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Item 7. Management’s Discussion and Analysis

2024-08-16 compared with 2023-08-18 · 176 added, 186 removed, 276 unchanged (57% of the section changed)

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This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

In this MD&A, there are statements concerning the future operating and future financial performance of Madison Square Garden Entertainment Corp., (formerly MSGE Spinco, Inc.) (“MSG Entertainment”) and its direct and indirect subsidiaries (collectively, “we,” “us,” “our” “MSG Entertainment,” or the “Company”).

In this MD&A, there are statements concerning the future operating and future financial performance of MSG Entertainment.

Words such as “expects,” “anticipates,” “believes,” “estimates,” “may,” “will,” “should,” “could,” “potential,” “continue,” “intends,” “plans,” and similar words and terms used in the discussion of future operating and future financial performance identify forward-looking statements.

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• the level of our expenses, including our corporate expenses;

• the level of our revenues, which depends in part on the popularity of the Christmas Spectacular Starring the Radio City Rockettes (the “ Christmas Spectacular ”), the sports teams whose games are played at Madison Square Garden (“The Garden”), and other events which are presented in our venues;

• lack of operating history as a stand-alone public company and costs associated with being an independent public company;

• the level of our revenues, which depends in part on the popularity of the Christmas Spectacular , the professional sports teams whose games are played at The Garden and other events which are presented in our venues, and our ability to attract such events;

• the on-ice and on-court performance of the professional sports teams whose games we host in our venues;

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• competition, for example, from other venues and sports and entertainment options, including of new competing venues;

• our ability to effectively manage any impacts of a pandemic or other public health emergency (including COVID-19 variants) as well as renewed actions taken in response by governmental authorities or certain professional sports leagues, including ensuring compliance with rules and regulations imposed upon our venues, to the extent applicable;

• the effect of any postponements or cancellations by third-parties or the Company due to operational challenges and other health and safety concerns or as a result of a pandemic or other public health emergency (such as the partial cancellation of the 2021 production of the Christmas Spectacular );

• the effect of any postponements or cancellations by third-parties or the Company of scheduled events, whether as a result of a pandemic or other public health emergency due to operational challenges and other health and safety concerns (such as the partial cancellation of the 2021 production of the Christmas Spectacular ) or otherwise;

• the extent to which attendance at our venues may be impacted by government actions, renewed health concerns by potential attendees and reduced tourism;

• the impact on the payments we receive under the arena license agreements that require the New York Knicks (the “Knicks”) of the National Basketball Association (the “NBA”) and the New York Rangers (the “Rangers”) of the National Hockey League (the “NHL”) to play their home games at The Garden (the “Arena License Agreements”) as a result of government-mandated capacity restrictions, league restrictions and/or social-distancing or vaccination requirements, if any, at Knicks and Rangers games;

• the impact on the payments we receive under the Arena License Agreements that require the Knicks of the NBA and the Rangers of the NHL to play their home games at The Garden as a result of government-mandated capacity restrictions, league restrictions and/or social-distancing or vaccination requirements, if any, at Knicks and Rangers games;

• changes in laws, guidelines, bulletins, directives, policies and agreements, and regulations under which we operate;

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• seasonal fluctuations and other variations in our operating results and cash flow from period to period;

• the successful development of new live productions, enhancements or changes to existing productions and the investments associated with such development, enhancements, or changes;

• enhancements or changes to existing productions and the investments associated with such enhancements or changes;

• business, reputational and litigation risk if there is a cyber or other security incident resulting in loss, disclosure or misappropriation of stored personal information, or disclosure of confidential information or other breaches of our information security;

• activities or other developments (such as pandemics, including the COVID-19 pandemic) that discourage or may discourage congregation at prominent places of public assembly, including our venues;

• activities or other developments (such as a pandemic or other public health emergency) that discourage or may discourage congregation at prominent places of public assembly, including our venues;

• the acquisition or disposition of assets or businesses and/or the impact of, and our ability to successfully pursue, acquisitions or other strategic transactions;

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• financial community perceptions of our business, operations, financial condition and the industries in which we operate;

• the performance by Madison Square Garden Sports Corp.

(together with its subsidiaries, as applicable, “MSG Sports”) of its obligations under various agreements with the Company and ongoing commercial arrangements, including the Arena License Agreements;

• the tax-free treatment of the MSGE Distribution (as defined below);

• our ability to achieve the intended benefits of the MSGE Distribution;

• failure of the Company or Sphere Entertainment Co.

(together with its subsidiaries, as applicable, “Sphere Entertainment”) to satisfy its obligations under transition services agreements, or other agreements entered into in connection with the MSGE Distribution;

• our status as an emerging growth company;

• the performance by MSG Sports of its obligations under various agreements with the Company and ongoing commercial arrangements, including the Arena License Agreements;

• the tax-free treatment of the MSGE Distribution;

• failure of the Company or Sphere Entertainment to satisfy its obligations under transition services agreements, or other agreements entered into in connection with the MSGE Distribution;

• the additional factors described under “Risk Factors” in this Annual Report on Form 10-K.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment.

We disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securities laws.

Moreover, we operate in a very competitive and rapidly changing environment.

New risks emerge from time to time.

It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.

In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form 10-K may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events.

We cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur.

Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.

We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Annual Report on Form 10-K to conform these statements to actual results or to changes in our expectations.

In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Annual Report on Form 10-K may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

All dollar amounts included in the following MD&A are presented in thousands, except as otherwise noted.

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This section provides an analysis of our results of operations for Fiscal Year 2024 and 2023, on a consolidated and combined basis, respectively.

Analysis of our results of operations for Fiscal Year 2022, including a comparison of Fiscal Year 2022 to Fiscal Year 2021, is included 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.

Analysis of our results of operations for Fiscal Year 2023, including a comparison of Fiscal Year 2023 to Fiscal Year 2022, is included in the Company’s Annual Report on Form 10-K for Fiscal Year 2023 filed on August 18, 2023.

Liquidity and Capital Resources.

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MSGE Distribution and Business Overview

On April 20, 2023 (the “MSGE Distribution Date”), Sphere Entertainment distributed approximately 67% of the shares of outstanding common stock of MSG Entertainment to its stockholders (the “MSGE Distribution”), with Sphere Entertainment retaining approximately 33% of the outstanding shares of common stock of MSG Entertainment (in the form of Class A common stock) (the “MSGE Retained Interest”) immediately following the MSGE Distribution.

