What changed in this filing

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Item 1. Financial Statements

2024-11-08 compared with 2024-05-09 · 263 added, 410 removed, 475 unchanged (59% of the section changed)

Financial Statements

Financial Statements (Unaudited)

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

1 unchanged sentence

(in thousands, except per share data)

March 31, June 30,

September 30, June 30,

Current Assets:

9 unchanged sentences

Indefinite-lived intangible assets 63,801 63,801

Deferred tax assets, net

81,733 68,307

Other non-current assets 101,960 110,283

11 unchanged sentences

Operating lease liabilities, non-current 451,071 427,014

Deferred tax liabilities, net 24,151 23,518

Other non-current liabilities 39,765 43,787

4 unchanged sentences

Additional paid-in-capital 26,909 33,481

Treasury stock at cost ( 4,365 and 840 shares outstanding as of March 31, 2024 and June 30, 2023, respectively)

Treasury stock at cost ( 4,365 shares outstanding as of September 30, 2024 and June 30, 2024)

( 140,512 ) ( 140,512 )

Retained earnings (deficit) 48,676 ( 28,697 )

Retained earnings

96,282 115,603

Accumulated other comprehensive loss ( 31,906 ) ( 32,262 )

3 unchanged sentences

(a) Class A Common Stock, $ 0.01 par value per share, 120,000 shares authorized;

45,523 and 45,024 shares issued as of March 31, 2024 and June 30, 2023, respectively.

45,958 and 45,556 shares issued as of September 30, 2024 and June 30, 2024, respectively.

(b) Class B Common Stock, $ 0.01 par value per share, 30,000 shares authorized;

6,867 shares issued as of March 31, 2024 and June 30, 2023.

See accompanying notes to the unaudited condensed consolidated and combined financial statements.

6,867 shares issued as of September 30, 2024 and June 30, 2024.

See accompanying notes to the unaudited condensed consolidated financial statements.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in thousands, except per share data)

Three Months Ended Nine Months Ended

March 31, March 31,

2024 2023 2024 2023

Three Months Ended

September 30,

Revenues from entertainment offerings

2 unchanged sentences

Arena license fees and other leasing revenue

36,712 32,015 64,787 66,818

Total revenues 138,714 142,212

8 unchanged sentences

Depreciation and amortization ( 13,781 ) ( 13,585 )

(Loss) gains, net on dispositions — ( 51 ) — 4,361

Restructuring charges ( 2,362 ) ( 2,461 ) ( 14,803 ) ( 9,820 )

Operating income 16,803 24,664 120,801 126,798

Interest income (a)

Restructuring credits (charges)

40 ( 11,553 )

Operating loss

( 18,482 ) ( 33,425 )

Interest income

Interest expense ( 14,043 ) ( 14,287 )

Other income (expense), net 78 8,070 ( 1,545 ) 6,784

Income from operations before income taxes 2,797 21,793 77,770 101,331

Income tax expense ( 2 ) ( 73 ) ( 397 ) ( 804 )

Net income 2,795 21,720 77,373 100,527

Net loss attributable to nonredeemable noncontrolling interest — — — ( 553 )

Net income attributable to MSG Entertainment’s stockholders $ 2,795 $ 21,720 $ 77,373 $ 101,080

Income per share attributable to MSG Entertainment’s stockholders:

Basic $ 0.06 $ 0.42 $ 1.59 $ 1.95

Diluted $ 0.06 $ 0.42 $ 1.58 $ 1.95

Weighted-average number of shares of common stock:

Other expense, net

( 769 ) ( 4,469 )

Loss from operations before income taxes

( 32,922 ) ( 51,330 )

Income tax benefit

$ ( 19,321 ) $ ( 50,671 )

Loss per share attributable to MSG Entertainment’s stockholders:

Basic and diluted

$ ( 0.40 ) $ ( 1.00 )

Weighted-average number of shares of common stock:

Basic and diluted

48,217 50,437

_________________

(a) See Note 12 .

Related Party Transactions for further information on related party arrangements.

(b) On April 20, 2023, 51,768 common shares were distributed to Sphere Entertainment Co.

stockholders in the MSGE Distribution (as defined in Note 1.

Description of Business and Basis of Presentation).

This share amount is being utilized for the calculation of basic and diluted loss per common share attributable to Madison Square Garden Entertainment Corp.’s stockholders for the three and nine months ended March 31, 2023 because the Company was not a standalone public company prior to the MSGE Distribution.

See accompanying notes to the unaudited condensed consolidated and combined financial statements.

See accompanying notes to the unaudited condensed consolidated financial statements.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

(in thousands)

Three Months Ended Nine Months Ended

March 31, March 31,

Three Months Ended

September 30,

$ ( 19,321 ) $ ( 50,671 )

Net income $ 2,795 $ 21,720 $ 77,373 $ 100,527

Other comprehensive income, before income taxes:

Amortization of net actuarial loss included in net periodic benefit cost

450 323 1,350 1,063

Pension plans and postretirement plans

Other comprehensive income, before income taxes 541 238

1 unchanged sentence

Other comprehensive income, net of income taxes

Comprehensive loss

$ ( 18,965 ) $ ( 50,474 )

Comprehensive income 3,167 21,987 78,487 101,405

Comprehensive loss attributable to nonredeemable noncontrolling interest — — — ( 553 )

Comprehensive income attributable to MSG Entertainment $ 3,167 $ 21,987 $ 78,487 $ 101,958

See accompanying notes to the unaudited condensed consolidated and combined financial statements.

See accompanying notes to the unaudited condensed consolidated financial statements.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

Nine Months Ended

Three Months Ended

September 30,

OPERATING ACTIVITIES:

Net income $ 77,373 $ 100,527

Adjustments to reconcile net income to net cash provided by operating activities:

$ ( 19,321 ) $ ( 50,671 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation and amortization 13,781 13,585

Share-based compensation expense 6,262 12,965

Deferred income tax expense 397 —

Provision for doubtful accounts 158 —

Deferred income tax benefit

( 13,612 ) ( 659 )

Amortization of deferred financing costs 852 812

Related party paid in kind interest ( 512 ) ( 2,939 )

Net unrealized and realized gains on equity investments with readily determinable fair value ( 391 ) ( 4,307 )

Gains, net on dispositions — ( 4,361 )

Net unrealized and realized (gains) losses on equity investments with readily determinable fair value

( 124 ) 3,901

Other non-cash adjustments 94 305

Change in assets and liabilities:

7 unchanged sentences

Operating lease right-of-use assets and lease liabilities 20,934 1,499

Net cash provided by operating activities $ 111,054 $ 132,341

Net cash (used in) provided by operating activities

$ ( 27,359 ) $ 1,378

INVESTING ACTIVITIES:

Capital expenditures ( 5,905 ) ( 3,334 )

Proceeds from dispositions, net — 27,904

Proceeds from sale of investments

Loans to related parties

( 65,000 ) ( 6,700 )

Loan to related parties

Other investing activities ( 840 ) —

Net cash (used in) provided by investing activities

Net cash used in investing activities

$ ( 6,690 ) $ ( 55,490 )

1 unchanged sentence

Proceeds from revolving credit facility

Principal repayments on term loan and revolving credit facilities

55,000 73,000

Repayments on related party loan, net

Principal repayment on long-term debt

Proceeds from related party loan — 126

Payments for debt financing costs

Taxes paid in lieu of shares issued for equity-based compensation

( 12,830 ) ( 11,834 )

Stock repurchases

Net transfers to Sphere Entertainment and Sphere Entertainment’s subsidiaries — ( 79,299 )

Net cash used in financing activities $ ( 94,476 ) $ ( 85,194 )

Net (decrease) increase in cash, cash equivalents, and restricted cash

Net cash provided by financing activities

$ 38,107 $ 9,273

Net increase (decrease) in cash, cash equivalents, and restricted cash

4,058 ( 44,839 )

Cash, cash equivalents, and restricted cash, beginning of period

5 unchanged sentences

Non-cash stock repurchases in lieu of payment of loan due from related party

Non-cash financing lease obligation

$ ( 130 ) $ —

See accompanying notes to the unaudited condensed consolidated and combined financial statements.

See accompanying notes to the unaudited condensed consolidated financial statements.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF (DEFICIT) EQUITY (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF DEFICIT (Unaudited)

(in thousands)

Sphere Entertainment Co.

Retained Earnings (Deficit) Accumulated Other Comprehensive Loss

Total Madison Square Garden Entertainment Corp.

