Madison Square Garden Entertainment Corp. 10-Q

Item 1. Financial Statements (Unaudited) MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except per share data) As of March 31, June 30, 2025 2024 ASSETS Current Assets: Cash, cash equivalents, and restricted cash $ 89,474 $ 33,555 Accounts receivable, net 84,507 77,259 Related party receivables, current 31,857 17,469 Prepaid expenses and other current assets 101,756 90,801 Total current assets 307,594 219,084 Non-Current Assets: Property and equipment, net 626,982 633,533 Right-of-use lease assets 489,757 388,658 Goodwill 69,041 69,041 Indefinite-lived intangible assets 63,801 63,801 Deferred tax assets, net 41,327 68,307 Other non-current assets 140,910 110,283 Total assets $ 1,739,412 $ 1,552,707 LIABILITIES AND EQUITY Current Liabilities: Accounts payable, accrued and other current liabilities $ 175,470 $ 203,750 Related party payables, current 73,810 42,506 Long-term debt, current 28,438 16,250 Operating lease liabilities, current 28,979 27,736 Deferred revenue 230,873 215,581 Total current liabilities 537,570 505,823 Non-Current Liabilities: Long-term debt, net of deferred financing costs 577,409 599,248 Operating lease liabilities, non-current 569,763 427,014 Other non-current liabilities 45,144 43,787 Total liabilities 1,729,886 1,575,872 Commitments and contingencies (see Note 8) Equity (Deficit): Class A Common Stock (a) 460 456 Class B Common Stock (b) 69 69 Additional paid-in-capital 40,184 33,481 Treasury stock at cost ( 5,483 and 4,365 shares outstanding as of March 31, 2025 and June 30, 2024, respectively) ( 180,204 ) ( 140,512 ) Retained earnings 180,211 115,603 Accumulated other comprehensive loss ( 31,194 ) ( 32,262 ) Total equity (deficit) 9,526 ( 23,165 ) Total liabilities and equity $ 1,739,412 $ 1,552,707 _________________ (a) Class A Common Stock, $ 0.01 par value per share, 120,000 shares authorized; 46,031 and 45,556 shares issued as of March 31, 2025 and June 30, 2024, respectively. (b) Class B Common Stock, $ 0.01 par value per share, 30,000 shares authorized; 6,867 shares issued as of March 31, 2025 and June 30, 2024. See accompanying notes to the unaudited condensed consolidated financial statements. 2 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data) Three Months Ended Nine Months Ended March 31, March 31, 2025 2024 2025 2024 Revenues (a) Revenues from entertainment offerings $ 160,214 $ 146,221 $ 593,571 $ 581,025 Food, beverage, and merchandise revenues 45,808 45,380 124,104 127,379 Arena license fees and other leasing revenue 36,443 36,712 70,921 64,787 Total revenues 242,465 228,313 788,596 773,191 Direct operating expenses (a) Entertainment offerings, arena license fees, and other leasing direct operating expenses ( 107,995 ) ( 112,997 ) ( 358,755 ) ( 375,786 ) Food, beverage, and merchandise direct operating expenses ( 30,875 ) ( 29,024 ) ( 74,898 ) ( 70,673 ) Total direct operating expenses ( 138,870 ) ( 142,021 ) ( 433,653 ) ( 446,459 ) Selling, general, and administrative expenses (a) ( 52,112 ) ( 53,945 ) ( 155,047 ) ( 151,156 ) Depreciation and amortization ( 14,372 ) ( 13,182 ) ( 42,336 ) ( 39,972 ) Impairment of long-lived assets ( 9,700 ) — ( 9,700 ) — Restructuring charges ( 84 ) ( 2,362 ) ( 14 ) ( 14,803 ) Operating income 27,327 16,803 147,846 120,801 Interest income 710 341 1,447 2,275 Interest expense ( 11,800 ) ( 14,425 ) ( 38,798 ) ( 43,761 ) Other (expense) income, net ( 949 ) 78 ( 2,763 ) ( 1,545 ) Income from operations before income taxes 15,288 2,797 107,732 77,770 Income tax expense ( 7,252 ) ( 2 ) ( 43,124 ) ( 397 ) Net income $ 8,036 $ 2,795 $ 64,608 $ 77,373 Earnings per share attributable to MSG Entertainment’s stockholders: Basic $ 0.17 $ 0.06 $ 1.34 $ 1.59 Diluted $ 0.17 $ 0.06 $ 1.33 $ 1.58 Weighted-average number of shares of common stock: Basic 47,955 48,109 48,171 48,675 Diluted 48,271 48,447 48,445 48,883 _________________ (a) See Note 12 . Related Party Transactions for further information on related party arrangements. See accompanying notes to the unaudited condensed consolidated financial statements. 3 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands) Three Months Ended Nine Months Ended March 31, March 31, 2025 2024 2025 2024 Net income $ 8,036 $ 2,795 $ 64,608 $ 77,373 Other comprehensive income, before income taxes: Pension plans and postretirement plans 542 450 1,626 1,350 Income tax expense ( 186 ) ( 78 ) ( 558 ) ( 236 ) Other comprehensive income, net of income taxes 356 372 1,068 1,114 Comprehensive income $ 8,392 $ 3,167 $ 65,676 $ 78,487 See accompanying notes to the unaudited condensed consolidated financial statements. 