On the MSGE Distribution Date, Sphere Entertainment distributed approximately 67% of the shares of outstanding common stock of MSG Entertainment to its stockholders, with Sphere Entertainment retaining approximately 33% of the outstanding shares of common stock of MSG Entertainment (in the form of Class A common stock), referred to herein as 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).

Following the completion of the secondary offering by Sphere Entertainment of the Company’s Class A Common Stock on September 22, 2023, Sphere Entertainment no longer owns any of the Company’s outstanding 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, for every share of Sphere Entertainment’s Class A common stock, par value $0.01 per share, held of record as of the close of business, New York City time, on April 14, 2023 (the “Record Date”), and (b) one share of MSG Entertainment’s Class B common stock, par value $0.01 per share, for every share of Sphere Entertainment’s Class B common stock, par value $0.01 per share, held of record as of the close of business, New York City time, on the Record Date.

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Although we primarily license our venues to third-party promoters for a fee, we also promote or co-promote shows.

If we serve as promoters or co-promoters of a show, we have economic risk relating to the event.

If we serve as promoter or co-promoter of a show, we have economic risk relating to the event.

The Company also creates, produces and/or presents live productions that are performed in the Company’s venues.

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See “— Description of Our Business — Revenue Sources — Venue License Fees” below for further discussion of our venue licensing arrangements with MSG Sports.

Revenues from Entertainment Offerings

Ticket Sales and Suite Licenses

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We sell tickets to the public through our box office, via our websites and ticketing agencies and through group sales.

The amount of revenue we earn from ticket sales depends on the number of shows and the mix of events that we promote, the capacity of the venue used, the extent to which we can sell to fully utilize the capacity, and our ticket prices.

The Garden has 21 Event Level suites, 58 Lexus Level suites, 18 Infosys Level suites, the Caesars Sportsbook Lounge, Suite Sixteen and the Hub Loft.

amount of revenue we earn from ticket sales depends on the number of shows and the mix of events that we promote, the capacity of the venue used, the extent to which we can sell to fully utilize the capacity, and ticket prices.

The Garden has 22 Event Level suites, 1 Event Level Club Space, 58 Lexus Level suites, 18 Infosys Level suites, the Madison Club, Chase Lounge and the Hub Loft.

Suite licenses at The Garden are generally sold to corporate custom ers with the majority being multi-year licenses with annual escalators.

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Our fees typically include both the cost of renting space in our venues and costs for providing event staff, such as front-of-house and back-of-house staff, including stagehands, electricians, laborers, box office staff, ushers and security as well as production services such as staging, lighting and sound.

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 agreement.

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 term, adjusted pursuant to the terms of the Arena License Agreements, which is comprised of non-consecutive periods of use when MSG Sports uses The Garden generally for their professional sports teams’ preseason and regular season home games.

As such, operating lease revenue is recognized ratably as events occur.

The Arena License Agreements allow for certain reductions in the license fees during periods when The Garden is not available for use due to a force majeure event.

As a result of the government-mandated suspension of events at The Garden due to the impact of the COVID-19 pandemic, at the beginning of Fiscal Year 2021, The Garden was not available for use.

Capacity restrictions, use limitations and social distancing requirements were in place for the entirety of the Knicks and Rangers 2020- 21 regular seasons, which materially impacted the payments we received under the Arena License Agreements for Fiscal Year 2021.

On July 1, 2021, the Knicks and Rangers began paying the full amounts provided for under their respective Arena License Agreements.

The Knicks and the Rangers each completed their 2021-2022 82-game regular seasons, with the Rangers advancing to the playoffs.

Pursuant to the Arena License Agreements, the Company receives 30% of revenues, net of taxes and credit card fees, recorded on a net basis (agent), from the sale of MSG Sports teams merchandise sold at The Garden.

Under the Arena License Agreements, the Company shares certain sponsorship and signage revenues with MSG Sports.

Pursuant to these agreements, MSG Sports has the rights to sponsorship and signage revenue that is specific to Knicks and Rangers events.

The Company and MSG Sports also entered into sponsorship sales representation agreements, under which the Company has the right and obligation to sell and service sponsorships for the sports teams of MSG Sports, in exchange for a commission.

Facility and Ticketing Fees

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These revenues are earned in the form of certain fees and assessments, including the facility fees we charge, and vary by venue.

Signage and Sponsorship

We earn revenues through the sale of signage space and sponsorship rights in connection with our venues, productions and other live entertainment events.

Signage revenues generally involve the sale of advertising space at The Garden during entertainment events and otherwise in our venues.

We also earn our revenues through the sale of outdoor signage around the Madison Square Garden complex I.

Sponsorship agreements may require us to use the name, logos and other trademarks of sponsors in our advertising and in promotions for our venues, productions and other live entertainment events.

Sponsorship arrangements may be exclusive within a particular sponsorship category or non-exclusive and generally permit a sponsor to use the name, logos and other trademarks of our productions, events and venues in connection with their own advertising and in promotions in our venues or in the community.

Food, Beverage, and Merchandise Revenues

Food and beverage

We sell food and beverages during substantially all events held at our venues.

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Pursuant to the Arena License Agreements related to the use of The Garden by MSG Sports, the Company shares with MSG Sports revenues and related expenses associated with sales of food and beverages (including suite catering) during Knicks and Rangers games at The Garden.

Revenue generated from in-venue food and beverage sales at MSG Sports’ events is recognized by the Company on a gross basis, with a corresponding revenue sharing expense for MSG Sports’ share of such sales recorded within direct operating

The Arena License Agreements require the Company to pay 50% of the net proceeds generated from in-venue food and beverage sales to MSG Sports.

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Typically, revenues from our merchandise sales at our non-proprietary events relate to sales of merchandise provided by the artist, the producer or promoter of the event and are generally subject to a revenue sharing arrangement and are generally recorded on a net basis (as agent).

Signage and Sponsorship

We earn revenues through the sale of signage space and sponsorship rights in connection with our venues, productions and other live entertainment events.

Signage revenues generally involve the sale of advertising space at The Garden during entertainment events and otherwise in our venues.

We also earn our revenues through the sale of outdoor signage around the Madison Square Garden complex and Penn Station.

Sponsorship agreements may require us to use the name, logos and other trademarks of sponsors in our advertising and in promotions for our venues, productions and other live entertainment events.

Under the Arena License Agreements, the Company shares certain sponsorship and signage revenues with MSG Sports.

Pursuant to these agreements, MSG Sports has the rights to sponsorship and signage revenue that is specific to Knicks and Rangers events.

