−Removed: Summary of Risk Factors
−Removed: The following is a summary of the principal risks that could adversely affect our business, operations and financial results.
−Removed: For a more complete discussion of the material risks facing our business, please see below.
Risks Related to Our Business
Our business faces intense and wide-ranging competition that may have a material negative effect on our business and results of operations.
−Removed: • The success of our business depends on the continued popularity of the Christmas Spectacular production, and the entertainment and sporting events we host at our venues.
−Removed: • Our business strategy may, in the future, include the development of new productions, which could require us to make considerable investments for which there can be no guarantee of success.
−Removed: • We depend on licenses from third parties for the performance of musical works at our venues.
−Removed: • Our properties are subject to, and benefit from, certain easements, the availability of which may not continue on terms favorable to us or at all.
−Removed: • A change to or withdrawal of a New York City real estate tax exemption for the Madison Square Garden Complex may have a material negative effect on our business and results of operations.
−Removed: • Our operations and operating results were materially impacted by the COVID-19 pandemic and actions taken in response by governmental authorities and certain professional sports leagues and a resurgence of the pandemic or another pandemic or other public health emergency could adversely affect our business and results of operations.
−Removed: Economic and Operational Risks
−Removed: • Our business has been adversely impacted and may, in the future, be materially adversely impacted by an economic downturn, recession, financial instability, inflation or changes in consumer tastes and preferences.
−Removed: • We do not own all of our venues and our failure to renew our leases on economically attractive terms may have a material negative effect on our business and results of operations.
−Removed: • The geographic concentration of our business could subject us to greater risk than our competitors and have a material negative effect on our business and results of operations.
−Removed: • Our business could be adversely affected by terrorist activity or the threat of terrorist activity, weather and other conditions that discourage congregation at prominent places of public assembly.
−Removed: • We may pursue acquisitions and other strategic transactions and/or investments to complement or expand our business that may not be successful.
−Removed: • We are subject to extensive governmental regulation, including building and zoning regulation, and our failure to comply with these regulations may have a material negative effect on our business and results of operations.
−Removed: For example, The Garden requires a zoning special permit, which was originally granted by the New York City Planning Commission in 1963 and renewed in July 2013 for 10 years (while our current application for renewal of the zoning special permit remains pending, we have been advised that we can continue to use and operate The Garden as normal until the renewal review process concludes) .
−Removed: The failure to obtain the renewal of this zoning special permit, or to do so on favorable terms, would have a negative effect on our business.
−Removed: • Our business is subject to seasonal fluctuations, and our operating results and cash flow have in the past varied, and could in the future, vary substantially from period to period.
−Removed: • Labor matters may have a material negative effect on our business and results of operations.
−Removed: • We are subject to the risk of adverse outcomes or negative publicity in litigation.
−Removed: Risks Related to Indebtedness, Financial Condition, Cybersecurity and Intellectual Property
−Removed: • We have substantial indebtedness and are highly leveraged, which could adversely affect our business.
−Removed: • We have and could in the future incur substantial operating losses, adjusted operating losses and negative cash flow.
−Removed: • We face continually evolving cybersecurity and similar risks, which could result in loss, disclosure, theft, destruction or misappropriation of, or access to, our confidential information and cause disruption of our business, damage to our brands and reputation, legal exposure and financial losses.
−Removed: • Theft of our intellectual property may have a material negative effect on our business and results of operations.
−Removed: Corporate Governance Risks
−Removed: • We are materially dependent on affiliated entities’ performances under various agreements.
−Removed: • Sphere Entertainment owns a significant amount of our total outstanding shares in the form of Class A Common Stock, which may be sold freely into this market.
−Removed: This has caused and could in the future cause the market price of our common stock to drop significantly, even if our business is doing well.
−Removed: • We may have a significant indemnity obligation to Sphere Entertainment if the MSGE Distribution is treated as a taxable transaction.
−Removed: • The tax rules applicable to the MSGE Distribution may restrict us from engaging in certain corporate transactions or from raising equity capital beyond certain thresholds for a period of time after the MSGE Distribution.
−Removed: • Certain adverse U.S.
−Removed: federal income tax consequences might apply to non-U.S.
−Removed: holders that hold our Class A common stock if we are treated as a “United States real property holding corporation” (“USRPHC”).
−Removed: • We do not have an operating history as a stand-alone public company.
−Removed: • Our historical financial results may not be representative of our results as a separate, stand-alone company.
−Removed: • When applicable, if we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned and our stock price may suffer.
−Removed: • We share certain key directors and officers with Sphere Entertainment, MSG Sports and/or AMC Networks Inc.
−Removed: (“AMC Networks”) (referred to herein as the “Other Entities”), which means those directors and officers do not devote their full time and attention to our affairs and the overlap may give rise to conflicts.
−Removed: These overlaps may result in the diversion of corporate opportunities and other conflicts, and provisions in our amended and restated certificate of incorporation may provide us no remedy in that circumstance.
−Removed: Risks Related to Our Business
−Removed: Our business faces intense and wide-ranging competition that may have a material negative effect on our business and results of operations.
−Removed: Our business competes, in certain respects and to varying degrees, with other leisure-time activities such as television, radio, motion pictures, sporting events and other live performances, the Internet, social media and social networking platforms, and online and mobile services, including sites for online content distribution, video on demand and other alternative sources of entertainment and information, in addition to competing for concerts with other event venues, for total entertainment dollars in our marketplace.
+Added: Our business competes, in certain respects and to varying degrees, with other leisure-time activities and entertainment options such as television, radio, motion pictures, sporting events, music festivals and other live performances, restaurants and nightlife venues, the Internet, social media and social networking platforms, and online and mobile services, including sites for online content distribution, video on demand and other alternative sources of entertainment and information, in addition to competing for concerts with other event venues, for total entertainment dollars in our marketplace.
The success of our business is largely dependent on the continued success of the Christmas Spectacular , and the availability of, and our venues’ ability to attract concerts, family shows, sporting events and other events, competition for which is intense, and the ability of performers to attract strong attendance at our venues.
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In addition, any delay in launching potential productions or enhancements has in the past resulted and could in the future result in the incurrence of operating costs that are not recouped.
−Removed: For example, we wrote off approximately $75.4 million
−Removed: of deferred production costs across Fiscal Years 2016 and 2017 related to the New York Spectacular Starring the Radio City Rockettes.
+Added: For example, we wrote off approximately $75.4 million of deferred production costs across Fiscal Years 2016 and 2017 related to the New York Spectacular Starring the Radio City Rockettes.
We depend on licenses from third parties for the performance of musical works at our venues, the loss of which or renewal of which on less favorable terms may have a negative effect on our business and results of operations.
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For example, the “breezeway” into the Madison Square Garden Complex from Seventh Avenue in New York City is a significant easement that we share with other property owners.
−Removed: Our ability to continue to utilize these and other easements, including for advertising and promotional purposes, requires us to comply with a number of conditions.
+Added: Our ability to continue to utilize this and other easements, including for advertising and promotional purposes, requires us to comply with a number of conditions.
Certain adjoining property owners have easements over our property, which we are required to maintain so long as those property owners meet certain conditions.
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We are party to Arena License Agreements with subsidiaries of MSG Sports that require two of MSG Sports’ professional sports teams — the Knicks and Rangers — to play all of their home games at The Garden.
−Removed: Under the Arena License Agreements, which each have a term of 35 years running through 2055 (unless extended), the Knicks and the Rangers pay an annual license fee in connection with their respective use of The Garden.
+Added: Under the Arena License Agreements, which each have a term of 35 years running through 2055, the Knicks and the Rangers pay an annual license fee in connection with their respective use of The Garden.
In addition, the Arena License Agreements provide us with additional revenue opportunities.
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There can be no assurance that the tax exemption will not be amended in a manner that imposes property tax or repealed in its entirety, either of which could have a material negative effect on our business and results of operations.
