What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2025-02-06 · 119 added, 111 removed, 240 unchanged (49% of the section changed)

7 unchanged sentences

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

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

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

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

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

• the level of our capital expenditures and other investments;

• general economic conditions, especially in the New York City and Chicago metropolitan areas where we have business activities;

• general economic conditions, especially in the New York City and Chicago metropolitan areas where we have business activities, including the impact of a recession on our business;

• the demand for sponsorship and suite arrangements;

8 unchanged sentences

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

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

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

• activities or other developments that discourage or may discourage congregation at prominent places of public assembly, including our venues;

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

7 unchanged sentences

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

• changes in international trade policies and practices, including tariffs, and the economic impacts, volatility and uncertainty resulting therefrom;

• the performance by Madison Square Garden Sports Corp.

3 unchanged sentences

• failure of the Company or Sphere Entertainment Co.

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

(together with its subsidiaries, as applicable, “Sphere Entertainment”) to satisfy its obligations under services agreements or 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 on August 16, 2024 (the “2024 Form 10-K”).

5 unchanged sentences

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

This MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s unaudited financial statements and accompanying notes thereto included in this Quarterly Report on Form 10-Q, as well as 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 2024 Form 10-K, to help provide an understanding of our financial condition, changes in financial condition and results of operations .

This MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s unaudited condensed and consolidated financial statements and accompanying notes thereto included in this Quarterly Report on Form 10-Q, as well as 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 2024 Form 10-K, to help provide an understanding of our financial condition, changes in financial condition and results of operations .

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

4 unchanged sentences

Results of Operations.

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

This section provides an analysis of our unaudited results of operations for the three and nine months ended March 31, 2025 and 2024.

Liquidity and Capital Resources.

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.

This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the nine months ended March 31, 2025 and 2024, as well as certain contractual obligations.

Seasonality of Our Business.

9 unchanged sentences

The Garden, The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, and The Chicago Theatre.

The Company’s business also includes the original production, the Christmas Spectacular.

The Company’s business includes the original production, the Christmas Spectacular.

The Company also has an entertainment and sports bookings business, which showcases a broad array of compelling concerts, family shows and special events, as well as a diverse mix of sporting events, for millions of guests annually.

9 unchanged sentences

Our operating results are largely dependent on our ability to attract concerts and other events to our venues, revenues under various agreements entered into with MSG Sports, and the continuing popularity of the Christmas Spectacular .

Certain of these factors in turn depend on the popularity and/or performance of the professional sports teams whose games we host at The Garden.

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.

Certain of these factors in turn depend on the popularity and/or performance of the sports teams whose games we host at The Garden.

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

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

4 unchanged sentences

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

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

Comparison of the three and nine months ended March 31, 2025 versus the three and nine months ended March 31, 2024.

Three Months Ended

December 31, Change

March 31, Change

2025 2024 Amount Percentage

2 unchanged sentences

Food, beverage, and merchandise revenues 45,808 45,380 428 1 %

Arena license fees and other leasing revenue

Arena license fees and other leasing revenue (a)

36,443 36,712 (269) (1) %

10 unchanged sentences

Depreciation and amortization (14,372) (13,182) (1,190) (9) %

Restructuring credits (charges) 30 (888) 918 NM

Impairment of long-lived assets (9,700) — (9,700) NM

Restructuring charges (84) (2,362) 2,278 96 %

Operating income 27,327 16,803 10,524 63 %

2 unchanged sentences

Other (expense) income, net (949) 78 (1,027) NM

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

Income from operations before income taxes 15,288 2,797 12,491 NM

Income tax expense (7,252) (2) (7,250) NM

$ 8,036 $ 2,795 $ 5,241 188 %

Six Months Ended

December 31, Change

Nine Months Ended

March 31, Change

2025 2024 Amount Percentage

2 unchanged sentences

Food, beverage, and merchandise revenues 124,104 127,379 (3,275) (3) %

Arena license fees and other leasing revenue

Arena license fees and other leasing revenue (a)

70,921 64,787 6,134 9 %

11 unchanged sentences

Depreciation and amortization (42,336) (39,972) (2,364) (6) %

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

Impairment of long-lived assets (9,700) — (9,700) NM

Restructuring charges (14) (14,803) 14,789 100 %

Operating income 147,846 120,801 27,045 22 %

6 unchanged sentences

______________________________________________________

(a) Arena license fees and other leasing revenue are recognized on a straight line basis and are comprised of a contractual cash component plus or minus a non-cash component for each period presented.

