Madison Square Garden Entertainment Corp. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures An evaluation was carried out under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2023 the Company’s disclosure controls and procedures were effective. Management’s Report on Internal Control over Financial Reporting This Annual Report on Form 10-K does not include a report of management’s assessment regarding our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or an attestation report of our independent registered accounting firm due to a transition period established by rules of the SEC for newly public companies. 47 Additionally, our independent registered accounting firm will not be required to opine on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until we are no longer an “emerging growth company” as defined in the Jumpstart Our Business Startups (JOBS) Act. Changes in Internal Control over Financial Reporting There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. PART III Item 10. Directors, Executive Officers and Corporate Governance Information relating to our directors, executive officers and corporate governance will be included in the proxy statement for the 2023 annual meeting of the Company’s stockholders, which is expected to be filed within 120 days of our fiscal year end, and is incorporated herein by reference. Item 11. Executive Compensation Information relating to executive compensation will be included in the proxy statement for the 2023 annual meeting of the Company’s stockholders, which is expected to be filed within 120 days of our fiscal year end, and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information relating to the beneficial ownership of our common stock will be included in the proxy statement for the 2023 annual meeting of the Company’s stockholders, which is expected to be filed within 120 days of our fiscal year end, and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence Information relating to certain relationships and related transactions and director independence will be included in the proxy statement for the 2023 annual meeting of the Company’s stockholders, which is expected to be filed within 120 days of our fiscal year end, and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services Information relating to principal accountant fees and services will be included in the proxy statement for the 2023 annual meeting of the Company’s stockholders, which is expected to be filed within 120 days of our fiscal year end, and is incorporated herein by reference. 48 PART IV Item 15. Exhibits and Financial Statement Schedules Page No. The following documents are filed as part of this report: 1. The financial statements as indicated in the index set forth on page F- 1 2. Financial statement schedule: Schedule supporting consolidated and combined financial statements: Schedule II — Valuation and Qualifying Accounts 54 Schedules other than that listed above have been omitted, since they are either not applicable, not required or the information is included elsewhere herein. 3. Exhibits: The following documents are filed as exhibits hereto: EXHIBIT NO. DESCRIPTION 2.1 Distribution Agreement, dated as of March 29, 2023, between Sphere Entertainment Co. (formerly Madison Square Garden Entertainment Corp.) and Madison Square Garden Entertainment Corp. (formerly MSGE Spinco Inc.) (incorporated by reference to Exhibit 2.1 to the Company’s Registration Statement on Form 10 (file No. 001-41627) filed on March 30 , 2023). 2.2 Contribution Agreement, dated as of March 29, 2023, between Sphere Entertainment Co. (formerly Madison Square Garden Entertainment Corp.), Sphere Entertainment Group, LLC (formerly MSG Entertainment Group, LLC) and Madison Square Garden Entertainment Corp. (formerly MSGE Spinco Inc.) (incorporated by reference to Exhibit 2.2 to the Company’s Registration Statement on Form 10 (file No. 001-41627) filed on March 30 , 2023). 3.1 Second Amended and Restated Certificate of Incorporation of Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.), dated April 20, 2023 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on April 24, 2023). 3.2 Amended By-Laws of Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.), dated April 20, 2023 (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on April 24, 2023). 4.1 Registration Rights Agreement, dated March 31, 2023, by and among Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) and The Charles F. Dolan Children Trusts (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on April 24, 2023). 4.2 Registration Rights Agreement, dated March 31, 2023, by and among Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) and The Dolan Family Affiliates (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed on April 24, 2023). 4.3 Stockholder and Registration Rights Agreement, dated as of March 29, 2023, between Sphere Entertainment Co. (formerly Madison Square Garden Entertainment Corp.) and Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 4.4 Description of Capital Stock. 10.1 Transition Services Agreement, dated as of March 29, 2023, between Sphere Entertainment Co. (formerly Madison Square Garden Entertainment Corp.) and Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form 10 (file No. 001-41627) filed on March 30 , 2023). 10.2 Tax Disaffiliation Agreement, dated as of March 29, 2023, between Sphere Entertainment Co. (formerly Madison Square Garden Entertainment Corp.) and Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form 10 (file No. 001-41627) filed on March 30 , 2023) . 49 EXHIBIT NO. DESCRIPTION 10.3 Employee Matters Agreement, dated as of March 29, 2023, between Sphere Entertainment Co. (formerly Madison Square Garden Entertainment Corp.) and Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form 10 (file No. 001-41627) filed on March 30 , 2023) . 10.4 2023 Employee Stock Plan (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 filed on April 19, 2023). † 10.5 2023 Stock Plan for Non-Employee Directors (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-8 filed on April 19, 2023). † 10 .6 Standstill Agreement, dated March 31, 2023, between Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) and The Dolan Family Group (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on April 24, 2023). 10.7 Form of Indemnification Agreement between Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) and its Directors and Officers. (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.8 Form of Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) Non-Employee Director Award Agreement. (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). † 10.9 Form of Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) Restricted Stock Units Agreement (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed May 18, 2023). † 10.1 0 Form of Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) Performance Restricted Stock Units Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed May 18, 2023). † 10.11 Form of Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) Option Agreement ( incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed May 18, 2023). † 10.12 Form of Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) Performance Option Agreement (incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed May 18, 2023). † 10.13 Form of Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) Restricted Stock Units Agreement in respect of Sphere Entertainment Co. Restricted Stock Units (incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed May 18, 2023). † 10.14 Form of Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) Option Agreement in respect of Sphere Entertainment Co. Options (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q filed May 18, 2023). † 10.15 Form of Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) Performance Restricted Stock Units in respect of Sphere Entertainment Co. Performance Restricted Stock Units (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q filed May 18, 2023). † 10.16 Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) Executive Deferred Compensation Plan, as amended and restated (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on April 24, 2023). † 10.17 Lease Agreement, between RCPI Trust and Radio City Productions LLC, relating to Radio City Music Hall, dated December 4, 1997 (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). * 10.18 First Amendment to Lease Agreement, dated December 4, 1997, between RCPI Trust and Radio City Productions LLC, dated February 19, 1999 (incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.19 Second Amendment to Lease Agreement, dated December 4, 1997, between RCPI Landmark Properties, L.L.C. and Radio City Productions LLC, dated November 6, 2002 (incorporated by reference to Exhibit 10.19 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). * 10.2 0 Third Amendment to Lease Agreement, dated December 4, 1997, between RCPI Landmark Properties, L.L.C. and Radio City Productions LLC, dated August 14, 2008 (incorporated by reference to Exhibit 10.20 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). * 50 EXHIBIT NO. DESCRIPTION 10.21 Fourth Amendment to Lease Agreement, dated December 4, 1997, between RCPI Landmark Properties, L.L.C. and Radio City Productions LLC, dated January 24, 2011 (incorporated by reference to Exhibit 10.21 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). * 10.22 Fifth Amendment to Lease Agreement, dated December 4, 1997, between RCPI Landmark Properties, L.L.C. and Radio City Productions LLC, dated July 18, 2018 (incorporated by reference to Exhibit 10.22 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.23 Sixth Amendment to Lease Agreement, dated December 4, 1997, between RCPI Landmark Properties, L.L.C. and Radio City Productions LLC, dated July 1, 2021 (incorporated by reference to Exhibit 10.23 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). * 10.24 Seventh Amendment to Lease Agreement, dated December 4, 1997, between RCPI Landmark Properties, L.L.C. and Radio City Productions LLC, dated April 18, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 24, 2023). * 10.25 First Renewal Option Extension Letter amending Lease Agreement, dated December 4, 1997, by and between RCPI Landmark Properties, L.L.C. and Radio City Productions LLC (as amended), dated February 24, 2021 (incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.26 Second Renewal Option Extension Letter amending Lease Agreement, dated December 4, 1997, by and between RCPI Landmark Properties, L.L.C. and Radio City Productions LLC (as amended), dated March 25, 2021 (incorporated by reference to Exhibit 10.25 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.27 Third Renewal Option Extension Letter amending Lease Agreement, dated December 4, 1997, by and between RCPI Landmark Properties, L.L.C. and Radio City Productions LLC (as amended), dated April 29, 2021 (incorporated by reference to Exhibit 10.26 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.28 Guaranty of Lease, dated April 18, 2023, by Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 24, 2023). * 10.29 Summary of Office Space Arrangement, between MSG Entertainment Group, LLC (formerly MSG Sports & Entertainment, LLC) and the Knickerbocker Group LLC. (incorporated by reference to Exhibit 10.28 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.3 0 Aircraft Support Services Agreement, dated December 17, 2018, between MSG Entertainment Group, LLC (formerly MSG Sports & Entertainment, LLC) and the Dolan Family Members (for the DFO G550) (incorporated by reference to Exhibit 10.29 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.31 Amendment No. 1 to Aircraft Support Services Agreement, dated December 17, 2018, between MSG Entertainment Group, LLC (formerly MSG Sports & Entertainment, LLC) and the Dolan Family Members (for the DFO G550), effective as of May 10, 2022 (incorporated by reference to Exhibit 10.30 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.32 Amendment No. 2 to Aircraft Support Services Agreement, effective as of May 16, 2023, by and between MSG Entertainment Holdings, LLC (as successor-in-interest to MSG Entertainment Group, LLC) and the Dolan Family Members (for the DFO G550) (incorporated by reference to Exhibit 10.32 to the Company’s Registration Statement on Form S-1 filed on June 20, 2023). 10.33 Flight Crew Services Agreement, dated May 6, 2019, between DFO and MSG Entertainment Group, LLC (formerly MSG Sports & Entertainment, LLC) (for the Challenger) (incorporated by reference to Exhibit 10.31 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.34 Dry Lease Agreement, dated December 17, 2018, between Sterling2K LLC and MSG Entertainment Group, LLC (formerly MSG Sports & Entertainment, LLC) (for the DFO G550) (incorporated by reference to Exhibit 10.32 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.35 Amendment No. 1 to Dry Lease Agreement, dated as of December 20, 2021, between Sterling2K LLC and MSG Entertainment Group, LLC (for the DFO G550) (incorporated by reference to Exhibit 10.33 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.36 Amendment No. 2 to Dry Lease Agreement, dated December 17, 2018, between Sterling2K LLC and MSG Entertainment Group, LLC (formerly MSG Sports & Entertainment, LLC) (for the DFO G550), effective as of November 4, 2022 (incorporated by reference to Exhibit 10.34 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 51 EXHIBIT NO. DESCRIPTION 10.37 Dry Lease Agreement, dated May 6, 2019, between Brighid Air, LLC and MSG Entertainment Group, LLC (formerly MSG Sports & Entertainment, LLC) (for the Challenger) (incorporated by reference to Exhibit 10.35 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.38 Amendment No. 1 to Dry Lease Agreement, dated as of May 6, 2019, between Brighid Air, LLC and MSG Entertainment Group, LLC (formerly MSG Sports & Entertainment, LLC) (for the Challenger), effective as of August 18, 2022 (incorporated by reference to Exhibit 10.36 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.39 Time Sharing Agreement, dated as of December 20, 2021, between MSG Entertainment Group, LLC and Charles F. Dolan (for the New G550) (incorporated by reference to Exhibit 10.37 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.4 0 Time Sharing Agreement, dated as of December 20, 2021, between Patrick F. Dolan and MSG Entertainment Group, LLC (for the Challenger) (incorporated by reference to Exhibit 10.38 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.41 Form of Time Sharing Agreement between MSG Entertainment Holdings, LLC and Sphere Entertainment Group, LLC (formerly MSG Entertainment Group, LLC) (for the G550) (incorporated by reference to Exhibit 10.39 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.42 Form of Time Sharing Agreement between MSG Entertainment Holdings, LLC and Sphere Entertainment Group, LLC (formerly MSG Entertainment Group, LLC) (for the Challenger) (incorporated by reference to Exhibit 10.40 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.43 Credit Agreement, dated as of June 30, 2022, among MSG National Properties, LLC, MSG Entertainment Group, LLC and certain subsidiaries of MSG National Properties, LLC, as guarantors, the lenders and L/C issuers party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.41 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.44 Security Agreement, dated as of June 30, 2022, among MSG National Properties, LLC, and the other grantors referred to therein, as grantors, and JP Morgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.42 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.45 Arena License Agreement, dated as of April 15, 2020, between MSG Arena, LLC and New York Knicks, LLC (incorporated by reference to Exhibit 10.43 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). * 10.46 Arena License Agreement, dated as of April 15, 2020, between MSG Arena, LLC and New York Rangers, LLC (incorporated by reference to Exhibit 10.44 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). * 10.47 Sponsorship Sales and Representation Agreement, dated as of April 15, 2020, between New York Rangers, LLC and MSG Entertainment Group, LLC (incorporated by reference to Exhibit 10.45 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.48 Sponsorship Sales and Representation Agreement, dated as of April 15, 2020, between Knicks Holdings, LLC and MSG Entertainment Group, LLC (incorporated by reference to Exhibit 10.46 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). 10.49 Transaction Agreement, dated as of April 18, 2023, among MSG Arena, LLC, MSG Arena Holdings, LLC, MSG National Properties, LLC, MSG Entertainment Holdings, LLC, Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.), Sphere Entertainment Co. (formerly Madison Square Garden Entertainment Corp.), Sphere Entertainment Group, LLC (formerly MSG Entertainment Group, LLC), and the National Basketball Association (incorporated by reference to Exhibit 10.49 to the Company’s Registration Statement on Form S-1 filed on June 20, 2023). 10.5 0 Employment Agreement, dated as of April 20, 2023 between Madison Square Garden Entertainment Corp. (formerly MSGE Spinco, Inc.) and James L. Dolan (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on April 24, 2023). † 10.51 Employment Agreement, dated December 20, 2021, between Madison Square Garden Entertainment Corp. and David F. Byrnes, as assigned to MSGE Spinco, Inc. (incorporated by reference to Exhibit 10.51 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). † 10.52 Employment Agreement, dated October 26, 2021, between Madison Square Garden Entertainment Corp. and Jamal Haughton, as assigned to MSGE Spinco, Inc. (incorporated by reference to Exhibit 10.50 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). † 52 EXHIBIT NO. DESCRIPTION 10.53 Employment Agreement, dated November 17, 2021, between Madison Square Garden Entertainment Corp. and Philip D’Ambrosio, as assigned to MSGE Spinco, Inc. (incorporated by reference to Exhibit 10.49 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). † 10.54 Employment Agreement, effective April 1, 2023, between Madison Square Garden Entertainment Corp. and Philip D’Ambrosio (incorporated by reference to Exhibit 10.1 to the Company ’ s Current Report on Form 8-K filed on J une 2, 2023) . † 10.55 Employment Agreement, dated March 23, 2022, between Madison Square Garden Entertainment Corp. and Courtney Zeppetella, as assigned to MSGE Spinco, Inc. (incorporated by reference to Exhibit 10.52 to the Company’s Registration Statement on Form 10 filed on March 30, 2023). † 10.56 Delayed Draw Term Loan Credit Agreement, dated as of April 20, 2023, between Sphere Entertainment Co. (formerly Madison Square Garden Entertainment Corp.), as Borrower, and MSG Entertainment Holdings, LLC, as Lender (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on April 24, 2023). 10.57 Release, dated April 18, 2023, between Sphere Entertainment Co. (formerly Madison Square Garden Entertainment Corp.) and RCPI Landmark Properties, L.L.C. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 24, 2023). 10.58 Amendment No. 1 to Credit Agreement and Waiver, dated as of April 18, 2023, among MSG National Properties, LLC, the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on April 24, 2023). 10.59 Amendment No. 2 to Credit Agreement, dated as of May 25, 2023, among MSG National Properties, LLC, the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.59 to the Company’s Registration Statement on Form S-1 filed on June 20, 2023). 21.1 Subsidiaries of the Registrant. 23.1 Consent of Deloitte and Touche LLP. 24.1 Power of Attorney (included on signature page to this Annual Report on Form 10-K). 31.1 Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification by the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ** 32.2 Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ** 101 The following materials from Madison Square Garden Entertainment Corp. Annual Report on Form 10-K for the fiscal year ended June 30, 2023, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) consolidated and combined balance sheets, (ii) consolidated and combined statements of operations, (iii) consolidated and combined statements of comprehensive income (loss), (iv) consolidated and combined statements of cash flows, (v) consolidated and combined statements of equity (deficit), and (vi) notes to consolidated and combined financial statements. 