Arena License Fees and Other Leasing Revenue

As such, operating lease revenue is recognized ratably as events occur.

Our principal expenses are payments made to performers of our productions, staging costs and day-of-event costs associated with events, and advertising costs.

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In situations where we provide our venues to a third-party promoter under a license fee arrangement, day-of-event costs are typically included in the license fees charged to the promoter.

Under the Arena License Agreements related to the use of The Garden by MSG Sports, the Company is

reimbursed for day-of-event costs (as defined under the Arena License Agreements).

Under the Arena License Agreements related to the use of The Garden by MSG Sports, the Company is reimbursed for day-of-event costs (as defined under the Arena License Agreements).

The Company records such reimbursements as reductions to direct operating expenses.

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We incur significant costs promoting our productions and other events through various advertising campaigns, including advertising on social and digital platforms, television, outdoor platforms and radio, and in newspapers.

In light of the intense competition for entertainment events, such expenditures are a necessity to drive interest in our productions and encourage members of the public to purchase tickets to our shows.

In light of the intense competition for

entertainment events, such expenditures are a necessity to drive interest in our productions and encourage members of the public to purchase tickets to our shows.

Other Expenses

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The Company's combined statements of operations for the years ended June 30, 2022 and 2021, as well as the financial information for the period of July 1, 2022 to April 20, 2023 that is included in the results of operations for the year ended June 30, 2023 were prepared on a standalone basis derived from the consolidated financial statements and accounting records of the Company’s former parent, Sphere Entertainment, and are presented as carve-out financial statements as MSG Entertainment was not a standalone public company prior to the MSGE Distribution.

The combined statements of operations for the year ended June 30, 2022 and 2021, as well as the financial information for the period of July 1, 2022 to April 20, 2023 that is included in the results of operations for the year ended June 30, 2023, include allocations for certain support functions that were 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.

The combined statements of operations for the year ended June 30, 2022, as well as the financial information for the period of July 1, 2022 to April 20, 2023 that is included in the results of operations for the year ended June 30, 2023, include allocations for certain support functions that were 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 were allocated 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 and Sphere Entertainment, which are recorded as a reduction of either direct operating expenses or selling, general and administrative expenses.

These expenses were allocated 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 and Sphere Entertainment, which are recorded as a reduction of either direct operating expenses or selling, general and administrative expenses.

Management believes the assumptions underlying the combined financial statements, including the assumptions regarding allocating general corporate expenses, are reasonable.

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Description of Business and Basis of Presentation to the consolidated and combined financial statements included in Item 8 of this Annual Report on Form 10-K for additional information.

Impact of the COVID-19 Pandemic on Our Business

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 events (including the partial cancellation of the 2021 production of the Christmas Spectacular ) during the second and third quarters of the Fiscal Year 2022 as a result of an increase in COVID-19 cases.

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.

For more information about the risks to the Company as a result of the COVID-19 pandemic and its impact on our operating results, see “Item 1A.

Risk Factors” included elsewhere in this Form 10-K for further details.

Advertising Sales Representation Agreement Termination

Prior to December 31, 2022, the Company was a party to an advertising sales representation agreement (the “Networks Advertising Sales Representation Agreement”) with Sphere Entertainment’s subsidiary, MSGN Holdings, L.P.

(“MSG Networks LP”), pursuant to which the Company had the exclusive right and obligation to sell MSG Networks LP advertising availabilities for a commission.

(“MSG Networks”), pursuant to which the Company had the exclusive right and obligation to sell MSG Networks advertising availabilities for a commission.

The Networks Advertising Sales Representation Agreement was terminated effective as of December 31, 2022.

For Fiscal Years 2023, 2022, and 2021 , the Company recognize d $8,802, $20,878 and $13,698 of revenues, respectively, under the advertising sales representation agreement with MSG Networks.

The termination of the Networks Advertising Sales Representation Agreement has impacted the operating results of the Company for Fiscal Year 2023 and will impact the operating results of the Company on a go forward basis.

As a result, after December 31, 2022, the Company no longer recognizes advertising sales commission revenue or the employee costs related to the MSG Networks LP advertising sales agency.

For Fiscal Years 2024,

2023, and 2022 , the Company recognize d $0, $8,802 and $20,878 of revenues, respectively, under the Networks Advertising Sales Representation Agreement.

As a result, after December 31, 2022, the Company no longer recognizes advertising sales commission revenue or the employee costs related to the Networks Advertising Sales Representation Agreement, which has impacted the operating results of the Company and will impact the operating results of the Company on a go forward basis.

Results of Operations

Effective for the third quarter of Fiscal Year 2024, the Company modified its presentation of revenues and direct operating expenses.

Total revenue is now presented in three categories consisting of (i) Revenues from entertainment offerings, (ii) Food, beverage, and merchandise revenues, and (iii) Arena license fees and other leasing revenues.

In addition, total direct operating expenses is now presented in two categories consisting of (i) Entertainment offerings and leasing direct operating expenses and (ii) food, beverage, and merchandise direct operating expenses.

Prior period financial information has been revised to conform with the current period presentation.

Consolidated and Combined Results of Operations

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2024 2023 Amount Percentage

Revenues $ 851,496 $ 653,490 $ 198,006 30 %

Revenues from entertainment offerings

$ 723,897 $ 643,885 $ 80,012 12 %

Food, beverage, and merchandise revenues 162,092 135,933 26,159 19 %

Arena license fees and other leasing revenue 73,276 71,678 1,598 2 %

Total revenues 959,265 851,496 107,769 13 %

Direct operating expenses

Entertainment offerings, arena license fees, and other leasing direct operating expenses (a)

(475,502) (420,301) (55,201) (13) %

Food, beverage, and merchandise direct operating expenses

(93,334) (79,628) (13,706) (17) %

Total direct operating expenses (568,836) (499,929) (68,907) (14) %

Selling, general and administrative expenses (206,963) (180,216) (26,747) (15) %

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Restructuring charges (17,649) (10,241) (7,408) (72) %

Operating income (loss) 105,008 (5,648) 110,656 NM

Interest expense, net (44,625) (45,960) 1,335 (3) %

Loss on extinguishment of debt — (35,629) 35,629 (100) %

Other income (expense), net 17,389 (49,033) 66,422 (135) %

Income (loss) from operations before income taxes 77,772 (136,270) 214,042 157 %

Income tax (expense) benefit (1,728) 70 (1,798) NM

Net income (loss) 76,044 (136,200) 212,244 156 %

Net loss attributable to nonredeemable noncontrolling interests (553) (2,864) 2,311 (81) %

Net income (loss) attributable to MSG Entertainment’s stockholders $ 76,597 $ (133,336) $ 209,933 157 %

Operating income 111,941 105,008 6,933 7 %

Interest income 2,976 7,244 (4,268) (59) %

Interest expense (57,954) (51,869) (6,085) (12) %

Other (expense) income, net (4,672) 17,389 (22,061) NM

Income from operations before income taxes 52,291 77,772 (25,481) (33) %

Income tax benefit (expense) 92,009 (1,728) 93,737 NM

Net income 144,300 76,044 68,256 90 %

Net loss attributable to nonredeemable noncontrolling interests — (553) 553 NM

Net income attributable to MSG Entertainment’s stockholders $ 144,300 $ 76,597 $ 67,703 88 %

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(a) Venue operations and infrastructure costs are not specifically allocated to each revenue stream, but are instead attributed in their entirety to service revenue which is the Company’s principal revenue stream.