Arena license fees include operating lease revenue of (i) $21,746 and $40,048 collected in cash for the three and nine months ended March 31, 2025, respectively, and $22,372 and $38,610 for the three and nine months ended March 31, 2024, respectively, and (ii) a non-cash portion of $11,848 and $21,833 for the three and nine months ended March 31, 2025 respectively, and $13,216 and $22,831 for the three and nine months ended March 31, 2024, respectively.

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

Revenues for the three and nine months ended March 31, 2025 increased $14,152 and $15,405, respectively, as compared to the prior year period.

Revenues from Entertainment Offerings

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.

For the three months ended March 31, 2025 the increase in revenues from entertainment offerings was primarily due to (i) higher revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $6,250, (ii) higher revenues from the presentation of the Christmas Spectacular production of $4,907, and (iii) higher revenues from venue-related sponsorship, signage, and suite license fees of $4,628, partially offset by lower event-related revenues of $3,601.

The increase in revenues of $6,250 subject to the sharing of economics with MSG Sports pursuant to the Arena License agreements was primarily due to higher suite license revenues (excluding the portion retained by the Company).

The increase in revenues of $4,907 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, five additional performances as compared to the prior year quarter.

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

The increase in revenues of $4,628 from venue-related sponsorship, signage and suite license fees was primarily due to higher suite license revenues (excluding the portion shared with MSG Sports pursuant to the Arena License agreements).

The decrease in event-related revenues of $3,601 was due to (i) lower revenues from concerts of $21,912, which mainly reflects lower per-concert revenues primarily due to a shift in the mix of events at The Garden from promoted events to rentals and a decrease in the number of events at the Company’s venues, partially offset by (ii) higher revenues from other live entertainment and sporting events (excluding the Knicks and Rangers) of $18,311, which was primarily due to higher per-event revenues and an increase in the number of events at the Company’s venues.

For the nine months ended March 31, 2025, the increase in revenues from entertainment offerings was primarily due to (i) higher revenues from the presentation of the Christmas Spectacular production of $20,058, (ii) higher revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $13,429, and (iii) higher revenues from sponsorship and suites of $5,069, which was partially offset by lower event-related revenues of $27,656.

The increase in revenues of $20,058 from the presentation of the Christmas Spectacular production, as compared to the prior year period, was primarily due to higher ticket-related revenues.

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

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

The increase in revenues of $13,429 subject to the sharing of economics with MSG Sports pursuant to the Arena License agreements was primarily due to higher suite license revenues (excluding the portion retained by the Company).

The increase in revenues of $5,069 from suites and sponsorship was primarily due to higher suite license revenues (excluding the portion shared with MSG Sports pursuant to the Arena License agreements).

The decrease in event-related revenues of $27,656 was due to lower revenues from concerts of $40,502 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, partially offset by and higher revenues from other live entertainment and sporting events (excluding the Knicks and Rangers) of $12,846, which was primarily due to an increase in the number of events at The Garden and to a lesser extent, higher per-show revenues from other live entertainment and sporting events.

Food, Beverage, and Merchandise Revenues

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.

For the three months ended March 31, 2025, the increase in food, beverage, and merchandise revenues was primarily due to higher food and beverage sales at other live entertainment and sporting events (excluding the Knicks and Rangers), partially offset by lower food and beverage sales at concerts.

The increase in food and beverage sales at other live entertainment and sporting events was due to an increase in the number of events held at the Company’s venues and higher per-event revenues, both as compared to the prior year quarter.