104 The cover page from the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 formatted in Inline XBRL and contained in Exhibit 101. _________________ * Certain confidential information, identified by bracketed asterisks “[*****]” has been omitted from this exhibit pursuant to Item 601(b)(10) of Regulation S-K because it is both (i) not material and (ii) would be competitively harmful to the Company if publicly disclosed. ** Furnished herewith. These exhibits shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. † This exhibit is a management contract or a compensatory plan or arrangement. Item 16. Form 10-K Summary The Company has elected not to provide summary information. 53 MADISON SQUARE GARDEN ENTERTAINMENT CORP. SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (in thousands) (Additions) / Deductions Balance at Beginning of Period Charged to Costs and Expenses Charged to Other Accounts Deductions Balance at End of Period Year Ended June 30, 2023 Allowance for doubtful accounts / credit losses $ ( 3,710 ) $ ( 81 ) $ — $ 3,319 $ ( 472 ) Deferred tax valuation allowance ( 151,043 ) 34,147 21,544 (a) — ( 95,352 ) $ ( 154,753 ) $ 34,066 $ 21,544 $ 3,319 $ ( 95,824 ) Year Ended June 30, 2022 Allowance for doubtful accounts / credit losses $ ( 4,167 ) $ ( 166 ) $ — $ 623 $ ( 3,710 ) Deferred tax valuation allowance ( 119,135 ) ( 31,679 ) ( 229 ) — ( 151,043 ) $ ( 123,302 ) $ ( 31,845 ) $ ( 229 ) $ 623 $ ( 154,753 ) Year Ended June 30, 2021 Allowance for doubtful accounts / credit losses $ ( 3,926 ) $ ( 887 ) $ — $ 646 $ ( 4,167 ) Deferred tax valuation allowance ( 39,030 ) ( 70,501 ) ( 9,604 ) — ( 119,135 ) $ ( 42,956 ) $ ( 71,388 ) $ ( 9,604 ) $ 646 $ ( 123,302 ) _________________ (a) Prior to the MSGE Distribution, the Company’s collection for ticket sales, sponsorships and suite rentals in advance were recorded as deferred revenue and were recognized as revenues when earned for both accounting and tax purposes. The tax recognition on most of this deferred revenue was accelerated to the date of the MSGE Distribution and is the responsibility of Sphere Entertainment. The Company will not reimburse Sphere Entertainment for such taxes. At the time of the MSGE Distribution, the Company recorded a deferred tax asset and a corresponding valuation allowance of $ 71,395 with regard to the deferred revenue acceleration for income tax purposes. Additionally, the Company’s historical consolidated and combined financial statements for periods prior to the MSGE Distribution reflect net operating losses (“NOLs”) and tax credits calculated on a separate return basis. These NOL carryforwards were calculated as if the Company operated as a separate stand-alone entity. Due to the MSGE Distribution, the NOLs and tax credits did not carry over to the Company in the amount of $ 106,272 and was recorded to deferred tax liability with an equal and offsetting entry to the valuation allowance. Additionally, $ 13,333 was recorded related to other deferred taxes with an equal and offsetting entry to the valuation allowance. 54 SIGNATURES Pursuant to the requirements of the Section 13 or 15(d) the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 18 th day of August 2023. Madison Square Garden Entertainment Corp. By: /s/ DAVID F. BYRNES Name: David F. Byrnes Title: Executive Vice President and Chief Financial Officer (Principal Financial Officer) POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David F. Byrnes, Jamal H. Haughton, and Courtney M. Zeppetella, and each of them, as such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for such person in such person’s name, place and stead, in any and all capacities, to sign this report, and file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons in the capacities and on the dates indicated. Name Title Date /s/ JAMES L. DOLAN Executive Chairman and Chief Executive Officer (Principal Executive Officer) and Director August 18, 2023 James L. Dolan /s/ DAVID F. BYRNES Executive Vice President and Chief Financial Officer (Principal Financial Officer) August 18, 2023 David F. Byrnes /s/ COURTNEY M. ZEPPETELLA Senior Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer) August 18, 2023 Courtney M. Zeppetella /s/ MARTIN BANDIER Director August 18, 2023 Martin Bandier /s/ DONNA M. COLEMAN Director August 18, 2023 Donna M. Coleman /s/ CHARLES F. DOLAN Director August 18, 2023 Charles F. Dolan /s/ CHARLES P. DOLAN Director August 18, 2023 Charles P. Dolan 55 Name Title Date /s/ MARIANNE DOLAN WEBER Director August 18, 2023 Marianne Dolan Weber /s/ PAUL J. DOLAN Director August 18, 2023 Paul J. Dolan /s/ QUENTIN F. DOLAN Director August 18, 2023 Quentin F. Dolan /s/ RYAN T. DOLAN Director August 18, 2023 Ryan T. Dolan /s/ THOMAS C. DOLAN Director August 18, 2023 Thomas C. Dolan /s/ FREDERIC V. SALERNO Director August 18, 2023 Frederic V. Salerno /s/ BRIAN G. SWEENEY Director August 18, 2023 Brian G. Sweeney 56 INDEX TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm ( Deloitte & Touche LLP , New York, NY , Auditor Firm ID: 34 ) F - 2 Consolid ated and Combined Balance Sheets as of June 30, 20 23 and 2022 F - 3 Consolidated and Combined Statements of Operations for the fiscal years ended June 30, 2023, 2022, and 2021 F - 4 C onsolidated and Combined Statements of Comprehensive Income ( Loss ) for the fiscal years ended June 30, 2023, 2022, and 2021 F - 5 Consolidated and Combined Statements of Cash Flows for the fiscal years ended June 30, 2023, 2022, and 2021 F- 6 Consolidated and Combined Statements of Equity (Deficit) for the fiscal years ended June 30, 202 3, 2022, and 2021 F- 7 Notes to the Consolidated and Combined Financial Statements F- 8 F - 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Madison Square Garden Entertainment Corp. Opinion on the Financial Statements We have audited the accompanying consolidated and combined balance sheets of Madison Square Garden Entertainment Corp. and subsidiaries (the "Company") as of June 30, 2023 and 2022, the related consolidated and combined statements of operations, comprehensive income (loss), cash flows, and equity (deficit) for each of the three years in the period ended June 30, 2023, and the related notes and financial statement Schedule II listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Emphasis of Matter As described in Notes 1 and 17 to the financial statements, the financial statements were derived from the consolidated financial statements and accounting records of Sphere Entertainment Co. These financial statements include transactions with related parties and allocations for certain support functions that are provided on a centralized basis, which may not be indicative of the conditions that would have existed, or 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 operated without such affiliations and had been a stand-alone company during the periods presented. /s/ Deloitte & Touche LLP New York, New York August 18, 2023 We have served as the Company's auditor since 2022. F - 2 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONSOLIDATED AND COMBINED BALANCE SHEETS (in thousands, except per share data) June 30, 2023 2022 ASSETS Current Assets: Cash, cash equivalents and restricted cash $ 84,355 $ 62,573 Accounts receivable, net 63,898 102,501 Related party receivables, current 69,466 96,938 Prepaid expenses and other current assets 77,562 79,441 Total current assets 295,281 341,453 Non-Current Assets: Property and equipment, net 628,888 696,079 Right-of-use lease assets 235,790 271,154 Goodwill 69,041 69,041 Intangible assets, net 63,801 65,439 Other non-current assets 108,356 83,535 Total assets $ 1,401,157 $ 1,526,701 LIABILITIES AND DEFICIT Current Liabilities: Accounts payable, accrued and other current liabilities $ 214,725 $ 221,961 Related party payables, current 47,281 72,683 Long-term debt, current 16,250 8,762 Operating lease liabilities, current 36,529 39,006 Deferred revenue 225,855 202,678 Total current liabilities 540,640 545,090 Non-Current Liabilities: Long-term debt, net of deferred financing costs 630,184 654,912 Operating lease liabilities, non-current 219,955 254,114 Deferred tax liabilities, net 23,518 23,253 Other non-current liabilities 56,332 50,921 Total liabilities 1,470,629 1,528,290 Commitments and contingencies (see Note 11) Deficit: Class A Common Stock (a) 450 — Class B Common Stock (b) 69 — Additional paid-in capital 17,727 — Treasury stock at cost ( 840 shares as of June 30, 2023) ( 25,000 ) — Sphere Entertainment Co. investment — 33,265 Accumulated deficit ( 28,697 ) — Accumulated other comprehensive loss ( 34,021 ) ( 34,740 ) Total MSG Entertainment stockholders’ deficit ( 69,472 ) ( 1,475 ) Nonredeemable noncontrolling interests — ( 114 ) Total deficit ( 69,472 ) ( 1,589 ) Total liabilities and deficit $ 1,401,157 $ 1,526,701 _________________ (a) Class A Common Stock, $ 0.01 par value per share, 120,000 shares authorized; 45,024 shares issued as of June 30, 2023. (b) Class B Common Stock, $ 0.01 par value per share, 30,000 shares authorized; 6,867 shares issued as of June 30, 2023. See accompanying notes to the consolidated and combined financial statements. F - 3 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (in thousands, except per share data) Years Ended June 30, 2023 2022 2021 Revenues (a) $ 851,496 $ 653,490 $ 81,812 Direct operating expenses (a) ( 499,929 ) ( 417,301 ) ( 96,236 ) Selling, general and administrative expenses (a) ( 180,216 ) ( 167,132 ) ( 136,597 ) Depreciation and amortization ( 60,463 ) ( 69,534 ) ( 71,576 ) Gains, net on dispositions 4,361 — — Restructuring charges ( 10,241 ) ( 5,171 ) ( 14,691 ) Operating income (loss) 105,008 ( 5,648 ) ( 237,288 ) Interest income (a) 7,244 7,150 6,442 Interest expense ( 51,869 ) ( 53,110 ) ( 33,735 ) Loss on extinguishment of debt — ( 35,629 ) — Other income (expense), net 17,389 ( 49,033 ) 50,622 Income (loss) from operations before income taxes 77,772 ( 136,270 ) ( 213,959 ) Income tax (expense) benefit ( 1,728 ) 70 ( 5,349 ) Net income (loss) 76,044 ( 136,200 ) ( 219,308 ) Less: Net loss attributable to nonredeemable noncontrolling interest ( 553 ) ( 2,864 ) ( 694 ) Net income (loss) attributable to MSG Entertainment’s stockholders $ 76,597 $ ( 133,336 ) $ ( 218,614 ) Earnings (loss) per share attributable to MSG Entertainment’s stockholders: Basic $ 1.48 $ ( 2.58 ) $ ( 4.22 ) Diluted $ 1.47 $ ( 2.58 ) $ ( 4.22 ) Weighted-average number of shares of common stock: Basic 51,819 51,768 51,768 Diluted 52,278 51,768 51,768 _________________ (a) See Note 17. Related Party Transactions for further information on related party arrangements. See accompanying notes to the consolidated and combined financial statements. F - 4 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Years Ended June 30, 2023 2022 2021 Net income (loss) $ 76,044 $ ( 136,200 ) $ ( 219,308 ) Other comprehensive loss, before income taxes: Pension plans and postretirement plans: Net unamortized losses arising during the period ( 1,496 ) ( 2,805 ) ( 5,168 ) Amortization of net actuarial loss included in net periodic benefit cost 520 1,420 1,191 Curtailments — — 156 Settlement loss 5 — 870 Other comprehensive loss, before income taxes ( 971 ) ( 1,385 ) ( 2,951 ) Income tax benefit related to items of other comprehensive income 176 243 461 Other comprehensive loss, net of income taxes ( 795 ) ( 1,142 ) ( 2,490 ) Comprehensive income (loss) 75,249 ( 137,342 ) ( 221,798 ) Less: Comprehensive loss attributable to nonredeemable noncontrolling interests ( 553 ) ( 2,864 ) ( 694 ) Comprehensive income (loss) attributable to MSG Entertainment’s stockholders $ 75,802 $ ( 134,478 ) $ ( 221,104 ) See accompanying notes to the consolidated and combined financial statements. F - 5 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (in thousands) Years Ended June 30, 2023 2022 2021 OPERATING ACTIVITIES: Net income (loss) $ 76,044 $ ( 136,200 ) $ ( 219,308 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 60,463 69,534 71,576 Share-based compensation expense 31,813 39,357 40,663 Amortization of deferred financing costs 3,221 6,781 4,315 Provision for deferred income taxes 720 225 566 Related party paid in kind interest ( 3,189 ) ( 3,582 ) ( 4,952 ) Net unrealized (gain) loss on equity investments with readily determinable fair value ( 16,050 ) 49,842 ( 53,505 ) Provision for doubtful accounts (credit losses) 81 166 887 Non-cash lease expense 12,807 11,717 5,460 Gains, net on dispositions ( 4,361 ) — — Loss on extinguishment of debt — 35,629 — Write-off of deferred production costs — — 942 Change in assets and liabilities: Accounts receivable, net 38,844 ( 34,861 ) ( 18,819 ) Related party receivables, net of payables ( 43,037 ) 19,535 24,631 Prepaid expenses and other current and non-current assets ( 31,363 ) ( 42,408 ) ( 10,838 ) Accounts payable, accrued and other current and non-current liabilities ( 696 ) 87,556 ( 9,523 ) Deferred revenue 24,254 4,173 19,677 Operating lease right-of-use assets and lease liabilities ( 13,857 ) ( 12,113 ) 110 Net cash provided by (used in) operating activities $ 135,694 $ 95,351 $ ( 148,118 ) INVESTING ACTIVITIES Capital expenditures ( 15,188 ) ( 15,797 ) ( 10,315 ) (Purchase) proceeds from sale of investments 24,289 ( 350 ) 21,976 Proceeds from dispositions, net 27,904 — — Proceeds from loan receivable — 68,367 — Loan to related parties ( 6,700 ) ( 6,780 ) ( 22,000 ) Net cash provided by (used in) investing activities $ 30,305 $ 45,440 $ ( 10,339 ) FINANCING ACTIVITIES Proceeds from issuance of term loan, net of issuance discount $ 304 $ 650,000 $ 630,500 Principal repayments on long-term debt ( 20,126 ) ( 646,750 ) ( 3,250 ) Proceeds from revolving credit facilities — 29,100 — Stock repurchases ( 25,000 ) — — Debt extinguishment costs — ( 12,838 ) — Payments for debt financing costs — ( 16,060 ) ( 14,417 ) Net transfers to Sphere Entertainment and Sphere Entertainment’s subsidiaries ( 99,395 ) ( 399,739 ) ( 139,345 ) Net cash provided by (used in) financing activities $ ( 144,217 ) $ ( 396,287 ) $ 473,488 Net increase (decrease) in cash, cash equivalents and restricted cash 21,782 ( 255,496 ) 315,031 Cash, cash equivalents and restricted cash at beginning of period 62,573 318,069 3,038 Cash, cash equivalents and restricted cash at end of period $ 84,355 $ 62,573 $ 318,069 Non-cash investing and financing activities: Capital expenditures incurred but not yet paid $ 761 $ 1,585 $ 1,083 Related party loan payable assigned to the Company $ 53,656 $ — $ — Non-cash reduction of loan receivable from related party $ 5,350 $ 4,019 $ — See accompanying notes to the consolidated and combined financial statements. F - 6 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY (DEFICIT) (in thousands) Common Stock Sphere Entertainment Co. Investment Additional Paid-Capital Treasury Stock Accumulated deficit Accumulated Other Comprehensive Loss Total Madison Square Garden Entertainment Corp. Stockholders’ Equity (Deficit) Non-redeemable Noncontrolling Interests Total Equity (Deficit) Balance as of June 30, 2020 $ — $ 846,274 $ — $ — $ — $ ( 31,108 ) $ 815,166 $ 3,444 $ 818,610 Net loss — ( 218,614 ) — — — — ( 218,614 ) ( 694 ) ( 219,308 ) Other comprehensive loss — — — — — ( 2,490 ) ( 2,490 ) — ( 2,490 ) Comprehensive loss — — — — — — ( 221,104 ) ( 694 ) ( 221,798 ) Net decrease in Sphere Entertainment Co. Investment — ( 98,160 ) — — — — ( 98,160 ) — ( 98,160 ) Balance as of June 30, 2021 $ — $ 529,500 $ — $ — $ — $ ( 33,598 ) $ 495,902 $ 2,750 $ 498,652 Net loss — ( 133,336 ) — — — — ( 133,336 ) ( 2,864 ) ( 136,200 ) Other comprehensive loss — — — — — ( 1,142 ) ( 1,142 ) — ( 1,142 ) Comprehensive loss — — — — — — ( 134,478 ) ( 2,864 ) ( 137,342 ) Net decrease in Sphere Entertainment Co. Investment — ( 362,899 ) — — — — ( 362,899 ) — ( 362,899 ) Balance as of June 30, 2022 $ — $ 33,265 $ — $ — $ — $ ( 34,740 ) $ ( 1,475 ) $ ( 114 ) $ ( 1,589 ) Net income — 105,294 — — ( 28,697 ) — 76,597 ( 553 ) 76,044 Other comprehensive loss — — — — — ( 795 ) ( 795 ) — ( 795 ) Comprehensive income (loss) — — — — — — 75,802 ( 553 ) 75,249 Share-based compensation — — 5,981 — — — 5,981 — 5,981 BCE Disposition — — — — — — — 667 667 Net decrease in Sphere Entertainment Co. Investment — ( 105,794 ) — — — — ( 105,794 ) — ( 105,794 ) Issuance of common stock and reclassification of Sphere Entertainment Co. Investment 519 ( 32,765 ) 11,996 — — 1,514 ( 18,736 ) — ( 18,736 ) Stock repurchases, inclusive of tax — — ( 250 ) ( 25,000 ) — — ( 25,250 ) — ( 25,250 ) Balance as of June 30, 2023 $ 519 $ — $ 17,727 $ ( 25,000 ) $ ( 28,697 ) $ ( 34,021 ) $ ( 69,472 ) $ — $ ( 69,472 ) See accompanying notes to the consolidated and combined financial statements. F - 7 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS All amounts included in the following Notes to Consolidated and Combined Financial Statements are presented in thousands, except as otherwise noted. Note 1. Description of Business and Basis of Presentation Description of Business Madison Square Garden Entertainment Corp., formerly MSGE Spinco, Inc. (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 operates and reports financial information in one reportable segment. The Company’s decision to organize as one reportable segment is based upon its internal organizational structure, the manner in which its operations are managed, and the criteria used by the Company’s Executive Chairman and Chief Executive Officer, its Chief Operating Decision Maker (“CODM”), to evaluate segment performance. The Company’s CODM reviews total company operating results to assess overall performance and allocate resources. The Company’s portfolio of venues includes: Madison Square Garden (“The Garden”), The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, and The Chicago Theatre. The Company also owns and produces the original production, the Christmas Spectacular Starring the Radio City Rockettes (the “ Christmas Spectacular ”). The Company also has an entertainment and sports bookings business, which showcases a broad array of compelling concerts, family shows and special events, as well as a diverse mix of sporting events, for millions of guests annually. The Company conducts a significant portion of its operations at venues that it either owns or operates under long-term leases. The Company owns The Garden, The Theater at Madison Square Garden and The Chicago Theatre, and leases Radio City Music Hall and the Beacon Theatre. All of the Company’s revenues and assets are attributed to or located in the United States and are primarily concentrated in the New York City metropolitan area. MSG Entertainment Distribution On April 20, 2023 (the “MSGE 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 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 Distribution. As a result, the Company became an independent publicly traded company on April 21, 2023 through the MSGE Distribution. As of August 9, 2023, Sphere Entertainment owned approximately 17 % of the outstanding common stock of the Company (in the form of Class A common stock). In the MSGE Distribution, stockholders of Sphere Entertainment received (a) one share of MSG Entertainment’s Class A common stock, par value $ 0.01 per share (“Class A common stock”), 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 (“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. Basis of Presentation The Company reports on a fiscal year basis ending on June 30. In these consolidated and combined financial statements, the fiscal years ended June 30, 2023, 2022, and 2021 are referred to as “Fiscal Year 2023”, “Fiscal Year 2022”, and “Fiscal Year 2021”, respectively, and the fiscal year ending June 30, 2024 is referred to as “Fiscal Year 2024”. Subsequent to the MSGE Distribution, the Company’s financial statements as of June 30, 2023 and for the period from April 21, 2023 to June 30, 2023 included in the year ended June 30, 2023 are presented on a consolidated basis, as the Company became a standalone public company on April 21, 2023. The Company’s combined financial statements as of June 30, 2022 and for the years ended June 30, 2022 and 2021, as well as the financial information from July 1, 2022 through April 20, 2023 that is included in the results of operations for the year ended June 30, 2023 were prepared on a stand-alone basis derived from the consolidated financial statements and accounting records of 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 F - 8 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) accepted accounting principles (“GAAP”) 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 . 