4 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended March 31, 2025 2024 OPERATING ACTIVITIES: Net income $ 64,608 $ 77,373 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 42,336 39,972 Impairment of long-lived assets 9,700 — Share-based compensation expense 21,834 26,186 Deferred income tax expense 26,422 397 Amortization of deferred financing costs 2,537 2,508 Related party paid in kind interest — ( 512 ) Net unrealized and realized loss (gain) on equity investments with readily determinable fair value 203 ( 391 ) Other non-cash adjustments 730 158 Change in assets and liabilities: Accounts receivable, net ( 7,978 ) ( 44,820 ) Related party receivables and payables, net 16,916 39,091 Prepaid expenses and other current and non-current assets ( 40,561 ) ( 41,434 ) Accounts payable ( 5,816 ) 7,870 Accrued and other current, and non-current liabilities ( 44,514 ) ( 26,557 ) Deferred revenue 22,698 25,415 Operating lease right-of-use assets and lease liabilities 33,193 5,798 Net cash provided by operating activities $ 142,308 $ 111,054 INVESTING ACTIVITIES: Capital expenditures $ ( 18,155 ) $ ( 19,646 ) Proceeds from sale of investments 55 13,484 Loan to related parties — ( 65,000 ) Other investing activities ( 1,279 ) ( 1,463 ) Net cash used in investing activities $ ( 19,379 ) $ ( 72,625 ) FINANCING ACTIVITIES: Proceeds from revolving credit facility $ 55,000 $ 73,000 Principal repayment on long-term debt ( 67,188 ) ( 102,288 ) Repayments on related party loan, net — ( 304 ) Payments for debt financing costs — ( 632 ) Taxes paid in lieu of shares issued for equity-based compensation ( 15,077 ) ( 13,378 ) Repurchases of Class A common stock ( 39,692 ) ( 50,874 ) Other financing activities ( 53 ) — Net cash used in financing activities $ ( 67,010 ) $ ( 94,476 ) Net increase (decrease) in cash, cash equivalents, and restricted cash 55,919 ( 56,047 ) Cash, cash equivalents, and restricted cash, beginning of period 33,555 84,355 Cash, cash equivalents, and restricted cash, end of period $ 89,474 $ 28,308 Non-cash investing and financing activities: Capital expenditures incurred but not yet paid or paid by landlord $ 22,130 $ 29,389 Non-cash repurchases of Class A common stock in lieu of payment of loan due from related party $ — $ 65,512 Non-cash financing activities $ ( 148 ) $ — See accompanying notes to the unaudited condensed consolidated financial statements. 5 MADISON SQUARE GARDEN ENTERTAINMENT CORP. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) (Unaudited) (in thousands) Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Loss Total Equity (Deficit) Balance as of December 31, 2024 $ 529 $ 34,686 $ ( 165,512 ) $ 172,175 $ ( 31,550 ) $ 10,328 Net income — — — 8,036 — 8,036 Other comprehensive income — — — — 356 356 Share-based compensation — 6,250 — — — 6,250 Tax withholding associated with shares issued for share-based compensation — ( 702 ) — — — ( 702 ) Repurchases of Class A common stock, inclusive of excise tax — ( 50 ) ( 14,692 ) — — ( 14,742 ) Balance as of March 31, 2025 $ 529 $ 40,184 $ ( 180,204 ) $ 180,211 $ ( 31,194 ) $ 9,526 Balance as of December 31, 2023 $ 524 $ 25,339 $ ( 140,512 ) $ 45,881 $ ( 33,279 ) $ ( 102,047 ) Net income — — — 2,795 — 2,795 Other comprehensive income — — — — 372 372 Share-based compensation — 5,448 — — — 5,448 Tax withholding associated with shares issued for share-based compensation — ( 1,131 ) — — — ( 1,131 ) Balance as of March 31, 2024 $ 524 $ 29,656 $ ( 140,512 ) $ 48,676 $ ( 32,907 ) $ ( 94,563 ) Balance as of June 30, 2024 $ 525 $ 33,481 $ ( 140,512 ) $ 115,603 $ ( 32,262 ) $ ( 23,165 ) Net income — — — 64,608 — 64,608 Other comprehensive income — — — — 1,068 1,068 Share-based compensation — 21,834 — — — 21,834 Tax withholding associated with shares issued for share-based compensation 4 ( 15,081 ) — — — ( 15,077 ) Repurchases of Class A common stock, inclusive of excise tax — ( 50 ) ( 39,692 ) — — ( 39,742 ) Balance as of March 31, 2025 $ 529 $ 40,184 $ ( 180,204 ) $ 180,211 $ ( 31,194 ) $ 9,526 Balance as of June 30, 2023 $ 519 $ 17,727 $ ( 25,000 ) $ ( 28,697 ) $ ( 34,021 ) $ ( 69,472 ) Net income — — — 77,373 — 77,373 Other comprehensive income — — — — 1,114 1,114 Share-based compensation — 26,186 — — — 26,186 Tax withholding associated with shares issued for share-based compensation 5 ( 13,383 ) — — — ( 13,378 ) Repurchases of Class A common stock, inclusive of excise tax — ( 874 ) ( 115,512 ) — — ( 116,386 ) Balance as of March 31, 2024 $ 524 $ 29,656 $ ( 140,512 ) $ 48,676 $ ( 32,907 ) $ ( 94,563 ) See accompanying notes to the unaudited condensed consolidated financial statements. 