Leasing direct operating expenses materially consist of venue operations and infrastructure costs.

As a result, the Company combines service and leasing direct operating expenses as “Entertainment offerings, arena license fees, and other leasing direct operating expenses” for presentation purposes.

NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.

Revenues for Fiscal Year 2024 increased $107,769 as compared to Fiscal Year 2023.

The net increase in revenue was attributable to the following:

Increase in event-related revenues $ 95,393

Increase in revenues from the presentation of the Christmas Spectacular

Increase in revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements 35,537

Increase in venue-related sponsorship, signage and suite license fee revenues 16,998

Decrease in revenues due to the disposition of Boston Calling Events, LLC during the current fiscal year (18,559)

Decrease in commissions due to termination of the Networks Advertising Sales Representation Agreement (12,076)

Other net increases 6,045

The increase in event-related revenues reflects (i) higher revenues from concerts of $92,889 and (ii) higher revenues from other live entertainment and other sporting events of $2,504 during Fiscal Year 2023.

The increase in revenue from concerts was primarily due to an increase in the number of concerts held at the Company’s venues, including the impact from the return of live events in the fiscal first quarter as compared to limited live events held in the first quarter of Fiscal Year 2022 (due to the COVID-19 pandemic) and higher per-concert revenue during Fiscal Year 2023.

The Company had 181 Christmas Spectacular performances during the 2022-23’s holiday season as compared to 101 performances in the prior year’s holiday season due to the partial cancellation of the 2021 production.

For the 2022-23 holiday

season, approximately 930,000 tickets were sold, representing an over 25% increase in attendance on a per-show basis as compared to the prior year.

The increase in revenues from the presentation of the Christmas Spectacular production was primarily due to higher ticket-related revenues, as compared to the prior year period.

This reflected the increase in the number of performances and, to a lesser extent, higher per-show paid attendance, both as compared to the prior year period.

The increase in revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements primarily reflects higher suite license fee revenues and to a lesser extent higher food beverage and merchandise at Knicks and Rangers games.

The increase in suite license fee revenues also reflects the return of live events at the Company’s venues in the fiscal first quarter as compared to limited live events held during the first quarter of Fiscal Year 2022 (due to the COVID-19 pandemic).

The increase in venue-related sponsorship, signage, and suite license fee revenues was primarily due to the return of live events at the Company’s venues as compared to limited live events held during the first quarter of Fiscal Year 2022 and higher suite sales.

Revenues from Entertainment Offerings

For Fiscal Year 2024, the increase in revenues from entertainment offerings was primarily due to (i) higher event-related revenues of $51,147, (ii) an increase in revenues subject to the sharing economics with MSG Sports pursuant to the Arena License Agreements of $17,233, (iii) an increase in revenues from the presentation of the Christmas Spectacular production of $15,750, partially offset by (iv) lower revenues of $8,802 due to the termination of the Networks Advertising Sales Representation Agreement.

For Fiscal Year 2024, the increase in event-related revenues primarily reflects higher revenues from concerts of $40,721, due to an increase in the number of concerts at the Company’s venues, and to a lesser extent, higher average per-concert revenue in the current year.

For Fiscal Year 2024, the increase in revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements primarily reflects higher suite license fee revenue and, to a lesser extent, higher commissions on merchandise sales, both as compared to the prior year.

For Fiscal Year 2024, the increase in revenues from the presentation of the Christmas Spectacular production, as compared to the prior year period, was primarily due to higher ticket-related revenues.

This reflected higher per-show revenue and, to a lesser extent, an increase in the number of performances as compared to the prior year.

The increase in per-show ticket-related revenues was due to higher average ticket yield and higher average per-show attendance as compared to the prior year.

The Company had 193 Christmas Spectacular performances during Fiscal Year 2024’s holiday season, as compared to 181 performances in the Fiscal Year 2023’s holiday season.

For this year’s holiday season, more than 1,000,000 tickets were sold, as compared to more than 930,000 tickets sold in the prior year.

The Company had 193 Christmas Spectacular performances during this year’s holiday season, as compared to 181 performances in the prior year’s holiday season.

Food, Beverage, and Merchandise Revenues

For Fiscal Year 2024, the increase in food, beverage and merchandise revenues was primarily due to higher food and beverage sales at concerts held at the Company’s venues, and at Knicks and Rangers games at The Garden, and to a lesser extent, higher food, beverage, and merchandise sales from the presentation of the Christmas Spectacular production.

For Fiscal Year 2024 the increase in food and beverage sales at concerts was due to an increase in the number of concerts held at the Company’s venues and to a lesser extent, higher average per-concert revenues in the current year.

For Fiscal Year 2024 the increase in food and beverage sales at Knicks and Rangers games was due to higher average per-game revenues, and to a lesser extent, an increase in the number of games held at The Garden.

For Fiscal Year 2024 the increase in food and beverage sales at the Christmas Spectacular production was primarily due to higher average per-show revenues, and to a lesser extent, an increase in the number of performances in the current year.

Direct operating expenses

Direct operating expenses for Fiscal Year 2024 increased $68,907 as compared to Fiscal Year 2023.

The net increase in direct operating expenses was attributable to the following:

Increase in event-related direct operating expenses, as discussed below $ 47,883

Increase in expenses associated with the sharing of economics with MSG Sports pursuant to the Arena License Agreements 26,945

Increase in direct operating expenses associated with the Christmas Spectacular 11,790

Increase in direct operating expenses associated with the Arena License Agreements 7,502

Increase in venue operating costs 6,242

Decrease in direct operating expenses due to the disposition of Boston Calling Events, LLC in the current fiscal year (19,650)

Other net increases 1,916

The increase in event-related direct operating expenses reflects (i) higher direct operating expenses from concerts of $48,373, partially offset by (ii) lower direct operating expenses form other sporting and live entertainment events of $489 during Fiscal Year 2023.