−Removed: Our operations and operating results were materially impacted by the COVID-19 pandemic and actions taken in response by governmental authorities and certain professional sports leagues, and a resurgence of the pandemic or another pandemic or other public health emergency could adversely affect our business and results of operations.
−Removed: The Company’s operations and operating results were materially impacted by the COVID-19 pandemic (including COVID-19 variants) and actions taken in response by governmental authorities and certain professional sports leagues during Fiscal Years 2020, 2021 and 2022.
−Removed: As a result of government-mandated assembly limitations and closures, all of our venues were closed beginning in March 2020 and substantially all of our business operations were suspended for the majority of Fiscal Year 2021.
−Removed: 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 subject to certain safety protocols and
−Removed: social distancing measures, and our New York and Chicago venues were not permitted to host events at full capacity until May 2021 and June 2021, respectively.
−Removed: The impact of the COVID-19 pandemic on our operations included (i) reduced payments under the Arena License Agreements while attendance at Knicks and Rangers home games was limited, (ii) the cancellation of the 2020 production of the Christmas Spectacular and the partial cancellation of the 2021 Christmas Spectacular production, (iii) fewer ticketed events at our venues once capacity restrictions were eliminated due to the lead time required to book touring acts and artists and (iv) the implementation of cost savings initiatives in order to streamline operations and preserve liquidity, including furloughing our venue employees while activities were limited, reducing our full-time workforce and additional comprehensive cost reduction measures.
−Removed: During Fiscal Years 2020 and 2021, over 70% and over 90% of the respective overall declines in our revenues were the result of the COVID-19 pandemic, in each case compared to the prior year period.
−Removed: See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors Affecting Results of Operations.”
−Removed: It is unclear to what extent COVID-19, including variants thereof, or another pandemic or public health emergency, could result in renewed government or league-mandated capacity restrictions or vaccination/mask requirements or impact the use of and/or demand for our venues, demand for our sponsorship and signage assets, deter our employees and vendors from working at our venues (which may lead to difficulties in staffing) or otherwise materially impact our operations.
−Removed: Governmental regulations enacted in response to the COVID-19 pandemic or another pandemic or public health emergency may impact the revenue we derive and/or the expenses we incur from events that we choose to host such that events that were historically profitable would instead result in losses, and could also materially impact the payments we receive under the Arena License Agreements to the extent the Knicks and/or the Rangers are required to play games without an audience during future seasons or to suspend, cancel or otherwise reduce the number of games scheduled in the regular reason or playoffs.
+Added: Our operations and operating results have been, and may in the future be, materially impacted by a pandemic or other public health emergency, such as the COVID-19 pandemic.
+Added: Although the Company saw a return to normal business operations following the COVID-19 pandemic, it is unclear to what extent a resurgence of COVID-19, including variants thereof, or another pandemic or public health emergency, could result in renewed government or league-mandated capacity restrictions or vaccination/mask requirements or impact the use of and/or demand for our venues, demand for our sponsorship and signage assets, deter our employees and vendors from working at our venues (which may lead to difficulties in staffing), result in event bookings being cancelled or postponed, or otherwise materially impact our operations.
+Added: Governmental regulations enacted in response to the COVID-19 pandemic or another pandemic or public health emergency have in the past impacted, and could impact in the future, the revenue we derive and/or the expenses we incur from events that we choose to host such that events that were historically profitable would instead result in losses, and could also materially impact the payments we receive under the Arena License Agreements to the extent the Knicks and/or the Rangers are required to play games without an audience during future seasons or to suspend, cancel or otherwise reduce the number of games scheduled in the regular reason or playoffs.
See “— Economic and Operational Risks — We are subject to extensive governmental regulation and our failure to comply with these regulations may have a material negative effect on our business and results of operations .”
Our business is particularly sensitive to reductions in travel and discretionary consumer spending.
−Removed: A pandemic such as COVID-19, or the fear of a new pandemic or public health emergency, has in the past and could in the future impede economic activity in impacted regions and globally over the long term leading to a decline in discretionary spending on sports and entertainment events and other leisure activities, including declines in domestic and international tourism, which could result in long-term effects on our business.
+Added: A pandemic such as COVID-19, or the fear of a new pandemic or public health emergency, has in the past impeded and could in the future impede economic activity in impacted regions and globally over the long term leading to a decline in discretionary spending on sports and entertainment events and other leisure activities, including declines in domestic and international tourism, which has in the past resulted and could in the future result in long-term effects on our business.
To the extent a pandemic or other public health emergency adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those relating to our liquidity, indebtedness and our ability to comply with the covenants contained in the agreements that govern our indebtedness.
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and global economies, disruptions to financial markets, inflation, recession, high unemployment, geopolitical events, including any prolonged effects caused by the COVID-19 pandemic or other similar outbreak or public health emergency, and the resulting negative effects on consumers’ and businesses’ discretionary spending, have in the past materially negatively affected, and may in the future materially negatively affect our business and results of operations.
−Removed: A prolonged period of reduced consumer or corporate spending, including with respect to sponsorship, such as during the COVID-19 pandemic, could have an adverse effect on our business and our results of operations.
−Removed: See “— Risks Related to Our Business — Our operations and operating results were materially impacted by the COVID-19 pandemic and actions taken in response by governmental authorities and certain professional sports leagues, and a resurgence of the pandemic or another pandemic or other public health emergency could adversely affect our business and results of operations .”
+Added: A prolonged period of reduced consumer or corporate spending, including with respect to sponsorship, such as during the COVID-19 pandemic, has in the past and could in the
+Added: future have an adverse effect on our business and our results of operations.
+Added: See “— Risks Related to Our Business — Our operations and operating results have been, and may in the future be, materially impacted by a pandemic or other public health emergency, such as the COVID-19 pandemic.
We do not own all of our venues and our failure to renew our leases on economically attractive terms may have a material negative effect on our business and results of operations.
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For example, our operations and operating results were materially impacted by the COVID-19 pandemic.
−Removed: See “— Risks Related to Our Business — Our operations and operating results were materially impacted by the COVID-19 pandemic and actions taken in response by governmental authorities and certain professional sports leagues, and a resurgence of the pandemic or another pandemic or other public health emergency could adversely affect our business and results of operations .”
+Added: See “— Risks Related to Our Business — Our operations and operating results have been, and may in the future be, materially impacted by a pandemic or other public health emergency, such as the COVID-19 pandemic.
Our business could be adversely affected by terrorist activity or the threat of terrorist activity, weather and other conditions that discourage congregation at prominent places of public assembly.
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See “— Risks Related to Our Business — O ur operations and operating results were materially impacted by the COVID-19 pandemic and actions taken in response by governmental authorities and certain professional sports leagues, and a resurgence of the pandemic or another pandemic or other public health emergency could adversely affect our business and results of operations .”
−Removed: Weather or other conditions, including natural disasters, in locations where we own or operate venues may affect patron attendance as well as sales of food and beverages and merchandise, among other things.
+Added: Weather or other conditions, including natural disasters and similar events, in locations where we own or operate venues may affect patron attendance as well as sales of food and beverages and merchandise, among other things.
Weather conditions may also require us to cancel or postpone events.
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Any transactions that we are able to identify and complete may involve risks, including the commitment of significant capital, the incurrence of indebtedness, the payment of advances, the diversion of management’s attention and resources from our existing business to develop and integrate the acquired or combined business, the inability to successfully integrate such business or assets into our operations, litigation or other claims in connection with acquisitions or against companies we invest in or acquire, our lack of control over certain companies, including joint ventures and other minority investments, the risk of not achieving the intended results and the exposure to losses if the underlying transactions or ventures are not successful.
−Removed: At times, we have had significant investments in businesses that we account for under the equity method of accounting, and we may again in the future.