6 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) All amounts included in the following Notes to Condensed Consolidated Financial Statements (unaudited) are presented in thousands, except per share data or as otherwise noted. Note 1. Description of Business and Basis of Presentation Description of Business Madison Square Garden Entertainment Corp. (together with its subsidiaries, as applicable, the “Company” or “MSG Entertainment”), is a live entertainment company comprised of iconic venues and marquee entertainment content. Utilizing the Company’s powerful brands and live entertainment expertise, the Company delivers unique experiences that set the standard for excellence and innovation while forging deep connections with diverse and passionate audiences. The Company operates and reports financial information in one reportable segment. The Company’s portfolio of venues includes: Madison Square Garden (“The Garden”), The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, and The Chicago Theatre. The Company owns and produces the original production, the Christmas Spectacular Starring the Radio City Rockettes (the “ Christmas Spectacular ”). The Company also books other entertainment and sports events, 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. MSG Entertainment Distribution On April 20, 2023, Sphere Entertainment Co. (together with its subsidiaries, as applicable, “Sphere Entertainment”) distributed approximately 67 % of the outstanding common stock of the Company to its stockholders (the “Distribution”), with Sphere Entertainment retaining approximately 33 % of the outstanding common stock of the Company in the form of Class A common stock, $ 0.01 par value per share (“Class A Common Stock”) immediately following the Distribution. As a result, the Company became an independent publicly traded company on April 21, 2023. Following the completion of the secondary offering by Sphere Entertainment of the Company’s Class A Common Stock on September 22, 2023, Sphere Entertainment no longer owns any of the Company’s outstanding common stock. See Note 1. Description of Business and Basis of Presentation to the Company’s audited consolidated and combined financial statements and notes thereto as of June 30, 2024 and 2023 and for the three years ended June 30, 2024, 2023 and 2022 (the “Audited Consolidated and Combined Annual Financial Statements”) included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 filed with the Securities and Exchange Commission (the “SEC”) on August 16, 2024 (the “2024 Form 10-K”) for more information regarding the Distribution. Basis of Presentation The Company reports on a fiscal year basis ending on June 30 th (“Fiscal Year”). In these unaudited condensed consolidated financial statements, the years ending and ended on June 30, 2026, June 30, 2025 and 2024, respectively, are referred to as “Fiscal Year 2026,” “Fiscal Year 2025” and “Fiscal Year 2024,” respectively. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and Article 10 of Regulation S-X of the SEC, and should be read in conjunction with the Company’s Audited Consolidated and Combined Annual Financial Statements. In the opinion of the Company, the accompanying financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2025 and its results of operations for the three and nine months ended March 31, 2025 and 2024 and cash flows for the nine months ended March 31, 2025 and 2024. The condensed consolidated balance sheet as of June 30, 2024 was derived from the Audited Consolidated and Combined Annual Financial Statements but does not contain all of the footnote disclosures from the Audited Consolidated and Combined Annual Financial Statements. The results of operations for the periods presented are not necessarily indicative of the results that might be expected for future interim periods or for the full year. As a result of the production of the Christmas Spectacular and arena license fees in connection with the use of The Garden by the New York Knicks (the “Knicks”) of the National Basketball Association and the New York Rangers (the “Rangers”) of the National Hockey League, the Company generally earns a disproportionate share of its annual revenues in the second and third quarters of its fiscal year. Reclassifications For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation in accordance with GAAP. 7 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 2. Summary of Significant Accounting Policies A. Principles of Consolidation All intercompany accounts and balances within the Company’s consolidated businesses have been eliminated. B. Use of Estimates The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the provision for credit losses, goodwill, intangible assets, other long-lived assets, deferred tax assets, pension and other postretirement benefit obligations and the related net periodic benefit cost, and other liabilities. In addition, estimates are used in revenue recognition, depreciation and amortization, litigation matters and other matters. Management believes its use of estimates in the financial statements to be reasonable. Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and, as such, these estimates may ultimately differ from actual results. Changes in estimates resulting from weakness in the economic environment or other factors beyond the Company’s control could be material and would be reflected in the Company’s condensed consolidated financial statements in future periods. C. Revenue Recognition and Direct Operating Expenses The Company generates revenue from the provision of services and sale of tangible products, as well as leasing transactions. Revenues are presented under these three categories in the condensed consolidated statements of operations, as described below. Service revenue, presented as “Revenues from entertainment offerings” primarily includes: • Ticket sales and other ticket-related revenue; • Venue license fees for events held at the Company’s venues that the Company does not produce or promote/co-promote; • Sponsorship and signage; • Suite licenses and single night suite rentals; • Advertising commissions and related service fees; and • Commissions related to the sale of merchandise for which the Company is not the principal in the underlying transaction. Direct operating expenses related to the provision of services and leasing, presented as “Entertainment offerings, arena license fees, and other leasing direct operating expenses”, primarily include: • Event production costs including direct personnel expenses; • Venue operations and infrastructure costs; (a) • Venue rental costs for venues not owned by the Company; • Sponsorship and signage fulfillment costs; • Contractual revenue sharing expenses related to suite licenses and certain internal signage; and • Event-related marketing and advertising costs. Product revenue, presented as “Food, beverage, and merchandise revenues”, includes: • Sales of food and beverage during events held at the Company’s venues; and • Sales of the Company’s merchandise at the Company’s venues and via traditional retail channels. Direct operating expenses related to the sale of products, presented as “Food, beverage, and merchandise direct operating expenses” include: • Costs of goods sold including direct personnel expenses; and 8 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) • Contractual revenue sharing expenses related to food and beverage sold at events held by Madison Square Garden Sports Corp. (together with its subsidiaries, as applicable, “MSG Sports”) at The Garden. Lease revenue, presented as “Arena license fees and other leasing revenue”, includes: • Rental fees related to the arena license agreements that require the Knicks and the Rangers to play their home games at The Garden (the “Arena License Agreements”) with MSG Sports; and • Sublease income. _________________ (a) Venue operations and infrastructure costs are not specifically allocated to each revenue category, but are instead attributed in their entirety to service revenue, which is the Company’s principal revenue category. Leasing direct operating expenses materially consist of venue operations and infrastructure costs. As a result, the Company combines service and leasing direct operating expenses within “Entertainment offerings, arena license fees, and other leasing direct operating expenses” for presentation purposes. The Company recognizes revenue when, or as, performance obligations under the terms of a contract are satisfied, which generally occurs when, or as, control of promised goods or services is transferred to customers. Revenue is measured as the amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services (“transaction price”). To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the most likely amount to which the Company expects to be entitled. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and the determination of whether to include such estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information that is reasonably available. The Company accounts for taxes collected from customers and remitted to governmental authorities on a net basis and excludes these amounts from revenues. In addition, the Company defers certain costs to fulfill the Company’s contracts with customers to the extent such costs relate directly to the contracts, are expected to generate resources that will be used to satisfy the Company’s performance obligations under the contracts, and are expected to be recovered through revenue generated under the contracts. Contract fulfillment costs are expensed as the Company satisfies the related performance obligations. Arrangements with Multiple Performance Obligations The Company enters into arrangements with multiple performance obligations, such as multi-year sponsorship agreements, which may derive revenues for the Company, as well as Sphere Entertainment and MSG Sports within a single arrangement. The Company also derives revenue from similar types of arrangements which are entered into by Sphere Entertainment and MSG Sports. Payment terms for such arrangements can vary by contract, but payments are generally due in installments throughout the contractual term. The performance obligations included in each sponsorship agreement vary and may include advertising and other benefits such as, but not limited to, signage at The Garden and the Company’s other venues, digital advertising, event