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 April 21, 2023, separate financial statements had not been prepared for the Company and it has not operated as a stand-alone business from Sphere Entertainment. The 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 combined financial statements are presented as if the Company’s businesses had been combined for all periods presented. The assets and liabilities in the combined financial statements have been reflected on a historical cost basis, as immediately prior to the MSGE Distribution all of the assets and liabilities presented were wholly owned by Sphere Entertainment and are being transferred to the Company at a carry-over basis. The financial information from July 1, 2022 through April 20, 2023 that is included in the results of operations for the year ended June 30, 2023 and the combined statements of operations for the years ended June 30, 2022 and 2021 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, information technology, and venue operations, among others. As part of the MSGE Distribution, certain corporate and operational support functions were transferred to the Company and therefore, charges were reflected in order to 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 expense. After the MSGE Distribution, the Company has been providing certain of these services to Sphere Entertainment through a transition services agreement (“TSA”), since certain employees providing support functions were transferred to the Company as part of the MSGE Distribution. Management believes the assumptions underlying the combined financial statements, including the assumptions regarding allocating general corporate expenses, are reasonable. Nevertheless, the 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. See Note 17. Related Party Transactions for more information regarding allocations of certain costs from the Company to Sphere Entertainment. As of the MSGE Distribution Date, Sphere Entertainment’s net investment in the Company was contributed to Sphere Entertainment’s stockholders through the distribution of approximately 67 % of the common stock of the Company. The par value of the Company’s stock was recorded as a component of common stock, with the remaining balance recorded as retained deficit in the consolidated balance sheet on the MSGE Distribution Date. Impact of the COVID-19 Pandemic The Company’s operations and operating results were not materially impacted by the COVID-19 pandemic during Fiscal Year 2023, as compared to Fiscal Year 2022, which was materially impacted by fewer ticketed events at our venues in the first half of Fiscal Year 2022 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 2022. It is unclear to what extent COVID-19, including variants thereof, or another pandemic or public health emergency, could result in new government- or league-mandated capacity or other restrictions, vaccination/mask requirements, or impact the use of and/or demand for our venues and 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. F - 9 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Note 2. Summary of Significant Accounting Policies A. Principles of Consolidation and Combination Beginning April 21, 2023, the consolidated financial statements of the Company include the accounts of the Company and its subsidiaries. All significant intercompany accounts and balances within the Company’s combined businesses have been eliminated. For the periods prior to the MSGE Distribution Date, the combined financial statements include certain assets and liabilities that were historically held at Sphere Entertainment’s corporate level but were specifically identifiable or otherwise attributable to the Company. Certain historical intercompany transactions between Sphere Entertainment and the Company have been included as components of the Sphere Entertainment’s investment in the combined financial statements, as they are considered to be effectively settled upon effectiveness of the MSGE 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 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 Distribution are considered to be effectively settled in the combined financial statements at the time the transaction is recorded, with the offset recorded against Sphere Entertainment’s investment in the Company. See Note 17. 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 consolidated and 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 consolidated and combined financial statements in conformity with U.S. 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, 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 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 consolidated and combined financial statements in future periods. C. Revenue Recognition The Company recognizes revenue when, or as, performance obligations under the terms of a contract are satisfied, which generally occurs when, or as, control of promised goods or services is transferred to customers. Revenue is measured as the amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services (“transaction price”). To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the most likely amount to which the Company expects to be entitled. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and the determination of whether to include such estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information that is reasonably available. The Company accounts for taxes collected from customers and remitted to governmental authorities on a net basis and excludes these amounts from revenues. In addition, the Company defers certain costs to fulfill the Company’s contracts with customers to the extent such costs relate directly to the contracts, are expected to generate resources that will be used to satisfy the Company’s performance obligations under the contracts, and are expected to be recovered through revenue generated under the contracts. Contract fulfillment costs are expensed as the Company satisfies the related performance obligations. F - 10 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Arrangements with Multiple Performance Obligations The Company enters into arrangements with multiple performance obligations, such as multi-year sponsorship agreements, which may derive revenues for the Company, as well as Sphere Entertainment and MSG Sports within a single arrangement. The Company also derives revenue from similar types of arrangements which are entered into by MSG Sports. Payment terms for such arrangements can vary by contract, but payments are generally due in installments throughout the contractual term. The performance obligations included in each sponsorship agreement vary and may include advertising and other benefits such as, but not limited to, signage at The Garden and the Company’s other venues, digital advertising, event or property-specific advertising, as well as non-advertising benefits such as suite licenses and event tickets. To the extent the Company’s multi-year arrangements provide for performance obligations that are consistent over the multi-year contractual term, such performance obligations generally meet the definition of a series as provided for under the accounting guidance. If performance obligations are concluded to meet the definition of a series, the contractual fees for all years during the contract term are aggregated and the related revenue is recognized proportionately as the underlying performance obligations are satisfied. The timing of revenue recognition for each performance obligation is dependent upon the facts and circumstances surrounding the Company’s satisfaction of its respective performance obligation. The Company allocates the transaction price for such arrangements to each performance obligation within the arrangement based on the estimated relative standalone selling price of the performance obligation. The Company’s process for determining its estimated standalone selling prices involves management’s judgment and considers multiple factors including company specific and market specific factors that may vary depending upon the unique facts and circumstances related to each performance obligation. Key factors considered by the Company in developing an estimated standalone selling price for its performance obligations include, but are not limited to, prices charged for similar performance obligations, the Company’s ongoing pricing strategy and policies, and consideration of pricing of similar performance obligations sold in other arrangements with multiple performance obligations. The Company may incur costs such as commissions to obtain its multi-year sponsorship agreements. The Company assesses such costs for capitalization on a contract by contract basis. To the extent costs are capitalized, the Company estimates the useful life of the related contract asset, which may be the underlying contract term or the estimated customer life depending on the facts and circumstances surrounding the contract. The contract asset is amortized over the estimated useful life. Principal versus Agent Revenue Recognition The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service before transfer to the customer. When the Company concludes that it controls the good or service before transfer to the customer, the Company is considered a principal in the transaction and records revenue on a gross basis. When the Company concludes that it does not control the good or service before transfer to the customer but arranges for another entity to provide the good or service, the Company acts as an agent and records revenue on a net basis in the amount it earns for its agency service. Contract Balances Amounts collected in advance of the Company’s satisfaction of its contractual performance obligations are recorded as a contract liability within deferred revenue, and are recognized as the Company satisfies the related performance obligations. Amounts collected in advance of events for which the Company is not the promoter or co-promoter do not represent contract liabilities and are recorded within accrued and other current liabilities on the accompanying consolidated and combined balance sheets. Amounts recognized as revenue for which the Company has a right to consideration for goods or services transferred to customers and for which the Company does not have an unconditional right to bill as of the reporting date are recorded as contract assets. Contract assets are transferred to accounts receivable once the Company’s right to consideration becomes unconditional. D. Direct Operating Expenses Direct operating expenses include, but are not limited to, event costs related to the presentation and production of the Company’s live entertainment and sporting events, revenue sharing expenses associated with signage, sponsorship and suite license fee revenue and in-venue food and beverage sales that are attributable to MSG Sports and venue lease, maintenance, and other operating expenses. F - 11 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Production Costs for the Company’s Original Productions The Company defers certain costs of productions such as creative design, scenery, wardrobes, rehearsal and other related costs for the Company’s proprietary shows. Deferred production costs are amortized on a straight-line basis over the course of a production’s performance period using the expected life of a show’s assets. Deferred production costs are subject to recoverability assessments whenever there is an indication of potential impairment . Revenue Sharing Expenses Revenue sharing expenses are determined based on contractual agreements between the Company and MSG Sports, primarily related to suite license, certain internal signage and in-venue food and beverage sales. E. Advertising Expenses Advertising costs are typically charged to expense when incurred. Total advertising costs expensed were $ 8,832 , $ 7,995 , and $ 269 for Fiscal Years 2023, 2022 and 2021, respectively. F. Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC Topic 740”). The Company’s provision for income taxes is based on current period income, changes in deferred tax assets and liabilities, and changes in estimates with regard to uncertain tax positions. Deferred tax assets are subject to an ongoing assessment of realizability. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company’s ability to realize its deferred tax assets depends upon the generation of sufficient future taxable income to allow for the realization of its deductible temporary differences. Interest and penalties, if any, associated with uncertain tax positions are included in income tax expense. Prior to the MSGE Distribution and for periods presented prior to April 21, 2023, income tax expense has been recorded as if the Company filed tax returns on a standalone basis separate from Sphere Entertainment. This separate return methodology applies to accounting guidance for income taxes in the combined financial statements as if the Company was a standalone public company for the periods prior to the MSGE Distribution. Therefore, cash tax payments and items of current and deferred taxes may not be reflective of the Company’s actual tax balances prior to or subsequent to the MSGE Distribution. Prior to the MSGE Distribution, the Company's operating results were included in Sphere Entertainment’s consolidated U.S. federal and state income tax returns. Pursuant to rules promulgated by the Internal Revenue Service and various state taxing authorities, the Company expects to file its initial U.S. income tax return for the period from April 21, 2023 through June 30, 2023. In addition, although deferred tax assets have been recognized for NOLs and tax credits in accordance with the separate return method, such NOLs and credits did not carry over with the Company in connection with the MSGE Distribution. G. Share-based Compensation For periods prior to the MSGE Distribution Date, certain employees of the Company participated in Sphere Entertainment’s share-based compensation plans. Share-based compensation expense has been attributed to the Company based on the awards and terms previously granted to Sphere Entertainment’s employees. For purposes of the consolidated and combined financial statements, an allocation to Sphere Entertainment of share-based compensation expense related to corporate employees was recorded. In addition, Share-based compensation expense attributed to the Company’s direct employees was recorded in the combined financial statements. Share-based compensation expense related to directors and corporate executives of Sphere Entertainment has been allocated on a proportional basis, which management has deemed to be reasonable. Following the MSGE Distribution, the Company measures the cost of employee services received in exchange for an award of equity-based instruments based on the grant date fair value of the award. Share-based compensation cost is recognized in earnings over the period during which an employee is required to provide service in exchange for the award, except for restricted stock units granted to non-employee directors which, unless otherwise provided under the applicable award agreement, are fully vested, and are expensed at the grant date. The Company accounts for forfeitures as they occur, rather than estimating expected forfeitures. H. Earnings (Loss) Per Share For the periods after the MSGE Distribution Date, basic earnings per share (“EPS”) attributable to the Company’s common stockholders is based upon net income (loss) attributable to the Company’s common stockholders divided by the weighted-average number of shares of common stock outstanding during the period. Diluted EPS reflects the effect of the assumed F - 12 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) vesting of restricted stock units and exercise of stock options only in the periods in which such effect would have been dilutive. For the periods when a net loss is reported, the computation of diluted EPS equals the basic EPS calculation since common stock equivalents were antidilutive due to losses from continuing operations. Holders of Class A common stock and Class B common stock are entitled to receive dividends equally on a per-share basis if and when such dividends are declared. As the holders of Class A and Class B common stock are entitled to identical dividend and liquidation rights, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net earnings (loss) per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both an individual and combined basis. On the MSGE Distribution Date, 51,768 shares of common stock of the Company, inclusive of 17,021 shares of Class A common stock 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 Fiscal Years 2022 and 2021 because the Company was not a standalone public company prior to the MSGE Distribution. In addition, for Fiscal Years 2022 and 2021 the computation of diluted earnings per share equals the basic earnings (loss) per 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. I. Cash and Cash Equivalents The Company considers the balance of its investment in funds that substantially hold highly liquid securities that mature within three months or less from the date the fund purchases these securities to be cash equivalents. The carrying amount of cash and cash equivalents either approximates fair value due to the short-term maturity of these instruments or is at fair value. Checks outstanding in excess of related book balances are included in accounts payable in the accompanying consolidated and combined balance sheets. The Company presents the change in these book cash overdrafts as cash flows from operating activities. J. Restricted Cash 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 its workers compensation and general liability insurance obligations. The carrying amount of restricted cash approximates fair value due to the short-term maturity of these instruments. K. Short-Term Investments Short-term investments include investments that (i) have original maturities of greater than three months and (ii) the Company has the ability to convert into cash within one year. The Company classifies its short-term investments at the time of purchase as “held-to-maturity” and re-evaluates its classification quarterly based on whether the Company has the intent and ability to hold until maturity. Short-term investments, which are recorded at cost and adjusted for accrued interest, approximate fair value. Cash inflows and outflows related to the sale and purchase of short-term investments are classified as investing activities in the Company’s consolidated and combined statements of cash flows. L. Accounts Receivable Accounts receivable are recorded at net realizable value. The Company maintains an allowance for credit losses to reserve for potentially uncollectible receivables. The allowance for credit losses is estimated based on the Company’s consideration of credit risk and analysis of receivables aging, specific identification of certain receivables that are at risk of not being paid, past collection experience and other factors. The Company recognized an allowance of $ 472 and $ 3,710 for Fiscal Years 2023 and 2022, respectively. M. Investments in Equity Securities For the Company’s equity investments with readily determinable fair values, changes in the fair value of those investments are measured quarterly and are recorded within Other income (expense), net in the accompanying consolidated and combined statements of operations. N. Property and Equipment and Other Long-Lived Assets Property and equipment and other long-lived assets, including amortizable intangible assets, are stated at cost or acquisition date fair value, if acquired. Expenditures for new facilities or equipment, and expenditures that extend the useful lives of F - 13 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) existing facilities or equipment, are capitalized and recorded at cost. The useful lives of the Company’s long-lived assets are based on estimates of the period over which the Company expects the assets to be of economic benefit to the Company. In estimating the useful lives, the Company considers factors such as, but not limited to, risk of obsolescence, anticipated use, plans of the Company, and applicable laws and permit requirements. Depreciation starts on the date when the asset is available for its intended use. Construction in progress assets are not depreciated until available for their intended use. Costs of maintenance and repairs are expensed as incurred. The major categories of property and equipment are depreciated on a straight-line basis using the estimated lives indicated below: Estimated Useful Lives Buildings Up to 40 years Equipment 1 year to 20 years Furniture and fixtures 1 year to 10 years Leasehold improvements Shorter of term of lease or useful life of improvement Intangible assets with finite lives are amortized principally using the straight-line method over the following estimated useful lives: Estimated Useful Lives Trade names 7 years Festival rights 7 years Other intangibles 15 years O. Goodwill and Indefinite-Lived Assets Under the acquisition method