+Added: At times, we have had, and we may again in the future have, significant investments in businesses that we account for under the equity method of accounting.
Certain of these investments have generated operating losses in the past and certain have required additional investments from us in the form of equity or loans.
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We have in the past written down and, to the extent that these investments are not successful in the future, we may write down all or a portion of such investments.
−Removed: Additionally, these businesses may be subject to laws, rules and other circumstances, and have risks in their operations, which may be similar to, or different from, those to which we are subject.
+Added: Additionally, these businesses may be subject to laws, rules and other circumstances, and have risks in their operations, which may be similar to, or different from,
+Added: those to which we are subject.
Any of the foregoing risks could result in a material negative effect on our business and results of operations or adversely impact the value of our investments.
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As a result of government mandated assembly limitations and closures implemented in response to the COVID-19 pandemic, our venues were unable to host events for the substantial majority of Fiscal Year 2021.
−Removed: There can be no assurance that some or all of these restrictions will not be imposed again in the future due to increased infection rates of COVID-19 (including variants) or another pandemic.
+Added: There can be no assurance that some or all of these restrictions will not be imposed again in the future due to another pandemic or public health emergency.
We are unable to predict what the long-term effects of these events, including renewed government regulations or requirements, will be.
For example, future governmental regulations adopted in response to the COVID-19 or another pandemic or public health emergency may impact the revenue we derive and/or the expenses we incur from the events that we choose to host, such that events that were historically profitable would instead result in losses.
−Removed: See “— Risks Related to Our Business — Our operations and operating results were materially impacted by the COVID-19 pandemic and actions taken in response by governmental authorities and certain professional sports leagues, and a resurgence of the pandemic or another pandemic or other public health emergency could adversely affect our business and results of operations .”
+Added: See “— Risks Related to Our Business — Our operations and operating results have been, and may in the future be, materially impacted by a pandemic or other public health emergency, such as the COVID-19 pandemic .”
• Hospitality-related Permits/Licenses .
We hold liquor licenses at each of our venues and are subject to licensing requirements with respect to the sale of alcoholic beverages in the jurisdictions in which we serve those beverages.
+Added: The New York State Liquor Authority has threatened to revoke certain of the Company’s liquor licenses, alleging that the Company’s policy of temporarily excluding adverse attorneys from entering its venues during the course on ongoing litigation violates New York state beverage laws.
Failure to receive or retain, or the suspension of, liquor licenses or permits could interrupt or terminate our ability to serve alcoholic beverages at the applicable venue and could have a material negative effect on our business and our results of operations.
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Our venues are subject to zoning and building regulations including permits relating to the operation of The Garden.
−Removed: The Garden requires a zoning special permit, which was originally granted by the New York City Planning Commission in 1963 and renewed in July 2013 for 10 years (while our current application for renewal of the zoning special permit remains pending, we have been advised that we can continue to use and operate The Garden as normal until the renewal review process concludes).
−Removed: As part of our special permit application, we have proposed making improvements to The Madison Square Garden Complex, including new entrances to Penn Station and improved public areas around the perimeter of The Garden.
−Removed: Relevant rail agencies are considering proposals to redevelop Penn Station, which proposed redevelopment would impact The Garden, which sits atop Penn Station (and could impact the Theater at Madison Square Garden, which is part of The Garden complex, depending on the outcome of negotiations between relevant stakeholders, including us).
−Removed: Certain government officials and special interest groups have used and may continue to use the renewal process for the zoning special permit to pressure us to make financial contributions to the redevelopment of Penn Station, relocate or transfer all or portions of The Madison Square Garden Complex.
+Added: The Garden requires a zoning special permit, which was originally granted by the New York City Planning Commission in 1963 and renewed in July 2013 for 10 years and again in September 2023 for five years.
+Added: The Garden sits above Penn Station.
+Added: Relevant rail agencies are considering proposals to redevelop Penn Station, which proposed redevelopment would impact The Garden (and could impact the Theater at Madison Square Garden, which is part of the Madison Square Garden Complex, depending on the outcome of negotiations between relevant stakeholders, including us).
+Added: Certain government officials and special interest groups have in the past used, and may in the future use, the renewal process for the zoning special permit to pressure us to make financial contributions to the redevelopment of Penn Station, relocate or transfer all or portions of the Madison Square Garden Complex.
For example, in June 2023 the New York Metropolitan Transportation Authority, New Jersey Transit and Amtrak, which operate commuter rail services from Penn Station, issued a compatibility report asserting that The Garden imposes severe constraints on Penn Station that restrict efforts to make its desired improvements.
The report also called for the Company to make significant cash contributions and property transfers to facilitate the Penn Station redevelopment.
−Removed: There can be no assurance regarding the future renewal of the special permit or the terms thereof
−Removed: (including requirements for us to make significant capital expenditures as a condition to renewal of the permit), and the failure to obtain such renewal or to do so on favorable terms would have a material negative effect on our business.
+Added: There can be no assurance regarding the future renewal of the special permit or the terms thereof (including requirements for us to make significant capital expenditures as a condition to renewal of the permit), and the failure to obtain such renewal or to do so on favorable terms would have a material negative effect on our business.
• Data Privacy .
−Removed: We are subject to various data privacy and protection laws, regulations, policies and contractual obligations that apply to the collection, transmission, storage, processing and use of personal information or personal data, which, among other things, impose certain requirements relating to the privacy and security of personal information.
+Added: We are subject to data privacy and protection laws, regulations, policies and contractual obligations that apply to the collection, transmission, storage, processing and use of personal information or personal data, which, among other things, impose certain requirements relating to the privacy and security of personal information.
The variety of laws and regulations governing data privacy and protection, and the use of the internet as a commercial medium, are rapidly evolving, extensive and complex, and may include provisions and obligations that are inconsistent with one another or uncertain in their scope or application.
The data protection landscape is rapidly evolving in the United States.
−Removed: As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities.
−Removed: For example, California has passed a comprehensive data privacy law, the California Consumer Privacy Act of 2018 (the “CCPA”), and a number of other states, including Virginia, Colorado, Utah and Connecticut have also passed similar laws, and additional states may do so in the near future.
−Removed: Additionally, the California Privacy Rights Act (the “CPRA”) imposes additional data protection obligations on covered businesses, including additional consumer rights procedures and obligations, limitations on data uses, new audit requirements for higher-risk data, and constraints on certain uses of sensitive data.
+Added: As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face
+Added: increased scrutiny or attention from regulatory authorities.
+Added: For example, California has passed a comprehensive data privacy law, the CCPA, and a number of other states, including New Jersey, Virginia, Colorado, Utah and Connecticut have also passed similar laws, and additional states may do so in the near future.
+Added: Additionally, the CPRA imposes additional data protection obligations on covered businesses, including additional consumer rights procedures and obligations, limitations on data uses, new audit requirements for higher-risk data, and constraints on certain uses of sensitive data.
The majority of the CPRA provisions went into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required.
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We cannot yet determine the impact that these future laws and regulations may have on our business.
+Added: As new privacy- and security-related laws and regulations are implemented, the time and resources needed for us to comply with such laws and regulations, as well as our potential liability for non-compliance with such laws and regulations, may increase.
In addition, governmental authorities and private litigants continue to bring actions against companies for online collection, use, dissemination and security practices that are unfair or deceptive.
+Added: We may incur significant legal expenses or reputational damage for data privacy or security claims regardless of whether we are found to be liable.
Our business is, and may in the future be, subject to a variety of other laws and regulations, including licensing, permitting, and historic designation and similar requirements working conditions, labor, immigration and employment laws; health, safety and sanitation requirements and compliance with the Americans with Disabilities Act (and related state and local statutes).
