spinco Distribution. On April 20, 2023, a subsidiary of the Company, MSG Entertainment Holdings, entered into a delayed draw term loan facility with Sphere Entertainment. Pursuant to the DDTL Facility, MSG Entertainment Holdings has committed to lend up to $ 65,000 in delayed draw term loans to Sphere Entertainment on an unsecured basis until October 20, 2024. As of the date of this filing, Sphere Entertainment has not yet drawn upon the DDTL Facility. See Note 9. Commitments and Contingencies for more information regarding the DDTL Facility. On April 20, 2023, Sphere Entertainment transferred the interest bearing unsecured loan under the Eden Loan Agreement to the Company. See Note 15. Related Party Transactions for more information regarding the Eden Loan Agreement. On April 18, 2023, in connection with the MSGE Spinco Distribution, the National Properties Credit Agreement was amended to change the parent guarantor from Sphere Entertainment Group to MSG Entertainment Holdings, the direct parent of MSG National Properties. See Note 10. Credit Facilities for more information regarding the change in the National Properties Credit Agreement parent guarantor. 26