What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-02-06 compared with 2024-11-08 · 142 added, 86 removed, 209 unchanged (52% of the section changed)

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In this MD&A, there are statements concerning the future operating and future financial performance of Madison Square Garden Entertainment Corp.

(“MSG Entertainment”) and its direct and indirect subsidiaries (collectively, “we,” “us,” “our,” “MSG Entertainment,” or the “Company”).

and its direct and indirect subsidiaries (collectively, “we,” “us,” “our,” “MSG Entertainment,” or the “Company”).

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

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• the costs associated with, and the outcome of, litigation, including any negative publicity, and other proceedings to the extent uninsured, including litigation or other claims against companies we invest in or acquire;

• the impact of governmental regulations or laws, changes in how those regulations and laws are interpreted, as well as the continued benefit of certain tax exemptions and the ability to maintain necessary permits or licenses;

• the impact of governmental regulations or laws, including potential legislation related to ticketing, changes in how those regulations and laws are interpreted, as well as the continued benefit of certain tax exemptions and the ability to maintain necessary permits or licenses;

• the impact of any government plans to redesign New York City’s Penn Station;

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

• the additional factors described under “Risk Factors” 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”).

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

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

In this MD&A, the years ending and ended on June 30, 2025, 2024 and 2023, respectively, are referred to as “Fiscal Year 2025,” “Fiscal Year 2024” and “Fiscal Year 2023,” respectively.

In this MD&A, the years ending and ended on June 30, 2025 and 2024, respectively, are referred to as “Fiscal Year 2025” and “Fiscal Year 2024,” respectively.

Our MD&A is organized as follows:

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Results of Operations.

This section provides an analysis of our unaudited results of operations for the three months ended September 30, 2024 and 2023.

This section provides an analysis of our unaudited results of operations for the three and six months ended December 31, 2024 and 2023.

Liquidity and Capital Resources.

This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the three months ended September 30, 2024 and 2023, as well as certain contractual obligations.

This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the six months ended December 31, 2024 and 2023, as well as certain contractual obligations.

Seasonality of Our Business.

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MSG Entertainment Distribution

On April 20, 2023, 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 MSG Entertainment in the form of Class A common stock, $0.01 par value per share (“Class A Common Stock”), immediately following the Distribution (the “Retained Interest”).

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

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Our Company’s future performance is dependent in part on general economic conditions and the effect of these conditions on our customers.

Weak economic conditions may lead to lower demand for suite licenses and tickets to our live productions, concerts, family shows and other events, which would also negatively affect concession and merchandise sales, and lower levels of sponsorship and venue signage.

and venue signage.

These conditions may also affect the number of concerts, family shows and other events that take place in the future.

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

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

In addition, total direct operating expenses is presented in two categories consisting of (i) Entertainment offerings, arena license fees and other leasing direct operating expenses and (ii) Food, beverage, and merchandise direct operating expenses.

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

Comparison of the three months ended September 30, 2024 versus the three months ended September 30, 2023.

Comparison of the three and six months ended December 31, 2024 versus the three and six months ended December 31, 2023.

Three Months Ended

September 30, Change

December 31, Change

2024 2023 Amount Percentage

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Depreciation and amortization (14,183) (13,205) (978) (7) %