Any changes to the legal and regulatory framework applicable to our business, especially in the rapidly evolving area of data privacy or to a lesser extent public health and safety, could have an adverse impact on our business and our failure to comply with applicable governmental laws and regulations, or to maintain necessary permits or licenses, could result in liability or government actions that could have a material negative effect on our business and results of operations.
−Removed: Our business is subject to seasonal fluctuations, and our operating results and cash flow have in the past varied, and could in the future, vary substantially from period to period.
+Added: Our business is subject to seasonal fluctuations, and our operating results and cash flows have in the past varied, and could in the future, vary substantially from period to period.
Our revenues and expenses have been seasonal and we expect they will continue to be seasonal.
−Removed: For example, 15% of our revenues in Fiscal Year 2023 were derived from the Christmas Spectacular .
+Added: For example 16% of our revenues in Fiscal Year 2024 were derived from the Christmas Spectacular , (compared to the 2022 production representing 15% of our revenues in Fiscal Year 2023).
Our revenues are highest in the second quarter of our fiscal year when these performances primarily occur.
−Removed: As a result, our business earns a disproportionate amount of its revenue and operating income in the second quarter of each fiscal year.
−Removed: Therefore, our operating results and cash flow reflect significant variation from period to period and will continue to do so in the future.
−Removed: Consequently, period-to-period comparisons of our operating results may not necessarily be meaningful and the operating results of one period are not indicative of our financial performance during a full fiscal year.
+Added: As a result of seasonality, our business earns a disproportionate amount of its revenue and operating income in the second quarter of each fiscal year.
+Added: Therefore, our operating results and cash flows reflect significant variation from period to period and will continue to do so in the future.
+Added: Consequently, period-to-period comparisons of our operating results or cash flows may not necessarily be meaningful and the operating results or cash flows of one period are not indicative of our financial performance during a full fiscal year.
This variability may adversely affect our business, results of operations and financial condition.
−Removed: The unavailability of systems upon which we rely may have a material negative effect on our business and results of operations.
−Removed: We rely upon various internal and third-party software or systems in the operation of our business, including, with respect to ticket sales, credit card processing, email marketing, point of sale transactions, database, inventory, human resource management and financial systems.
−Removed: From time to time, certain of these arrangements may not be covered by long-term agreements.
−Removed: The failure or unavailability of these internal or third-party services or systems, depending upon its severity and duration, could have a material negative effect on our business and results of operations.
Labor matters may have a material negative effect on our business and results of operations.
−Removed: As a result of labor market disruptions due to lingering effects of the COVID-19 pandemic and otherwise, we have in the past faced difficulty in maintaining staffing at our venues and retaining talent in our corporate departments.
−Removed: As a result, we have had to scale back hours and days of operations in certain markets and venues.
−Removed: If we are unable to attract and retain qualified people or to do so on reasonable terms, our venues could be short staffed or become more expensive to operate and affect our ability to meet our customers’ demand, any of which could materially adversely affect our business and results of operations.
Our business is dependent upon the efforts of unionized workers.
As of June 30, 2024, approximately 4,700 full-time and part-time employees, who represent approximately 70% of the Company’s workforce, were subject to CBAs.
−Removed: Approximately 26% of
−Removed: 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.
+Added: Approximately 9% of such union employees are subject to CBAs that expired as of June 30, 2024 and approximately 12% are subject to CBAs that will expire by June 30, 2025 if they are not extended prior thereto.
Any labor disputes, such as strikes or lockouts, with the unions with which we have CBAs could have a material negative effect on our business and results of operations (including our ability to produce or present concerts, programming, theatrical productions, sporting events and other events).
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If any Knicks or Rangers games are cancelled because of any such labor difficulties, the loss of revenue, including from customers who would have attended home games at The Garden would have a negative impact on our business and results of operations.
+Added: As a result of labor market disruptions due to lingering effects of the COVID-19 pandemic and otherwise, we have in the past faced difficulty in maintaining staffing at our venues and retaining talent in our corporate departments.
+Added: As a result, we have had to scale back hours and days of operations in certain markets and venues.
+Added: If we are unable to attract and retain qualified people or to do so on reasonable terms, our venues could be short staffed or become more expensive to operate and affect our ability to meet our customers’ demand, any of which could materially adversely affect our business and results of operations.
There is a risk of injuries and accidents in connection with our venues, which could subject us to personal injury or other claims; we are subject to the risk of adverse outcomes or negative publicity in other types of litigation.
There are inherent risks associated with producing and hosting events and operating, maintaining, renovating or constructing our venues.
−Removed: As a result, personal injuries, accidents and other incidents have occurred and may occur from time to time, which have in the past and could in the future subject us to claims and liabilities.
+Added: As a result, personal injuries, accidents and other incidents have occurred and may occur from time to time, which have in the past subjected, and could in the future subject, us to claims and liabilities.
These risks may not be covered by insurance or could involve exposures that exceed the limits of any applicable insurance policy.
Incidents in connection with events at any of our venues could also reduce attendance at our events and may have a negative impact on our revenue and results of operations.
−Removed: We seek to obtain contractual indemnities for events at our venues that we do not promote, and under the Arena License Agreements, MSG Sports and the Company have reciprocal indemnity obligations to each other in connection with the home games of the Knicks and Rangers held at The Garden.
−Removed: While we also maintain insurance policies that provide coverage for incidents in the ordinary course of business, there can be no assurance that such indemnities or insurance will be adequate at all times and in all circumstances.
−Removed: From time to time, the Company, its subsidiaries and/or our affiliates are involved in various legal proceedings, including proceedings or lawsuits brought by governmental agencies, stockholders, customers, employees, private parties and other stakeholders.
+Added: We seek to obtain contractual indemnities for events at our venues that we do not promote, and
+Added: under the Arena License Agreements, MSG Sports and the Company have reciprocal indemnity obligations to each other in connection with the home games of the Knicks and Rangers held at The Garden.
+Added: While we also maintain insurance policies that provide coverage for incidents in the ordinary course of business, there can be no assurance that such indemnities or insurance will be adequate at all times and in all circumstances, or that we will be able to continue to obtain or renew such insurance policies on favorable terms or at all.
+Added: From time to time, the Company, its subsidiaries and/or its affiliates are involved in various legal proceedings, including proceedings or lawsuits brought by governmental agencies, stockholders, customers, employees, private parties and other stakeholders.
The outcome of litigation is inherently unpredictable and, regardless of the merits of the claims, litigation may be expensive, time-consuming, disruptive to our operations and distracting to management.
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As of June 30, 2024, our total indebtedness was $626 million, $16 million of which matures before the end of Fiscal Year 2025.
−Removed: On June 30, 2022, MSG National Properties, LLC (“MSG National Properties”) and certain other subsidiaries entered into a five-year $650 million senior secured term loan facility (the “National Properties Term Loan Facility”) and a five-year $100 million revolving credit facility (the “National Properties Revolving Credit Facility” and, together with the National Properties Term Loan Facility, the “National Properties Facilities”), which are guaranteed by MSG Entertainment Holdings, to fund working capital needs, for general corporate purposes of MSG National Properties and its subsidiaries, and to make distributions to MSG Entertainment Holdings (the “National Properties Credit Agreement”).
+Added: MSG National Properties, LLC (“MSG National Properties”) and certain other subsidiaries are party to a five-year $650 million senior secured term loan facility (the “National Properties Term Loan Facility”) and a five-year $150 million revolving credit facility (the “National Properties Revolving Credit Facility” and, together with the National Properties Term Loan Facility, the “National Properties Facilities”), which are guaranteed by MSG Entertainment Holdings, to fund working capital needs, for general corporate purposes of MSG National Properties and its subsidiaries, and to make distributions to MSG Entertainment Holdings (the “National Properties Credit Agreement”).
As of June 30, 2024, outstanding letters of credit were $18.8 million and the remaining balance available under the National Properties Revolving Credit Facility was $131.2 million.