The decrease in food and beverage sales at concerts was primarily due to fewer concerts held at the Company’s venues as compared to the prior year quarter.

For the nine months ended March 31, 2025, 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 other live entertainment and sporting events, (iii) higher food, beverage and merchandise sales related to the Christmas Spectacular production, and (iv) higher food and beverage sales at Knicks and Rangers games.

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

The increase in food and beverage sales at other live entertainment and sporting events was due to additional events at The Garden and, to a lesser extent, higher average per-event revenues in the current year period.

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

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 seven additional shows, both as compared to the prior year period.

Arena License Fees and 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.

For the three months ended March 31, 2025, the decrease in revenues was due to lower arena license fees from MSG Sports pursuant to the Arena License Agreements due to a combined two fewer Knicks and Rangers games played at The Garden in the current year period, mostly offset by an increase in other leasing revenue.

For the nine months ended March 31, 2025, 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 one combined additional Knicks and Rangers game played at The Garden in the current year period.

In the three and nine months ended March 31, 2025, the Knicks and Rangers played a combined 43 and 80 pre/regular season games at The Garden, respectively, as compared to 45 and 79 combined pre/regular season games, respectively, in the prior year periods.

Direct operating expenses

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 for the three and nine months ended March 31, 2025 decreased $3,151 and $12,806, 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 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.

For the three months ended March 31, 2025, the decrease in direct operating expenses associated with entertainment offerings, arena license fees, and other leasing primarily reflects lower event-related expenses of $8,977 and, to a lesser extent, a decrease in venue operating costs of $2,240, 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 $6,589.

The decrease in event-related expenses of $8,977 reflects (i) lower direct operating expenses from concerts of $17,543, mainly due to lower per-concert expenses, primarily as a result of 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 Company’s venues partially offset by (ii) higher direct operating expenses from other live entertainment and sporting events (excluding the Knicks and Rangers) of $8,566, primarily due to higher per-event expenses and an increase in the number of events at the Company’s venues.

The decrease in venue operating costs of $2,240 was primarily due to lower employee compensation and benefits and other cost decreases.

The increase in direct operating expenses of $6,589 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 nine months ended March 31, 2025, the decrease in direct operating expenses associated with entertainment offerings, arena license fees, and other leasing primarily reflects lower event-related expenses of $26,116 and a decrease in venue operating costs of partially $3,703, offset by an increase in direct operating expenses subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $12,564.

The decrease in event-related expenses of $26,116 reflects (i) lower direct operating expenses from concerts of $35,380, 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 $9,264.

The decrease in venue operating costs of $3,703 was primarily due to lower variable operating costs.

Direct Operating Expenses Associated with Food, Beverage, and Merchandise

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.

For the three months ended March 31, 2025, the increase in food, beverage and merchandise direct operating expenses was primarily driven by an increase in food and beverage costs related to other live entertainment and sporting events (excluding the Knicks and Rangers), partially offset by a decrease in food and beverage costs related to concerts at the Company’s venues.

For the nine months ended March 31, 2025, the increase in food, beverage and merchandise direct operating expenses was primarily driven by higher food, beverage and merchandise costs related to other live entertainment and sporting events, 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 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.

For the three and nine months ended March 31, 2025, selling, general, and administrative expenses decreased $1,833 and increased $3,891, respectively, as compared to the prior year period.

For the three months ended March 31, 2025, the decrease of $1,833 was primarily due to a decrease in employee compensation and benefits partially offset by other net cost increases.

For the nine months ended March 31, 2025, the increase of $3,891 was primarily due to (i) higher rent expense, and (ii) an increase in employee compensation and benefits, including executive management transition costs of $4,562 recognized in the current year period partially offset by (iii) decreases in professional fees and other costs.

Depreciation and amortization

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 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.

For the three and nine months ended March 31, 2025, depreciation and amortization increased $1,190 and $2,364, respectively, as compared to the prior year period primarily due to the increase in fixed assets in the first and second quarter of Fiscal Year 2025.