Restructuring credits (charges) 40 (11,553) 11,593 100 %

Operating loss

(18,482) (33,425) 14,943 45 %

Restructuring credits (charges) 30 (888) 918 NM

Operating income 139,001 137,423 1,578 1 %

Interest income 365 1,083 (718) (66) %

Interest expense (12,955) (15,049) 2,094 14 %

Other expense, net

Other (expense) income, net (1,045) 2,846 (3,891) NM

Income from operations before income taxes 125,366 126,303 (937) (1) %

Income tax expense (49,473) (1,054) (48,419) NM

$ 75,893 $ 125,249 $ (49,356) (39) %

Loss from operations before income taxes

Six Months Ended

December 31, Change

2024 2023 Amount Percentage

Revenues from entertainment offerings

$ 433,357 $ 434,791 $ (1,434) — %

Income tax benefit 13,601 659 12,942 NM

Net loss attributable to MSG Entertainment’s stockholders

Food, beverage, and merchandise revenues 78,296 82,012 (3,716) (5) %

Arena license fees and other leasing revenue

34,478 28,075 6,403 23 %

Total revenues

546,131 544,878 1,253 — %

Direct operating expenses

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

(250,760) (262,571) 11,811 4 %

Food, beverage, and merchandise direct operating expenses

(44,023) (41,867) (2,156) (5) %

Total direct operating expenses

(294,783) (304,438) 9,655 3 %

Selling, general, and administrative expenses

(102,935) (97,211) (5,724) (6) %

Depreciation and amortization (27,964) (26,789) (1,175) (4) %

Restructuring credits (charges) 70 (12,441) 12,511 NM

Operating income 120,519 103,999 16,520 16 %

Interest income 737 1,935 (1,198) (62) %

Interest expense (26,998) (29,336) 2,338 8 %

Other expense, net (1,814) (1,625) (189) (12) %

Income from operations before income taxes 92,444 74,973 17,471 23 %

Income tax expense (35,872) (395) (35,477) NM

$ 56,572 $ 74,578 $ (18,006) (24) %

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

Revenues for the three months ended September 30, 2024 decreased $3,498 as compared to the prior year period.

Revenues for the three and six months ended December 31, 2024 increased $4,751 and $1,253, respectively, as compared to the prior year period.

Revenues from Entertainment Offerings

For the three months ended September 30, 2024 the decrease in Revenues from entertainment offerings was primarily due to lower event-related revenues of $1,534.

The decrease in event-related revenues reflects (i) lower revenues from concerts of $990, which reflects lower per-concert revenues due to a shift in the mix of the events at The Garden from promoted events to rentals and a decrease in the number of events at the Company’s theaters, partially offset by an increase in the number of concerts at The Garden, and (ii) lower revenues from other live entertainment and sporting events (excluding the Knicks and Rangers) of $543.

For the three months ended December 31, 2024 the decrease in Revenues from entertainment offerings was primarily due to lower event-related revenues of $22,521 largely offset by (i) higher revenues from the presentation of the Christmas Spectacular production of $15,140, and (ii) higher revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $7,706.

The decrease in event-related revenues was due to (i) lower revenues from concerts of $17,599, which reflects lower per-concert revenues primarily due to a shift in the mix of the events at The Garden from promoted events to rentals and a decrease in the number of events at The Garden, and (ii) lower revenues from other live entertainment and sporting events (excluding the Knicks and Rangers) of $4,922, which was primarily due to lower per-show revenues from other live entertainment events, partially offset by an increase in the number of other live entertainment events and higher per-show revenue for sporting events.

The increase in revenues from the presentation of the Christmas Spectacular production was primarily due to an increase in ticket-related revenue, which reflected higher per-show revenue and, to a lesser extent, two additional performances as compared to the prior year period.

The increase in per-show revenue was primarily due to higher average ticket yield and, to a lesser extent, higher average per-show attendance as compared to the prior year period.

The Company had 200 Christmas Spectacular performances during this year’s holiday season, of which 185 took place in the fiscal 2025 second quarter, as compared to 193 performances in the prior year’s holiday season, of which 183 took place in the fiscal 2024 second quarter.

For this year’s holiday season, approximately 1.1 million tickets were sold, as compared to more than 1.0 million tickets sold in the prior year.

For the three months ended December 31, 2024, the increase in revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License agreements was primarily due to higher suite license fee revenues.

For the six months ended December 31, 2024, the decrease in Revenues from entertainment offerings was primarily due to lower event-related revenues of $24,055 which was partially offset by higher revenue from the presentation of the Christmas Spectacular production of $15,151 and higher revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $7,179.