Stockholders’

(Deficit) Equity

Nonredeemable

Noncontrolling

Total (Deficit) Equity

Balance as of December 31, 2023 $ 524 $ — $ 25,339 $ ( 140,512 ) $ 45,881 $ ( 33,279 ) $ ( 102,047 ) $ — $ ( 102,047 )

Net income — — — — 2,795 — 2,795 — 2,795

Retained earnings (Accumulated deficit)

Accumulated Other Comprehensive Loss

Total Deficit

Balance as of June 30, 2024 $ 525 $ 33,481 $ ( 140,512 ) $ 115,603 $ ( 32,262 ) $ ( 23,165 )

— — — ( 19,321 ) — ( 19,321 )

Other comprehensive income

— — — — 356 356

Comprehensive income — — — — — — 3,167 — 3,167

Comprehensive loss

— — — — — ( 18,965 )

Share-based compensation

1 unchanged sentence

Tax withholding associated with shares issued for share-based compensation 4 ( 12,834 ) — — — ( 12,830 )

Balance as of March 31, 2024 $ 524 $ — $ 29,656 $ ( 140,512 ) $ 48,676 $ ( 32,907 ) $ ( 94,563 ) $ — $ ( 94,563 )

Balance as of December 31, 2022 $ — $ 133,018 $ — $ — $ — $ ( 34,129 ) $ 98,889 $ — $ 98,889

Net income — 21,720 — — — — 21,720 — 21,720

Other comprehensive income — — — — — 267 267 — 267

BCE Disposition — — — — — — — — —

Comprehensive income — — — — — — 21,987 — 21,987

Net decrease in Sphere Entertainment Co.

Investment — ( 77,373 ) — — — — ( 77,373 ) — ( 77,373 )

Balance as of March 31, 2023 $ — $ 77,365 $ — $ — $ — $ ( 33,862 ) $ 43,503 $ — $ 43,503

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF (DEFICIT) EQUITY (Unaudited)

(in thousands)

Sphere Entertainment Co.

Retained Earnings (Deficit) Accumulated Other Comprehensive Loss

Total Madison Square Garden Entertainment Corp.

Stockholders’

(Deficit) Equity

Nonredeemable

Noncontrolling

Total (Deficit) Equity

Balance as of September 30, 2024 $ 529 $ 26,909 $ ( 140,512 ) $ 96,282 $ ( 31,906 ) $ ( 48,698 )

Balance as of June 30, 2023 $ 519 $ 17,727 $ ( 25,000 ) $ ( 28,697 ) $ ( 34,021 ) $ ( 69,472 )

Net income — — — — 77,373 — 77,373 — 77,373

— — — ( 50,671 ) — ( 50,671 )

Other comprehensive income — — — — 197 197

Comprehensive loss

— — — — — ( 50,474 )

Comprehensive income — — — — — — 78,487 — 78,487

Share-based compensation — 12,965 — — — 12,965

— — 26,186 — — — 26,186 — 26,186

Tax withholding associated with shares issued for share-based compensation 5 — ( 13,383 ) — — — ( 13,378 ) — ( 13,378 )

Tax withholding associated with shares issues for share-based compensation 4 ( 11,838 ) — — — ( 11,834 )

Stock repurchases, inclusive of tax — ( 874 ) ( 115,512 ) — — ( 116,386 )

— — ( 874 ) ( 115,512 ) — — ( 116,386 ) — ( 116,386 )

Balance as of March 31, 2024 $ 524 $ — $ 29,656 $ ( 140,512 ) $ 48,676 $ ( 32,907 ) $ ( 94,563 ) $ — $ ( 94,563 )

Balance as of June 30, 2022 $ — $ 33,265 $ — $ — $ — $ ( 34,740 ) $ ( 1,475 ) $ ( 114 ) $ ( 1,589 )

Net income — 101,080 — — — — 101,080 ( 553 ) 100,527

Other comprehensive income — — — — — 878 878 — 878

BCE disposition — — — — — — — 667 667

Comprehensive income — — — — — — 101,958 114 102,072

Net increase in Sphere Entertainment Co.

— ( 56,980 ) — — — — ( 56,980 ) — ( 56,980 )

Balance as of March 31, 2023 $ — $ 77,365 $ — $ — $ — $ ( 33,862 ) $ 43,503 $ — $ 43,503

See accompanying notes to the unaudited condensed consolidated and combined financial statements.

Balance as of September 30, 2023 $ 523 $ 17,980 $ ( 140,512 ) $ ( 79,368 ) $ ( 33,824 ) $ ( 235,201 )

See accompanying notes to the unaudited condensed consolidated financial statements.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

All amounts included in the following Notes to Condensed Consolidated and Combined Financial Statements (unaudited) are presented in thousands, except per share data or as otherwise noted.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

All amounts included in the following Notes to Condensed Consolidated Financial Statements (unaudited) are presented in thousands, except per share data or as otherwise noted.

Description of Business and Basis of Presentation

9 unchanged sentences

MSG Entertainment Distribution

On April 20, 2023 (the “MSGE Distribution Date”), Sphere Entertainment Co.

(together with its subsidiaries, as applicable, “Sphere Entertainment”), distributed approximately 67 % of the outstanding common stock of the Company to its stockholders (the “MSGE Distribution”), with Sphere Entertainment retaining approximately 33 % of the outstanding common stock of the Company in the form of Class A common stock, $ 0.01 par value per share (“Class A Common Stock”) immediately following the MSGE Distribution.

As a result, the Company became an independent publicly traded company on April 21, 2023 through the MSGE Distribution.

On April 20, 2023, Sphere Entertainment Co.

(together with its subsidiaries, as applicable, “Sphere Entertainment”) distributed approximately 67 % of the outstanding common stock of the Company to its stockholders (the “Distribution”), with Sphere Entertainment retaining approximately 33 % of the outstanding common stock of the Company in the form of Class A common stock, $ 0.01 par value per share (“Class A Common Stock”) immediately following the Distribution.

As a result, the Company became an independent publicly traded company on April 21, 2023.

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.

Description of Business and Basis of Presentation to the Company’s audited consolidated and combined financial statements and notes thereto as of June 30, 2023 and 2022 and for the three years ended June 30, 2023, 2022 and 2021 (the “Audited Consolidated and Combined Annual Financial Statements”) included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 filed with the Securities and Exchange Commission (the “SEC”) on August 18, 2023 (the “2023 Form 10-K”) for more information regarding the MSGE Distribution.

Description of Business and Basis of Presentation to the Company’s audited consolidated and combined financial statements and notes thereto as of June 30, 2024 and 2023 and for the three years ended June 30, 2024, 2023 and 2022 (the “Audited Consolidated and Combined Annual Financial Statements”) included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 filed with the Securities and Exchange Commission (the “SEC”) on August 16, 2024 (the “2024 Form 10-K”) for more information regarding the Distribution.

Basis of Presentation

The Company reports on a fiscal year basis ending on June 30 th (“Fiscal Year”).

In these unaudited condensed consolidated and combined financial statements, the years ending and ended on June 30, 2024 and 2023, respectively, are referred to as “Fiscal Year 2024” and “Fiscal Year 2023,” respectively.

In these unaudited condensed consolidated financial statements, the years ending and ended on June 30, 2026, June 30, 2025 and 2024, respectively, are referred to as “Fiscal Year 2026,” “Fiscal Year 2025” and “Fiscal Year 2024,” respectively.

The accompanying financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) for interim financial information and Article 10 of Regulation S-X of the SEC, and should be read in conjunction with the Company’s Audited Consolidated and Combined Annual Financial Statements.

Subsequent to the MSGE Distribution, the Company’s balance sheets as of March 31, 2024 and June 30, 2023 and the statements of operations for the three and nine months ended March 31, 2024 are presented on a consolidated basis, as the Company became a standalone public company on April 21, 2023.

The Company’s financial statements prior to April 21, 2023 that are included in the results of operations for the three and nine months ended March 31, 2023 were prepared on a stand-alone basis derived from the consolidated financial statements and accounting records of Sphere Entertainment.

These financial statements reflect the combined historical results of operations, financial position and cash flows of the Company in accordance with GAAP and SEC Staff Accounting Bulletin Topic 1-B, Allocation of Expenses and Related Disclosure in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity , and Article 10 of Regulation S-X of the SEC for interim financial information.

References to GAAP issued by the Financial Accounting Standards Board (“FASB”) in these footnotes are to the FASB Accounting Standards Codification, also referred to as “ASC.”

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

Nevertheless, the combined financial statements may not include all of the actual expenses that would have been incurred by the Company and may not reflect its combined results of operations, financial position and cash flows had it been a stand-alone company during the periods presented on a combined basis.

Actual costs that would have been incurred if the Company had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

The Company is unable to quantify the amounts that it would have recorded during the historical periods on a stand-alone basis.

Related Party Transactions in

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

the Audited Consolidated and Combined Annual Financial Statements for further details regarding allocations of certain costs from the Company to Sphere Entertainment.

In the opinion of the Company, the accompanying financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2024 and its results of operations for the three and nine months ended March 31, 2024 and 2023 and cash flows for the nine months ended March 31, 2024, and 2023.

The condensed consolidated balance sheets were derived from the Audited Consolidated and Combined Annual Financial Statements but do not contain all of the footnote disclosures from the Audited Consolidated and Combined Annual Financial Statements.

In the opinion of the Company, the accompanying financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2024 and its results of operations and cash flows for the three months ended September 30, 2024 and 2023.

The condensed consolidated balance sheet as of June 30, 2024 was derived from the Audited Consolidated and Combined Annual Financial Statements but does not contain all of the footnote disclosures from the Audited Consolidated and Combined Annual Financial Statements.

The results of operations for the periods presented are not necessarily indicative of the results that might be expected for future interim periods or for the full year.