Impairment of long-lived assets

For the three and nine months ended March 31, 2025, impairment of long-lived assets increased $9,700, as compared to the prior year period due to impairment losses recognized on the Company’s right-of-use assets due to the decision to stop utilizing one of the floors in its New York office in the third quarter of Fiscal Year 2025.

Restructuring charges

For the three and nine months ended March 31, 2025, restructuring charges decreased $2,278 and $14,789, 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.

For the three and nine months ended March 31, 2025, operating income increased by $10,524 and $27,045, respectively, as compared to the prior year period.

The increase in operating income for the three months ended March 31, 2025 was primarily due to an increase in revenues and, to a lesser extent, a decrease in direct operating expenses and restructuring charges, partially offset by an increase in impairment of long-lived assets.

The increase in operating income for the nine months ended March 31, 2025 was primarily due to an increase in revenues, a decrease in direct operating expenses and lower restructuring charges, partially offset by an increase in selling, general and administrative expenses and impairment of long-lived assets.

Interest income

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.

For the three and nine months ended March 31, 2025, interest income increased $369 and decreased $828, respectively, as compared to the prior year period.

The increase in interest income for the three months ended March 31, 2025 was primarily due to higher average balances in the Company’s cash, cash equivalents and restricted cash for the quarter.

The decrease in interest income for the nine months ended March 31, 2025 was primarily due to lower average balances for the first half of Fiscal Year 2025 and lower interest rates in the Company’s cash, cash equivalents and restricted cash.

Interest expense

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.

For the three and nine months ended March 31, 2025, interest expense decreased $2,625 and $4,963, 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, net

For the three months ended March 31, 2025, other expense, net was $949, as compared to other income, net of $78 in the corresponding prior year period.

The change for the three months ended March 31, 2025 was primarily due to (i) a change in unrealized gains to an unrealized loss of $837 associated with the investment in Townsquare Media, Inc., and (ii) a change in unrealized gains to an unrealized loss of $278 associated with the Company’s Executive Deferred Compensation Plan.

For the nine months ended March 31, 2025, other expense, net was $2,763, as compared to $1,545 in the corresponding prior year period.

The change for the nine months ended March 31, 2025 was primarily due to (i) the absence of a $1,658 net gain associated with the investment in DraftKings Inc.

recognized in the prior period, (ii) a decrease in dividend income of $455 associated with the

investment in Townsquare Media, as compared to the prior period, and (iii) a decrease in unrealized gains from the Company’s other investments of $323, as compared to the prior period, partially offset by (iv) a decrease in realized and unrealized loss of $1,232 associated with the investment in Townsquare Media.

Income tax expense

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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%.

Income tax expense for the three and nine months ended March 31, 2025 of $7,252 and $43,124, respectively, reflects an effective tax rate of 47% and 40%, respectively.

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

Income tax expense for the three and nine months ended March 31, 2024 of $2 and $397 , respectively, reflects an effective tax rate of 0% and 1%, respectively.

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.

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

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

(i) depreciation, amortization and impairments of property and equipment, goodwill and other long-lived assets, including right-of-use assets and related lease costs,

(ii) share-based compensation expense,

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

The Company excludes impairments of long-lived assets, including right-of-use assets and related lease costs, as these expenses do not represent core business operating results of the Company.

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.

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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 income to adjusted operating income for the three and six months ended December 31, 2024 as compared to the prior year periods:

The following is a reconciliation of operating income to adjusted operating income for the three and nine months ended March 31, 2025 as compared to the prior year periods:

Three Months Ended

December 31, Change

March 31, Change

2025 2024 Amount Percentage

Operating income $ 27,327 $ 16,803 $ 10,524 63 %

Depreciation and amortization 14,372 13,182 1,190 9 %

Impairment of long-lived assets 9,700 — 9,700 NM

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

6,250 5,611 639 11 %

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

Restructuring (credits) charges

(30) 888 (918) NM

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

1,361 — 1,361 NM

Restructuring charges 84 2,362 (2,278) (96) %

Amortization for capitalized cloud computing arrangement costs 183 388 (205) (53) %