of accounting, the Company recognizes separately from goodwill the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquiree, generally at the acquisition date fair value. The Company measures goodwill as of the acquisition date as the excess of consideration transferred, which is also measured at fair value over the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed. Costs that the Company incurs to complete a business combination such as investment banking, legal, and other professional fees are not considered part of consideration and the Company charges these costs to selling, general and administrative expense as they are incurred. In addition, the Company recognizes measurement-period adjustments in the period in which the amount is determined, including the effect on earnings of any amounts the Company would have recorded in previous periods if the accounting had been completed at the acquisition date. Goodwill and identifiable intangible assets that have indefinite useful lives are not amortized. P. Impairment of Long-Lived and Indefinite-Lived Assets In assessing the recoverability of the Company’s long-lived and indefinite-lived assets, the Company must make estimates and assumptions regarding future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the magnitude of any such charge. Fair value estimates are made based on relevant information at a specific point in time, and are subjective in nature and involve significant uncertainties and judgments. If these estimates or assumptions change materially, the Company may be required to record impairment charges related to its long-lived and/or indefinite-lived assets. Goodwill is tested annually for impairment as of August 31 st and at any time upon the occurrence of certain events or changes in circumstances. The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would not need to perform a quantitative impairment test for that reporting unit. If the Company cannot support such a conclusion or the Company does not elect to perform the qualitative assessment, the Company would identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company generally determines the fair value of a reporting unit using an income approach, such as the discounted cash flow method, or other acceptable valuation techniques, including the cost approach, in instances when it does not perform the qualitative assessment of goodwill. The amount of an impairment loss is measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. F - 14 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Identifiable indefinite-lived intangible assets are tested annually for impairment as of August 31 st and at any time upon the occurrence of certain events or substantive changes in circumstances. The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. In the qualitative assessment, the Company must evaluate the totality of qualitative factors, including any recent fair value measurements, that impact whether an indefinite-lived intangible asset other than goodwill has a carrying amount that more likely than not exceeds its fair value. The Company must proceed to conducting a quantitative analysis if the Company (i) determines that such an impairment is more likely than not to exist, or (ii) foregoes the qualitative assessment entirely. Under the quantitative assessment, the impairment test for identifiable indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, then an impairment loss is recognized in an amount equal to that excess. The Company generally determines the fair value of an indefinite-lived intangible asset using an income approach, such as the relief from royalty method, in instances when it does not perform the qualitative assessment of the intangible asset. For other long-lived assets, including property and equipment, right-of-use (“ROU”) lease assets and intangible assets that are amortized, the Company evaluates assets for recoverability when there is an indication of potential impairment. If the undiscounted cash flows from a group of assets being evaluated is less than the carrying value of that group of assets, the fair value of the asset group is determined and the carrying value of the asset group is written down to fair value. The Company generally determines the fair value of a finite-lived intangible asset using an income approach, such as the discounted cash flow method. See Note 10. Goodwill and Intangible Assets for further discussion of impairment of goodwill and indefinite-lived intangibles. Q. Leases The Company’s leases primarily consist of certai n venues, c orporate office space, storage and, to a lesser extent, office and other equipment. The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the lease term is assessed based on the date when the underlying asset is made available by the lessor for the Company’s use. The Company’s assessment of the lease term reflects the non-cancellable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain not to exercise, as well as periods covered by renewal options which the Company is reasonably certain to exercise. The Company’s lease agreements do not contain material residual value guarantees or material restrictive covenants. The Company determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated and combined statements of operations and statements of cash flows over the lease term. For leases with a term exceeding 12 months, a lease liability is recorded on the Company’s consolidated and combined balance sheets at lease commencement reflecting the present value of the fixed minimum payment obligations over the lease term. A corresponding ROU asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. In addition, the ROU asset is adjusted to reflect any above or below market lease terms under acquired lease contracts. The Company includes fixed payment obligations related to non-lease components in the measurement of ROU assets and lease liabilities, as the Company has elected to account for lease and non-lease components together as a single lease component. ROU assets associated with finance leases are presented separate from ROU assets associated with operating leases and are included within Property and equipment, net on the Company’s consolidated and combined balance sheets. For purposes of measuring the present value of the Company’s fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in the underlying leasing arrangements are typically not readily determinable. The Company’s incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment surrounding the associated lease. For operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For finance leases, the initial ROU asset is depreciated on a straight-line basis over the lease term, along with recognition of interest expense associated with accretion of the lease liability, which is ultimately reduced by the related fixed payments. For leases with a term of 12 months or less, any fixed lease payments are recognized on a straight-line basis over the lease term and are not recognized on the consolidated and combined balance sheets. Variable lease costs for both operating and finance leases, if any, are recognized as incurred and such costs are excluded from lease balances recorded on the consolidated and combined balance sheets. F - 15 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) R. Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. S. Defined Benefit Pension Plans and Other Postretirement Benefit Plans As more fully described in Note 13, Pension Plans and Other Postretirement Benefit Plans certain employees of the Company participated in defined benefit pension plans sponsored by Sphere Entertainment prior to the MSGE Distribution. After the MSGE Distribution, Sphere Entertainment transferred the sponsorship of certain funded defined benefit plans to the Company, The Company accounts for the transferred defined benefit pension plans under the guidance of ASC Topic 715, Compensation — Retirement Benefits (“ASC Topic 715”). Accordingly, for the defined benefit pension plans liabilities, the consolidated and combined financial statements reflected the full impact of such plans on both the consolidated and combined statements of operations and the consolidated and combined balance sheets and the Company recorded an asset or liability to recognize the funded status of the defined benefit pension plans (other than multiemployer plans), as well as a liability only for any required contributions to the defined benefit pension plans that were accrued and unpaid at the balance sheet date. The related pension expenses attributed to the Company were based primarily on pension-eligible compensation of active participants. Actuarial gains and losses that have not yet been recognized through the consolidated and combined statements of operations are recorded in accumulated other comprehensive income (loss) until they are amortized as a component of net periodic benefit cost through other comprehensive income (loss). After the MSGE Distribution Date, the Company has both funded and unfunded defined benefit plans, as well as a contributory other postretirement benefit plan, covering certain full-time employees and retirees. The expense recognized by the Company is determined using certain assumptions, including the expected long-term rate of return and discount rates, among others. The Company recognizes the funded status of its defined benefit pension and other postretirement plans(other than multiemployer plans) as an asset or liability in the consolidated and combined balance sheets and recognizes changes in the funded status in the year in which the changes occur through other comprehensive income (loss). T. Fair Value Measurements The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels: • Level I — Quoted prices for identical instruments in active markets. • Level II — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. • Level III — Instruments whose significant value drivers are unobservable. U. Concentrations of Risk Financial instruments that may potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents are invested in money market accounts and time deposits. The Company monitors the financial institutions and money market funds where it invests its cash and cash equivalents with diversification among counterparties to mitigate exposure to any single financial institution. The Company’s emphasis is primarily on safety of principal and liquidity, and secondarily on maximizing the yield on its investments. F - 16 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) V. Recently Adopted Accounting Pronouncements Recently Adopted Accounting Pronouncements In December 2019, the FASB issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . This ASU eliminates certain exceptions to the general approach in ASC Topic 740 and includes methods of simplification to the existing guidance. This standard was adopted by the Company in the first quarter of Fiscal Year 2022. The adoption of this standard had no impact on the Company’s consolidated and combined financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This ASU provides temporary optional expedients and exceptions to the guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate and other interbank offered rates to alternative reference rates. In January 2021, the FASB issued ASU No. 2021-01, which refines the scope of Topic 848 and clarifies some of its guidance as part of the FASB’s monitoring of global reference rate activities. The new guidance was effective upon issuance, and the Company was allowed to elect to apply the amendments prospectively through December 31, 2022. The Company adopted ASU No. 2020-04 in Fiscal Year 2022. The adoption did not have a material impact on the Company’s consolidated and 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 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 ASC Subtopic 205-20 — Discontinued Operations . The gain on the BCE Disposition was recorded in Gains, net on dispositions in the consolidated and 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 Gains, net on dispositions in the consolidated and combined statements of operations. Note 4. Revenue Recognition For Fiscal Years 2023, 2022 and 2021, all revenue recognized in the consolidated and combined statements of operations is considered to be revenue from contracts with customers in accordance with ASC Topic 606, Revenue From Contracts with Customers (“ASC Topic 606”), except for revenues from Arena License Agreements. In Fiscal Years 2023 and 2022, the Company did not have any material provisions for credit losses on receivables or contract assets arising from contracts with customers. Arena License Agreements In Fiscal Year 2020, the Company entered into Arena License Agreements with MSG Sports that require the Knicks and the Rangers to play their home games at The Garden. These agreements also provide for the provision of certain services by the Company to MSG Sports for MSG Sports events that are held at The Garden and include revenue-sharing provisions for certain agreements entered into by the Company and MSG Sports. The Arena License Agreements contain both lease and non-lease components. The revenue to be recognized with respect to the lease components of the Arena License Agreements is accounted for as operating lease revenue in accordance with ASC Topic 842. The non-lease components are accounted for in accordance with ASC Topic 606, as further discussed below. During Fiscal Years 2023, 2022 and 2021, the Company recognized $ 68,068 , $ 68,072 and $ 21,345 , respectively, of revenues under the Arena License Agreements. F - 17 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Event Related Revenue The Company earns event related revenues principally from the sale of tickets for events that the Company produces or promotes/co-promotes, and from venue license fees charged to third-party promoters for events held at the Company’s venues that the Company does not produce or promote/co-promote. The Company’s performance obligations with respect to event-related revenues from the sale of tickets, venue license fees from third-party promoters, sponsorships, concessions and merchandise are satisfied at the point in time or as the related event occurs. The Company also earns revenue from the provision of various event-related services that are incremental to MSG Sports’ general use of The Garden. The Company’s performance obligations with respect to these event-related services are satisfied as the related event occurs. The Company’s revenues also include revenue from the license of The Garden’s suites for the Company’s or MSG Sports’ events. Suite license arrangements are generally multi-year fixed-fee arrangements that include annual fee increases. Payment terms for suite license arrangements can vary by contract, but payments are generally due in installments prior to each license year. The Company’s performance obligation under such arrangements is to provide the licensee with access to the suite when events occur at The Garden. The Company accounts for the performance obligation under these types of arrangements as a series and, as a result, the related suite license fees for all years during the license term are aggregated and revenue is recognized proportionately over the license period as the Company satisfies the related performance obligation. Progress toward satisfaction of the Company’s annual suite license performance obligation is measured as access to the suite that is provided to the licensee for each event throughout the contractual term of the license. Other Revenue The Company also earns revenues from the sale of advertising in the form of venue signage and other forms of sponsorship, which are not related to any specific event of the Company or MSG Sports. The Company’s performance obligations with respect to this advertising are satisfied as the related benefits are delivered over the term of the respective agreements. Principal vs. Agent Considerations Revenue for the Company’s suite license arrangements is recorded on a gross basis, as the Company is the principal in such transactions and controls the related goods or services before transfer to the customer. MSG Sports is entitled to a share of the Company’s suite license revenue pursuant to the terms of the Arena License Agreements, which is recognized in the consolidated and combined statements of operations as a component of direct operating expenses. For sponsorship agreements entered into by the Company or by MSG Sports that contain performance obligations satisfied solely by the Company, revenue is generally recorded on a gross basis as the Company is the principal with respect to such performance obligations and controls the related goods or services before transfer to the customer. In accordance with the Arena License Agreements, MSG Sports is entitled to a share of the revenue generated from certain signage performance obligations where the Company is the principal. The Company records this signage revenue on a gross basis and MSG Sports’ share of such revenue as a component of direct operating expenses within the consolidated and combined statements of operations. For Fiscal Years 2023, 2022 and 2021, the Company recorded revenue-sharing expense of $ 119,017 , $ 92,086 and $ 558 , respectively, for MSG Sports’ share of the Company’s revenues from (i) suite licenses, (ii) certain signage and sponsorships, and (iii) food and beverage based upon the provisions of the underlying contractual arrangements, and on the basis of direct usage when specifically identified or allocated proportionally for all prior periods. In Fiscal Year 2020, the Company entered into advertising sales representation agreements with certain subsidiaries of MSG Sports. Pursuant to these agreements, the Company has the exclusive right and obligation to sell sponsorship assets on behalf of the respective subsidiaries of MSG Sports. The Company is entitled to both fixed and variable commissions under the terms of these agreements. The Company recognizes the fixed component ratably over the term of the arrangement which corresponds with the Company’s satisfaction of its service-based performance obligations. Variable commissions are earned and recognized as the related sponsorship performance obligations are satisfied by MSG Sports. The Company is not the principal in such arrangements as it does not control the related goods or services prior to transfer to the customer. As an agent under these arrangements, the Company recognizes the advertising commission revenue on a net basis. The Company was also party to an advertising sales representation agreement with MSG Networks until December 31, 2022. See Note 17. Related Party Transactions for more information regarding the advertising sales representation agreements with subsidiaries of MSG Sports and Sphere Entertainment. F - 18 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Disaggregation of Revenue The following table disaggregates the Company’s revenue by major source based upon the timing of transfer of goods or services to the customer for Fiscal Years 2023, 2022 and 2021: Year Ended June 30, 2023 2022 2021 Event-related and entertainment offerings (a) $ 546,304 $ 386,309 $ 14,062 Sponsorship, signage and suite licenses (b) 203,758 156,387 15,897 Other (c) 29,756 39,384 27,528 Total revenues from contracts with customers 779,818 582,080 57,487 Revenues from Arena License Agreements, leases and subleases 71,678 71,410 24,325 Total revenues $ 851,496 $ 653,490 $ 81,812 _______________ (a) Event-related and entertainment offerings revenues are recognized at a point in time. (b) See Note 2. Summary of Significant Accounting Policies, Revenue Recognition, and the discussion above within this Note 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 MSG Sports, and (ii) advertising commission revenues recognized from MSG Networks up to December 31, 2022. 