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These payments reduce our earnings and cash available for other potential business purposes.
−Removed: Furthermore, our interest expense could increase if interest rates increase (including in connection with rising inflation) because our indebtedness bears interest at floating rates or to the extent we have to refinance existing debt with higher cost debt.
In addition, the ability of MSG National Properties to draw on its revolving credit facility will depend on its ability to meet certain financial covenants and other conditions.
1 unchanged sentence
Although our cash flows could decrease in these scenarios, our required payments in respect of indebtedness would not decrease.
−Removed: In addition, our ability to make payments on, or repay or refinance, such debt, and to fund our operating and capital expenditures, depends largely upon our future operating performance and our ability to access the credit markets.
+Added: Our ability to make payments on, or repay or refinance, such debt, and to fund our operating and capital expenditures, depends largely upon our future operating performance and our ability to access the credit markets.
Our future operating performance, to a certain extent, is subject to general economic conditions, recession, fears of recession, and financial, competitive, regulatory and other factors that are beyond our control.
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Our variable rate indebtedness subjects us to interest rate risk, which has caused, and may continue to cause, our debt service obligations to increase significantly.
−Removed: Borrowings under our facilities are at variable rates of interest and expose us to interest rate risk.
−Removed: The interest rate on the National Properties Facilities was 7.70% as of June 30, 2023.
−Removed: Interest rates have increased significantly (including in connection with rising inflation), and, as a result, our debt service obligations on our variable rate indebtedness have increased significantly even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, have correspondingly decreased.
−Removed: Further increases in interest rates will cause additional increases in our debt service obligations.
−Removed: We have incurred substantial operating losses, adjusted operating losses and negative cash flow and there is no assurance we will have operating income, positive adjusted operating income or positive cash flow in the future.
−Removed: We incurred operating income (loss) of $105.0 million and $(5.6) million for Fiscal Year 2023 and Fiscal Year 2022, respectively.
−Removed: In addition, we have in prior periods incurred operating losses and negative cash flow and there is no assurance that we will have operating income, adjusted operating income, or positive cash flow in the future.
+Added: As of June 30, 2024, we had $626 million of indebtedness that bore interest at variable rates, which exposes us to interest rate risk.
+Added: The interest rate on the National Properties Facilities was 7.94% as of June 30, 2024, compared to 7.70% as of June 30, 2023.
+Added: As a result, increases in market interest rates increase our interest expense and our debt service obligations.
+Added: For example, our interest expense increased from approximately $51.9 million in Fiscal Year 2023 to approximately $58.0 million in Fiscal Year 2024 despite a reduction in the aggregate outstanding principal amount of the National Properties Facilities.
+Added: If interest rates were to continue to increase (including in connection with rising inflation), this would further increase the amount of interest expense that we would have to pay in connection with our variable interest rate indebtedness, which could cause our interest expense to be substantial relative to our revenues and cash outflows.
+Added: We have in the past incurred substantial operating losses, adjusted operating losses and negative cash flow and there is no assurance we will have operating income, positive adjusted operating income or positive cash flow in the future.
+Added: We have in prior periods incurred operating losses, adjusted operating losses and negative cash flow.
+Added: There is no assurance that we will have operating income, adjusted operating income, or positive cash flow in the future.
Significant operating losses may limit our ability to raise necessary financing, or to do so on favorable terms, as such losses could be taken into account by potential investors, lenders and the organizations that issue investment ratings on indebtedness.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors Affecting Results of Operations.”
−Removed: Sphere Entertainment’s management identified a material weakness during Fiscal Year 2022, which has now been remediated.
+Added: We are required to assess our internal control over financial reporting on an annual basis and Sphere Entertainment’s management identified a material weakness during Fiscal Year 2022, which has now been remediated.
If we identify other material weaknesses or adverse findings in the future, our ability to report our financial condition or results of operations accurately or timely may be adversely affected, which may result in a loss of investor confidence in our financial reports, significant expenses to remediate any internal control deficiencies, and ultimately have an adverse effect on the market price of our common stock.
−Removed: Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, our management will be required to report on, and our independent registered public accounting firm will be required to attest to, the effectiveness of our internal control over financial reporting.
−Removed: Currently, we are an emerging growth company, and are exempt from complying with the auditor attestation requirements of Section 404, but we will be subject to the requirements in the future.
−Removed: The rules governing the standards that must be met for management to assess internal control over financial reporting are complex and require significant documentation, testing and possible remediation.
−Removed: In addition, if we fail to maintain the adequacy of our internal control over financial reporting, we will not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.
+Added: Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, our management is required to report on, and our independent registered public accounting firm is required to attest to, the effectiveness of our internal control over financial reporting.
+Added: The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.
+Added: If we fail to maintain the adequacy of our internal control over financial reporting, we will not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.
If we fail to achieve and maintain an effective internal control environment, we could suffer misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information.
This could result in significant expenses to remediate any internal control deficiencies and lead to a decline in our stock price.
−Removed: Once we are subject to these requirements, our management may be unable to conclude in future periods that our disclosure controls and procedures are effective due to the effects of various factors, which may, in part, include unremediated material weaknesses in internal controls over financial reporting.
−Removed: Disclosure controls and procedures include, without limitation,
−Removed: controls and procedures designed to ensure that information required to be disclosed by a company in those reports is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
−Removed: In addition, we may not be able to identify and remediate other control deficiencies, including material weaknesses, in the future.
Subsequent to the filing of the Fiscal Year 2021 Form 10‑K, Sphere Entertainment management evaluated an immaterial accounting error related to interest costs that should have been capitalized for the Sphere in Las Vegas in Fiscal Years 2021, 2020 and 2019 and in the fiscal quarter ended September 30, 2021, as prescribed by Accounting Standards Codification Topic 835-20 (Capitalization of Interest).
As a result of the accounting error, Sphere Entertainment re-evaluated the effectiveness of its internal control over financial reporting and identified a material weakness as of June 30, 2021, September 30, 2021, December 31, 2021 and March 31, 2022.
−Removed: Sphere Entertainment undertook certain remediation efforts by implementing additional controls which were operating effectively as of June 30, 2022, and as a result, Sphere Entertainment’s management has concluded that the material weakness has been remediated and its internal control over financial reporting was effective as of June 30, 2022.
+Added: Sphere Entertainment undertook certain remediation efforts by implementing additional controls which were operating effectively as of June 30, 2022, and as a result, Sphere Entertainment’s management concluded that the material weakness had been remediated and its internal control over financial reporting was effective as of June 30, 2022.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.
In the MSGE Distribution, the internal control structure of Sphere Entertainment was transferred to our company, and we now provide those services under the Transition Services Agreement with Sphere Entertainment.
+Added: Our management may be unable to conclude in future periods that our disclosure controls and procedures are effective due to the effects of various factors, which may, in part, include unremediated material weaknesses in internal controls over financial reporting.
+Added: Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in those reports is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
+Added: In addition, we may not be able to identify and remediate other control deficiencies, including material weaknesses, in the future.
Risks Related to Cybersecurity and Intellectual Property
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System interruption and the lack of integration and redundancy in these systems and infrastructure may have an adverse impact on our business, financial condition and results of operations.
−Removed: System interruption and the lack of integration and redundancy in the information systems and infrastructure, both of our own websites and other computer systems and of affiliate and third-party software, computer networks and other communications systems service providers on which we rely with respect to ticket sales, credit card processing, email marketing, point of sale transactions, database, inventory, human resource management and financial systems, may adversely affect our ability to operate websites or apps, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations.
+Added: System interruption and the lack of integration and redundancy in the information systems and infrastructure, both of our own websites and other computer systems and of affiliate and third-party software, computer networks and other communications systems service providers on which we rely with respect to ticket sales, credit card processing, email marketing, point of sale transactions, database, inventory, human resource management and financial systems, may adversely affect our ability to operate websites or apps,
+Added: process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations.