As a result of the production of the Christmas Spectacular , arena license fees in connection with the use of The Garden by the New York Knicks (the “Knicks”) of the National Basketball Association (the “NBA”) and the New York Rangers (the “Rangers”) of the National Hockey League (the “NHL”), the Company generally earns a disproportionate share of its annual revenues in the second and third quarters of its fiscal year.

As a result of the production of the Christmas Spectacular , arena license fees in connection with the use of The Garden by the New York Knicks (the “Knicks”) of the National Basketball Association and the New York Rangers (the “Rangers”) of the National Hockey League, the Company generally earns a disproportionate share of its annual revenues in the second and third quarters of its fiscal year.

Reclassifications

For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation in accordance with GAAP.

The accompanying unaudited condensed consolidated and combined financial information for the three and nine-month periods ended March 31, 2024, and 2023 have been revised to change the presentation of our revenue and direct operating expenses from an aggregated to a disaggregated basis.

The accompanying unaudited condensed consolidated financial information for the three months ended September 30, 2023 has been revised to change the presentation of our revenue and direct operating expenses from an aggregated to a disaggregated basis.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Summary of Significant Accounting Policies

Principles of Consolidation and Combination

All significant intracompany accounts and balances within the Company’s consolidated businesses have been eliminated.

For the periods prior to the MSGE Distribution Date, the combined financial statements include certain assets and liabilities that were historically held at Sphere Entertainment’s corporate level but were specifically identifiable or otherwise attributable to the Company.

Certain historical intercompany transactions between Sphere Entertainment and the Company have been included as components of Sphere Entertainment’s investment in the condensed consolidated and combined financial statements, as they are considered to be effectively settled upon effectiveness of the MSGE Distribution and were not historically settled in cash.

Certain other historical intercompany transactions between Sphere Entertainment and the Company have been classified as related party, rather than intercompany, in the condensed consolidated and combined financial statements as they were historically settled in cash.

Expenses related to corporate allocations from the Company to Sphere Entertainment prior to the MSGE Distribution are considered to be effectively settled in the condensed consolidated and combined financial statements at the time the transaction is recorded, with the offset recorded against Sphere Entertainment’s investment.

Related Party Transactions, for further information on related party arrangements.

The Company disposed of its controlling interest in Boston Calling Events, LLC on December 2, 2022 (the “BCE Disposition”) and these condensed consolidated and combined financial statements reflect the results of operations of BCE until the BCE Disposition.

Dispositions for further information on the BCE disposition.

Principles of Consolidation

All significant intercompany accounts and balances within the Company’s consolidated businesses have been eliminated.

Use of Estimates

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

The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events.

These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses.

7 unchanged sentences

Changes in estimates resulting from weakness in the economic environment or other factors beyond the Company’s control could be material and would be reflected in the Company’s condensed consolidated financial statements in future periods.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

Revenue Recognition and Direct Operating Expenses

The following reflects an update to the Company’s comprehensive revenue recognition and direct operating expense accounting policies to align with the disaggregation of revenue and direct operating expenses as presented on the condensed consolidated and combined statements of operations.

The Company generates revenue from the provision of services and sale of tangible products, as well as leasing transactions.

Revenues are presented under these three categories in the condensed consolidated and combined statements of operations, as described below.

Revenues are presented under these three categories in the condensed consolidated statements of operations, as described below.

Service revenue, presented as “Revenues from entertainment offerings” primarily includes:

21 unchanged sentences

• Rental fees related to the arena license agreements that require the Knicks and the Rangers to play their home games at The Garden (the “Arena License Agreements”) with MSG Sports

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

• Sublease income

9 unchanged sentences

The Company accounts for taxes collected from customers and remitted to governmental authorities on a net basis and excludes these amounts from revenues.

In addition, the Company defers certain costs to fulfill the Company’s contracts with customers to the extent such costs relate directly to the contracts, are expected to generate resources that will be used to satisfy the Company’s performance obligations under the

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

contracts, and are expected to be recovered through revenue generated under the contracts.

Contract fulfillment costs are expensed as the Company satisfies the related performance obligations.

1 unchanged sentence

The Company enters into arrangements with multiple performance obligations, such as multi-year sponsorship agreements, which may derive revenues for the Company, as well as Sphere Entertainment and MSG Sports within a single arrangement.

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

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.

15 unchanged sentences

When the Company concludes that it does not control the good or service before transfer to the customer but arranges for another entity to provide the good or service, the Company acts as an agent and records revenue on a net basis in the amount it earns for its agency service.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Contract Balances

Amounts collected in advance of the Company’s satisfaction of its contractual performance obligations are recorded as a contract liability within deferred revenue and are recognized as the Company satisfies the related performance obligations.

Amounts collected in advance of events for which the Company is not the promoter or co-promoter do not represent contract liabilities and are recorded within accrued and other current liabilities on the accompanying consolidated and combined balance sheets.

Amounts recognized as revenue for which the Company has a right to consideration for goods or services transferred to customers and for which the Company does not have an unconditional right to bill as of the reporting date are recorded as contract assets.

1 unchanged sentence

Production Costs for the Company’s Original Productions

The Company defers certain costs of productions such as creative design, scenery, wardrobes, rehearsal and other related costs for the Company’s proprietary shows.

Deferred production costs are amortized on a straight-line basis over the course of a production’s performance period using the expected life of a show’s assets and are recorded as a component of Entertainment offerings, arena license fees, and other leasing direct operating expenses on the Company’s condensed consolidated and combined statement of

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

The Company defers certain costs of productions such as creative design, scenery, wardrobes, rehearsal and other related costs for the Company’s proprietary shows, reported under Prepaid expenses and other current assets and Other non-current assets.

Deferred production costs are subject to recoverability assessments whenever there is an indication of potential impairment.

Revenue Sharing Expenses

Revenue sharing expenses are determined based on contractual agreements between the Company and MSG Sports, primarily related to suite licenses, certain internal signage and in-venue food and beverage sales and are recorded as a component of Entertainment offerings, arena license fees, and other leasing direct operating expenses on the Company’s condensed consolidated and combined statement of operations.

Recently Issued and Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

In November 2023 , the FASB issued Accounting Standards Update (“ASU”) No.

In November 2023 , the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Improvement to Reportable Segment Disclosures .

1 unchanged sentence

The standard requires disclosure of significant expense categories and amounts for such expenses, including those segment expenses that are regularly provided to the chief operating decision maker, easily computable from information that is regularly provided, or significant expenses that are expressed in a form other than actual amounts.

This standard will be effective for the Company in Fiscal Year 2025 and is required to be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of the additional disclosure requirements on the Company’s condensed consolidated and combined financial statements .

This standard will be effective for the Company as of and for the Fiscal Year ending June 30, 2025 and is required to be applied retrospectively to all prior periods presented in the financial statements.

The Company continues to evaluate the impact of the additional disclosure requirements on the Company’s consolidated financial statements .

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , a final standard on improvements to income tax disclosures which applies to all entities subject to income taxes.

2 unchanged sentences

This standard will be effective for the Company in Fiscal Year 2026 and should be applied prospectively.

The Company is currently evaluating the impact of the additional disclosure requirements on the Company’s condensed consolidated and combined financial statements .

The Company has not had any dispositions during Fiscal Year 2024.

Disposition of Our Interest in Boston Calling Events

The Company entered into an agreement on December 1, 2022 to sell its controlling interest in BCE.

The transaction closed on December 2, 2022, resulting in a total gain on sale of $ 8,744 , net of transaction costs.

BCE meets the definition of a business under SEC Regulation S-X Rule 11-01(d)-1 and ASC Topic 805 — Business Combinations .

The BCE Disposition did not represent a strategic shift with a major effect on the Company’s operations, and as such, has not been reflected as a discontinued operation under ASC Subtopic 205-20 — Discontinued Operations .

The gain on the BCE Disposition was recorded in (Loss) gains, net on dispositions in the condensed consolidated and combined statements of operations.

Disposition of Corporate Aircraft

On December 30, 2022, the Company sold its owned aircraft for $ 20,375 .

In connection with the sale, the Company recognized a loss of $ 4,383 , net of transaction costs.

The loss on the aircraft disposition was recorded in (Loss) gains, net on dispositions in the condensed combined statements of operations.

The Company is currently evaluating the impact of the additional disclosure requirements on the Company’s consolidated financial statements .

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , requiring additional disclosures about specified categories of expenses included in certain expense captions presented on the face of the income statement.

This standard will be effective for the Company as of and for the Fiscal Year ending June 30, 2028, and may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of adopting this guidance on the Company’s consolidated financial statements.

Revenue Recognition

Contracts with Customers

All revenue recognized in the condensed consolidated and combined statements of operations is considered to be revenue from contracts with customers in accordance with ASC Topic 606, Revenue From Contracts with Customers , except for revenues from the Arena License Agreements, leases and subleases that are accounted for in accordance with ASC Topic 842, Leases .

All revenue recognized in the condensed consolidated statements of operations is considered to be revenue from contracts with customers in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue From Contracts with Customers , except for revenues from the Arena License Agreements, leases and subleases that are accounted for in accordance with

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ASC Topic 842, Leases .