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 table disaggregates the Company’s consolidated and 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 Fiscal Years 2023, 2022, and 2021. Year Ended June 30, 2023 2022 2021 Ticketing and venue license fee revenues (a) $ 360,596 $ 250,092 $ 8,311 Sponsorship and signage, suite, and advertising commission revenues ( b) 262,475 219,113 43,312 Food, beverage and merchandise revenues 151,126 109,915 3,078 Other 5,621 2,960 2,786 Total revenues from contracts with customers 779,818 582,080 57,487 Revenues from Arena License Agreements, leases and subleases 71,678 71,410 24,325 Total revenues $ 851,496 $ 653,490 $ 81,812 _________________ (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) live entertainment and other sporting events. (b) Amounts include (i) revenues from sponsorship sales and representation agreements with MSG Sports and (ii) advertising commission revenues recognized from MSG Networks until the termination of this agreement as of December 31, 2022. Contract Balances The following table provides information about the opening and closing contract balances from the Company’s contracts with customers as of June 30, 2023, 2022 and 2021. As of June 30, 2023 2022 2021 Receivables from contracts with customers, net (a) $ 69,295 $ 106,664 $ 72,978 Contract assets, current (b) 11,254 5,503 7,052 Deferred revenue, including non-current portion (c) 226,029 203,256 199,041 ________________ (a) As of June 30, 2023, 2022 and 2021, the Company’s receivables from contracts with customers above included $ 5,397 , $ 4,163 and $ 5,172 , respectively, related to various related parties. See Note 17. Related Party Transactions for further details on these related party arrangements. F - 19 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) (b) Contract assets primarily relate to the Company’s rights to consideration for goods or services transferred to 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) Revenue recognized for Fiscal Year 2023 relating to the deferred revenue balance as of June 30, 2022 was $ 176,828 . Transaction Price Allocated to the Remaining Performance Obligations The Company’s remaining performance obligations under contracts primarily relates to performance obligations under sponsorship and suite license agreements that have original expected durations longer than one year and for which the considerations are 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. The following table depicts the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2023: As of June 30, 2023 Fiscal year ending June 30, 2024 $ 167,456 Fiscal year ending June 30, 2025 125,123 Fiscal year ending June 30, 2026 80,783 Fiscal year ending June 30, 2027 50,027 Fiscal year ending June 30, 2028 28,990 Thereafter 26,799 Total estimated revenue expected to be recognized in the future related to performance obligations $ 479,178 Note 5. Restructuring Charges During Fiscal Year 2023, Sphere Entertainment implemented a cost reduction program which resulted in the recognition of termination benefits for a workforce reduction of certain executives and employees. The Company recognized restructuring charges of $ 10,241 , net of contributory credits from the Company to Sphere Entertainment for the Company’s corporate employees. Restructuring charges are inclusive of $ 2,293 of share-based compensation expenses. As of June 30, 2023, the Company had a restructuring accrual of $ 2,530 , shown in accounts payable, accrued and other current liabilities. For Fiscal Year 2022, the Company recorded restructuring charges of $ 5,171 , net of contributory credits from the Company to Sphere Entertainment for the Company’s corporate employees. Restructuring charges are inclusive of $ 1,612 of share-based compensation expenses. As of June 30, 2022, the Company had a restructuring accrual of $ 3,210 , shown in accounts payable, accrued and other current liabilities of which was paid prior to June 30, 2023. For Fiscal Year 2021, the Company recorded restructuring charges of $ 14,691 , primarily related to termination benefits provided to employees, of which all amounts have been paid as of June 30, 2022. These measures included reductions in full-time workforce in August 2020 and November 2020. Note 6. Computation of Earnings per-Share On the MSGE Distribution Date, 51,768 shares of common stock of the Company, inclusive of 17,021 shares of Class A common stock 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 Fiscal Years 2022 and 2021 because the Company was not a standalone public company prior to the MSGE Distribution. In addition, for Fiscal Years 2022 and 2021 the computation of diluted earnings per share equals the basic earnings (loss) per 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 and since common stock equivalents were antidilutive due to losses from operations . F - 20 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) The following table presents a reconciliation of weighted-average shares used in the calculations of basic and diluted earnings (loss) per share attributable to the Company’s stockholders. Years Ended June 30, 2023 2022 2021 Weighted-average shares (denominator): Weighted-average shares for basic EPS 51,819 51,768 51,768 Dilutive effect of shares issuable under share-based compensation plans (a) 459 — — Weighted-average shares for diluted EPS 52,278 51,768 51,768 Weighted-average anti-dilutive shares (a) 740 — — _________________ (a) For Fiscal Years 2022 and 2021, all restricted stock units and stock options were excluded from the above table because there was no stock trading information available to compute dilutive effect of shares issuable under share-based compensation plans under the treasury method in accordance with ASC Topic 260, Earnings Per Share. Note 7. Equity Investments With Readily Determinable Fair Value As of June 30, 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 (the “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. Therefore, the fair value of the Company’s investment in Class C common stock of Townsquare is also determined based on the quoted market price in an active market on the NYSE, which is classified as Level I of the fair value hierarchy. The carrying fair value of these investments, which is reported under Other non-current assets in the accompanying consolidated and combined balance sheets as of June 30, 2023 and 2022, is as follows: As of June 30, 2023 2022 Townsquare Class A common stock $ 6,945 $ 4,776 Townsquare Class C common stock 13,399 21,499 DraftKings Class A common stock 11,297 10,146 Total Equity investments with readily determinable fair value $ 31,641 $ 36,421 F - 21 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) The following table summarizes the realized and unrealized gain (loss) on equity investments with readily determinable fair value, which is reported in Other income (expenses), net in the accompanying consolidated and combined statements of operations: Years ended June 30, 2023 2022 2021 Unrealized gain (loss) — Townsquare $ 7,644 $ ( 14,629 ) $ 26,563 Unrealized gain (loss)— DraftKings 8,406 ( 35,213 ) 26,942 Total Unrealized gains (loss) $ 16,050 $ ( 49,842 ) $ 53,505 Gain (loss) from shares sold— DraftKings 2,608 — ( 2,327 ) Gain (loss) from shares sold— Townsquare 975 — — Total realized and unrealized gain (loss) $ 19,633 $ ( 49,842 ) $ 51,178 Supplemental information on realized gain (loss): Shares of common stock sold — DraftKings 444 — 420 Cash proceeds from common stock sold — DraftKings $ 9,864 $ — $ 22,079 Shares of common stock sold — Townsquare 1,500 — — Cash proceeds from common stock sold — Townsquare $ 14,550 $ — $ — Note 8. Property and Equipment, Net As of June 30, 2023 and 2022, property and equipment, net consisted of the following assets: As of June 30, 2023 2022 Land $ 62,768 $ 62,768 Buildings 999,205 995,965 Equipment 322,445 323,741 Aircraft (a) — 38,090 Furniture and fixtures 29,151 28,976 Leasehold improvements 105,877 105,877 Construction in progress 2,828 3,139 Total Property and equipment 1,522,274 1,558,556 Less accumulated depreciation and amortization ( 893,386 ) ( 862,477 ) Property and equipment, net $ 628,888 $ 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 $ 59,709 , $ 63,696 and $ 70,588 for Fiscal Years 2023, 2022 and 2021, respectively. F - 22 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Note 9. Leases The following table summarizes the ROU assets and lease liabilities recorded on the Company’s consolidated and combined balance sheets as of June 30, 2023 and 2022: As of June 30, 2023 2022 ROU assets $ 235,790 $ 271,154 Lease liabilities: Operating leases, current ( 36,529 ) ( 39,006 ) Operating leases, non-current ( 219,955 ) ( 254,114 ) Total lease liabilities $ ( 256,484 ) $ ( 293,120 ) The following table summarizes the activity related to lease costs recorded within the Company’s consolidated and combined statements of operations for Fiscal Years 2023, 2022 and 2021: Line Item in the Company’s Consolidated and Combined Statements of Operations Years Ended June 30, 2023 2022 2021 Operating lease cost Direct operating expenses 20,729 $ 22,360 $ 20,138 Operating lease cost Selling, general and administrative expenses 11,176 9,782 9,773 Variable lease cost Direct operating expenses 346 147 247 Variable lease cost Selling, general and administrative expenses 39 41 39 Total lease cost $ 32,290 $ 32,330 $ 30,197 In November 2021, Sphere Entertainment executed an agreement with the existing landlord for its New York corporate office space, which was assigned to the Company in connection with the MSGE Distribution, pursuant to which it will be relocating from the space that the Company currently occupies to newly renovated office space within the same building. The Company will not be involved in the design or construction of the new space for purposes of the Company’s buildout prior to obtaining possession, which is expected to occur in Fiscal Year 2024. Upon obtaining possession of the space, the new lease is expected to result in an additional lease obligation and right of use asset. While lease payments under the new lease agreement will be recognized as a lease expense on a straight-line basis over the lease term, the Company will begin paying full rent in the second half of Fiscal Year 2026 due to certain tenant incentives included in the arrangement. Base rent payments will increase every five years beginning in Fiscal Year 2031 in accordance with the terms of the lease. The future lease payments related to this new lease for the next five fiscal years and thereafter are expected to be as follows: As of June 30, 2023 Fiscal Year 2024 $ — Fiscal Year 2025 10,121 Fiscal Year 2026 16,276 Fiscal Year 2027 39,207 Fiscal Year 2028 39,563 Thereafter (Fiscal Year 2029 to Fiscal Year 2046) 799,225 Total lease payments $ 904,392 Supplemental cash flow information related to operating leases is as follows: Years Ended June 30, 2023 2022 2021 Cash paid for amounts included in the measurement of operating lease liabilities $ 35,400 $ 33,312 $ 29,380 Lease assets obtained in exchange for new lease obligations $ 478 $ 298,100 $ — F - 23 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Maturities of operating lease liabilities as of June 30, 2023 were as follows: As of June 30, 2023 Fiscal year ending June 30, 2024 $ 38,324 Fiscal year ending June 30, 2025 28,899 Fiscal year ending June 30, 2026 10,527 Fiscal year ending June 30, 2027 22,788 Fiscal year ending June 30, 2028 22,927 Thereafter 230,772 Total lease payments 354,237 Less: imputed interest 97,753 Total lease liabilities $ 256,484 The weighted average remaining lease term and weighted average discount rate for our operating leases are as follows: As of June 30, 2023 2022 Weighted average remaining lease term (in years) 12.85 12.90 Weighted average discount rate 4.77 % 4.79 % As of June 30, 2023, the Company’s existing operating leases, which are recorded on the accompanying consolidated and combined financial statements, had remaining lease terms ranging from 0.80 years to 15.1 years. Lessor Arrangements The Company is party to Arena License Agreements with MSG Sports that, among other things, require the Knicks and the Rangers to play their home games at The Garden in exchange for fixed annual license fees scheduled to be paid monthly over the term of the agreements. The Company accounts for these license fees as operating lease revenue given that the Company provides MSG Sports with the right to direct the use of and obtain substantially all of the economic benefit from The Garden during Knicks and Rangers home games. Operating lease revenue is recognized on a straight-line basis over the lease term, adjusted pursuant to the terms of the Arena License Agreements. In the case of the Arena License Agreements, the lease terms relate to non-consecutive periods of use when MSG Sports uses The Garden for their professional sports teams’ home games, and operating lease revenue is therefore recognized ratably as events occur. The Arena License Agreements provide that license fees are not required to be paid by MSG Sports during periods when The Garden is unavailable for use due to a force majeure event. As a result of government-mandated suspension of events at The Garden beginning on March 13, 2020 due to the impact of the COVID-19 pandemic, The Garden was not available for use by MSG Sports from the effective date of the Arena License Agreements through the first quarter of Fiscal Year 2021, and, accordingly, the Company did not record any operating lease revenue for this arrangement during the first quarter of Fiscal Year 2021. Use of The Garden resumed for Knicks and Rangers home games without fans in December 2020 and January 2021, respectively, and was available at 10 % seating capacity from February through May 2021 when it became available at 100 % seating capacity. The Company recorded $ 68,068 , $ 68,072 and $ 21,345 of revenues under the Arena License Agreements for Fiscal Year 2023, 2022, and 2021, respectively. In addition, the Company recorded revenues from third party and related party lease and sublease arrangements of $ 3,610 , $ 3,338 and $ 2,980 for Fiscal Year 2023, 2022, and 2021, respectively. Note 10. Goodwill and Intangible Assets As of June 30, 2023 and 2022, the carrying amount of goodwill was $ 69,041 . The Company has one reportable segment and one reporting unit. F - 24 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) The Company’s indefinite-lived intangible assets as of June 30, 2023 and 2022 were as follows: As of 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 On August 31, 2022 and 2021, the Company performed its annual impairment tests of goodwill and indefinite-lived intangible assets and determined that there were no impairments of goodwill and indefinite-lived intangible assets identified as of the impairment test date. The Company’s intangible assets subject to amortization are as follows: June 30, 2023 Gross Accumulated Amortization Net Other intangibles (a) $ 4,217 $ ( 4,217 ) $ — Total amortizable intangible assets $ 4,217 $ ( 4,217 ) $ — June 30, 2022 Gross Accumulated Amortization Net Trade names (b) $ 2,530 $ ( 2,169 ) $ 361 Festival rights (b) 8,080 ( 6,926 ) 1,154 Other intangibles 4,217 ( 4,094 ) 123 Total amortizable intangible assets $ 14,827 $ ( 13,189 ) $ 1,638 _________________ (a) The Other intangibles were fully amortized. (b) 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. Amortization expense for intangible assets was $ 754 , $ 5,838 , and $ 988 for Fiscal Years 2023, 2022, and 2021, respectively. Note 11. Commitments and Contingencies Commitments As of June 30, 2023, commitments of the Company in the normal course of business in excess of one year were as follows: Commitments June 30, 2024 June 30, 2025 June 30, 2026 June 30, 2027 June 30, 2028 Thereafter Total Contractual obligations $ 11,225 $ 12,588 $ 16,276 $ 39,207 $ 39,563 $ 799,225 $ 918,084 Letters of credit 8,382 — — — — — 8,382 Total commitments $ 19,607 $ 12,588 $ 16,276 $ 39,207 $ 39,563 $ 799,225 $ 926,466 See Note 9. Leases for more information regarding the Company’s contractually obligated minimum lease payments for operating leases having an initial non-cancelable term in excess of one year for the Company’s venues and various corporate offices. These commitments are presented exclusive of the imputed interest used to reflect the payment’s present value. See Note 12. Credit Facilities for more information regarding the principal repayments required under the National Properties Facilities. F - 25 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) 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. 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 equals the applicable margin under the National Properties Facilities (as defined below), plus 1.00 % per annum. Subject to customary borrowing conditions, the DDTL Facility is drawable in up to six 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 has 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. 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. On July 14, 2023, Sphere Entertainment drew down the full amount of $ 65,000 under the DDTL Facility. On August 9, 2023, Sphere Entertainment repaid the full principal amount of the DDTL Facility and accrued interest and commitment fees by delivering to 1,923 shares of MSG Entertainment Class A common stock to the Company. 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 12. Credit Facilities The following table summarizes the presentation of the outstanding balances under the Company’s credit and other debt agreements as of June 30, 2023 and 2022: As of June 30, 2023 2022 Current Portion National Properties Term Loan Facility $ 16,250 $ 8,125 Other debt — 637 Current portion of long-term debt $ 16,250 $ 8,762 F - 26 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) June 30, 2023 June 30, 2022 Principal Unamortized Deferred Financing Costs Net Principal Unamortized Deferred Financing Costs Net Non-current Portion National Properties Term Loan Facility $ 625,625 $ ( 12,845 ) $ 612,780 $ 641,875 $ ( 16,063 ) $ 625,812 National Properties Revolving Credit Facility 17,100 — 17,100 29,100 — 29,100 Other debt 304 — 304 — — — Long-term debt, net of deferred financing costs $ 643,029 $ ( 12,845 ) $ 630,184 $ 670,975 $ ( 16,063 ) $ 654,912 National Properties Facilities General. On June 30, 2022, MSG National Properties, LLC (“MSG National Properties”), MSG Entertainment Group, LLC 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”). In connection with the MSGE Distribution, the National Properties Credit Agreement was amended to replace MSG Entertainment Group, LLC with MSG Entertainment Holdings as the parent guarantor. As of June 30, 2023, outstanding letters of credit were $ 8,382 and the remaining balance available under the National Properties Revolving Credit Facility was $ 74,518 . Proceeds. The proceeds of the National Properties Facilities were used on the closing date to repay in full the obligations outstanding under MSG National Properties’ prior term loan facility (the “Prior National Properties Loan Facility”) and to pay fees and expenses in connection with the National Properties Facilities and the refinancing of the Prior National Properties Loan Facility. Up to $ 25,000 of the National Properties Revolving Credit Facility is available for the issuance of letters of credit. Proceeds of the National Properties Revolving Credit Facility may be used to fund working capital needs, for general corporate purposes of MSG National Properties and its subsidiaries and to make distributions to MSG Entertainment Holdings. 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”). As of June 30, 2023, the additional rate used in calculating the floating rate was (i) 2.50 % per annum for borrowings bearing the National Properties Base Rate, and (ii) 5.20 % per annum for borrowings bearing 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 June 30, 2023 was 7.70 %. 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 National Properties Facilities will mature on June 30, 2027. 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 5.0 % per annum ( 1.25 % per quarter) in the fiscal quarter ending September 30, 2025, with the balance due at the maturity of the facility. The principal obligations under the National Properties Revolving Credit Facility are due at the maturity of the facility. 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 F - 27 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) 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 ended 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 began testing in the fiscal quarter ended 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 June 30, 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. All obligations under the National Properties Facilities are guaranteed by MSG Entertainment Holdings and MSG National Properties’ existing and future direct and indirect domestic subsidiaries, other than the subsidiaries that own The Garden and certain other excluded subsidiaries (the “Subsidiary Guarantors”). 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. 