The increase in event-related direct operating expenses primarily reflects an increase in the number of concerts held at the Company’s venues as compared to the prior year period.

The increase in direct operating expenses associated with the sharing of economics with MSG Sports pursuant to the Arena License Agreements primarily reflects the increase in suite license fee revenues related to Knicks’ and Rangers’ games at The Garden.

The increase in direct operating expenses associated with the Christmas Spectacular was primarily due to the increase in the number of performances as compared to the prior year periods.

Direct Operating Expenses Associated with Entertainment Offerings, Arena License Fees and Other Leasing

For Fiscal Year 2024, the increase in direct operating expenses associated with entertainment offerings, arena license fees, and other leasing reflects (i) higher event-related expenses of $30,037, (ii) higher expenses associated with the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $14,818, (iii) higher expenses related to the presentation of the Christmas Spectacular production of $3,279, and (iv) higher venue operating costs of $2,729.

For Fiscal Year 2024, the increase in event-related expenses was primarily due to higher direct operating expenses from concerts of $22,814, which was due to the increase in the number of concerts at the Company’s venues and, to a lesser extent, higher per-concert expenses.

For Fiscal Year 2024, the increase in expenses associated with the sharing of economics with MSG Sports pursuant to the Arena License Agreements primarily reflects direct operating expenses incurred as a result of the increase in suite license fee revenues.

Direct Operating Expenses Associated with Food, Beverage, and Merchandise

For Fiscal Year 2024, the increase in food, beverage and merchandise direct operating expenses was primarily driven by (i) the related increase in food and beverage sales at concerts held at the Company’s venues, (ii) the related increase in food and beverage sales at Knicks and Rangers games and, (iii) the increase in food, beverage, and merchandise sales related to the presentation of the Christmas Spectacular production.

Selling, general, and administrative expenses

Selling, general, and administrative expenses for Fiscal Year 2024 increased $26,747, or 15%, to $206,963 as compared to Fiscal Y ear 2023.

Results for Fiscal Year 2022 reflect the allocation of corporate and administrative costs based on the accounting requirements for the preparation of carve-out statements.

These results do not include all of the expenses that would have been incurred by MSG Entertainment had it been a standalone public company for Fiscal Year 2022.

Fiscal Year 2023 reflects the impact of carve-out accounting through the April 20, 2023 spin-off date and, thereafter, reflects the results of the Company on a fully standalone basis.

The increase in selling, general, and administrative expenses were mainly due to additional professional fees and employee compensation and benefits, offset by carve out allocations and the impact of the Company’s transition services agreement with Sphere Entertainment.

Gains (loss), net on dispositions

Gains (loss), net on dispositions for Fiscal Year 2023 was a gain of $4,361 as compared to $0 in Fiscal Year 2022.

The gain was due to the gain on sale of the Company’s controlling interest in Boston Calling Events, LLC (the “BCE Disposition”), partially offset by the net loss on the disposal of a corporate aircraft during Fiscal Year 2023.

Results for Fiscal Year 2024 reflect MSG Entertainment on a fully standalone basis.

Results for Fiscal Year 2023 through the April, 20, 2023 spin-off date reflect the allocation of corporate and administrative costs based on the accounting requirements for the preparation of carve-out financial statements.

These results do not include all of the expenses that would have been incurred by MSG Entertainment had it been a standalone public company for the prior year.

This was the primary driver of the overall increase in

selling, general and administrative expenses, partially offset by the impact of the Company’s transition services agreement with Sphere Entertainment.

Depreciation and amortization

Depreciation and amortization for Fiscal Year 2023 decreased $9,071, or 13%, to $60,463 as compared to Fiscal Year 2022 primarily due to certain intangible assets being fully amortized and the disposal of a corporate aircraft during Fiscal Year 2023.

Depreciation and amortization for Fiscal Year 2024 decreased $6,587, or 11%, to $53,876 as compared to $60,463 in Fiscal Year 2023, primarily due to certain intangible assets being fully amortized and the disposal of a corporate aircraft during Fiscal Year 2023.

Gains, net on dispositions

Gains, net on dispositions for Fiscal Year 2024 was $0 as compared to $4,361 in Fiscal Year 2023.

The net gains in Fiscal Year 2023 reflect the gain on sale of the Company’s controlling interest in Boston Calling Events, LLC (the “BCE Disposition”), partially offset by the net loss on the disposal of a corporate aircraft.

Restructuring charges

Restructuring charges for Fiscal Year 2023 increased $5,070, to $10,241 as compared to the prior year period.

The restructuring charges relate to the termination benefits provided due to a workforce reduction of certain executives and employees as part of Sphere Entertainment’s cost reduction program implemented in Fiscal Year 2023.

Restructuring charges for Fiscal Year 2024 increased $7,408, to $17,649 as compared to $10,241 in Fiscal Year 2023.

The restructuring charges relate to the termination benefits for certain corporate executives and employees.

Operating income

Operating income for Fiscal Year 2023 improved $110,656 to $105,008 as compared to an operating loss of $5,648 in Fiscal Year 2022.

The improvement in operating income was primarily due to the increase in revenues, and, to a lesser extent a decrease in depreciation and amortization, offset by higher direct operating expenses and selling, general and administration expenses.

Interest expense, net

Interest expense, net for Fiscal Year 2023 was $44,625 as compared to $45,960 in Fiscal Year 2022, a decrease of $1,335, as a result of decrease in amortization of deferred financing costs following the refinancing of MSG National Properties, LLC’s (“MSG National Properties”) prior term loan facility in June 2022 and the absence of notes payable to BCE following the BCE Disposition, partially offset by an increase in interest rates.

Loss on extinguishment of debt

For Fiscal Year 2023, the Company did not incur any losses on the extinguishment of debt as compared to a loss of $35,629 in Fiscal Year 2022 due to the extinguishment of MSG National Properties’ prior term loan facility in June 2022.

Other income (expense), net

For Fiscal Year 2023, other income, net was $17,389 as compared to other expense, net of $49,033 for Fiscal Year 2022, an improvement of $66,422.

The change was primarily due to (i) an increase in unrealized gains of $43,619 and $22,273 associated with the investments in DraftKings Inc.

(“DraftKings”) and Townsquare Media, Inc.