The decrease in event-related revenues reflects (i) lower revenues from concerts of $18,590, which reflects lower per-concert revenues due to a shift in the mix of the events at The Garden from promoted events to rentals and a decrease in the number of events at The Garden, and (ii) lower revenues from other live entertainment and sporting events (excluding the Knicks and Rangers) of $5,465 which was primarily due to lower per-show revenues from other live entertainment events, partially offset by an increase in the number of other live entertainment events and higher per-show revenue for sporting events.

Food, Beverage, and Merchandise Revenues

For the three months ended September 30, 2024, the decrease in food, beverage and merchandise revenues was primarily due to lower food and beverage sales at concerts at the Company’s venues, as compared to the prior year period, which was primarily due to lower

per-concert food and beverage revenues and, to a lesser extent, the decrease in the number of events at the Company’s theaters, partially offset by the increase in the number of events at the Garden.

For the three months ended December 31, 2024, the increase in Food, beverage, and merchandise revenues was primarily due to (i) higher food and beverage sales at Knicks and Rangers games, (ii) higher food, beverage and merchandise sales related to the Christmas Spectacular production and (iii) other revenue increases, all as compared to the prior year quarter partially offset by (iv) lower food and beverage sales at concerts at the Company’s venues.

The increase in food and beverage sales at Knicks and Rangers games was due to the impact of three more Knicks and Rangers games played at The Garden and, to a lesser extent, higher average per-game revenues in the current year quarter.

The increase in food, beverage and merchandise sales related to the Christmas Spectacular production was due to higher average per-show revenues and, to a lesser extent, the impact of two additional shows, both as compared to the prior year quarter.

The decrease in food and beverage sales at concerts was due to fewer concerts at The Garden and, to a lesser extent, lower per-concert revenues, both as compared to the prior year quarter.

For the six months ended December 31, 2024, the decrease in food, beverage and merchandise revenues was primarily due to (i) lower food and beverage sales at concerts at the Company’s venues as compared to the prior year period partially offset by (ii) higher food and beverage sales at Knicks and Rangers games, and (iii) higher food, beverage and merchandise sales related to the Christmas Spectacular production.

The decrease in food and beverage sales at concerts was due to fewer concerts at The Garden and, to a lesser extent, lower per-concert revenues, both as compared to the prior year period.

Arena License Fees and Other Leasing Revenue

For the three months ended September 30, 2024, the increase in revenues was due to other leasing revenue.

For the three months ended December 31, 2024, the increase in revenues was due to higher arena license fees from MSG Sports pursuant to the Arena License Agreements due to three more Knicks and Rangers games played at The Garden in the current year period, and an increase in other leasing revenue.

For the six months ended December 31, 2024, the increase in revenues was primarily due to other leasing revenue and, to a lesser extent, higher arena license fees from MSG Sports pursuant to the Arena License Agreements due to three more Knicks and Rangers games played at The Garden in the current year period.

In the three and six months ended December 31, 2024, the Knicks and Rangers played a combined 35 and 37 pre/regular season games at The Garden, respectively, as compared to 32 and 34 combined pre/regular season games, respectively, in the prior year periods.

Direct operating expenses

Direct operating expenses for the three months ended September 30, 2024 decreased $3,968 as compared to the prior year period.

Direct operating expenses for the three and six months ended December 31, 2024 decreased $5,687 and $9,655, respectively as compared to the prior year period.

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

For the three months ended September 30, 2024, the decrease in direct operating expenses associated with entertainment offerings, arena license fees, and other leasing primarily reflects lower event-related expenses of $3,488.

The decrease in event-related expenses reflects (i) lower direct operating expenses from concerts of $3,103, primarily due to lower per-concert expenses due to a shift in the mix of events at The Garden from promoted events to rentals, partially offset by an increase in the number of events at The Garden, and (ii) lower direct operating expenses from other live entertainment and sporting events (excluding the Knicks and Rangers) of $385.

For the three months ended December 31, 2024, the decrease in direct operating expenses associated with entertainment offerings, arena license fees, and other leasing primarily reflects lower event-related expenses of $13,656, partially offset by an increase in direct operating expenses subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $6,560.