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. Accounting Treatment. The Company evaluated the terms of the National Properties Term Loan Facility and the Prior National Properties Term Loan Facility and concluded such facilities to be substantially different for accounting purposes. As a result, the Company recorded a loss on extinguishment of $ 35,629 in connection with the above financing transactions for Fiscal Year 2022. Debt Maturities Maturities for the outstanding debt balances as of June 30, 2023 were as follows: National Properties Facilities Other debt Total Fiscal year ending June 30, 2024 $ 16,250 $ — $ 16,250 Fiscal year ending June 30, 2025 16,250 304 16,554 Fiscal year ending June 30, 2026 32,500 — 32,500 Fiscal year ending June 30, 2027 593,975 — 593,975 Fiscal year ending June 30, 2028 — — — Thereafter — — — $ 658,975 $ 304 $ 659,279 F - 28 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Interest payments and loan principal repayments made by the Company under the National Properties Credit Agreement were as follows: Interest Payments Loan Principal Repayments Year Ended June 30, Year Ended June 30, 2023 2022 2021 2023 2022 2021 National Properties Facilities 48,548 52,163 22,879 20,125 646,750 3,250 The carrying value and fair value of the Company’s financial instruments reported in the accompanying consolidated and combined balance sheets were as follows: June 30, 2023 June 30, 2022 Carrying Value (a) Fair Value Carrying Value (a) Fair Value Liabilities: National Properties Facilities $ 658,975 $ 655,509 $ 679,100 $ 679,100 Other debt 304 304 637 637 Total $ 659,279 $ 655,813 $ 679,737 $ 679,737 _________________ (a) The total carrying value of the Company’s financial instruments as of June 30, 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 $ 12,845 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 13. Pension Plans and Other Postretirement Benefit Plans Prior to the MSGE Distribution, Sphere Entertainment sponsored both funded and unfunded defined benefit plans, as well as a postretirement benefit plan, covering certain full-time employees and retirees of the Company. In connection with the MSGE Distribution, the sponsorship of certain plans was transferred to the Company as described below. In connection with the MSGE Distribution, the Company also established certain non-qualified excess plans covering certain employees as described below. Defined Benefit Pension Plans and Postretirement Benefit Plans After the MSGE Distribution, sponsorship of a non-contributory, qualified cash balance retirement plan covering the Company’s non-union employees (the “Cash Balance Pension Plan”) and an u nfunded non-contributory, non-qualified excess cash balance plan covering certain employees who participate in the underlying qualified plan (collectively, the “Cash Balance Plans”) was transferred from Sphere Entertainment to MSG Entertainment. Since March 1, 2011, the Cash Balance Pension Plan has also included the assets and liabilities of a frozen (as of December 31, 2007) non-contributory qualified defined benefit pension plan covering non-union employees hired prior to January 1, 2001 (the “Retirement Pension Plan”). The Cash Balance Plans were amended to freeze participation and future benefit accruals effective December 31, 2015 for all employees. Therefore, since December 31, 2015, no new participants have been able to participate in the Cash Balance Plans l and no further annual pay credits will be made for any future year. Existing account balances under the plans will continue to be credited with monthly interest in accordance with the terms of the plans. MSG Entertainment also sponsors an unfunded non-contributory, non-qualified defined benefit pension plan for the benefit of certain employees who participated in the Retirement Pension Plan on March 1, 2011 (the “Excess Plan”). As of December 31, 2007, the Excess Plan was amended to freeze all benefits earned through December 31, 2007 and to eliminate the ability of participants to earn benefits for future service under these plans. Lastly, in connection with the MSGE Distribution, sponsorship of a non-contributory, qualified defined benefit pension plan covering certain of the Company’s union employees (the “Union Plan”) was transferred from Sphere Entertainment to MSG Entertainment. Benefits payable to retirees under the Union Plan are based upon years of Benefit Service (as defined in the Union Plan document). F - 29 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) The Cash Balance Plans, Union Plan, and Excess Plan are collectively referred to as the “pension plans.” MSG Entertainment also sponsors a welfare plan (the “Postretirement Plan”) which provides certain postretirement healthcare benefits to certain employees of the Company hired prior to January 1, 2001, who are eligible to commence receipt of early or normal benefits under the Cash Balance Pension Plan, and their dependents, as well as certain union employees. Prior to the MSGE Distribution, Sphere Entertainment was the legal sponsor of the pension plans and Postretirement Plan. For purposes of the combined financial statements, it was determined that these plans’ assets and liabilities were attributable to the Company. Therefore, the combined financial statements for periods prior to the MSGE Distribution reflect the full impact of the pension plans and Postretirement Plan on both the combined statements of operations and combined balance sheets. As discussed above, the Pension Plans and Postretirement Plan were transferred to the Company. The following table summarizes the projected benefit obligations, assets, funded status and the amounts recorded on the Company’s consolidated and combined balance sheets as of June 30, 2023 and 2022, associated with the pension plans and Postretirement Plan based upon actuarial valuations as of those measurement dates. Pension Plans Postretirement Plan June 30, June 30, 2023 2022 2023 2022 Change in benefit obligation: Benefit obligation at beginning of period $ 135,916 $ 171,897 $ 2,463 $ 3,218 Service cost 68 120 25 32 Interest cost 5,874 3,708 97 42 Actuarial loss (gain) (a) ( 3,753 ) ( 33,344 ) 304 ( 501 ) Benefits paid ( 7,139 ) ( 6,465 ) ( 372 ) ( 328 ) Plan settlements paid ( 97 ) — — — Other ( 144 ) — — — Benefit obligation at end of period 130,725 135,916 2,517 2,463 Change in plan assets: Fair value of plan assets at beginning of period 108,978 145,651 — — Actual return on plan assets 1,782 ( 30,667 ) — — Employer contributions 250 400 — — Benefits paid ( 7,080 ) ( 6,406 ) — — Administrative expenses paid ( 1,694 ) — — — Fair value of plan assets at end of period 102,236 108,978 — — Funded status at end of period $ ( 28,489 ) $ ( 26,938 ) $ ( 2,517 ) $ ( 2,463 ) _____________________ (a) In Fiscal Year 2023, the actuarial gains on the benefit obligations were primarily due to an increase in discount rate partially offset by an increase in the interest crediting rates. In Fiscal Year 2022, the actuarial gains on the benefit obligations were primarily due to a net increase in discount and interest crediting rates. Amounts recognized in the consolidated and combined balance sheets as of June 30, 2023 and 2022 consist of: Pension Plans Postretirement Plan June 30, June 30, 2023 2022 2023 2022 Current liabilities (included in accrued employee related costs) $ ( 270 ) $ ( 264 ) $ ( 318 ) $ ( 364 ) Non-current liabilities (included in defined benefit and other postretirement obligations) $ ( 28,219 ) $ ( 26,674 ) $ ( 2,199 ) $ ( 2,099 ) $ ( 28,489 ) $ ( 26,938 ) $ ( 2,517 ) $ ( 2,463 ) F - 30 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Accumulated other comprehensive loss, before income tax, as of June 30, 2023 and 2022 consists of the following amounts that have not yet been recognized in net periodic benefit cost: Pension Plans Postretirement Plan June 30, June 30, 2023 2022 2023 2022 Actuarial gain (loss) $ ( 40,625 ) $ ( 41,910 ) $ ( 555 ) $ ( 251 ) The following table presents components of net periodic benefit cost for the pension plans and Postretirement Plan included in the accompanying consolidated and combined statements of operations for Fiscal Years 2023, 2022, and 2021 . 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 Year Ended June 30, Year Ended June 30, 2023 2022 2021 2023 2022 2021 Service cost $ 68 $ 120 $ 96 $ 25 $ 32 $ 47 Interest cost 5,874 3,708 3,385 97 42 45 Expected return on plan assets ( 4,362 ) ( 6,016 ) ( 5,232 ) — — — Recognized actuarial loss 1,800 1,386 1,093 — 34 98 Settlement loss recognized (a) 5 — 870 — — — Net periodic benefit cost reported in the consolidated and combined statements of operations $ 3,385 $ ( 802 ) $ 212 $ 122 $ 108 $ 190 _________________ (a) For Fiscal Years 2023, 2022 and 2021, lump-sum payments totaling $ 97 , $ 0 and $ 52 , respectively, were distributed to vested participants of the non-qualified excess cash balance plan, triggering the recognition of settlement losses in accordance with ASC Topic 715. Due to these pension settlements, the Company was required to remeasure its pension plan liability for Fiscal Year 2021. The discount rates used for the projected benefit obligation and interest cost were 5.44 % and 5.41 % ,respectively as of June 30, 2023, 1.96 % and 1.30 % as of June 30, 2022, respectively, and 1.77 % and 1.24 % as of June 30, 2021, respectively. Additionally, settlement charges of $ 5 , $ 0 and $ 870 were recognized in Other income (expense), net for Fiscal Years 2023, 2022 and 2021, respectively. Other pre-tax changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for Fiscal Years 2023, 2022, and 2021 were as follows: Pension Plans Postretirement Plan Years Ended June 30, Years Ended June 30, 2023 2022 2021 2023 2022 2021 Actuarial gain (loss), net $ ( 1,800 ) $ ( 3,306 ) $ ( 5,244 ) $ 304 $ 501 $ 76 Recognized actuarial loss 520 1,386 1,093 — 34 98 Curtailments — — 91 — — 65 Settlement loss recognized 5 — 870 — — — Total recognized in other comprehensive income (loss) $ ( 1,275 ) $ ( 1,920 ) $ ( 3,190 ) $ 304 $ 535 $ 239 Funded Status The accumulated benefit obligation for the pension plans aggregated t o $ 130,725 and $ 135,916 at June 30, 2023 and 2022, respectively. As of June 30, 2023 and 2022, each of the pension plans had accumulated benefit obligations and projected benefit obligations in excess of plan assets. F - 31 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Pension Plans and Postretirement Plan Assumptions Weighted-average assumptions used to determine benefit obligations (made at the end of the period) as of June 30, 2023 and 2022 were as follows: Pension Plans Postretirement Plan June 30, June 30, 2023 2022 2023 2022 Discount rate 5.34 % 4.86 % 5.40 % 4.62 % Interest crediting rate 3.77 % 2.76 % n/a n/a Healthcare cost trend rate assumed for next year n/a n/a 7.00 % 6.00 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) n/a n/a 5.00 % 5.00 % Year that the rate reaches the ultimate trend rate n/a n/a 2032 2027 Weighted-average assumptions used to determine net periodic benefit cost (made at the beginning of the period) for Fiscal Years 2023, 2022 and 2021 were as follows: Pension Plans Postretirement Plan Years Ended June 30, Years Ended June 30, 2023 2022 2021 2023 2022 2021 Discount rate - projected benefit obligation 4.86 % 2.87 % 2.84 % 4.63 % 2.17 % 2.09 % Discount rate - service cost 4.97 % 3.11 % 3.20 % 4.89 % 2.65 % 2.15 % Discount rate - interest cost 4.56 % 1.92 % 1.92 % 4.28 % 1.51 % 1.23 % Expected long-term return on plan assets 5.92 % 4.94 % 4.02 % n/a n/a n/a Interest crediting rate 2.76 % 2.32 % 1.37 % n/a n/a n/a Healthcare cost trend rate assumed for next year n/a n/a n/a 6.00 % 6.25 % 6.50 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) n/a n/a n/a 5.00 % 5.00 % 5.00 % Year that the rate reaches the ultimate trend rate n/a n/a n/a 2027 2027 2027 The discount rates were determined (based on the expected duration of the benefit payments for the plans) from the Willis Towers Watson U.S. Rate Link: 40-90 Discount Rate Model as of June 30, 2023 and 2022 to select a rate at which the Company believed the plans’ benefits could be effectively settled. This model was developed by examining the yields on selected highly rated corporate bonds. The expected long-term return on plan assets is based on a periodic review and modeling of the plans’ asset allocation structures over a long-term horizon. Expectations of returns for each asset class are the most important of the assumptions used in the review and modeling and are based on comprehensive reviews of historical data, forward-looking economic outlook, and economic/financial market theory. The expected long-term rate of return was selected from within the reasonable range of rates determined by (i) historical returns for the asset classes covered by the investment policy and (ii) projections of returns over the long-term period during which benefits are payable to plan participants. F - 32 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Plan Assets and Investment Policy The weighted-average asset allocation of the pension plans’ assets at June 30, 2023 and 2022 was as follows: As of June 30, Asset Classes (a) : 2023 2022 Fixed income securities 75 % 78 % Equity securities 15 % 14 % Cash equivalents 10 % 8 % 100 % 100 % _____________________ (a) The Company’s target allocation for the Cash Balance Plan assets is 85 % fixed income securities and 15 % equity as of June 30, 2023 and the Company’s target allocation for the Union Plan assets is 100 % fixed income securities. Investment allocation decisions have been made by (i) Sphere Entertainment’s Investment & Benefits Committee prior to the MSGE Distribution and (ii) the Company’s Investment & Benefits Committee after the MSGE Distribution. Each Investment & Benefits Committee utilized the services of an investment manger to actively manage the assets of the pension plans. The Company has established asset allocation target and investment policies and guidelines with the investment manager. The investment manager takes into account expected long-term risks, returns, correlation, and other prudent investment assumptions when recommending asset classes and investment managers to the Company’s Investment & Benefits Committee. The investment manager also considers each applicable pension plans’ liabilities when making investment allocation recommendations. The majority of the pension plans’ assets are invested in fixed income securities. Investments at Estimated Fair Value The cumulative fair values of the individual plan assets at June 30, 2023 and 2022 by asset class were as follows: Fair Value Hierarchy As of June 30, 2023 2022 Fixed income securities: U.S. Treasury securities (a) I $ 3,673 $ 672 Money market fund (a) I 6,511 8,311 U.S. Gov’t Agency Obligations (b) II 308 — Mutual fund - equity (c) II 15,296 15,661 Common collective trust (c) II 76,448 84,334 Total investments measured at fair value $ 102,236 $ 108,978 _____________________ (a) U.S. Treasury Securities and the money market fund are classified within Level I of the fair value hierarchy as they are valued using observable inputs that reflect quoted prices for identical assets in active markets. (b) U.S. Government Agency Obligations are classified within Level II of the fair value hierarchy as they are valued daily using institutional bond quotes based on evaluations based on various market and industry inputs. (c) The common collective trust (“CCT”) and the mutual fund, which are non-exchange traded funds, are classified within Level II of the fair value hierarchy at their net asset value (“NAV”) as reported by the Trustee and investment manager, respectively. The NAV is based on the fair value of the underlying investments held by the funds which are based on quoted market prices less their liabilities. Both the CCT and the mutual fund publish their daily NAV and use such value as the basis for current transactions. Contributions for Qualified Defined Benefit Pension Plans During Fiscal Year 2023, the Company contributed $ 250 to the Union Plan. The Company expects to contribute $ 12,600 and $ 250 to the Cash Balance Plan and Union Plan, respectively in Fiscal Year 2024. F - 33 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Estimated Future Benefit Payments The following table presents estimated future fiscal year benefit payments for the pension plans and Postretirement Plan: Pension Plans Postretirement Plan Fiscal year ending June 30, 2024 $ 10,799 $ 328 Fiscal year ending June 30, 2025 $ 8,355 $ 334 Fiscal year ending June 30, 2026 $ 8,666 $ 315 Fiscal year ending June 30, 2027 $ 9,015 $ 271 Fiscal year ending June 30, 2028 $ 8,754 $ 266 Fiscal years ending June 30, 2029 – 2033 $ 46,261 $ 1,119 Defined Contribution Plans MSG Entertainment sponsors The Madison Square Garden 401(k) Savings Plan (the “401(k) Plan”) and the MSG Entertainment Holdings, LLC Excess Savings Plan (collectively referred to as the “Savings Plans”). The 401(k) Plan is a multiple employer plan. For Fiscal Years 2023, 2022 and 2021 , expenses related to the Savings Plans, excluding expenses related to MSG Sports employees and for Fiscal Years 2023 excluded expenses related to Sphere Entertainment employees , that are included in the accompanying consolidated and combined statements of operations wer e $ 5,187 , $ 4,284 and $ 2,274 , res pectively. In addition, MSG Entertainment sponsors The Madison Square Garden 401(k) Union Plan (the “Union Savings Plan”). The Union Savings Plan is a multiple employer plan. For Fiscal Years 2023, 2022 and 2021 , expenses related to the Union Savings Plan included in the accompanying consolidated and combined statements of operations were $ 428 , $ 394 and $ 215 , res pectively. Multiemployer Plans The Company contributes to a number of multiemployer defined benefit pension plans, multiemployer defined contribution pension plans, and multiemployer health and welfare plans that provide benefits to retired union-represented employees under the terms of collective bargaining agreements (“CBAs”). Multiemployer Defined Benefit Pension Plans The multiemployer defined benefit pension plans to which the Company contributes generally provide for retirement and death benefits for eligible union-represented employees based on specific eligibility/participant requirements, vesting periods and benefit formulas. The risks to the Company of participating in these multiemployer defined benefit pension plans are different from single-employer defined benefit pension plans in the following aspects: • Assets contributed to a multiemployer defined benefit pension plan by one employer may be used to provide benefits to employees of other participating employers. • If a participating employer stops contributing to a multiemployer defined benefit pension plan, the unfunded obligations of the plan may be borne by the remaining participating employers. • If the Company chooses to stop participating in some of these multiemployer defined benefit pension plans, the Company may be required to pay those plans an amount based on the Company’s proportion of the underfunded status of the plan, referred to as a withdrawal liability. However, cessation of participation in a multiemployer defined benefit pension plan and subsequent payment of any withdrawal liability is subject to the collective bargaining process. The following table outlines the Company’s participation in multiemployer defined benefit pension plans for Fiscal Years 2023, 2022 and 2021, and summarizes the contributions that the Company has made during each period. The “EIN” and “Pension Plan Number” columns provide the Employer Identification Number and the three-digit plan number for each applicable plan. The most recent Pension Protection Act zone status available as of June 30, 2023 and 2022 relates to the plan’s two most recent years ended which are indicated. Among other factors, plans in the red zone are generally less than 65 % funded, plans in the orange zone are both less than 80 % funded and have an accumulated funding deficiency or are expected to have a deficiency in any of the next six plan years, plans in the yellow zone are less than 80 % funded, and plans in the green zone are at least 80 % funded. The “FIP/RP Status Pending/Implemented” column indicates whether a funding improvement plan (“FIP”) for yellow/ F - 34 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) orange zone plans or a rehabilitation plan (“RP”) for red zone plans is either pending or has been implemented by the trustees of such plan. The zone status and any FIP or RP information is based on information that the Company received from the plan, and the zone status is as certified by the plan’s actuary. The last column lists the expiration date(s) or a range of expiration dates of the CBA to which the plans are subject. There are no other significant changes that affect such comparability. PPA Zone Status FIP/RP Status Pending / Implemented Company Contributions As of June 30, Year Ended June 30, Plan Name EIN Pension Plan Number 2023 2022 2023 2022 2021 Surcharge Imposed