Disaggregation of Revenue

The following table disaggregates the Company’s revenue by major source based upon the timing of satisfaction of the Company’s performance obligations to the customer for the three and nine months ended March 31, 2024 and 2023:

Three Months Ended Nine Months Ended

March 31, March 31,

2024 2023 2024 2023

Three Months Ended

September 30,

Event-related offerings (a)

2 unchanged sentences

38,938 39,815

9,741 9,501 24,854 31,306

Total revenues from contracts with customers

4 unchanged sentences

_________________

(a) Event-related and entertainment offerings revenues are recognized at a point in time.

(a) Event-related offerings revenues are recognized at a point in time.

(b) See Note 2.

1 unchanged sentence

Revenue Recognition, included in the Company’s Audited Consolidated and Combined Annual Financial Statements for further details on the pattern of recognition of sponsorship, signage, and suite license revenues.

(c) Primarily consists of (i) revenues from sponsorship sales and representation agreements with MSG Sports and (ii) advertising commission revenues recognized under the advertising sales representation agreement (the “Networks Advertising Sales Representation Agreement”) between the Company and Sphere Entertainment’s subsidiary, MSGN Holdings, L.P.

(“MSG Networks”).

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

In addition to the disaggregation of the Company’s revenue by major source as disclosed above, the following table disaggregates the Company’s revenues by revenue category in accordance with the required entity-wide disclosure requirements of ASC Subtopic 280-10-50-38 to 40, Segment Reporting , and the disaggregation of revenue required disclosures in accordance with ASC Subtopic 606-10-50-5, Revenue From Contracts with Customers-Overall-Disclosures, for the three and nine months ended March 31, 2024 and 2023.

In addition to the disaggregation of the Company’s revenue as disclosed above, the following table disaggregates the Company’s revenues by revenue category , for the three months ended September 30, 2024 and 2023.

Three Months Ended

Nine Months Ended

March 31, March 31,

2024 2023 2024 2023

September 30,

Ticketing and venue license fee revenues (a)

$ 70,206 $ 71,729

Sponsorship and signage, suite, and advertising commission revenues (b)

Sponsorship and signage, suite, and advertising commission revenues

42,890 43,336

9 unchanged sentences

(a) Amounts include ticket sales, including other ticket-related revenue, and venue license fees from the Company’s events such as (i) concerts, (ii) the presentation of the Christmas Spectacular and (iii) other live entertainment and sporting events.

(b) Amounts include (i) revenues from sponsorship sales and representation agreements with MSG Sports and (ii) advertising commission revenues from MSG Networks until the termination of the Networks Advertising Sales Representation Agreement as of December 31, 2022.

Contract Balances

The following table provides information about the opening and closing contract balances from the Company’s contracts with customers as of March 31, 2024 and June 30, 2023:

The following table provides information about the opening and closing contract balances from the Company’s contracts with customers as of September 30, 2024 and June 30, 2024:

September 30,

2024 June 30,

6 unchanged sentences

________________

(a) Receivables from contracts with customers, net, which are reported in Accounts receivable, net and Related party receivables, current in the Company’s

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

condensed consolidated balance sheets, represent the Company’s unconditional rights to consideration under its contracts with customers.

As of March 31, 2024 and June 30, 2023, the Company’s receivables from contracts with customers above included $ 4,309 and $ 5,397 , respectively, related to various related parties.

(a) Receivables from contracts with customers, net, which are reported in Accounts receivable, net and Related party receivables, current in the Company’s condensed consolidated balance sheets, represent the Company’s unconditional rights to consideration under its contracts with customers.

As of September 30, 2024 and June 30, 2024, the Company’s receivables from contracts with customers above included $ 5,114 and $ 2,432 , respectively, related to various related parties.

Related Party Transactions for further details on related party arrangements.

3 unchanged sentences

Deferred revenue is reduced and the related revenue is recognized once the underlying goods or services are transferred to a customer.

Revenue recognized for the three and nine months ended March 31, 2024 relating to the deferred revenue balance as of June 30, 2023 was $ 23,006 and $ 158,715 , respectively.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

recognized for the three months ended September 30, 2024 relating to the deferred revenue balance as of June 30, 2024 was $ 85,476 .

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2024, the Company’s remaining performance obligations under contracts were approximately $ 493,000 , of which 43 % is expected to be recognized over the next two years and an additional 57 % of the balance is expected to be recognized thereafter.

As of September 30, 2024, the Company’s remaining performance obligations under contracts were approximately $ 601,000 , of which 57 % is expected to be recognized over the next two years and an additional 43 % of the balance is expected to be recognized thereafter.

This primarily relates to performance obligations under sponsorship and suite license agreements that have original expected durations longer than one year and for which the consideration is not variable.

In developing the estimated revenue, the Company applies the allowable practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

Restructuring Charges

During the nine months ended March 31, 2024, the Company recorded restructuring charges related to termination benefits for certain corporate executives and employees.

The Company recorded restructuring charges of $ 2,362 and $ 14,803 for the three and nine months ended March 31, 2024, respectively, inclusive of $ 0 and $ 6,788 , respectively, of share-based compensation expenses, which are accrued in accounts payable, accrued and other current liabilities and additional paid-in capital on the condensed consolidated balance sheet.

The Company recorded restructuring charges of $ 2,461 and $ 9,820 , net of contributory credits from the Company to Sphere Entertainment for the Company’s corporate employees, during the three and nine months ended March 31, 2023, respectively.

Restructuring charges are inclusive of $ 0 and $ 2,293 of share-based compensation expenses for the three and nine months ended March 31, 2023, respectively.

Changes to the Company’s restructuring liability through March 31, 2024 were as follows:

Restructuring Credits (Charges)

During the three months ended September 30, 2024, the Company recorded restructuring credits of $ 40 related to adjustments for previously accrued termination benefits for certain corporate executives and employees.

During the three months ended September 30, 2023, the Company recorded restructuring charges of $ 11,553 , inclusive of $ 6,788 of share-based compensation expenses, shown in accounts payable, accrued and other current liabilities and additional paid-in-capital on the condensed consolidated balance sheet.

Changes to the Company’s restructuring liability through September 30, 2024 were as follows:

Restructuring Liability

June 30, 2024

Restructuring charges (excluding share-based compensation expense)

March 31, 2024 $ 10,778

As of March 31, 2024, the Company held an investment in Townsquare Media, Inc.

(“Townsquare”) and as of June 30, 2023, also held an investment in DraftKings Inc.

(“DraftKings”), which was subsequently sold during the first quarter of Fiscal Year 2024.

Restructuring credits

September 30, 2024 $ 3,460

As of September 30, 2024, the Company held an investment in Townsquare Media, Inc.

(“Townsquare”).

The Company also held an investment in DraftKings Inc.

(“DraftKings”), which was sold during the first quarter of Fiscal Year 2024:

• Townsquare is a media, entertainment and digital marketing solutions company that is listed on the New York Stock Exchange (“NYSE”) under the symbol “TSQ.”

• DraftKings is a fantasy sports contest and sports gambling provider that is listed on the Nasdaq Stock Market (“NASDAQ”) under the symbol “DKNG.”

• Other equity investments held in trust under the Company’s Executive Deferred Compensation Plan.

As of September 30, 2024, the Company also held other equity investments held in trust under the Company’s Executive Deferred Compensation Plan.

Refer to Note 10.

Pension Plans and Other Postretirement Benefit Plans for further details regarding the plan

On March 1, 2024, the Company converted all shares of Class C common stock of Townsquare into an equal number of shares of Class A common stock of Townsquare, subject to restrictions set forth in Townsquare’s certificate of incorporation.

The fair value of the Company’s investments in Class A common stock of Townsquare and Class A common stock of DraftKings is determined based on quoted market prices in active markets on the NYSE and NASDAQ, respectively, which are classified within Level I of the fair value hierarchy.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

The carrying fair value of these investments, which is reported under Other non-current assets in the accompanying condensed consolidated balance sheets as of March 31, 2024 and June 30, 2023, is as follows:

Ownership Percentage as of March 31, 2024 March 31,

The fair value of the Company’s investments in Class A common stock of Townsquare and Class A common stock of DraftKings was determined based on quoted market prices in active markets on the NYSE and NASDAQ, respectively, which are classified within Level I of the fair value hierarchy.

The carrying value of the Company’s investments, which is reported under Other non-current assets in the accompanying condensed consolidated balance sheets as of September 30, 2024 and June 30, 2024, is as follows:

September 30,

2024 June 30,

1 unchanged sentence

Townsquare Class A common stock $ 1,287 $ 1,438

Townsquare Class C common stock — 13,399

DraftKings Class A common stock — 11,297

Other equity investments with readily determinable fair values held in trust under the Company’s Executive Deferred Compensation Plan 5,047 4,226

Equity method investments:

Crown Properties Collection (a)

Equity investments without readily determinable fair values 596 475

Equity method investments and equity investments without readily determinable fair values (a)

Total investments $ 7,042 $ 6,320

_______________

(a) In March 2024, the Company paid $ 51 for an 8.3 % investment in Oak View Group’s Crown Properties Collection, LLC ("CPC").