The decrease in event-related expenses reflects lower direct operating expenses from concerts of $14,738, primarily due to lower per-concert expenses due to a shift in the mix of events at The Garden from promoted events to rentals, and to a lesser extent, a decrease in the number of events at The Garden, partially offset by higher direct operating expenses from other live entertainment and sporting events (excluding the Knicks and Rangers) of $1,082.

The increase in direct operating expenses subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements primarily reflects direct operating expenses incurred as a result of the increase in suite license fee revenues.

For the six months ended December 31, 2024, the decrease in direct operating expenses associated with entertainment offerings, arena license fees, and other leasing primarily reflects lower event-related expenses of $17,139, partially offset by an increase in direct operating expenses subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $5,975.

The decrease in event-related expenses reflects (i) lower direct operating expenses from concerts of $17,837, primarily due to lower per-concert expenses due to a shift in the mix of events at The Garden from promoted events to rentals, and (ii) higher direct operating expenses from other live entertainment and sporting events (excluding the Knicks and Rangers) of $698.

Direct Operating Expenses Associated with Food, Beverage, and Merchandise

For the three months ended September 30, 2024, the increase in food, beverage and merchandise direct operating expenses was primarily driven by an increase in food and beverage costs related to concerts held at the Company’s venues partially offset by a decrease in food and beverage costs related to other live entertainment and sporting events held at the Company’s venues.

For the three months ended December 31, 2024, the increase in food, beverage and merchandise direct operating expenses was primarily driven by an increase in food and beverage costs related to Knicks and Rangers games at The Garden, higher food, beverage and merchandise costs related to the Christmas Spectacular production and other cost increases, partially offset by a decrease in food and beverage costs related to concerts, primarily at The Garden.

For the six months ended December 31, 2024, the increase in food, beverage and merchandise direct operating expenses was primarily driven by higher food, beverage and merchandise costs related to Knicks and Rangers games at The Garden and the Christmas Spectacular production, which was partially offset by a decrease in food and beverage costs related to fewer concerts at The Garden.

Selling, general, and administrative expenses

For the three months ended September 30, 2024, selling, general, and administrative expenses decreased $3,076, as compared to the prior year period.

The decrease was primarily due to (i) lower professional fees, mainly due to the absence of non-recurring costs incurred and paid by the Company in the prior year period for the sale of the Retained Interest by Sphere Entertainment;

(ii) a decrease in employee compensation and benefits;

and (iii) lower other costs, partially offset by higher rent expense.

For the three and six months ended December 31, 2024, selling, general, and administrative expenses increased $8,800 and $5,724, respectively, as compared to the prior year period.

For the three months ended December 31, 2024, the increase was primarily due to (i) an increase in employee compensation and benefits, including, executive management transition costs of $4,544 recognized in the current year period, and (ii) higher rent expense.

For the six months ended December 31, 2024, the increase was primarily due to (i) higher rent expense, and (ii) an increase in employee compensation and benefits, including executive management transition costs of $4,544 recognized in the current year period partially offset by (iii) a decrease in professional fees.

Depreciation and amortization

For the three months ended September 30, 2024, depreciation and amortization increased $196, as compared to the prior year period primarily due to the increase in fixed assets in the first quarter of Fiscal Year 2025.

For the three and six months ended December 31, 2024, depreciation and amortization increased $978 and $1,175, respectively, as compared to the prior year period primarily due to the increase in fixed assets in the second quarter of Fiscal Year 2025.

Restructuring credits (charges)

For the three months ended September 30, 2024, restructuring charges decreased $11,593, as compared to the prior year period, which reflects termination benefits provided in the prior year period due to a workforce reduction of certain executives and employees.

Operating loss

For the three months ended September 30, 2024, operating loss improved by $14,943.

The improvement in operating loss for the three months ended September 30, 2024 was primarily due to lower restructuring charges and, to a lesser extent, a decrease in direct operating expenses, and selling, general and administrative expenses, partially offset by a decrease in revenues, as compared to the prior year period.