Expiration Date of CBA Pension Fund of Local No. 1 of I.A.T.S.E. 136414973 001 Green as of 2022-12-31 Green as of 2021-12-31 No $ 2,550 $ 1,999 $ 194 No 6/30/2026 All Other Multiemployer Defined Benefit Pension Plans 2,897 1,907 584 $ 5,447 $ 3,906 $ 778 The Company was listed in the following plans’ Form 5500’s as providing more than 5% of the total contributions for the following plans and plan years: Fund Name Exceeded 5 Percent of Total Contributions Year Contributions to Plan Exceeded 5 Percent of Total Contributions (As of Plan’s Year-End) Pension Fund of Local No. 1 of I.A.T.S.E True December 31, 2021, 2020 and 2019 32BJ/Broadway League Pension Fund True December 31, 2021, 2020 and 2019 Treasurers and Ticket Sellers Local 751 Pension Fund True August 31, 2022, 2021 and 2020 Multiemployer Defined Contribution Pension Plans The Company contributed $ 7,316 , $ 5,641 and $ 723 fo r Fiscal Years 2023, 2022 and 2021 , respectively, to multiemployer defined contribution pension plans. Executive Deferred Compensation Plan The Company assumed the sponsorship of the Madison Square Garden Entertainment Corp. Executive Deferred Compensation Plan from Sphere Entertainment in connection with the MSGE Distribution (the “Deferred Compensation Plan”). The Deferred Compensation Plan was established to permit a select group of highly-compensated employees to defer the employee’s annual base salary and bonus into the Deferred Compensation Plan with returns on such deferrals tracking the performance of certain investments. Following the MSGE Distribution accounts attributable to the Sphere Entertainment’s current employees as of the Distribution Date were transferred to a deferred compensation plan established by Sphere Entertainment in connection with the MSGE Distribution. Amounts deferred and invested by employees under the Deferred Compensation Plan are placed in an irrevocable trust established by the Company and all assets of the trust are subject to the creditors of the Company in the event of insolvency. In accordance with ASC Topic 710, Compensation – General (“ASC Topic 710”), the assets of the trust are consolidated with the accounts of the Company and are recognized in the Company’s consolidated balance sheet. In accordance with ASC Topic 710, the Company remeasures the deferred compensation liability, with a charge (or credit) to compensation cost in the Company’s consolidated statements of operations, to reflect changes in the fair value of the assets owed to the participants of the Deferred Compensation Plan. The Company remeasures the fair value of the assets held in trust in accordance with ASC Topic 321, Investments – Equity Securities , and recognizes unrealized gains and losses in Miscellaneous income (expense), net in the Company’s consolidated statements of operations. The Company recorded compensation expense/(compensation cost credits) of $ 225 , for the year ended June 30, 2023, within Selling, general and administrative expenses to reflect the remeasurement of the Deferred Compensation Plan liability. In addition, the Company recorded gains/(losses) of $ 225 , for the year ended June 30, 2023 within Other income (expense), net to reflect the remeasurement of the fair value of assets under the Deferred Compensation Plan. The investments made from employee contributions and investments sold for employee distributions of trust assets are classified as operating activities in the Company’s consolidated and combined statements of cash flows. F - 35 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Amounts recognized in the consolidated balance sheets as of June 30, 2023 related to the Deferred Compensation Plan consist of: June 30, 2023 Non-current assets (included in investments) $ 2,954 Non-current liabilities (included in other employee related costs) $ ( 2,976 ) Note 14. Share-based Compensation Prior to the MSGE Distribution Date, certain employees of the Company participated in the share-based compensation plans of Sphere Entertainment (“Sphere Entertainment Employee Stock Plans”). The plans provide for discretionary grants of incentive stock options and non-qualified stock options, restricted shares, restricted stock units, performance stock units, stock appreciation rights and other share-based awards. All awards granted under the Sphere Entertainment Employee Stock Plans will settle in shares of Sphere Entertainment’s Class A common stock, or, at the option of the Compensation Committee of the Sphere Entertainment Board of Directors, in cash. Prior to the MSGE Distribution Date, the consolidated and combined financial statements only reflect 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 Sphere Entertainment Employee Stock Plans that were charged to Sphere Entertainment. Effective as of the MSGE Distribution Date, the Company adopted two share-based compensation plans: the 2023 Employee Stock Plan (the “Employee Stock Plan”) and the 2023 Stock Plan for Non-Employee Directors (the “Non-Employee Director Plan). Under the Employee Stock Plan, the Company is authorized to grant incentive stock options, non-qualified stock options, restricted shares, restricted stock units (“RSUs”), performance stock units (“PSUs”), stock appreciation rights and other equity-based awards. The Company may grant awards under the Employee Stock Plan for up to an aggregate number of 11,000 shares of Class A Common stock, which may be either treasury shares or authorized but unissued shares. Options and stock appreciation rights under the Employee Stock Plan must be granted with an exercise price of not less than the fair market value of a share of the Company’s Class A common stock on the date of grant and must expire no later than 10 years from the date of grant (or up to one additional year in the case of the death of a holder). The terms and conditions of awards granted under the Employee Stock Plan, including vesting and exercisability, are determined by the Compensation Committee of the Board of Directors (“Compensation Committee”) and may include terms or conditions based upon performance criteria. RSUs that were awarded by the Company to its employees will settle in shares of the Company's Class A common stock (either from treasury or with newly issued shares), or, at the option of the Compensation Committee, in cash. Under the Non-Employee Director Plan, the Company is authorized to grant non-qualified stock options, RSUs, restricted shares, stock appreciation rights and other equity-based awards. The Company may grant awards under this plan for up to an aggregate number of 750 shares of Class A common stock, which may be either treasury shares or authorized but unissued shares. Options under the Non-Employee Director Plan must be granted with an exercise price of not less than the fair market value of a share of the Company’s Class A common stock on the date of grant and must expire no later than 10 years from the date of grant (or up to one additional year in the case of the death of a holder). The terms and conditions of awards granted under the Non-Employee Director Plan, including vesting and exercisability, are determined by the Compensation Committee. Unless otherwise provided in an applicable award agreement, options granted under this plan will be fully vested and exercisable upon the date of grant. Unless otherwise provided in an applicable award agreement, RSUs granted under this plan will be fully vested upon the date of grant and will settle in shares of the Company's Class A common stock (either from treasury or with newly issued shares), or, at the option of the Compensation Committee, in cash. Treatment After the MSGE Distribution of Share-based Payment Awards Initially Granted Under Sphere Entertainment Equity Award Programs Prior to the MSGE Distribution, certain employees and the non-employee directors of Sphere Entertainment (some of whom are now employees or non-employee directors of the Company) participated in Sphere Entertainment equity award programs (the “Sphere Entertainment Stock Plans”). In connection with the MSGE Distribution, each option to purchase Sphere Entertainment’s Class A common stock became two options: one option to acquire Sphere Entertainment Class A common stock and one an option to acquire the Company’s Class A common stock granted under the Employee Stock Plan. The exercise price of the option was allocated between the existing Sphere Entertainment options and new Company options based upon the weighted average price of each of the Sphere Entertainment Class A common stock and our Class A Common Stock over the ten trading days immediately following the Distribution. In connection with the MSGE Distribution, each holder of a Sphere Entertainment RSU received one MSG Entertainment RSU in respect of every one Sphere Entertainment RSU owned on the F - 36 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) record date and continues to be entitled to a share of Sphere Entertainment Class A common stock (or cash or other property) for each Sphere Entertainment RSU in accordance with the Sphere Entertainment award agreement. Additionally, each holder of a Sphere Entertainment employee PSU received one Company PSU (at target performance) in respect of every one Sphere Entertainment PSU (at target performance) owned on the Record Date and continues to be entitled to a share of Sphere Entertainment Class A common stock (or cash or other property) for each Sphere Entertainment PSU in accordance with the Sphere Entertainment award agreement. Further, in connection with the MSGE Distribution, each holder of a Sphere Entertainment director RSU received one share of our Class A common stock in respect of every one Sphere Entertainment RSU owned on the Record Date and continues to be entitled to a share of Sphere Entertainment Class A common stock (or cash or other property) in accordance with the Sphere Entertainment award agreement. Share-based Compensation Expense Share-based compensation expense is generally recognized straight-line over the vesting term of the award, which typically provides for three-year cliff or graded vesting subject to continued employment. For awards that are graded vesting and subject to performance conditions, in addition to continued employment, the Company uses the graded-vesting method to recognize share-based compensation expense. The Company’s RSUs, PSUs and/or stock options held by individuals who are solely Sphere Entertainment and/or MSG Sports employees are not expensed by the Company; however, such RSUs/PSUs and/or stock options do have a dilutive effect on earnings (loss) per share available to the Company’s common stockholders. Share-based compensation expense was recognized in the consolidated and combined statements of operations as a component of direct operating expenses or selling, general and administrative expenses. The following table presents the share-based compensation expense recorded during Fiscal Years 2023, 2022, and 2021: Years Ended June 30, 2023 2022 2021 Share-based compensation expense (a) $ 29,521 $ 37,746 $ 40,663 _____________________ (a) For Fiscal Years 2023, 2022, and 2021 share-based compensation excludes costs of $ 2,293 , $ 1,612 , and nil , respectively, that have been reclassified to Restructuring charges in the consolidated and combined statements of operations, as detailed in Note 5, Restructuring Charges . RSU and PSU Award Activity The following table summarizes activity related to MSG Entertainment’s RSUs and PSUs held by the Company, MSG Sports, and Sphere’s employees from the MSGE Distribution Date to June 30, 2023: Number of Weighted-Average Grant-date Fair Value (a) RSUs PSUs Unvested award balance as of April 20, 2023 1,022 1,156 $ 66.49 Granted 64 21 $ 35.09 Vested (b) ( 168 ) ( 74 ) $ 62.41 Forfeited ( 15 ) ( 19 ) $ 58.82 Unvested award balance as of June 30, 2023 903 1,084 $ 65.78 _____________________ (a) Weighted-average grant-date fair value as of April 20, 2023 and for activity prior to MSGE Distribution Date does not reflect any adjustment associated with the MSGE Distribution. See above for further detail for the MSGE Distribution. (b) The fair value of RSUs and PSUs that vested and were distributed during Fiscal Year 2023 was $ 8,259 . Upon delivery, RSUs granted under the Sphere Entertainment Stock Plan (as defined above) were net share-settled to cover the required statutory tax withholding obligations. To fulfill the employees’ statutory minimum tax withholding obligations for the applicable income and other employment taxes, 82 of these RSUs, with an aggregate value of $ 2,783 were retained by Sphere Entertainment. F - 37 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) As of June 30, 2023, there was $ 32,635 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 1.8 years. Stock Options Award Activity Compensation expense for MSG Entertainment stock options held by the Company’s employees is determined based on the grant date fair value of the award calculated using the Black-Scholes options-pricing model. Stock options generally vest over a three years ’ service period and expire 7.5 to 10 years from the date of grant. The following table summarizes activity related to the Company’s stock options from the MSGE Distribution to June 30, 2023: Number of Time Vesting Options Weighted-Average Exercise Price Per Share (a) Weighted-Average Remaining Contractual Term (In Years) Aggregate Intrinsic Value Balance as of April 20, 2023 724 $ 55.87 Options granted in Fiscal Year 2023 — Balance as of June 30, 2023 724 $ 55.87 2.47 $ — Exercisable on June 30, 2023 724 $ 55.87 2.47 $ — _____________________ (a) Weighted-average grant-date fair value as of April 20, 2023 and for activity prior to MSGE Distribution Date does not reflect any adjustment associated with the MSGE Distribution. See above for further detail for the MSGE Distribution. Note 15. Equity Stock 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. The Company repurchased 840 shares of Common Stock for $ 25,000 during Fiscal Year 2023. On August 9, 2023, Sphere Entertainment repaid the full principal amount of the DDTL Facility and accrued interest and commitment fees by delivering 1,923 shares of MSG Entertainment Class A common stock to the Company. Such shares have been accounted for as treasury shares and are no longer outstanding as of August 9, 2023. Accumulated Other Comprehensive Loss The following table details the components of accumulated other comprehensive loss: Pension Plans and Postretirement Plan June 30, 2023 2022 2021 Balance at beginning of period $ ( 34,740 ) $ ( 33,598 ) $ ( 31,108 ) Other comprehensive loss: Amounts reclassified from accumulated other comprehensive loss (a) ( 971 ) ( 1,385 ) ( 2,951 ) Income tax benefit 176 243 461 Other comprehensive loss, total ( 795 ) ( 1,142 ) ( 2,490 ) Adjustment related to the transfer of pension plans and postretirement plan liabilities as a result of the MSGE Distribution 1,514 — — Balance at end of period $ ( 34,021 ) $ ( 34,740 ) $ ( 33,598 ) ________________ (a) Amounts reclassified from accumulated other comprehensive loss represent curtailments, settlement losses recognized, the amortization of net actuarial gain (loss) and net unrecognized prior service credit included in net periodic benefit cost, F - 38 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) which is reflected under Other income (expense), net in the accompanying consolidated and combined statements of operations (see Note 13. Pension Plans and Other Postretirement Benefit Plans). Note 16. Income Taxes Income tax expense is comprised of the following components: Year Ended June 30, 2023 2022 2021 Current (expense) benefit: Federal $ ( 1,008 ) $ 515 $ ( 2,536 ) State and other — ( 220 ) ( 2,247 ) ( 1,008 ) 295 ( 4,783 ) Deferred (expense) benefit: Federal 6,198 ( 4,711 ) ( 15,658 ) State and other ( 6,918 ) 4,486 15,092 ( 720 ) ( 225 ) ( 566 ) Income tax (expense) benefit $ ( 1,728 ) $ 70 $ ( 5,349 ) The income tax (expense) benefit differs from the amount derived by applying the statutory federal rate to pre-tax income (loss) principally due to the effect of the following items: Year Ended June 30, 2023 2022 2021 Federal tax (expense) benefit at statutory federal rate $ ( 16,332 ) $ 28,617 $ 44,931 State income taxes, net of federal benefit ( 13,033 ) 12,141 22,882 Change in valuation allowance 34,147 ( 31,679 ) ( 70,501 ) Change in the estimated applicable tax rate used to determine deferred taxes — — 2,545 Capital loss carryover 3,960 — — Nondeductible transaction costs ( 206 ) — — GAAP income of consolidated partnership attributable to non-controlling interest ( 116 ) ( 601 ) ( 146 ) Change in estimated rate to measure deferred taxes ( 557 ) — — Nondeductible officers’ compensation ( 3,861 ) ( 8,125 ) ( 5,209 ) Nondeductible expenses ( 266 ) ( 373 ) ( 285 ) Excess tax benefit related to share-based payment awards ( 5,457 ) 93 1,088 Other, net ( 7 ) ( 3 ) ( 654 ) Income tax (expense) benefit $ ( 1,728 ) $ 70 $ ( 5,349 ) F - 39 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) The tax effects of temporary differences which give rise to significant portions of the deferred tax assets and liabilities at June 30, 2023 and 2022 were as follows: June 30, 2023 2022 Deferred tax assets: Net operating losses (NOLs) $ 18,684 $ 102,273 Accrued employee benefits 28,271 29,440 Restricted stock units and stock options 8,571 12,452 Deferred revenue 34,914 — Right-of-use lease assets and lease liabilities, net 7,071 7,482 Deferred interest 3,299 24,950 Property and equipment 38,703 16,327 Other, net 5,853 7,183 Total gross deferred tax assets $ 145,366 $ 200,107 Less valuation allowance ( 95,352 ) ( 151,043 ) Net deferred tax assets $ 50,014 $ 49,064 Deferred tax liabilities: Intangibles and other assets $ ( 40,143 ) $ ( 40,069 ) Deferred revenue — ( 10,107 ) Prepaid expenses ( 4,854 ) ( 4,874 ) Investments ( 5,530 ) ( 3,377 ) Straight line rent ( 23,005 ) ( 13,890 ) Total deferred tax liabilities $ ( 73,532 ) $ ( 72,317 ) Net deferred tax liability $ ( 23,518 ) $ ( 23,253 ) In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company’s ability to realize its deferred tax assets depends upon the generation of sufficient future taxable income to allow for the utilization of its NOLs and future deductible temporary differences . As of June 30, 2023, based on current facts and circumstances, management believes that it is more likely than not that the Company will not realize the benefit for a portion of its net deferred tax assets. Accordingly, a valuation allowance has been recorded. Prior to the MSGE Distribution, the Company and Sphere Entertainment entered into a Tax Disaffiliation Agreement (“TDA”) that governs the parties’ respective rights, responsibilities and obligations with respect to taxes and tax benefits. Under the TDA, Sphere Entertainment will generally be responsible for all U.S. federal, state, local and other applicable income taxes of the Company for any taxable period or portion of such period ending on or before the MSGE Distribution Date. The federal NOL carryforward as of June 30, 2023 was $ 54,000 . The NOL has an unlimited carryforward period. The NOLs and tax credits recorded under the separate return basis prior to the MSGE Distribution did not carry over to the Company. Prior to the MSGE Distribution, the Company’s collection for ticket sales, sponsorships and suite rentals in advance were recorded as deferred revenue and were recognized as revenues when earned for both accounting and tax purposes. The tax recognition on most of these deferred revenues was accelerated to the date of the MSGE Distribution and is the responsibility of Sphere Entertainment. The Company will not reimburse Sphere Entertainment for such taxes. At the time of the MSGE Distribution, the Company recorded a deferred tax asset of $ 71,395 and a corresponding valuation allowance of $ 71,395 with regard to the deferred revenue acceleration for income tax purposes. As of June 30, 2023, the Company has a deferred tax asset of $ 48,185 with regard to the deferred revenue acceleration and the remaining tax deduction will be recorded as deferred F - 40 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) revenue is earned and the associated events occur or upon payment of refunds. Income tax refunds, net of payments, were $ 2,031 and $ 10,281 for Fiscal Years 2023 and 2022, respectively, as if the Company was on a standalone basis. Income tax payments, net of refunds, was $ 15,526 for Fiscal Year 2021 as if the Company was on a standalone basis . Note 17. Related Party Transactions As of June 30, 2023, members of the Dolan family including trusts for member 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 Company’s outstanding Class B Common Stock and