The investment in CPC is accounted for as an equity method investment, with MSGE's share of CPC results recorded on a three‐month lag.

The impact of recording results on a three-month lag is not material.

The following table summarizes the realized and unrealized gain (loss) on equity investments with readily determinable fair value, which is reported in Other income (expense), net for the three and nine months ended March 31, 2024 and 2023:

Three Months Ended Nine Months Ended

March 31, March 31,

2024 2023 2024 2023

Unrealized gain (loss) — Townsquare $ 717 $ 2,406 $ ( 1,589 ) $ ( 609 )

Unrealized gain — DraftKings — 5,104 — 4,916

Unrealized gain — Executive Deferred Compensation Plan

(a) Inclusive of the Company’s investment in Oak View Group’s Crown Properties Collection, LLC ("CPC").

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Three Months Ended

September 30,

Unrealized loss — Townsquare

$ ( 101 ) $ ( 5,449 )

Unrealized gain (loss) — Executive Deferred Compensation Plan 220 ( 145 )

Realized gain from shares sold — DraftKings

— 214 1,548 1,703

Total realized and unrealized gain

Realized gain from shares sold — Townsquare

Total realized and unrealized gain (loss)

$ 124 $ ( 4,046 )

2 unchanged sentences

Cash proceeds from common stock sold — DraftKings $ — $ 12,844

Shares of common stock sold — Townsquare

Cash proceeds from common stock sold — Townsquare

Property and Equipment, Net

As of March 31, 2024 and June 30, 2023, property and equipment, net consisted of the following:

As of September 30, 2024 and June 30, 2024, property and equipment, net consisted of the following:

September 30,

2024 June 30,

5 unchanged sentences

133,267 133,267

Construction in progress (a)

Construction in progress

29,442 10,193

Total Property and equipment $ 1,588,198 $ 1,565,611

2 unchanged sentences

Property and equipment, net $ 642,338 $ 633,533

_________________

(a) In October 2023, the Company took possession of certain floors in the New York corporate office space and will be relocating from the space that the Company currently occupies to newly renovated office space within the same building.

The Company was not involved in the design or construction of the new space for purposes of the Company’s build out prior to obtaining possession.

The increase in construction in progress primarily relates to build out costs incurred after

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

Upon obtaining possession of the space, the Company recognized an additional lease obligation of $ 96,334 and a right-of-use (“ROU”) lease asset of $ 88,602 , net of tenant improvement incentives received on the possession date.

While lease payments under the new lease agreement will be recognized as a lease expense on a straight-line basis over the lease term, the Company will begin paying full rent starting in the second half of Fiscal Year 2026 due to certain tenant incentives included in the arrangement.

Base rent payments will increase every five years beginning in Fiscal Year 2031 in accordance with the terms of the lease.

In January 2024, the Company recognized an additional lease obligation and ROU lease asset of $ 5,408 as the Company took possession of additional space in the New York corporate office.

The Company recorded depreciation expense on property and equipment of $ 13,182 and $ 39,972 for the three and nine months ended March 31, 2024, respectively, and $ 14,798 and $ 45,615 for the three and nine months ended March 31, 2023, respectively, which is recognized in Depreciation and amortization in the condensed consolidated and combined statements of operations.

The Company recorded depreciation expense on property and equipment of $ 13,781 and $ 13,585 for the three months ended September 30, 2024 and 2023, respectively, which is recognized in Depreciation and amortization in the condensed consolidated statements of operations.

Goodwill and Intangible Assets

As of March 31, 2024 and June 30, 2023, the carrying amount of goodwill was $ 69,041 .

The Company’s indefinite-lived intangible assets as of March 31, 2024 and June 30, 2023 were as follows:

As of September 30, 2024 and June 30, 2024, the carrying amount of goodwill was $ 69,041 .

The Company’s indefinite-lived intangible assets as of September 30, 2024 and June 30, 2024 were as follows:

September 30,

2024 June 30,

2 unchanged sentences

Total indefinite-lived intangible assets $ 63,801 $ 63,801

During the first quarter of Fiscal Year 2024, the Company performed its annual impairment test of goodwill and indefinite-lived intangible assets and determined that there were no impairments of goodwill and indefinite-lived intangibles identified as of the impairment test date.

No amortization expense was recognized in the three and nine months ended March 31, 2024 for definite lived intangible assets as a result of the disposition of the related assets in connection with the BCE Disposition on December 2, 2022.

The Company recorded amortization expense on definite lived intangible assets of $ 0 and $ 754 for the three and nine months ended March 31, 2023, respectively, which is recognized in Depreciation and amortization in the condensed consolidated and combined statements of operations.

During the first quarter of Fiscal Year 2025, the Company performed its annual qualitative impairment test of goodwill and indefinite-lived intangible assets and determined that there were no impairments of goodwill and indefinite-lived intangibles identified as of the impairment test date.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Commitments and Contingencies

1 unchanged sentence

The Company’s commitments as of June 30, 2024 included a total of $ 323,178 (primarily related to contractual obligations).

During the nine months ended March 31, 2024, the Company did not have any material changes in its non-cancelable contractual obligations (other than activities in the ordinary course of business).

During the three months ended September 30, 2024, the Company did not have any material changes in its non-cancelable contractual obligations (other than activities in the ordinary course of business).

Credit Facilities for details of the principal repayments required under the Company’s credit facilities.

6 unchanged sentences

Such shares have been classified by the Company pursuant to the Stock Repurchase Program (as defined and further explained in Note 13.

Stockholders’ Equity) as treasury shares and are no longer outstanding on the date of repayment.

Additional Financial Information ) as treasury shares and are no longer outstanding on the date of repayment.

Legal Matters

The Company is a defendant in various lawsuits.

Although the outcome of these lawsuits cannot be predicted with certainty (including

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

the extent of available insurance, if any), management does not believe that resolution of these lawsuits will have a material adverse effect on the Company.

Although the outcome of these lawsuits cannot be predicted with certainty (including the extent of available insurance, if any), management does not believe that resolution of these lawsuits will have a material adverse effect on the Company.

Credit Facilities

Credit Facilities, included in the Company’s Audited Consolidated and Combined Annual Financial Statements for more information regarding the Company’s credit facilities.

The following table summarizes the presentation of the outstanding balances under the Company’s credit and other debt agreements as of March 31, 2024 and June 30, 2023:

The following table summarizes the presentation of the outstanding balances under the Company’s credit agreements as of September 30, 2024 and June 30, 2024:

September 30,

2024 June 30,

4 unchanged sentences

$ 20,313 $ 16,250

March 31, 2024 June 30, 2023

September 30, 2024 June 30, 2024

Principal Unamortized Deferred Financing Costs Net Principal Unamortized Deferred Financing Costs Net

4 unchanged sentences

55,000 ( 461 ) 54,539 — ( 503 ) ( 503 )

— — — 304 — 304

Long-term debt, net of deferred financing costs

$ 656,250 $ ( 9,275 ) $ 646,975 $ 609,375 $ ( 10,127 ) $ 599,248

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

National Properties Facilities

MSG National Properties, LLC (“MSG National Properties”), MSG Entertainment Holdings and certain subsidiaries of MSG National Properties are party to a credit agreement dated June 30, 2022 (as amended, the “National Properties Credit Agreement”) with JP Morgan Chase Bank, N.A., as administrative agent and the lenders and L/C issuers party thereto, providing for a five-year , $ 650,000 senior secured term loan facility (the “National Properties Term Loan Facility”) and a five-year , $ 150,000 revolving credit facility (the “National Properties Revolving Credit Facility” and, together with the National Properties Term Loan Facility, the “National Properties Facilities”).

On September 15, 2023, the National Properties Credit Agreement was amended to, among other things, increase the National Properties Revolving Credit Facility by $ 50,000 to $ 150,000 .

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

As of March 31, 2024, outstanding letters of credit were $ 17,726 and the remaining balance available under the National Properties Revolving Credit Facility was $ 132,274 .

As of September 30, 2024, outstanding letters of credit were $ 18,826 and the remaining balance available under the National Properties Revolving Credit Facility was $ 76,174 .

Interest Rates.

Borrowings under the current National Properties Facilities bear interest at a floating rate, which at the option of MSG National Properties may be either (a) a base rate plus an applicable margin ranging from 1.50 % to 2.50 % per annum, determined based on the total leverage ratio of MSG National Properties and its restricted subsidiaries (the “National Properties Base Rate”), or (b) 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 SOFR Rate”).

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.

MSG National Properties is also required to pay customary letter of credit fees, as well as fronting fees, to banks that issue letters of credit pursuant to the National Properties Credit Agreement.

The interest rate on the National Properties Facilities as of March 31, 2024 was 7.93 %.

The interest rate on the National Properties Facilities as of September 30, 2024 was 7.45 %.

Principal Repayments .

1 unchanged sentence

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

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

are due at the maturity of the facil ity.

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 5.0 % 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 facil ity.

Under certain circumstances, MSG National Properties is required to make mandatory prepayments on loans outstanding, including prepayments in an amount equal to the net cash proceeds of certain sales of assets or casualty insurance and/or condemnation recoveries (subject to certain reinvestment, repair or replacement rights), subject to certain exceptions.