Remeasurement of deferred compensation plan liabilities (45) 191 (236) NM

Adjusted operating income (b)

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

Six Months Ended

December 31, Change

Adjusted operating income $ 57,871 $ 38,537 $ 19,334 50 %

Nine Months Ended

March 31, Change

2025 2024 Amount Percentage

Operating income $ 147,846 $ 120,801 $ 27,045 22 %

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

Depreciation and amortization 42,336 39,972 2,364 6 %

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

Impairment of long-lived assets 9,700 — 9,700 NM

Share-based compensation (excluding share-based compensation included in restructuring charges) 21,834 19,561 2,273 12 %

Restructuring charges 14 14,803 (14,789) (100) %

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

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Remeasurement of deferred compensation plan liabilities 149 389 (240) (62) %

Adjusted operating income (b)

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

Adjusted operating income $ 223,792 $ 198,397 $ 25,395 13 %

________________________________________________________

(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

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 $85,000 remaining as of December 31, 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 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.

As of March 31, 2025, the Company’s unrestricted cash and cash equivalents balance was $88,953.

The principal balance of the Company’s total debt outstanding as of March 31, 2025 was $613,438 and the Company had $131,633 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 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 .

As of March 31, 2025, outstanding letters of credit were $18,367 and the remaining balance available under the National Properties Revolving Credit Facility was $131,633 .

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 December 31, 2024 was 6.94%.

The interest rate on the National Properties Facilities as of March 31, 2025 was 6.92%.

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.

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

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 a specified maximum total leverage ratio.

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

As of March 31, 2025, 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, 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.

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

Contractual Obligations

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).

During the nine months ended March 31, 2025, 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 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

As of March 31, 2025, cash, cash equivalents and restricted cash totaled $89,474, as compared to $33,555 as of June 30, 2024.

The following table summarizes the Company’s cash flow activities for the nine months ended March 31, 2025 and 2024:

Nine Months Ended

Net cash provided by operating activities $ 142,308 $ 111,054

Net cash used in investing activities (19,379) (72,625)

(16,282) (62,731)

Net cash used in financing activities (67,010) (94,476)

Net increase (decrease) in cash, cash equivalents, and restricted cash $ 55,919 $ (56,047)

$ 21,664 $ (46,783)

Operating Activities

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 six months ended December 31, 2023.

Net cash provided by operating activities for the nine months ended March 31, 2025 increased by $31,254 as compared to the prior year period, primarily due to an increase in Net income adjusted for non-cash items of $22,679, and an increase in cash flows from changes in working capital of $8,575.

The increase in cash flows from changes in working capital was primarily driven by (i) a smaller increase in accounts receivable as compared to the prior year period, due to the timing of cash collections, and (ii) an increase in the net operating lease liabilities in the current year period, as the Company took possession of additional office space in New York.

These increases were partially offset by (iii) negative net cash outflows from related party receivables and payables, due to the timing

and settlement of the underlying related party transactions, (iv) a decrease in accounts payable, due to the timing of payments to vendors, (v) a decrease in accrued and other current and non-current liabilities, primarily as a result of timing of settlements with promoters, and (vi) a smaller increase in deferred revenue, due to the timing of billing and recognition of suite license and sponsor signage revenues, in each case as compared to the nine months ended March 31, 2024.

Investing Activities

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.

Net cash used in investing activities for the nine months ended March 31, 2025 decreased by $53,246 to $19,379 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 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.

Net cash used in financing activities for the nine months ended March 31, 2025 decreased by $27,466 to $67,010 as compared to the prior year period primarily due to (i) a decrease in principal debt repayments, and (ii) a decrease in stock repurchases, partially offset by (iii) a decrease in proceeds received from the National Properties Revolving Credit Facility.

Seasonality of Our Business

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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