For the three and six months ended December 31, 2024, restructuring charges decreased $918 and $12,511, respectively, as compared to the prior year period, which reflects termination benefits provided in the prior year period due to a workforce reduction of certain executives and employees.

Operating income

For the three and six months ended December 31, 2024, operating income increased by $1,578 and $16,520, respectively.

The increase in operating income for the three months ended December 31, 2024 was primarily due to a decrease in direct operating expenses and an increase in revenues, partially offset by higher selling, general and administrative expenses.

The increase in operating income for the six months ended December 31, 2024 was primarily due to lower restructuring charges and, to a lesser extent, a decrease in direct operating expenses, and partially offset by an increase in selling, general and administrative expenses.

Interest income

For the three months ended September 30, 2024, interest income decreased $479, as compared to the prior year period primarily due to lower average balances and lower interest rates in the Company’s cash, cash equivalents and restricted cash.

For the three and six months ended December 31, 2024, interest income decreased $718 and $1,198, respectively, as compared to the prior year period primarily due to lower average balances and lower interest rates in the Company’s cash, cash equivalents and restricted cash.

Interest expense

For the three months ended September 30, 2024, interest expense decreased $244, as compared to the prior year period primarily due to lower average borrowings and lower interest rates under the National Properties Facilities (as defined below under Liquidity and Capital Resources).

Other expense, net

For the three months ended September 30, 2024, other expense, net was $769 as compared to $4,469 for the three months ended September 30, 2023, a decrease of $3,700.

The change was primarily due to (i) a change in unrealized gains to an unrealized loss of $5,348, net, associated with the investment in Townsquare Media, Inc., offset by (ii) the absence of a $1,548 gain associated with the investment in DraftKings Inc.

recognized in the prior year period, and (iii) higher net periodic benefit costs of $207 associated with the Company’s funded and unfunded and qualified and non-qualified defined benefit plans.

Income tax benefit

For the three and six months ended December 31, 2024, interest expense decreased $2,094 and $2,338, respectively, as compared to the prior year period primarily due to lower average borrowings and lower interest rates under the National Properties Facilities (as defined below under Liquidity and Capital Resources).

Other (expense) income, ne t

For the three and six months ended December 31, 2024, Other (expense) income, net increased $3,891 and $189, respectively, as compared to the prior year period.

The changes were primarily due to (i) a change in unrealized gains to an unrealized loss of $3,279, net, associated with the investment in Townsquare Media, Inc., and (ii) higher net periodic benefit costs of $216 associated with the Company’s funded and unfunded and qualified and non-qualified defined benefit plans.

Income tax expense

In general, the Company is required to use an estimated annual effective tax rate to measure the tax benefit or tax expense recognized in an interim period.

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.

The estimated annual effective tax rate is revised on a quarterly basis.

Income tax expense for the three and six months ended December 31, 2024 of $49,473 and $35,872, respectively, reflects an effective tax rate of 39%.

The estimated annual effective tax rate exceeds the statutory federal tax rate of 21% primarily due to state and local taxes and nondeductible officers’ compensation.

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

Income tax expense for the three and six months ended December 31, 2023 of $1,054 and $395, respectively, 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 the offset of the valuation allowance, partially offset by state and local taxes.

Adjusted operating income (loss) (“AOI”)

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

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

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

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

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

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

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

The following is a reconciliation of operating loss to adjusted operating income (loss) for the three months ended September 30, 2024 as compared to the prior year periods:

The following is a reconciliation of operating income to adjusted operating income for the three and six months ended December 31, 2024 as compared to the prior year periods:

Three Months Ended

September 30, Change

December 31, Change

2024 2023 Amount Percentage

Operating loss $ (18,482) $ (33,425) $ 14,943 45 %

Operating income $ 139,001 $ 137,423 $ 1,578 1 %

Share-based compensation (excluding share-based compensation included in restructuring charges)