approximately 4.3 % of the Company’s outstanding Class A Common Stock (inclusive of options exercisable within 60 days of June 30, 2023). Such shares of Class A Common Stock and Class B Common Stock, collectively, represent approximately 62.2 % of the aggregate voting power of Company’s outstanding common stock. Members of the Dolan family are also the controlling stockholders of Sphere Entertainment, MSG Sports and AMC Networks Inc. (“AMC Networks”). Current Related Party Arrangements The Company is party to the following agreements and/or arrangements with MSG Sports: • Sponsorship sales and service representation agreements pursuant to which the Company has the exclusive right and obligation to sell MSG Sports’ sponsorships for an initial stated term of ten years for a commission; • A team sponsorship allocation agreement, pursuant to which MSG Sports receives an allocation of sponsorship and signage revenues associated with the sponsorship agreements; • Arena License Agreements pursuant to which the Company (i) provides MSG Sports the right to use The Garden for games of the Knicks and Rangers for a 35 -year term in exchange for venue license fees, (ii) shares revenues collected for suite licenses, (iii) operates and manages the sale of the sports teams merchandise at The Garden for a commission, (iv) operates and manages the sale of food and beverage sales and catering services during the Knicks and Rangers games for a portion of net profits (as defined under the Arena License Agreements), (v) provides day of game services, and (vi) provides other general services within The Garden; • A services agreement pursuant to which the Company provides certain corporate and other transition services to MSG Sports, such as information technology, security, accounts payable, payroll, tax, certain legal functions, human resources, insurance and risk management, government affairs, investor relations, corporate communications, benefit plan administration and reporting, and internal audit functions as well as certain marketing functions, in exchange for service fees. MSG Sports also provides certain services to the Company, including certain legal functions, communications, ticket, sponsorship and premium hospitality-related sales and certain operational and marketing services, in exchange for service fees; • A sublease agreement, pursuant to which the Company subleases office space to MSG Sports; • A group ticket sales representation agreement, pursuant to which the Company appointed MSG Sports as its sales and service representative to sell group ticket packages related Company events in exchange for a commission; • A single night rental commission agreement, pursuant to which MSG Sports may, from time to time, sell (or make referrals for sales of) licenses for the use of suites at The Garden for individual Company events in exchange for a commission; • 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 June 30, 2023, MSG Sports had advanced $ 304 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 consolidated and combined balance sheets; • Aircraft time sharing agreements (discussed below); and • Other agreements such as a trademark license agreement and certain other arrangements. F - 41 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) The Company is party to the following agreements and/or arrangements with Sphere Entertainment: • A Transition Services Agreement (“TSA”) pursuant to which the Company provides certain corporate and other transition services to Sphere Entertainment, such as information technology, security, accounts payable, payroll, tax, certain legal functions, human resources, insurance and risk management, government affairs, investor relations, corporate communications, benefit plan administration and reporting, and internal audit functions as well as certain marketing functions, in exchange for service fees. Sphere Entertainment also provides certain services to the Company, including certain studios and corporate technology services, in exchange for service fees; • Aircraft time sharing agreements (discussed below); and • Other agreements with Sphere Entertainment entered into in connection with the MSGE Distribution such as a distribution agreement, a tax disaffiliation agreement, an employee matters agreement, a stockholder and registration rights agreement, a trademark license agreement and certain other arrangements. The Company was also party to the DDTL Facility, which provided for a $ 65,000 senior unsecured delayed draw term loan facility to Sphere Entertainment, which was fully drawn on July 14, 2023 and repaid by Sphere Entertainment on August 9, 2023. In addition, the Company historically had various agreements with MSG Networks, which have historically been cash settled including an advertising sales representation agreement and a services agreement (the “MSG Networks Services Agreement”). • Pursuant to the advertising sales representation agreement, the Company had the exclusive right and obligation to sell advertising on behalf of MSG Networks in exchange for a commission. The Networks Advertising Sales Representation Agreement was terminated effective as of December 31, 2022. • Through the MSGE Distribution Date, pursuant to the MSG Networks Services Agreement, the Company also provided certain services to MSG Networks, such as information technology, accounts payable and payroll, human resources, and other corporate functions, as well as the executive support services described below, in exchange for service fees. MSG Networks also provided certain services to the Company, in exchange for service fees. Following the MSGE Distribution, the Company will continue to provide these services pursuant to the TSA with Sphere Entertainment and the MSG Networks Services Agreement is no longer in place. Further, the Company shares certain executive support costs, including office space, executive assistants, security and transportation costs, for (i) the Company’s Executive Chairman and Chief Executive Officer with Sphere Entertainment and MSG Sports and (ii) the Company’s Vice Chairman with Sphere Entertainment, MSG Sports and AMC Networks. Prior to April 1, 2022, the Company also shared costs for Sphere Entertainment’s former President with Sphere Entertainment and MSG Sports. The Company is a party to various aircraft arrangements: • Pursuant to certain Aircraft Support Services Agreements (the “Support Agreements”), the Company provides certain aircraft support services to (i) Charles F. Dolan, a director, and certain of his children, including James L. Dolan, the Company’s Executive Chairman, Chief Executive Officer and a director, Deborah Dolan-Sweeney, Patrick F. Dolan, Marianne Dolan Weber (a director of the Company), and Kathleen M. Dolan, and (ii) an entity controlled by Patrick F. Dolan, the son of Charles F. Dolan and brother of James L. Dolan. • The Company is party to reciprocal time sharing/dry lease agreements with Charles F. Dolan and Sterling2k LLC (collectively, “CFD”), an entity owned and controlled by Deborah Dolan-Sweeney, the daughter of Charles F. Dolan and the sister of James L. Dolan, pursuant to which the Company has agreed from time to time to make its aircraft available to CFD and CFD has agreed from time to time to make its aircraft available to the Company. Pursuant to the terms of the agreements, CFD may lease on a non-exclusive, “time sharing” basis, certain Company aircraft. • The Company is also party to a dry lease agreement and a time sharing agreement with Brighid Air, LLC (“Brighid Air”), a company owned and controlled by Patrick F. Dolan, the son of Charles F. Dolan and the brother of James L. Dolan, pursuant to which Brighid Air has agreed from time to time to make its Bombardier BD100-1A10 Challenger 350 aircraft (the “Challenger”) available to the Company on a non-exclusive basis. In connection with the dry lease agreement, the Company also entered into a Flight Crew Services Agreement (the “Flight Crew Agreement”) with Dolan Family Office, LLC (“DFO”), an entity owned and controlled by Charles F. Dolan, pursuant to which the F - 42 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Company may utilize pilots employed by DFO for purposes of flying the Challenger when the Company is leasing that aircraft under the Company’s dry lease agreement with Brighid Air. • Prior to December 21, 2021, the Company was also party to (i) a reciprocal time sharing/dry lease agreement with Quart 2C, LLC (“Q2C”), a company controlled by James L. Dolan and Kristin A. Dolan, his spouse, pursuant to which the Company from time to time made its aircraft available to Q2C, and Q2C, from time to time made its aircraft available to the Company, and (ii) an aircraft support services agreement with an entity controlled by James L. Dolan, pursuant to which the Company provided certain aircraft support services. These agreements were no longer effective as of December 21, 2021. • The Company and each of Sphere Entertainment, MSG Sports and AMC Networks are party to certain aircraft time sharing agreements, pursuant to which the Company has agreed from time to time to make aircraft available to Sphere Entertainment, MSG Sports and/or AMC Networks for lease on a “time sharing” basis. Additionally, the Company, Sphere Entertainment, MSG Sports and AMC Networks have agreed on an allocation of the costs of certain aircraft and helicopter use by their shared executives. • In addition to the aircraft arrangements described above, certain executives of the Company are party to aircraft time sharing agreements, pursuant to which the Company has agreed from time to time to make certain aircraft available for lease on a “time sharing” basis for personal use in exchange for payment of actual expenses of the flight (as listed in the agreement). 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. In August 2022, a subsidiary of Sphere Entertainment entered into a three-year agreement with 605, valued at $ 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 Distribution. The Company expects to engage 605 to provide additional data analytics services in the future. Pursuant to this arrangement, the Company recognized $ 272 of expense for the year ended June 30, 2023. No expense was recognized for Fiscal Years 2022 and 2021. 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. The BCE Disposition was completed on December 2, 2022. As of June 30, 2023 , the Company had no notes payable to related parties. 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 consolidated and combined statements of operations for Fiscal Years 2023, 2022, and 2021: Year Ended June 30, 2023 2022 2021 Revenues $ 105,862 $ 115,370 $ 51,657 Operating expenses (credits): Revenue sharing expenses 19,056 17,279 558 Reimbursement under Arena License Arrangements ( 22,279 ) ( 25,827 ) ( 9,717 ) Cost reimbursement from MSG Sports ( 38,473 ) ( 38,254 ) ( 36,502 ) Cost reimbursement from Sphere Entertainment (after April 20, 2023) and Corporate allocations to Sphere Entertainment (before April 20, 2023) ( 151,219 ) ( 161,189 ) ( 100,942 ) Other operating expenses, net 3,949 4,995 4,041 Total operating expenses (credits), net (a) $ ( 188,966 ) $ ( 202,996 ) $ ( 142,562 ) _____________________ (a) Of the total operating expenses, net, $( 1,019 ), $( 9,347 ) and $( 930 ) of net credits for Fiscal Years 2023, 2022 and 2021, respectively, are included in direct operating expenses in the accompanying consolidated and combined statements of operations, and $( 187,947 ), $( 193,649 ) and $( 141,632 ) for Fiscal Years 2023, 2022 and 2021, respectively, are included as net credits in selling, general and administrative expenses. F - 43 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Revenues In Fiscal Year 2023, the Knicks and the Rangers played a total of 96 home games at The Garden and the Company recorded $ 68,068 of revenues under the Arena License Agreements for Fiscal Year 2023. In addition, for Fiscal Year 2023 the Company recorded revenues under sponsorship sales and service representation agreements with MSG Sports of $ 19,063 , and merchandise sharing revenues with MSG Sports of $ 5,550 . The Company recorded revenues under the advertising sales representation agreement with MSG Networks of $ 8,802 for Fiscal Year 2023. The Company also earned $ 2,847 of sublease revenue from related parties during Fiscal Year 2023. In Fiscal Year 2022, the Knicks and the Rangers played a total of 98 home games at The Garden and the Company recorded $ 68,072 of revenues under the Arena License Agreements for Fiscal Year 2022. In addition, for Fiscal Year 2022, the Company recorded revenues under sponsorship sales and service representation agreements with MSG Sports of $ 17,570 and merchandise sharing revenues with MSG Sports of $ 4,412 . The Company recorded revenues under the advertising sales representation agreement with MSG Networks of $ 20,878 for Fiscal Year 2022. The Company also earned $ 2,444 of sublease revenue from related parties during Fiscal Year 2022. In Fiscal Year 2021, the Knicks and the Rangers played a total of 69 home games at The Garden and the Company recorded $ 21,345 of revenues under the Arena License Agreements for Fiscal Year 2021. In addition, for Fiscal Year 2021, the Company recorded revenues under sponsorship sales and service representation agreements with MSG Sports of $ 13,584 . The Company recorded revenues under the advertising sales representation agreement with MSG Networks of $ 13,698 for Fiscal Year 2021. The Company also earned $ 2,450 of sublease revenue from related parties during Fiscal Year 2021. 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 described above, 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 reimbursement from Sphere Entertainment (after April 20, 2023) and Corporate allocations to Sphere Entertainment (before April 21, 2023) As part of the MSGE Distribution, certain corporate and operational support functions are being transferred to the Company and therefore, charges were reflected in order to 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 prior to the MSGE Distribution. Furthermore, for the year ended June 30, 2023, Corporate reimbursement from Sphere Entertainment amounts (after April 20, 2023) reflect charges from the Company to Sphere Entertainment under the TSA of $ 27,494 , net of general and administrative costs charged to the Company by Sphere Entertainment. F - 44 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) 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, (iii) commission under the group ticket sales representation agreement with MSG Sports, and (iv) expenses for advertising and promotional services rendered by MSG Networks. 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. Other Related Party Matters 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. 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 Distribution, and is eliminated in consolidation by the Company for periods subsequent to the MSGE Distribution. During Fiscal Year 2023, Eden declared and paid dividends to Sphere Entertainment through a reduction of the loan receivable from Sphere Entertainment. During Fiscal Years 2023 and 2022, no interest or principal payments were received by Eden. Instead, the accrued but unpaid interest was added to the outstanding principal amount of the loan. The cash flows related to this loan receivable for periods prior to the MSGE Distribution 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 $ 3,177 , $ 2,117 and $ 1,888 related to the Eden Loan Agreement in Fiscal Years 2023, 2022 and 2021. On May 23, 2019, the Company entered into a subordinated credit agreement with TAO Group Sub-Holdings, LLC (“TAOG Sub-Holdings”), which was 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 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 $ 4,420 and $ 4,525 related to the TAO Subordinated Credit Agreement during the Fiscal Years 2022 and 2021, respectively. Cash Management Prior to the MSGE Distribution, Sphere Entertainment used a centralized approach to cash management and financing of operations. The Company’s and Sphere Entertainment’s other su bsidiaries’ cash was available for use and was regularly “swept” historically. Cash and cash equivalents was attributed to the Company for each of the periods presented, as such cash was held in accounts legally owned by the Company. Transfers o f cash both to and from Sphere Entertainment were included as components of Sphere Entertainment’s Investment on the combined statements of equity (deficit). The main components of the net transfers (to)/from Sphere Entertainment were 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 Prior to the MSGE Distribution, 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 F - 45 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) expense and other historical intercompany activities, were recorded as components of 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 included financing activities for capital transfers, cash sweeps, and other treasury services. As part of this activity, cash balances were swept to Sphere Entertainment regularly as part of the Sphere Entertainment cash management policy. Note 18. Additional Financial Information The following table provides a summary of the amounts recorded as cash and cash equivalents, and restricted cash: As of June 30, 2023 2022 Cash and cash equivalents $ 76,089 $ 58,102 Restricted cash 8,266 4,471 Total cash, cash equivalents and restricted cash $ 84,355 $ 62,573 The Company’s cash equivalents consist of money market accounts and time deposits of $ 58,132 and $ 50,527 for Fiscal Years 2023 and 2022, respectively. Cash equivalents are measured at fair value within Level I of the fair value hierarchy on a recurring basis using observable inputs that reflect quoted prices for identical assets in active markets. Prepaid expenses and other current assets consisted of the following: As of June 30, 2023 2022 Prepaid expenses $ 58,588 $ 65,065 Current contract assets (a) 11,254 5,503 Inventory (b) 2,557 2,752 Other 5,163 6,121 Total prepaid expenses and other current assets $ 77,562 $ 79,441 _________________ (a) See Note 4. Revenue Recognition for more information on contract assets. (b) Inventory is primarily comprised of food and liquor for venues. Other non-current assets consisted of the following: As of June 30, 2023 2022 Unbilled lease receivable (a) $ 67,325 $ 40,780 Equity investments with readily determinable fair value (b) 31,641 36,421 Deferred costs 4,120 3,692 Other 5,270 2,642 Total other non-current assets $ 108,356 $ 83,535 _________________ (a) Unbilled lease receivable relates to the amounts recorded under the Arena License Agreement. (b) See Note 7. Equity investments with readily determinable fair value for more information on long-term investments. F - 46 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (Continued) Accounts payable, accrued and other current liabilities consisted of the following: As of June 30, 2023 2022 Accounts payable $ 15,628 $ 11,241 Accrued payroll and employee related liabilities 64,532 88,501 Cash due to promoters 90,538 78,428 Accrued expenses 44,027 43,791 Total accounts payable, accrued and other current liabilities $ 214,725 $ 221,961 Other income (expense), net includes the following: Years Ended June 30, 2023 2022 2021 Gains from shares sold — DraftKings $ 2,608 $ — $ ( 2,327 ) Gains from Shares sold - Townsquare 975 — — Net unrealized gain (loss) on equity investments with readily determinable fair value 16,050 ( 49,842 ) 53,505 Other ( 2,244 ) 809 ( 556 ) Total other income (expense), net $ 17,389 $ ( 49,033 ) $ 50,622 Concentrations of Risk As of June 30, 2023, approximately 5,820 full-time and part-time employees, who represent approximately 70 % of our workforce, were represented by unions. Approximately 26 % of such union employees are subject to CBAs that expired as of June 30, 2023 and approximately 20 % are subject to CBAs that will expire by June 30, 2024 if they are not extended prior thereto. Note 19. Subsequent Events Delayed Draw Term Loan Facility On July 14, 2023, Sphere Entertainment drew down the full amount of $ 65,000 under the DDTL Facility. On August 9, 2023, Sphere Entertainment repaid the full principal amount of the DDTL Facility and accrued interest and commitment fees by delivering 1,923 shares of MSG Entertainment Class A common stock to the Company. Such shares have been accounted for as treasury shares and are no longer outstanding as of August 9, 2023. As of August 9, 2023, the Company had approximately $ 160,000 remaining under the $ 250,000 Class A Common Stock share repurchase program authorized by the Company’s Board of Directors on March 29, 2023. F - 47