Such interruptions could occur by virtue of natural disaster, malicious actions, such as hacking or acts of terrorism or war, or human error.
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If any of these adverse events were to occur, it could adversely affect our business, financial condition and results of operations.
+Added: We rely upon cloud computing services to operate certain aspects of our business and any disruption of or interference with our use of these services would impact our operations and our business would be adversely impacted.
+Added: Cloud computing services provide a distributed computing infrastructure platform for our business operations.
+Added: We have established our software and computer systems so as to utilize data processing, storage capabilities and other services provided by third parties.
+Added: Those third parties’ facilities are vulnerable to damage or interruption from cybersecurity attacks, terrorist attacks, natural disasters, power outages and similar events or acts of misconduct.
+Added: We have experienced, and we expect that in the future we will experience, interruptions, delays and outages in service and availability from third-party service providers from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints.
+Added: Given this, along with the fact that we cannot easily switch our cloud operations to another cloud provider, without significant costs, or at all, any disruption of or interference with our use of cloud providers would impact our operations and our business.
We face continually evolving cybersecurity and similar risks, which could result in loss, disclosure, theft, destruction or misappropriation of, or access to, our confidential information and cause disruption of our business, damage to our brands and reputation, legal exposure and financial losses.
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Data maintained in electronic form is subject to the risk of security incidents, including breach, compromise, intrusion, tampering, theft, destruction, misappropriation or other malicious activity.
+Added: The increased use of mobile and cloud technologies heightens these and other operational risks, as do hybrid work arrangements.
Our ability to safeguard such personal and other sensitive information, including information regarding the Company and our customers, sponsors, partners and employees, independent contractors and vendors, is important to our business.
−Removed: We take these matters seriously and take significant steps to protect our stored information, including the implementation of systems and processes to thwart malicious activity.
+Added: We take significant steps to protect our stored information, including the implementation of systems and processes to thwart malicious activity.
These protections are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.
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A compromise of our or our vendors’ systems could affect the security of information on our network or that of a third-party service provider.
−Removed: Additionally, outside parties may attempt to fraudulently induce employees, vendors or users to disclose sensitive, proprietary or confidential
−Removed: information in order to gain access to data and systems.
+Added: Additionally, outside parties may attempt to fraudulently induce employees, vendors or users to disclose sensitive, proprietary or confidential information in order to gain access to data and systems.
+Added: Given the increasing sophistication of bad actors and complexity of the techniques used to obtain unauthorized access or disable systems, a security incident could potentially persist for an extended period of time before being detected.
+Added: We may not be able to anticipate the incident or respond adequately or timely, and the extent of a particular incident, and the steps that we may need to take to investigate the incident, may not be immediately clear.
As a result, our or our customers’ or affiliates’ sensitive, proprietary and/or confidential information may be lost, disclosed, accessed or taken without consent.
2 unchanged sentences
We also continue to review and enhance our security measures in light of the constantly evolving techniques used to gain unauthorized access to networks, data, software and systems.
−Removed: We may be required to incur significant expenses in order to address any actual or potential security incidents that arise and we may not have insurance coverage for any or all of such expenses.
+Added: We have expended, and expect to continue to expend, significant expenses on an ongoing basis in order to review and enhance our security measures and to address any actual or potential security incidents that arise, but these measures may be ineffective and we may be subject to legal or regulatory action, as well as financial losses, and we may not have insurance coverage for any or all of such losses.
If we experience an actual or perceived security incident, our ability to conduct business may be interrupted or impaired, we may incur damage to our systems, we may lose profitable opportunities or the value of those opportunities may be diminished and we may lose revenue as a result of unlicensed use of our intellectual property.
−Removed: Unauthorized access to or security breaches of our systems could result in the loss of data, loss of business, severe reputational damage adversely affecting customer or investor confidence, diversion of management’s attention, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations and significant costs for remediation that may include liability for stolen or lost assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach and other liabilities.
+Added: Unauthorized access to or security breaches of our systems could result in the loss of data, loss of business, severe reputational damage adversely affecting customer or investor confidence, diversion of management’s attention, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations and
+Added: significant costs for remediation that may include liability for stolen or lost assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach and other liabilities.
In addition, in the event of a security incident, changes in legislation may increase the risk of potential litigation.
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Our insurance coverage may not be adequate to cover the costs of a data breach, indemnification obligations or other liabilities.
−Removed: In addition, in some instances, we may have obligations to notify relevant stakeholders of security breaches.
−Removed: Such mandatory disclosures are costly, could lead to negative publicity, may cause our customers to lose confidence in the effectiveness of our security measures and may require us to expend significant capital and other resources to respond to or alleviate problems caused by an actual or perceived security breach.
−Removed: We may become subject to infringement or other claims relating to our content or technology.
+Added: We also routinely transmit and receive personal, confidential and proprietary information by email and other electronic means.
+Added: We have discussed and worked with customers, sponsors, partners, employees, directors, independent contractors and vendors to secure transmission capabilities and protect against cyber incidents, but we do not have, and may be unable to put in place, secure capabilities with all of our customers, sponsors, partners, employees, directors, independent contractors and vendors and we may not be able to ensure that these third parties have appropriate controls in place to protect the confidentiality of the information.
+Added: An interception, misuse or mishandling of personal, confidential or proprietary information being sent to or received from a client, vendor, service provider, counterparty or other third party could result in legal liability, regulatory action and reputational harm.
+Added: In addition, new regulations require us to disclose information about material cybersecurity incidents on a timely basis, including those that may not have been resolved or fully investigated at the time of disclosure, or, in some instances, we may have obligations to notify relevant stakeholders of security breaches.
+Added: Such mandatory disclosures are costly, could provide information to threat actors, could lead to negative publicity, may cause our customers to lose confidence in the effectiveness of our security measures and may require us to expend significant capital and other resources to respond to or alleviate problems caused by an actual or perceived security breach.
+Added: We have in the past and may in the future become subject to infringement or other claims relating to our content or technology.
From time to time, third parties assert against us alleged intellectual property infringement claims (e.g., copyright, trademark and patent) or other claims relating to our productions, venues and brands, technologies, digital content or other content or material, some of which may be important to our business.
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We have entered into various agreements with Sphere Entertainment and MSG Sports that govern our ongoing commercial relationship, including the Arena License Agreements, sponsorship agency agreements in connection with the sale of sponsorships for the Knicks and Rangers, as well as MSG Sports’ other teams, and a trademark license agreement regarding the use of the “MSG” name.
−Removed: The Company provides Sphere Entertainment and MSG Sports with certain business services pursuant to services agreements, such as information technology, 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
−Removed: internal audit functions, as well as certain marketing functions.
+Added: The Company provides Sphere Entertainment and MSG Sports with certain business services pursuant to services agreements, such as information technology, 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.
These services include the collection and storage of certain personal information regarding employees and/or customers as well as information regarding the Company, Sphere Entertainment, MSG Sports and our sponsors and partners.
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If one of the affiliated entities were to breach, be unable to satisfy its material obligations under these agreements, including a failure to satisfy its indemnification or other financial obligations, or these agreements otherwise terminate or expire and we do not enter into replacement agreements, we could suffer operational difficulties and/or significant losses.
−Removed: Sphere Entertainment owns a significant amount of our total outstanding shares in the form of shares of Class A Common Stock, which may be sold freely into the market.
−Removed: This has caused and could in the future cause the market price of our common stock to drop significantly, even if our business is doing well.
−Removed: Sphere Entertainment retained 17,021,491 shares of our Class A common stock, representing 37.8% of our Class A common stock and 33.0% of our total outstanding shares, following the MSGE Distribution.
−Removed: Sphere Entertainment is required by applicable tax rules to dispose of all retained shares as soon as practicable consistent with the business purposes for the retention, and expects to dispose of such retained shares within one year of the date of the MSGE Distribution, subject to market conditions.