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Restructuring (credits) charges

(40) 11,553 (11,593) (100) %

(30) 888 (918) NM

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

1,361 — 1,361 NM

Amortization for capitalized cloud computing arrangement costs 168 — 168 NM

Amortization for capitalized cloud computing arrangement costs 201 448 (247) (55) %

Remeasurement of deferred compensation plan liabilities (26) 343 (369) NM

Adjusted operating income (loss) (b)

$ 1,909 $ (220) $ 2,129 NM

Adjusted operating income (b)

$ 164,012 $ 160,080 $ 3,932 2 %

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

Six Months Ended

December 31, Change

2024 2023 Amount Percentage

Operating income $ 120,519 $ 103,999 $ 16,520 16 %

Share-based compensation (excluding share-based compensation included in restructuring charges) 15,584 13,950 1,634 12 %

Depreciation and amortization 27,964 26,790 1,174 4 %

Restructuring (credits) charges (70) 12,441 (12,511) NM

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

1,361 2,035 (674) (33) %

Amortization for capitalized cloud computing arrangement costs 369 448 (79) (18) %

Remeasurement of deferred compensation plan liabilities 194 198 (4) (2) %

Adjusted operating income (b)

$ 165,921 $ 159,861 $ 6,060 4 %

________________________________________________________

(a) This adjustment represents non-recurring transaction costs incurred by the Company.

(b) During the third quarter of Fiscal Year 2024, the Company amended the definition of adjusted operating income (loss) so that the non-cash portion of operating lease revenue related to the Company’s Arena License Agreements with MSG Sports is no longer excluded in all periods presented.

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

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

Adjusted operating income (loss) includes operating lease revenue of (i) $854 and $829 of revenue collected in cash for the three months ended September 30, 2024 and 2023, respectively, and (ii) a non-cash portion of $470 and $495 for the three months ended September 30, 2024 and 2023, respectively.

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

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

Adjusted operating income (loss) includes operating lease revenue of (i) $17,447 and $18,301 of revenue collected in cash for the three and six months ended December 31, 2024, respectively, and $15,409 and $16,238 for the three and six months ended December 31, 2023, respectively, and (ii) a non-cash portion of $9,514 and $9,984 for the three and six months ended December 31, 2024 and , respectively, and $9,120 and $9,615 for the three and six months ended December 31, 2023, respectively.

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

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

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

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

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We regularly monitor and assess our ability to meet our net funding and investing requirements.

As of September 30, 2024, the Company’s unrestricted cash and cash equivalents balance was $37,307.

The principal balance of the Company’s total debt outstanding as of September 30, 2024 was $676,563 and the Company had $76,174 of available borrowing capacity under the National Properties Revolving Credit Facility.

As of December 31, 2024, the Company’s unrestricted cash and cash equivalents balance was $54,919.

The principal balance of the Company’s total debt outstanding as of December 31, 2024 was $617,500 and the Company had $131,174 of available borrowing capacity under the National Properties Revolving Credit Facility.

We believe we have sufficient liquidity from cash and cash equivalents, available borrowing capacity under our credit facilities and cash flows from operations to fund our operations and satisfy any obligations for the foreseeable future.

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

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 .

As of December 31, 2024, outstanding letters of credit were $18,826 and the remaining balance available under the National Properties Revolving Credit Facility was $131,174 .

Interest Rates.

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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 September 30, 2024 was 7.45%.

The interest rate on the National Properties Facilities as of December 31, 2024 was 6.94%.

Principal Repayments.

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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.

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.

The National Properties Credit Agreement includes financial covenants requiring MSG National Properties and its restricted subsidiaries to maintain a specified minimum liquidity level, a specified minimum debt service coverage ratio and specified maximum total leverage ratio.

casualty insurance and/or condemnation recoveries (subject to certain reinvestment, repair or replacement rights), subject to certain exceptions.

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.

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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.

As of December 31, 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.