1 unchanged sentence

The minimum liquidity level is set at $ 50,000 , and is tested based on the level of average daily liquidity, consisting of cash and cash equivalents and available revolving commitments, over the last month of each quarter over the life of the National Properties Facilities.

The debt service coverage ratio covenant began testing in the fiscal quarter ended December 31, 2022, and is set at a ratio of 2 :1 before stepping up to 2.5 :1 in the fiscal quarter ending September 30, 2024.

The debt service coverage ratio covenant began testing in the fiscal quarter ended December 31, 2022, and was set at a ratio of 2 :1 before stepping up to 2.5 :1 in the fiscal quarter ended September 30, 2024.

The leverage ratio covenant began testing in the fiscal quarter ended June 30, 2023.

It is tested based on the ratio of MSG National Properties and its restricted subsidiaries’ consolidated total indebtedness to adjusted operating income, with an initial maximum ratio of 6 :1, stepping down to 5.5 :1 in the fiscal quarter ending June 30, 2024 and 4.5 :1 in the fiscal quarter ending June 30, 2026.

As of March 31, 2024, MSG National Properties and its restricted subsidiaries were in compliance with the covenants of the National Properties Credit Agreement.

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

In addition to the financial covenants discussed above, the National Properties Credit Agreement and the related security agreement contain certain customary representations and warranties, affirmative and negative covenants and events of default.

12 unchanged sentences

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”).

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

All obligations under the National Properties Facilities, including the guarantees of those obligations, are secured by certain of the assets of MSG National Properties and the Subsidiary Guarantors (collectively, “Collateral”) including, but not limited to, a pledge of some or all of the equity interests held directly or indirectly by MSG National Properties in each Subsidiary Guarantor.

2 unchanged sentences

Interest Payments Principal Repayments

Nine Months Ended Nine Months Ended

March 31, March 31,

Three Months Ended Three Months Ended

September 30, September 30,

2024 2023 2024 2023

2 unchanged sentences

The carrying value and fair value of the Company’s debt reported in the accompanying condensed consolidated balance sheets were as follows:

March 31, 2024 June 30, 2023

September 30, 2024 June 30, 2024

National Properties Facilities

$ 676,563 $ 672,630 $ 625,625 $ 622,497

Other debt — — 304 304

Total Long-term debt $ 629,687 $ 620,242 $ 659,279 $ 655,813

________________

(a) The total carrying value of the Company’s debt as of March 31, 2024 and June 30, 2023 is equal to the current and non-current principal payments for the

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

Company’s credit agreements excluding unamortized deferred financing costs of $ 10,969 and $ 12,845 , respectively.

(a) The total carrying value of the Company’s debt as of September 30, 2024 and June 30, 2024 is equal to the current and non-current principal payments for the Company’s credit agreements excluding unamortized deferred financing costs of $ 9,275 and $ 10,127 , respectively.

The Company’s long-term debt is classified within Level II of the fair value hierarchy as it is valued using quoted indices of similar instruments for which the inputs are readily observable.

Pension Plans and Other Postretirement Benefit Plans

Prior to the MSGE Distribution, Sphere Entertainment sponsored both funded and unfunded and qualified and non-qualified defined benefit plans (the “Pension Plans”), as well as a postretirement benefit plan (the “Postretirement Plan”), covering certain full-time employees and retirees of the Company.

In connection with the MSGE Distribution, the sponsorship of the Pension Plans and Postretirement Plan was transferred to the Company.

Pension Plans and Other Postretirement Benefit Plans, included in the Company’s Audited Consolidated and Combined Annual Financial Statements for more information regarding the Pension Plans, Postretirement Plan, the Madison Square Garden 401(k) Savings Plans, The Madison Square Garden 401(k) Savings Plan (the “401(k) Plan”), the MSG Entertainment Holdings, LLC Excess Savings Plan (together with the 401(k) Plan, the “Savings Plans”), together with the associated excess savings plan, and the Madison Square Garden 401(k) Union Plan (the “Union Savings Plan”).

Defined Benefit Pension Plans and Other Postretirement Benefit Plans

The following table presents components of net periodic benefit cost (benefit) for the Pension Plans and Postretirement Plan included in the accompanying condensed consolidated and combined statements of operations for the three and nine months ended March 31, 2024 and 2023.

The following table presents components of net periodic benefit cost for the Pension Plans and Postretirement Plan included in the accompanying condensed consolidated statements of operations for the three months ended September 30, 2024 and 2023.

Service cost is recognized in direct operating expenses and selling, general and administrative expenses.

All other components of net periodic benefit cost (benefit) are reported in Other income (expense), net.

All other components of net periodic benefit cost are reported in Other expense, net.

Pension Plans Postretirement Plan

Three Months Ended Three Months Ended

March 31, March 31,

2024 2023 2024 2023

Service cost $ 17 $ 30 $ 6 $ 8

Interest cost 1,469 927 24 11

Expected return on plan assets ( 1,090 ) ( 1,504 ) — —

Recognized actuarial loss 450 314 — 9

Net periodic cost (benefit)

$ 846 $ ( 233 ) $ 30 $ 28

Pension Plans Postretirement Plan

Nine Months Ended Nine Months Ended

March 31, March 31,

September 30, September 30,

2024 2023 2024 2023

3 unchanged sentences

Recognized actuarial loss 446 238 6 —

Net periodic cost (benefit)

Net periodic cost

$ 840 $ 633 $ 41 $ 30

Contributions for Qualified Defined Benefit Pension Plans

During the three and nine months ended March 31, 2024, the Company contributed $ 0 and $ 12,250 to the Cash Balance Pension Plan.

During the three months ended September 30, 2024, the Company contributed $ 3,300 to a non-contributory, qualified cash balance retirement plan covering the Company’s non-union employees.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Defined Contribution Plans

For the three and nine months ended March 31, 2024 and 2023, expenses related to the Savings Plans and Union Savings Plan included in the accompanying condensed consolidated and combined statements of operations are as follows:

Three Months Ended Nine Months Ended

March 31, March 31,

2024 2023 2024 2023

For the three months ended September 30, 2024 and 2023, expenses related to the Savings Plans and Union Savings Plan included in the accompanying condensed consolidated statements of operations are as follows:

Three Months Ended

September 30,

Savings Plans $ 2,024 $ 2,034

Union Savings Plan $ 82 $ 50

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

Executive Deferred Compensation

Pension Plans and Other Postretirement Benefit Plans, included in the Company’s Audited Consolidated and Combined Annual Financial Statements, for more information regarding the Company’s Executive Deferred Compensation Plan (the “Deferred Compensation Plan”).

The Company recorded compensation expense of $ 233 and $ 432 for the three and nine months ended March 31, 2024, respectively, and $ 129 and $ 135 for the three and nine months ended March 31, 2023, respectively, within Selling, general, and administrative expenses to reflect the remeasurement of the Deferred Compensation Plan liability.

In addition, the Company recorded gains of $ 233 and $ 432 for the three and nine months ended March 31, 2024 and $ 129 and $ 135 for the three and nine months ended March 31, 2023, respectively, within Other income (expense), net to reflect remeasurement of the fair value of assets under the Deferred Compensation Plan.

The following table summarizes amounts recognized related to the Deferred Compensation Plan in the condensed consolidated and combined balance sheets:

The Company recorded compensation expense of $ 220 for the three months ended September 30, 2024 and a compensation cost credit of $ 145 for the three months ended September 30, 2023, within Selling, general, and administrative expenses to reflect the remeasurement of the Deferred Compensation Plan liability.

In addition, the Company recorded a gain of $ 220 for the three months ended September 30, 2024 and a loss of $ 145 for the three months ended September 30, 2023, within Other expense, net to reflect remeasurement of the fair value of assets under the Deferred Compensation Plan.

The following table summarizes amounts recognized related to the Deferred Compensation Plan in the condensed consolidated balance sheets:

September 30,

2024 June 30,

Non-current assets (included in Other non-current assets)

Deferred Compensation Plan assets (included in Other non-current assets)

$ 5,047 $ 4,226

Non-current liabilities (included in Other non-current liabilities)

Deferred Compensation Plan liabilities (included in Other non-current liabilities)

$ ( 5,063 ) $ ( 4,226 )

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Share Based Compensation, included in the Company’s Audited Consolidated and Combined Annual Financial Statements, for more information on these plans.

Share-based compensation expense for the Company’s restricted stock units (“RSUs”) and performance stock units (“PSUs”) are recognized in the condensed consolidated and combined statements of operations as a component of direct operating expenses or selling, general, and administrative expenses.

The share-based compensation expense recorded by the Company in Fiscal Year 2023 includes the expenses associated with the employees attributable to the Company, net of contributory credits from the Company to Sphere Entertainment for the Company’s corporate employees.

Share-based compensation expense for the Company’s restricted stock units (“RSUs”) and performance stock units (“PSUs”) are recognized in the condensed consolidated statements of operations as a component of direct operating expenses or selling, general, and administrative expenses.