−Removed: On June 27, 2023, Sphere Entertainment completed a secondary offering of 6,037,500 shares of our Class A common stock and sold 840,053 shares of our Class A common stock to us pursuant to a stock purchase agreement.
−Removed: Between the launch and pricing of that offering by Sphere Entertainment, the price of our Class A common stock declined by 22%, from $39.64 per share to $31.00 per share.
−Removed: As of June 30, 2023, Sphere Entertainment owned approximately 23.0% of our Class A common stock.
−Removed: On August 9, 2023, Sphere Entertainment repaid the DDTL Facility with 1,922,750 shares of our Class A common stock, and as a result Sphere Entertainment owned approximately 19.5% of our Class A common stock as of August 9, 2023.
−Removed: Further sales or other dispositions of our Class A common stock retained by Sphere Entertainment or the perception that these sales or other dispositions might occur, could depress the market price of our Class A common stock and could impair our ability to raise capital through the sale of our Class A common stock.
We may have a significant indemnity obligation to Sphere Entertainment if the MSGE Distribution is treated as a taxable transaction.
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holder should consult its tax advisor as to the particular tax consequences that would be applicable to such holder if we are treated as a USRPHC.
−Removed: We do not have an operating history as a stand-alone public company.
−Removed: Prior to the MSGE Distribution, our operations were a part of Sphere Entertainment, and Sphere Entertainment provided us with various financial, operational and managerial resources for conducting our business.
−Removed: Following the MSGE Distribution, we maintain our own credit and banking relationships and perform certain of our own financial and operational functions.
−Removed: We cannot assure you that we have successfully put in place the financial, operational and managerial resources necessary to operate as a public company or that we will be able to be profitable doing so.
−Removed: Our historical financial results may not be representative of our results as a separate, stand-alone company.
−Removed: Historical financial information we have included in this Annual Report on Form 10-K through April 20, 2023 has been derived from the consolidated financial statements and accounting records of Sphere Entertainment and does not necessarily reflect what our financial position, results of operations or cash flows would have been had we been a separate, stand-alone company during the periods presented.
−Removed: Although Sphere Entertainment did account for the Entertainment business (inclusive of the Sphere business) as a separate business segment, we were not operated as a separate, stand-alone company for the historical periods presented.
+Added: Our historical financial results may not be representative of our results as a separate, standalone company.
+Added: Historical financial information we have included in this Annual Report on Form 10-K through April 20, 2023 has been derived from the consolidated financial statements and accounting records of Sphere Entertainment and does not necessarily reflect what our financial position, results of operations or cash flows would have been had we been a separate, standalone company during the periods
+Added: Although Sphere Entertainment did account for the Entertainment business (inclusive of the Sphere business) as a separate business segment, we were not operated as a separate, standalone company for the historical periods presented.
The historical costs and expenses reflected in our consolidated and combined financial statements include an allocation for certain corporate functions historically provided by Sphere Entertainment, including general corporate expenses and employee benefits and incentives.
1 unchanged sentence
The historical information does not necessarily indicate what our results of operations, financial position, cash flows or costs and expenses will be in the future.
−Removed: We have incurred and may in the future incur additional material costs and expenses as a result of our separation from Sphere Entertainment.
−Removed: We have incurred and may in the future incur additional material costs and expenses greater than those we incurred prior to our separation from Sphere Entertainment.
−Removed: These increased costs and expenses have arisen and may arise from various factors, including financial reporting and costs associated with complying with federal securities laws (including compliance with the Sarbanes-Oxley Act).
−Removed: In addition, we expect to either maintain similar, or have increased, corporate and administrative costs and expenses to those we incurred while part of Sphere Entertainment, even though following the MSGE Distribution we are a smaller, stand-alone company.
−Removed: We cannot assure you that these costs will not be material to our business.
−Removed: If we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, or our internal control over financial reporting is not effective, the reliability of our financial statements may be questioned and our stock price may suffer.
−Removed: Section 404 of the Sarbanes-Oxley Act requires any company subject to the reporting requirements of the U.S.
−Removed: securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting.
−Removed: To comply with this statute, we will eventually be required to document and test our internal control procedures, our management will be required to assess and issue a report concerning our internal control over financial reporting, and our independent auditors will be required to issue an opinion on the Company’s internal controls over financial reporting.
−Removed: The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant
−Removed: documentation, testing and possible remediation to meet the detailed standards under the rules.
−Removed: During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act.
−Removed: If our management cannot favorably assess the effectiveness of our internal control over financial reporting or our auditors identify material weaknesses in our internal controls, investor confidence in our financial results may weaken, and our stock price may suffer.
−Removed: The reduced disclosure requirements applicable to us as an “emerging growth company” may make our Class A common stock less attractive to investors.
−Removed: We are an “emerging growth company” as defined in the Jumpstart Our Business (JOBS) Act, and we may avail ourselves of certain exemptions from various reporting requirements of public companies that are not “emerging growth companies,” including, but not limited to, an exemption from complying with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, and, like smaller reporting companies, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirement of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
−Removed: We may remain an emerging growth company for up to five full fiscal years following the MSGE Distribution.
−Removed: We will cease to be an emerging growth company, and, therefore, become ineligible to rely on the above exemptions, if we:
−Removed: (a) have more than $1.235 billion in annual revenue in a fiscal year; (b) issue more than $1 billion of non-convertible debt over a three-year period; or (c) become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) which would generally occur after:
−Removed: (i) we have filed at least one annual report; (ii) we have been a Securities and Exchange Commission (“SEC”) reporting company for at least 12 months; and (iii) the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.
−Removed: We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
−Removed: If some investors find our common stock less attractive as a result of the exemptions available to us as an emerging growth company, there may be a less active trading market for our common stock and our value may be more volatile than that of an otherwise comparable company that does not avail itself of the same or similar exemptions.
We are controlled by the Dolan Family.
2 unchanged sentences
• Class A common stock, par value $0.01 per share, which is entitled to one vote per share and is entitled collectively to elect 25% of our Board; and
−Removed: • Class B common stock, par value $0.01 per share, which is entitled to 10 votes per share and is entitled collectively to elect the remaining 75% of our Board.
+Added: • Class B common stock, par value $0.01 per share (“Class B common stock”), which is entitled to 10 votes per share and is entitled collectively to elect the remaining 75% of our Board.
As of June 30, 2024, the Dolan family, including trusts for the benefit of members of the Dolan family (collectively, the “Dolan Family Group”) collectively owns all of our Class B common stock, approximately 3.9% of our outstanding Class A common stock (inclusive of options exercisable and restricted stock units vesting within 60 days of June 30, 2024) and approximately 63.7% of the total voting power of all our outstanding common stock (in each case, inclusive of exercisable options).
19 unchanged sentences
The Dolan Family Group is able to prevent a change in control of our Company and no person interested in acquiring us would be able to do so without obtaining the consent of the Dolan Family Group.
−Removed: The Dolan Family Group, by virtue of its stock
−Removed: ownership, has the power to elect all of our directors subject to election by holders of Class B common stock, and is able collectively to control stockholder decisions on matters on which holders of all classes of our common stock vote together as a single class.
+Added: The Dolan Family Group, by virtue of its stock ownership, has the power to elect all of our directors subject to election by holders of Class B common stock, and is able collectively to control stockholder decisions on matters on which holders of all classes of our common stock vote together as a single class.
These matters could include the amendment of some provisions of our certificate of incorporation and the approval of fundamental corporate transactions.
4 unchanged sentences
The Dolan Family Group also controls Sphere Entertainment, MSG Sports and AMC Networks.