(“Townsquare”), respectively, and (ii) realized gains of $2,608 and $975 associated with the Company’s sale of investments in DraftKings and Townsquare, respectively, in Fiscal Year 2023, partially offset by a $281 increase in other pension costs.

Income tax expense for Fiscal Year 2023 of $1,728 differs from income tax benefit derived from applying the statutory federal rate of 21% to the pretax loss primarily due to (i) a decrease in the valuation allowance of $34,147 and offset by (ii) tax expense of $3,861 related to nondeductible officers’ compensation and (iii) state income tax expense of $13,033.

Income tax benefit for Fiscal Year 2022 of $70 differs from income tax benefit derived from applying the statutory federal rate of 21% to the pretax loss primarily due to (i) an increase in the valuation allowance of $31,679 and (ii) tax expense of $8,125 related to nondeductible officers’ compensation, partially offset by (iii) state income tax benefit of $12,141.

Operating income for Fiscal Year 2024 improved $6,933 to $111,941 as compared to operating income of $105,008 in Fiscal Year 2023.

The improvement in operating income was primarily due to the increase in revenues, partially offset by higher direct operating expenses and selling, general and administration expenses.

Interest income

For Fiscal Year 2024, interest income decreased $4,268 to $2,976 as compared to interest income of $7,244 in Fiscal Year 2023 primarily due to (i) the impact of the MSGE Distribution, which impacted the year-over-year comparability of results since the prior year period included carve-out allocations and (ii) lower average balances in the Company’s cash, cash equivalents and restricted cash, partially offset by higher interest rates.

Interest expense

Interest expense for Fiscal Year 2024 was $57,954 as compared to interest expense of $51,869 in Fiscal Year 2023, an increase of $6,085, primarily due to higher interest rates on borrowings and higher revolver borrowings under the National Properties Facilities.

Other (expense) income, net

For Fiscal Year 2024, other expense, net was $4,672 as compared to other income, net of $17,389 for Fiscal Year 2023, a change of $22,061.

The change was primarily due to (i) a change from an unrealized gain to an unrealized loss of $9,235 associated with the investment in Townsquare Media, Inc., (ii) the absence of a $8,406 unrealized gain associated with the investment in DraftKings Inc.

recognized in the prior year period, and (iii) higher net periodic benefit costs of $15 associated with the Company’s Pension Plans.

Income tax benefit for Fiscal Year 2024 of $92,009 differs from income tax expense derived from applying the statutory federal rate of 21% to the pretax income primarily due to (i) income tax benefit due to a decrease in the valuation allowance of $108,506 and (ii) income tax benefit of $4,487 related to return to provision adjustments, partially offset by (iii) state income tax expense of $9,039.

Income tax expense for Fiscal Year 2023 of $1,728 differs from income tax expense derived from applying the statutory federal rate of 21% to the pretax income primarily due to (i) income tax benefit due to a decrease in the valuation allowance of $34,147, partially offset by (ii) state income tax expense of $13,033 and (iii) income tax expense of $3,861 related to nondeductible officers’ compensation.

Income Taxes to the consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-K for further details on the components of income tax and a reconciliation of the statutory federal rate to the effective tax rate.

Adjusted operating income (loss) (“AOI”)

The Company evaluates performance based on several factors, of which the key financial measure is operating income (loss) before the following adjustments, which is referred to as adjusted operating income (loss) (“AOI”), a financial measure not calculated in accordance with U.S.

generally accepted accounting principles (“GAAP”).

We define adjusted operating income (loss) as operating income (loss) excluding:

(i) the impact of non-cash straight-line leasing revenue associated with the Arena License Agreements with MSG Sports,

(ii) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets,

(iii) share-based compensation expense,

(iv) restructuring charges or credits,

(v) merger and acquisition-related costs, including litigation expenses,

(vi) gains or losses on sales or dispositions of businesses and associated settlements,

(vii) the impact of purchase accounting adjustments related to business acquisitions,

(viii) gains and losses related to the remeasurement of liabilities under MSG Entertainment’s Executive Deferred Compensation Plan, and

(ix) amortization for capitalized cloud computing arrangement costs.

The Company believes that given the length of the Arena License Agreements and resulting magnitude of the difference in leasing revenue recognized and cash revenue received, the exclusion of non-cash leasing revenue provides investors with a clearer picture of the Company's operating performance .

Management believes that this adjustment is beneficial for other incremental reasons as well.

This adjustment provides senior management, investors and analysts with important information regarding a long-term related party agreement with MSG Sports.

In addition, this adjustment is included under the Company’s debt covenant compliance calculations and is a component of the performance measures used to evaluate, and compensate, senior management of the Company.

The Company has amended the definition of adjusted operating income so that the impact of the non-cash portion of operating lease costs related to the Company’s Arena License Agreements with MSG Sports is no longer excluded in all periods presented.

The Company evaluates its performance based on several factors, of which the key financial measure is adjusted operating income, a non-GAAP financial measure.

We define adjusted operating income as operating income excluding:

(i) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets,

(ii) share-based compensation expense,

(iii) restructuring charges or credits,

(iv) merger, spin-off, and acquisition-related costs, including merger-related litigation expenses,

(v) gains or losses on sales or dispositions of businesses and associated settlements,

(vi) the impact of purchase accounting adjustments related to business acquisitions,

(vii) gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan, and

(viii) amortization of capitalized cloud computing arrangement costs.

The Company believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the Company’s business without regard to the settlement of an obligation that is not expected to be made in cash.

The Company eliminates merger and acquisition-related costs, when applicable, because the Company does not consider such costs to be indicative of the ongoing operating performance of the Company as they result from an event that is of a non-recurring nature, thereby enhancing comparability.

In addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the MSG Entertainment’s Executive Deferred Compensation Plan, provides investors with a clearer picture of the Company’s operating performance given that, in accordance with GAAP, gains and losses related to the remeasurement of liabilities under the MSG Entertainment’s Executive Deferred Compensation Plan are recognized in Operating (income) loss whereas gains and losses related to the remeasurement of the assets under the MSG Entertainment’s Executive Deferred Compensation Plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Other income (expense), net, which is not reflected in Operating income (loss).

The Company eliminates merger, spin-off, and acquisition-related costs, when applicable, because the Company does not consider such costs to be indicative of the ongoing operating performance of the Company as they result from an event that is of a non-recurring nature, thereby enhancing comparability.

In addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan, provides investors with a clearer picture of the Company’s operating performance given that, in accordance with GAAP, gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan are recognized in Operating income whereas gains and losses related to the remeasurement of the assets under the executive deferred compensation plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Other (expense) income, net, which is not reflected in Operating income.

The Company believes AOI is an appropriate measure for evaluating the operating performance of the Company on a consolidated and combined basis.

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The Company uses revenues and AOI measures as the most important indicators of its business performance and evaluates management’s effectiveness with specific reference to these indicators.

AOI should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP.

AOI should be viewed as a supplement to and not a substitute for operating income, net income, cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP.

Since AOI is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies.

The Company has presented the components that reconcile operating income (loss), the most directly comparable GAAP financial measure, to AOI.

The following is a reconciliation of operating income to adjusted operating income:

The Company has presented the components that reconcile operating income, the most directly comparable GAAP financial measure, to AOI.

The following is a reconciliation of operating income to adjusted operating income for Fiscal Year 2024 as compared to Fiscal Year 2023:

Years Ended June 30, Change

2024 2023 Amount Percentage

Operating income (loss) $ 105,008 $ (5,648) $ 110,656 NM

Non-cash portion of arena license fees from MSG Sports (a)

(26,545) (27,754) 1,209

Operating income $ 111,941 $ 105,008 $ 6,933 7 %

Share-based compensation expense 24,544 29,521 (4,977) (17) %

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Restructuring charges 17,649 10,241 7,408 72 %

Gains, net on dispositions (4,361) — $ (4,361)

Amortization for capitalized cloud computing arrangement costs 600 39 $ 561

Remeasurement of deferred compensation plan liabilities 121 46 $ 75

Adjusted operating income $ 175,048 $ 79,134 $ 95,914 121 %

Gains, net on dispositions — (4,361) 4,361 NM

Merger, spin-off, and acquisition costs (a)

2,035 — 2,035 NM

Amortization of capitalized cloud computing arrangement costs 1,008 600 408 68 %

Remeasurement of deferred compensation plan liabilities 452 121 331 NM

Adjusted operating income (b)

$ 211,505 $ 201,593 $ 9,912 5 %

NM (not meaningful) — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero

values are considered not meaningful.

(a) This adjustment represents the non-cash portion of operating lease revenue related to the Company’s Arena License Agreements with MSG Sports.

________________

NM (not meaningful) — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.

(a) This adjustment represents non-recurring costs incurred and paid by the Company for the sale of the MSGE Retained Interest by Sphere Entertainment.

(b) The Company has amended the definition of adjusted operating income so that the impact of the non-cash portion of operating lease revenue related to the Company’s Arena License Agreements with MSG Sports is no longer excluded in all periods presented.

Pursuant to GAAP, recognition of operating lease revenue is recorded on a straight-line basis over the term of the agreement based upon the value of total future payments under the arrangement.

As a result, operating lease revenue is comprised of a contractual cash component plus or minus a non-cash component for each period presented.

Operating income on a GAAP basis includes lease income of (i) $41,524 and $40,319 collected in cash for Fiscal Years 2023 and 2022, respectively, and (ii) a non-cash portion of $26,545 and $27,754 for Fiscal Years 2023 and 2022, respectively.

Adjusted operating income includes operating lease revenue of (i) $42,769 of revenue collected in cash for Fiscal Year 2024 and $41,524 of revenue collected in cash for Fiscal Year 2023 , respectively, and (ii) a non-cash portion $25,299 for Fiscal Year 2024 and $26,545 for Fiscal Year 2023, respectively.

NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.

Net loss attributable to nonredeemable noncontrolling interests

For Fiscal Year 2024, the Company posted a net loss attributable to nonredeemable noncontrolling interests of $0 in comparison to a net loss attributable to nonredeemable noncontrolling interests of $553 for Fiscal Year 2023.

These amounts represent the share of net loss of BCE that is not attributable to the Company, prior to the BCE Disposition on December 2, 2022.

These amounts in the prior year period represent the share of net loss of BCE that is not attributable to the Company, prior to the BCE Disposition on December 2, 2022.

Comparison of Fiscal Year 2023 versus the Fiscal Year 2022

Analysis of our results of operations for Fiscal Year 2022, including a comparison of Fiscal Year 2022 to Fiscal Year 2021, is included 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.

Analysis of our results of operations for Fiscal Year 2023, including a comparison of Fiscal Year 2023 to Fiscal Year 2022, is included in the Company’s Annual Report on Form 10-K, dated August 18, 2023.

Liquidity and Capital Resources

Sources of Liquidity

Sources and Uses of Liquidity

Our primary sources of liquidity are cash and cash equivalents, cash flows from the operations of our businesses and available borrowing capacity under the National Properties Revolving Credit Facility (as defined below).

Our principal uses of cash include working capital-related items (including funding our operations), capital spending, share repurchases, debt service, investments and related loans and advances to affiliates that we may fund from time to time.

Our principal uses of cash include working capital-related items (including funding our operations), capital spending, debt service, investments and related loans and advances to affiliates that we may fund from time to time.

We may also use cash to continue to repurchase shares of our Class Common A Stock pursuant to the share repurchase program authorized by our Board of Directors on March 29, 2023, of which there was approximately $110,000 remaining as of June 30, 2024.

Our decisions as to the use of our available liquidity will be based upon the ongoing review of the funding needs of the business, the optimal allocation of cash resources, and the timing of cash flow generation.

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Credit Facilities to the consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of the National Properties Facilities.

On March 29, 2023, our Board 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 (as defined below) with shares of the Company’s Class A common stock) in accordance with applicable insider trading and other securities laws and regulations.

On June 27, 2023, the Company repurchased 840 shares of Class A Common Stock from the Sphere Entertainment for $25,000 in a private transaction, pursuant to a Stock Purchase Agreement, dated June 21, 2023, between the Company and the Sphere Entertainment.

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 committed to lend up to $65,000 in delayed draw term loans to Sphere Entertainment on an unsecured basis until October 20, 2024.

On July 14, 2023, Sphere Entertainment drew down on 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 MSG Entertainment Holdings 1,923 shares of MSG Entertainment Class A common stock.

Financing Agreements

On June 30, 2022, 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 letter of credit issuers party thereto (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.

MSG National Properties, MSG Entertainment Holdings and certain subsidiaries of MSG National Properties are party to the National Properties Credit Agreement, providing for a five-year, $650,000 National Properties Term Loan Facility and a five-year, $150,000 National Properties Revolving Credit Facility.

Up to $25,000 of the National Properties Revolving Credit Facility is available for the issuance of letters of credit.