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All obligations under the National Properties Facilities are guaranteed by MSG Entertainment Holdings and MSG National Properties’ existing and future direct and indirect domestic subsidiaries, other than the subsidiaries that own The Garden and certain other excluded subsidiaries (the “Subsidiary Guarantors”).

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

indirectly by MSG National Properties in each Subsidiary Guarantor.

The Collateral does not include, among other things, any interests in The Garden or the leasehold interests in Radio City Music Hall and the Beacon Theatre.

Contractual Obligations

During the three months ended September 30, 2024, the Company did not have any material changes in its non-cancelable contractual obligations other than the recognition of an additional lease obligation and right-of-use lease asset and activities in the ordinary course of business.

During the six months ended December 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).

Property and Equipment, Net and Note 8.

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Cash Flow Discussion

As of September 30, 2024, cash, cash equivalents and restricted cash totaled $37,613, as compared to $33,555 as of June 30, 2024.

The following table summarizes the Company’s cash flow activities for the three months ended September 30, 2024 and 2023:

Three Months Ended

September 30,

Net cash (used in) provided by operating activities

$ (27,359) $ 1,378

As of December 31, 2024, cash, cash equivalents and restricted cash totaled $55,219, as compared to $33,555 as of June 30, 2024.

The following table summarizes the Company’s cash flow activities for the six months ended December 31, 2024 and 2023:

Six Months Ended

Net cash provided by operating activities $ 85,499 $ 105,232

Net cash used in investing activities

(16,282) (62,731)

Net cash provided by financing activities

Net cash used in financing activities (47,553) (89,284)

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

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Operating Activities

Net cash flows from operating activities for the three months ended September 30, 2024 decreased by $28,737 as compared to the prior year period, primarily due to (i) an increase in Net income adjusted for non-cash items of $7,695, and (ii) a decrease in cash flows from changes in working capital of $36,432.

Net cash provided by operating activities for the six months ended December 31, 2024 decreased by $19,733 as compared to the prior year period, primarily due to (i) an increase in Net income adjusted for non-cash items of $2,904, and (ii) a decrease in cash flows from changes in working capital of $22,637.

The decrease in cash flows from changes in working capital were driven by negative net cash outflows from related party receivables and payables as compared to net cash inflows in the prior year period;

a larger decrease in accounts payable, accrued and other current and non-current liabilities;

and a smaller increase in deferred revenue, in each case as compared to the three months ended September 30, 2023.

a larger decrease in

accounts payable, accrued and other current and non-current liabilities;

and a smaller increase in Deferred revenue, in each case as compared to the six months ended December 31, 2023.

Investing Activities

Net cash used in investing activities for the three months ended September 30, 2024 decreased by $48,800 to $6,690 as compared to the prior year period primarily due to (i) the absence of a loan to a related party under the DDTL Facility, partially offset by fewer proceeds received from the sale of investments in the current year period as compared to the prior year period.

Net cash used in investing activities for the six months ended December 31, 2024 decreased by $46,449 to $16,282 as compared to the prior year period primarily due to (i) the absence of a loan to a related party under the delayed draw term loan facility, partially offset by fewer proceeds received from the sale of investments in the current year period as compared to the prior year period.

Financing Activities

Net cash provided by financing activities for the three months ended September 30, 2024 increased by $28,834 to $38,107 as compared to the prior year period primarily due to (i) the absence of stock repurchases in the current year period, partially offset by a decrease in proceeds received from the National Properties Revolving Credit Facility.

Net cash used in financing activities for the six months ended December 31, 2024 decreased by $41,731 to $47,553 as compared to the prior year period primarily due to (i) an decrease in principal debt repayments, and (ii) decrease in stock repurchases, partially offset by a decrease in proceeds received from the National Properties Revolving Credit Facility.

Seasonality of Our Business

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Critical Accounting Estimates

There have been no material changes to the Company’s critical accounting estimates from those set forth in 2024 Form 10-K.

There have been no material changes to the Company’s critical accounting estimates from those set forth in the 2024 Form 10-K.

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 2. Management’s Discussion and Analysis