The following table summarizes the Company’s share-based compensation expense:

Three Months Ended Nine Months Ended

March 31, March 31,

2024 2023 2024 2023

Three Months Ended

September 30,

Share-based compensation expense (a)

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________________

(a) The expense shown excludes $ 0 and $ 6,788 for the three and nine months ended March 31, 2024 , respectively, and $ 0 and $ 2,293 for the three and nine months ended March 31, 2023, respectively, that was reclassified to Restructuring charges in the condensed consolidated and combined statements of operations a s detailed in Note 5.

Restructuring Charges.

(b) To fulfill required statutory tax withholding obligations for the applicable income and other employment taxes, RSUs and PSUs with an aggregate value of $ 993 and $ 13,222 , and $ 0 and $ 1,147 were retained by the Company during the three and nine months ended March 31, 2024 and 2023, respectively.

For the three and nine months ended March 31, 2024 , weighted-average shares used in the calculation for diluted earnings per share (“EPS”) consisted of 48,447 and 48,883 shares of Class A Common Stock for basic EPS, respectively, and the dilutive effect of 338 and 208 shares of Class A Common Stock issuable, respectively, under share-based compensation plans.

For the three and nine months ended March 31, 2024 , weighted-average anti-dilutive shares primarily consisted of approximately 540 RSUs and stock options, and were excluded in the calculation of diluted EPS because their effect would have been anti-dilutive.

On April 20, 2023, 51,768 shares of Class A Common Stock were distributed to Sphere Entertainment stockholders in the MSGE Distribution.

This share amount is being utilized for the calculation of basic and diluted loss per share of Class A Common Stock attributable to the Company’s stockholders for the three and nine months ended March 31, 2023 because the Company was not a standalone public company prior to the MSGE Distribution.

As of March 31, 2024, there was $ 33,914 of unrecognized compensation cost related to unvested RSUs and PSUs held by the Company’s direct employees.

(a) The expense shown excludes $ 6,788 for the three months ended September 30, 2023, which was reclassified to Restructuring charges in the condensed consolidated statements of operations a s detailed in Note 4.

Restructuring Credits (Charges).

(b) To fulfill required statutory tax withholding obligations for the applicable income and other employment taxes, RSUs and PSUs with an aggregate value of $ 12,808 and $ 11,817 were retained by the Company during the three months ended September 30, 2024 and 2023, respectively.

For the three months ended September 30, 2024 and 2023 all RSUs and stock options were excluded from the anti-dilutive calculation because the Company reported a net loss for the period and, therefore, their impact on reported loss per share would have been antidilutive.

As of September 30, 2024, there was $ 55,333 of unrecognized compensation cost related to unvested RSUs and PSUs held by the Company’s direct employees.

The cost is expected to be recognized over a weighted-average period of approximately 2.5 years.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

Award Activity

During the nine months ended March 31, 2024 and March 31, 2023 , 624 and 66 RSUs were granted and 688 and 40 RSUs vested, respectively.

During the nine months ended March 31, 2024 and March 31, 2023, 506 and 60 PSUs were granted and 273 and 11 PSUs vested, respectively.

Stockholders’ Equity

Stock Repurchase Program

On March 29, 2023, the Company’s Board of Directors authorized a share repurchase program to repurchase up to $ 250,000 of the Company’s Class A Common Stock (the “Stock Repurchase Program”).

Pursuant to the Stock Repurchase Program, 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 in accordance with applicable insider trading and other securities laws and regulations.

The timing and amount of purchases will depend on market conditions and other factors.

For the nine months ended March 31, 2024, the Company repurchased 3,525 shares of Class A Common Stock for $ 115,512 .

As of March 31, 2024, the Company had approximately $ 110,000 remaining available for repurchases.

Accumulated Other Comprehensive Loss

The following table details the components of accumulated other comprehensive loss:

Pension Plans and Postretirement Plan

Three Months Ended Nine Months Ended

March 31, March 31,

2024 2023 2024 2023

Balance at beginning of period $ ( 33,279 ) $ ( 34,129 ) $ ( 34,021 ) $ ( 34,740 )

Other comprehensive income:

Amounts reclassified from accumulated other comprehensive loss (a)

450 323 1,350 1,063

Income tax expense ( 78 ) ( 56 ) ( 236 ) ( 185 )

Other comprehensive income, net of income taxes

372 267 1,114 878

Balance at end of period $ ( 32,907 ) $ ( 33,862 ) $ ( 32,907 ) $ ( 33,862 )

________________

(a) Amounts reclassified from accumulated other comprehensive loss represent the amortization of net actuarial loss included in net periodic benefit cost, which is reflected under Other income (expense), net in the accompanying condensed consolidated and combined statements of operations (see Note 11.

Pension Plans and Other Postretirement Benefit Plans).

During the three months ended September 30, 2024 and 2023 , 433 and 562 RSUs were granted and 416 and 476 RSUs vested,

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

respectively.

During the three months ended September 30, 2024 and 2023, 386 and 506 PSUs were granted and 305 and 241 PSUs vested, respectively.

Related Party Transactions

As of March 31, 2024 , members of the Dolan family, for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, and members of the Dolan family including trusts for the benefit of members of the Dolan family (collectively, the “Dolan Family Group”) collectively beneficially owned 100 % of the Company’s outstanding Class B Common Stock, $ 0.01 par value per share (“Class B Common Stock”) and approximately 3.9 % of the Company’s outstanding Class A Common Stock (inclusive of options exercisable within 60 days of March 31, 2024) .

As of September 30, 2024 , members of the Dolan family, for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, and members of the Dolan family including trusts for the benefit of members of the Dolan family (collectively, the “Dolan Family Group”) collectively beneficially owned 100 % of the Company’s outstanding Class B Common Stock, $ 0.01 par value per share (“Class B Common Stock”) and approximately 4.1 % of the Company’s outstanding Class A Common Stock (inclusive of options exercisable within 60 days of September 30, 2024) .

Such shares of Class A Common Stock and Class B Common Stock, collectively, represent approximately 63.6 % of the aggregate voting power of the Company’s outstanding common stock.

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There have been no material changes in such related party arrangements except as described below.

The Company has also entered into a commercial agreement with CPC, under which CPC provides sponsorship sales services.

The Company recorded commission expense of $ 854 and $ 1,013 for the three and nine months ended March 31, 2024 , respectively.

and did not record any commission expense for three and nine months ended March 31, 2023 as the arrangement was not yet in place

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

during those periods .

As of March 31, 2024 and June 30, 2023, prepaid expenses associated with this arrangement were $ 4,237 and $ 0 , respectively, and are reported under Prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets.

In the third quarter of Fiscal Year 2024, the Company entered into a commercial agreement with CPC, under which CPC provides sponsorship sales services.

The Company recorded commission expense of $ 494 and $ 0 for the three months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024 and June 30, 2024, prepaid expenses associated with this arrangement were $ 6,998 and $ 5,993 , respectively, and are reported under Prepaid expenses and other current assets, and Other non-current assets in the accompanying condensed consolidated balance sheets.

The Company provided a notice of termination with respect to the commercial agreement on September 20, 2024 and is currently negotiating the related wind down.

From time to time the Company enters into arrangements with 605, LLC (“605”).

3 unchanged sentences

605 provides audience measurement and data analytics services to the Company and its subsidiaries in the ordinary course of business.

In August 2022, a subsidiary of Sphere Entertainment entered into a three-year agreement with 605, valued at $ 750 , covering several customer analysis projects per year in connection with events held at our venues, which was assigned to the Company in connection with the MSGE Distribution.

Pursuant to this arrangement, the Company recognized $ 0 and $ 34 of expense for the three and nine months ended March 31, 2024, respectively, and $ 68 and $ 204 of expense for the three and nine months ended March 31, 2023 , respectively.

Pursuant to this arrangement, the Company recognized $ 34 of expense for the three months ended September 30, 2023.

On September 13, 2023, 605 was sold to iSpot.tv, and James L.

2 unchanged sentences

As a result, as of September 13, 2023, 605 is no longer considered to be a related party.

During Fiscal Year 2023 and the first quarter of Fiscal Year 2024, MSG Sports made market rate interest-bearing advances to the Company in connection with the construction of new premium hospitality suites at The Garden.

The advances were fully repaid (including interest) in the second quarter of Fiscal Year 2024.

As of March 31, 2024 and June 30, 2023, the other debt balance was $ 0 and $ 304 , respectively.

Subsequent to June 30, 2023, the Company entered into arrangements with (i) MSG Sports, pursuant to which MSG Sports provides certain sponsorship, premium hospitality and other business operations services to the Company in exchange for service fees, (ii) Sphere Entertainment, pursuant to which the Company provides certain sponsorship account management services to Sphere Entertainment in exchange for service fees, and (iii) MSG Sports and Sphere Entertainment, pursuant to which the three companies have agreed to allocate expenses in connection with the use by each company of aircraft owned or leased by the Company and MSG Sports.

Revenues and Operating Expenses

1 unchanged sentence

The significant components of these amounts are discussed below.