As of June 30, 2024, outstanding letters of credit were $18,826 and the remaining balance available under the National Properties Revolving Credit Facility was $131,174.

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”).

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, or (b) adjusted Term SOFR (i.e., Term SOFR plus 0.10%) 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 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.

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The interest rate on the National Properties Facilities as of June 30, 2024 was 7.94%.

Subject to customary notice and minimum amount conditions, the Company may voluntarily repay outstanding loans under the National Properties Facilities and terminate commitments under the National Properties Revolving Credit Facility, at any time, in whole or in part, subject only to customary breakage costs in the case of prepayment of Term SOFR loans.

The principal obligations under the National Properties Term Loan Facility are to be repaid in quarterly installments beginning with the fiscal quarter ended March 31, 2023, in an aggregate amount equal to 2.50% per annum (0.625% per quarter), stepping up to 5% per annum (1.25% per quarter) in the fiscal quarter ending September 30, 2025, with the balance due at the maturity of the facility on June 30, 2027.

Principal Repayments.

Subject to customary notice and minimum amount conditions, the Company may voluntarily repay outstanding loans under the National Properties Facilities or 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.

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.

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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.

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, which stepped down to 5.5:1 in the fiscal quarter ended June 30, 2024 and steps down to 4.5:1 in the fiscal quarter ending June 30, 2026.

As of June 30, 2024, MSG National Properties and its restricted subsidiaries were in compliance with the covenants of the National Properties Credit Agreement.

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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”).

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Net cash provided by operating activities $ 111,266 $ 135,694

Net cash provided by investing activities 30,305 45,440

Net cash (used in) provided by investing activities (62,371) 30,305

Net cash used in financing activities (99,695) (144,217)

Net increase (decrease) in cash, cash equivalents and restricted cash $ 21,782 $ (255,496)

Net (decrease) increase in cash, cash equivalents and restricted cash $ (50,800) $ 21,782

Operating Activities

Net ca sh provided by operating activities for Fiscal Year 2023 improved by $40,343 to $135,694 as compared to Fiscal Year 2022, primarily due to (i) the increase in net income and (ii) net changes in working capital assets and liabilities, which included an increase in accounts receivable and deferred revenue, a decrease in accounts payable, accrued and other current and non-current liabilities, a decrease in related party receivables, net of payables, and a decrease on operating lease right-of-use assets and lease liabilities, partially offset by higher non-cash add backs mainly for net unrealized gain on equity investments with readily determinable fair value and gains, net on dispositions recognized in Fiscal Year 2023.

Net cash provided by operating activities for Fiscal Year 2024 decreased by $24,428 as compared to Fiscal Year 2023, primarily due to (i) a decrease in Net income adjusted for non-cash items of $5,958, and (ii) a decrease in cash flows from changes in working capital of $18,470.

The decrease in cash flows from changes in working capital were driven by a larger decrease in accounts payable, accrued and other current and non-current liabilities;

an increase in accounts receivable versus a decrease in the prior year period;

a decrease in deferred revenue versus an increase in the prior year period;

and a larger increase in prepaid expenses and other current and non-current assets, in each case as compared to Fiscal Year 2023 .

These decreases in working capital cash flows were partially offset by positive net cash inflows from related party receivables and payables versus net cash outflows in the prior year period;

and an increase in net operating lease liabilities in the current year.

Investing Activities

Net cash provided by investing activities for Fiscal Year 2023 declined by $15,135 to $30,305 as compared to Fiscal Year 2022 primarily due to (i) the absence of proceeds received from a related party loan receivable in the current year period, offset by (ii) proceeds received from the dispositions of BCE and the corporate aircraft.

Net cash flows from investing activities for Fiscal Year 2024 decreased by $92,676 as compared to Fiscal Year 2023 primarily due to (i) an increase of $58,300 in loans to related parties related to the DDTL faci lity, ( ii) the absence of $27,904 in proceeds received from the dispositions of BCE and the corporate aircraft recognized in Fiscal Year 2023 and (iii) an increase of $8,993 in capital expenditures in the current year period as compared to Fiscal Year 2023.

Financing Activities

Net cash used in financing activities for Fiscal Year 2023 declined by $252,070 to $144,217 as compared to Fiscal Year 2022 primarily due to (i) lower net transfers to Sphere Entertainment and Sphere Entertainment’s subsidiaries in the current year period as compared to Fiscal Year 2022, (ii) the absence of debt extinguishment costs and deft financing fees in Fiscal Year 2023, offset by (iii) stock repurchases in Fiscal Year 2023.

Net cash used in financing activities for Fiscal Year 2024 decreased by $44,522 to $99,695 as compared to Fiscal Year 2023 primarily due to (i) the absence in net transfers to Sphere Entertainment and Sphere Entertainment’s subsidiaries under carve-out accounting principles in the current period and (ii) an increase in proceeds received from the National Properties Revolving Credit Facility in Fiscal Year 2024, partially offset by (i) an increase in principal repayments on the National Properties Term Loan Facilities and the

National Properties Revolving Credit Facility, (ii) an increase in stock repurchases, and (iii) taxes paid in lieu of shares for equity based compensation recognized in Fiscal Year 2024 .

Contractual Obligations

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Seasonality of Our Business

The revenues the Company earns from the Christmas Spectacular and arena license fees from MSG Sports in connection with the Knicks’ and Rangers’ use of The Garden generally means the Company earns a disproportionate share of its revenues and operating income in the second and third quarters of the Company’s fiscal year, with the first fiscal quarter being disproportionately lower.

Recently Issued Accounting Pronouncements and Critical Accounting Estimates

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In addition to the critical accounting estimates disclosed below, see Note 17.

Related Party Transactions to the consolidated and combined financial statements

included elsewhere in this Annual Report on Form 10-K for further details on corporate allocations recorded in the consolidated and combined financial statements.

Related Party Transactions to the consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-K for further details on corporate allocations recorded in the consolidated and combined financial statements.

The preparation of the Company’s consolidated and combined financial statements in conformity with GAAP requires management to make estimates and assumptions about future events.

3 unchanged sentences

Revenue Recognition – 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 both the Company as well as MSG Sports within a single arrangement.

The Company also derives revenue from similar types of arrangements which are entered into by MSG Sports.

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 Sphere Entertainment and MSG Sports.

Payment terms for such arrangements can vary by contract, but payments are generally due in installments throughout the contractual term.

11 unchanged sentences

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.

What changed 10-K

Item 7. Management’s Discussion and Analysis