−Removed: The members of the Dolan Family Group entered into an agreement with the Company in which they agreed that, during the 12-month period beginning on the MSGE Distribution date, the Dolan Family Group would obtain the prior approval of a majority of the Company’s Independent Directors prior to acquiring common stock of the Company through a tender offer that results in members of the Dolan Family Group owning more than 50% of the total number of outstanding shares of common stock of the Company.
−Removed: For purposes of this agreement, the term “Independent Directors” means the directors of the Company who have been determined by our Board to be independent directors for purposes of NYSE corporate governance standards.
We have elected to be a “controlled company” for NYSE purposes, which allows us not to comply with certain of the corporate governance rules of the NYSE.
2 unchanged sentences
As a controlled company, we have the right to elect not to comply with the corporate governance rules of the NYSE requiring:
−Removed: (i) a majority of independent directors on our Board; (ii) an independent corporate governance and nominating committee; and (iii) an independent compensation committee.
+Added: (i) a majority of independent directors on our Board; (ii) an independent corporate governance and nominating committee; and (iii) an
+Added: independent compensation committee.
Our Board has elected for the Company to be treated as a “controlled company” under NYSE corporate governance rules and not to comply with the NYSE requirement for a majority-independent board of directors and for an independent corporate governance and nominating committee because of our status as a controlled company.
3 unchanged sentences
Shares held by “affiliates” may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144.
−Removed: As described below, certain parties have registration rights covering a portion of our shares of Class A common stock.
+Added: Certain parties have registration rights covering a portion of our shares of Class A common stock.
We have entered into registration rights agreements with Charles F.
Dolan, members of his family, and certain Dolan family interests that provide them with “demand” and “piggyback” registration rights with respect to approximately 8.5 million shares of Class A common stock (inclusive of exercisable options), including shares issuable upon conversion of shares of Class B common stock.
−Removed: We have also entered into a Stockholder and Registration Rights Agreement with Sphere Entertainment, pursuant to which we provided Sphere Entertainment with “demand” and “piggyback” registration rights with respect to the 17,021,491 shares of Class A common stock it owned following the MSGE Distribution, inclusive of the shares sold in the secondary offering by Sphere Entertainment on June 27, 2023 and shares repurchased by the Company through Sphere Entertainment’s repayment of the DDTL Facility on August 9, 2023.
−Removed: In addition, Sphere Entertainment has agreed to vote the Class A common stock that it owns in proportion to the votes cast by the other holders of the Company’s Class A common stock on such matter, to the extent such shares of Class A common stock are entitled to be voted on such matter.
−Removed: The shares of Class A common stock owned by Sphere Entertainment will be present at all stockholder meetings for quorum purposes.
−Removed: Sphere Entertainment has granted the Company an irrevocable proxy to implement these voting agreements.
−Removed: Sphere Entertainment is required by applicable tax rules to dispose of all the retained shares, which represented approximately 19.5% of the outstanding shares of our Class A common stock as of August 9, 2023, as soon as practicable consistent with the business purposes for the retention, and expects to dispose of such retained shares within one year of the date of the MSGE Distribution, subject to market conditions.
Sales of a substantial number of shares of Class A common stock, including sales pursuant to these registration rights agreements, could adversely affect the market price of the Class A common stock and could impair our future ability to raise capital through an offering of our Class A common stock.
−Removed: Such adverse effects could be particularly negative during the period between the completion of the MSGE Distribution and the time when Sphere Entertainment completes its disposition of the retained shares.
We share certain directors and officers with Sphere Entertainment, MSG Sports and/or AMC Networks, which means those officers will not devote their full time and attention to our affairs and the overlap may give rise to conflicts.
−Removed: Dolan serves as the Executive Chairman and Chief Executive Officer of both the Company and Sphere Entertainment and as the Executive Chairman of MSG Sports.
+Added: Dolan serves as the Executive Chairman and Chief Executive Officer of each of the Company, Sphere Entertainment and MSG Sports.
Dolan also currently serves as Non-Executive Chairman of AMC Networks.
−Removed: In addition, Gregg G.
−Removed: Seibert serves as a Vice Chairman of the Company, MSG Sports, Sphere Entertainment and AMC Networks and Charles F.
+Added: In addition, Laura Franco serves as the Executive Vice President and General Counsel of both of the Company and Sphere Entertainment, Gregg G.
+Added: Seibert serves as a Vice Chairman each of the Company, Sphere Entertainment, MSG Sports and AMC Networks and Charles F.
Dolan serves as Chairman Emeritus of AMC Networks concurrently with his service on our Board.
−Removed: Furthermore, nine of the members of our Board also serve as directors of Sphere Entertainment, nine serve as directors of MSG Sports and five serve as directors of AMC Networks, including our Executive Chairman and Chief Executive Officer, who serves as Non-Executive Chairman of AMC Networks.
−Removed: There is no overlap of Class A Directors between Sphere Entertainment and the Company.
+Added: Furthermore, nine of the members of our Board also serve as directors of Sphere Entertainment, nine serve as directors of MSG Sports and three serve as directors of AMC Networks, including our Executive Chairman and Chief Executive Officer, who serves as Non-Executive Chairman of AMC Networks.
+Added: Further, our Secretary, Mark C.
+Added: Cresitello, also serves as Secretary of Sphere Entertainment and MSG Sports.
We refer to these persons as “Overlap Persons.” The Overlap Persons may have actual or apparent conflicts of interest with respect to matters involving or affecting each company.
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These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for our Company and an Other Entity.
−Removed: See the section entitled “Certain Relationships and Related Party Transactions — Certain Relationships and Potential Conflicts of Interest” in the Company’s Information Statement, dated April 3, 2023, filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on April 4, 2023 (the “Information Statement”) for a discussion of certain procedures we have instituted to help ameliorate such potential conflicts that may arise.
+Added: See the section entitled “Certain Relationships and Related Party Transactions — Certain Relationships and Potential Conflicts of Interest” in the Company’s Definitive Proxy Statement filed with the SEC on October 26, 2023 for a discussion of certain procedures we have instituted to help ameliorate such potential conflicts that may arise.
Our overlapping directors and officers with Sphere Entertainment, MSG Sports and/or AMC Networks may result in the diversion of corporate opportunities to Sphere Entertainment, MSG Sports and/or AMC Networks, and other conflicts, and provisions in our amended and restated certificate of incorporation may provide us no remedy in that circumstance.
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The Company has renounced its rights to certain business opportunities and the Company’s amended and restated certificate of incorporation provides that no Overlap Person will be liable to the Company or its stockholders for breach of any fiduciary duty that would otherwise occur by reason of the fact that any such individual directs a corporate opportunity (other than certain limited types of opportunities set forth in our amended and restated certificate of incorporation) to one or more of the Other Entities instead of the Company, or does not refer or communicate information regarding such corporate opportunities to the Company.
−Removed: These provisions in our amended and restated certificate of incorporation will also expressly validate certain contracts, agreements, arrangements and transactions (and amendments, modifications or terminations thereof) between the Company and the Other Entities and, to the fullest extent permitted by law, provide that the actions of the Overlap Person in connection therewith are not breaches of fiduciary duties owed to the Company, any of its subsidiaries or their respective stockholders.
−Removed: See the section entitled “Description of Capital Stock — Certain Corporate Opportunities and Conflicts” in the Information Statement.
−Removed: Unresolved Staff Comments
+Added: These provisions in our amended and restated certificate of incorporation also expressly validate certain contracts, agreements, arrangements and transactions (and amendments, modifications or terminations thereof) between the Company and the Other Entities and, to the fullest extent permitted by law, provide that the actions of the Overlap Person in connection therewith are not breaches of fiduciary duties owed to the Company, any of its subsidiaries or their respective stockholders.
+Added: See “Duties of Directors and Officers Regarding Potential Business Opportunities;
+Added: Renunciation of Interest in Potential Business Opportunities” in Exhibit 3.1 to this Annual Report on Form 10-K for more information.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.