These amounts are reflected in revenues and operating expenses in the accompanying condensed consolidated and combined statements of operations for the three and nine months ended March 31, 2024 and 2023:

Three Months Nine Months Ended

March 31, March 31,

2024 2023 2024 2023

These amounts are reflected in revenues and operating expenses in the accompanying condensed consolidated statements of operations for the three months ended September 30, 2024 and 2023:

September 30,

Revenues $ 7,883 $ 5,159

3 unchanged sentences

Cost reimbursement from MSG Sports ( 8,387 ) ( 9,861 )

Cost reimbursement from Sphere Entertainment (after April 20, 2023) and Corporate allocations to Sphere Entertainment (before April 20, 2023) ( 27,494 ) ( 40,794 ) ( 84,171 ) ( 114,761 )

Other operating expenses, net 1,266 327 4,120 3,682

Cost reimbursement from Sphere Entertainment

( 22,993 ) ( 30,336 )

Other operating (credits) expenses, net

( 1,117 ) 553

Total operating expenses (credits), net (a)

1 unchanged sentence

_________________

(a) Of the total operating expenses (credits), net, $( 1,661 ) and $ 895 for the three and nine months ended March 31, 2024, respectively, and $( 804 ) and $( 1,329 ) for the three and nine months ended March 31, 2023 , respectively, are included in direct operating expenses in the accompanying condensed consolidated and combined statements of operations, and $( 36,488 ) and $( 113,095 ) for the three and nine months ended March 31, 2024, respectively, and $( 51,010 ) and $( 141,653 ) for the three and nine months ended March 31, 2023 , respectively, are included in selling, general, and administrative expenses.

(b) Other operating expenses, net, includes CPC professional expenses.

The Company recorded $ 35,588 and $ 61,441 of revenues under the Arena License Agreements for the three and nine months ended March 31, 2024, respectively .

In addition to the Arena License Agreements, during the three and nine months ended March 31, 2024, the Company’s revenues from related parties primarily reflected sponsorship sales and service representation agreements of $ 7,234

(a) Of the total operating expenses (credits), net, $ 1,294 and $ 1,310 for the three months ended September 30, 2024 and 2023 , respectively, are included in direct operating expenses in the accompanying condensed consolidated statements of operations, and $( 32,714 ) and $( 40,231 ) for the three months ended September 30,

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

and $ 15,503 , respectively, and merchandise sharing revenues of $ 2,789 and $ 5,087 , respectively, with MSG Sports.

The Company also earned sublease revenue from related parties of $ 761 and $ 2,258 during the three and nine months ended March 31, 2024 , respectively.

The Company recorded $ 31,163 and $ 64,312 of revenues under the Arena License Agreements for the three and nine months ended March 31, 2023, respectively .

In addition, during the three and nine months ended March 31, 2023, the Company recorded revenues under sponsorship sales and service representation agreements of $ 7,079 and $ 15,643 , respectively, and merchandise sharing revenues of $ 2,160 and $ 4,451 , respectively, with MSG Sports.

The Company recorded revenues under the Networks Advertising Sales Representation Agreement of $ 0 and $ 8,802 for the three and nine months ended March 31, 2023 , respectively.

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

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.

The Company also earned sublease revenue from related parties of $ 716 and $ 2,100 during the three and nine months ended March 31, 2023, respectively .

Other Related Party Matters

Loans Receivable from Sphere Entertainment

Prior to the MSGE Distribution, the Company’s captive insurance entity, Eden Insurance Company, Inc.

(“Eden”), entered into a loan agreement with Sphere Entertainment (the “Eden Loan Agreement”), under which Eden granted Sphere Entertainment an unsecured loan bearing interest at a rate of SOFR plus 350 basis points with a principal amount not exceeding $ 60,000 .

This loan was in the form of a demand promissory note, payable immediately upon order from Eden.

The loan payable to the Company held by Sphere Entertainment under the Eden Loan Agreement was assigned by Sphere Entertainment to the Company in connection with the MSGE Distribution, and has been eliminated in consolidation by the Company for periods subsequent to the MSGE Distribution.

During Fiscal Year 2023, Eden declared and paid dividends to Sphere Entertainment through a reduction of the loan receivable from Sphere Entertainment.

During Fiscal Year 2023, no interest or principal payments were received by Eden.

Instead, the accrued but unpaid interest was added to the outstanding principal amount of the loan.

The cash flows related to this loan receivable for periods prior to the MSGE Distribution are reflected as investing activities, as these balances represent amounts loaned by the Company to Sphere Entertainment.

The Company recorded related party interest income of $ 0 and $ 0 related to the Eden Loan Agreement in the three and nine months ended March 31, 2024, respectively, and $ 1,121 and $ 2,925 in the three and nine months ended March 31, 2023, respectively.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2024 and 2023 , respectively , are included in selling, general, and administrative expenses.

The Company recorded $ 1,324 of revenues under the Arena License Agreements for the three months ended September 30, 2024 .

In addition to the Arena License Agreements, during the three months ended September 30, 2024, the Company’s revenues from related parties primarily reflected sponsorship sales and service representation agreements of $ 2,751 , and merchandise sharing revenues of $ 247 , with MSG Sports.

The Company also earned sublease revenue from related parties of $ 3,561 during the three months ended September 30, 2024 .

The Company recorded $ 1,324 of revenues under the Arena License Agreements for the three months ended September 30, 2023 .

In addition, during the three months ended September 30, 2023, the Company recorded revenues under sponsorship sales and service representation agreements of $ 2,763 , and merchandise sharing revenues of $ 196 , with MSG Sports.

The Company also earned sublease revenue from related parties of $ 759 during the three months ended September 30, 2023 .

Additional Financial Information

The following table provides a summary of the amounts recorded as cash, cash equivalents, and restricted cash:

September 30,

2024 June 30,

6 unchanged sentences

The Company has deposited cash in an interest-bearing escrow account related to credit support, debt facilities, and collateral to workers compensation and general liability insurance obligations.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

Prepaid expenses and other current assets consisted of the following:

September 30,

2024 June 30,

8 unchanged sentences

_________________

(a) Inventory is mostly comprised of food and liquor for venues.

(a) Inventory is mostly comprised of food and liquor for the venues.

Other non-current assets consisted of the following:

September 30,

2024 June 30,

2 unchanged sentences

Investments (b)

23,968 35,070

Deferred costs 3,723 3,649

5 unchanged sentences

Investments for more information on long-term investments.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Accounts payable, accrued and other current liabilities consisted of the following:

September 30,

2024 June 30,

4 unchanged sentences

Total accounts payable, accrued and other current liabilities $ 159,261 $ 203,750

Other income (expense), net includes the following:

Three Months Ended Nine Months Ended

March 31, March 31,

2024 2023 2024 2023

Other expense, net includes the following:

Three Months Ended

September 30,

Gains from shares sold — DraftKings $ — $ 1,548

Net unrealized gains (loss) on equity investments with readily determinable fair value

Gains from shares sold - TSQ

Net unrealized loss on equity investments with readily determinable fair value

( 101 ) ( 5,449 )

Other ( 673 ) ( 568 )

Total other income (expense), net

Total other expense, net

$ ( 769 ) $ ( 4,469 )

During the nine months ended March 31, 2024, the Company made income tax payments of $ 58 .

During the nine months ended March 31, 2023, the Company received income tax refunds, net of payments, of $ 2,031 .

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS (UNAUDITED)

During the three months ended September 30, 2024 and September 30, 2023, the Company made income tax payments of $ 381 and $ 0 , respectively.

Income tax benefit for the three months ended September 30, 2024 of $ 13,601 , reflects an effective tax rate of 41 %.

The estimated annual effective tax rate exceeds the statutory federal tax rate of 21% primarily due to state taxes and excess tax deficiencies related to share-based compensation.

The Company expects to utilize its net operating losses during Fiscal Year 2025 and as such will become a federal taxpayer by the end of Fiscal Year 2025.

Income tax benefit for the three months ended September 30, 2023 of $ 659 , reflects an effective tax rate of 1 %.

The estimated annual effective tax rate is lower than the statutory federal tax rate of 21% primarily due to a decrease in the valuation allowance, partially offset by state taxes.

Stock Repurchase Program

On March 29, 2023, the Company’s Board of Directors authorized a share repurchase program to repurchase up to $ 250,000 of the Company’s Class A Common Stock (the “Stock Repurchase Program”).

The timing and amount of purchases will depend on market conditions and other factors.

The Company did not repurchase any shares of Class A Common Stock under the plan in the three months ended September 30, 2024.

As of September 30, 2024, the Company had approximately $ 110,000 remaining available for repurchases.

Subsequent Events

In April and May 2024, the Company sold approximately 1,577 of its shares of Townsquare’s Class A common stock and received aggregate net cash proceeds of approximately $ 15,620 .

In April 2024, the Company recognized an additional lease obligation of $ 104,668 and ROU lease asset of $ 104,284 as the Company took possession of additional space in the New York corporate office.

In October 2024, the Company paid down $ 30,000 of outstanding principal under the National Properties Revolving Credit Facility.

On November 7, 2024 the Company paid down the remaining outstanding principal balance of $ 25,000 under the National Properties Revolving Credit Facility.

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-Q

Item 1. Financial Statements