or property-specific advertising, as well as non-advertising benefits such as suite licenses and event tickets. Further, these arrangements may require the Company to purchase the customers’ goods or services. To the extent the Company’s multi-year arrangements provide for performance obligations that are consistent over the multi-year contractual term, such performance obligations generally meet the definition of a series as provided for under the accounting guidance. If performance obligations are concluded to meet the definition of a series, the contractual fees for all years during the contract term are aggregated and the related revenue is recognized proportionately as the underlying performance obligations are satisfied. The timing of revenue recognition for each performance obligation is dependent upon the facts and circumstances surrounding the Company’s satisfaction of its respective performance obligation. The Company allocates the transaction price for such arrangements to each performance obligation within the arrangement based on the estimated relative standalone selling price of the performance obligation. The Company’s process for determining its estimated standalone selling prices involves management’s judgment and considers multiple factors including company specific and market specific factors that may vary depending upon the unique facts and circumstances related to each performance obligation. Key factors considered by the Company in developing an estimated standalone selling price for its performance obligations include, but are not limited to, prices charged for similar performance obligations, the Company’s ongoing pricing strategy and policies, and consideration of pricing of similar performance obligations sold in other arrangements with multiple performance obligations. The Company may incur costs such as commissions to obtain its multi-year sponsorship agreements. The Company assesses such costs for capitalization on a contract by contract basis. To the extent costs are capitalized, the Company estimates the useful life of the related contract asset, which may be the underlying contract term or the estimated customer life depending on the facts and circumstances surrounding the contract. The contract asset is amortized over the estimated useful life. 9 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Principal versus Agent Revenue Recognition The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service before transfer to the customer. When the Company concludes that it controls the good or service before transfer to the customer, the Company is considered a principal in the transaction and records revenue on a gross basis. When the Company concludes that it does not control the good or service before transfer to the customer but arranges for another entity to provide the good or service, the Company acts as an agent and records revenue on a net basis in the amount it earns for its agency service. Contract Balances Amounts collected in advance of the Company’s satisfaction of its contractual performance obligations are recorded as a contract liability within Deferred revenue and are recognized as the Company satisfies the related performance obligations. Amounts collected in advance of events for which the Company is not the promoter or co-promoter do not represent contract liabilities and are recorded within Accounts payable, accrued and other current liabilities on the accompanying consolidated balance sheets. Amounts recognized as revenue for which the Company has a right to consideration for goods or services transferred to customers and for which the Company does not have an unconditional right to bill as of the reporting date are recorded as contract assets. Contract assets are transferred to accounts receivable once the Company’s right to consideration becomes unconditional. Production Costs for the Company’s Original Productions The Company defers certain costs of productions such as creative design, scenery, wardrobes, rehearsal and other related costs for the Company’s proprietary shows, reported under Prepaid expenses and other current assets and Other non-current assets. Deferred production costs are amortized on a straight-line basis over the course of a production’s performance period using the expected life of a show’s assets and are recorded as a component of Entertainment offerings, arena license fees, and other leasing direct operating expenses on the Company’s condensed consolidated statement of operations. Deferred production costs are subject to recoverability assessments whenever there is an indication of potential impairment. Revenue Sharing Expenses Revenue sharing expenses are determined based on contractual agreements between the Company and MSG Sports, primarily related to suite licenses, certain internal signage and in-venue food and beverage sales and are recorded as a component of Entertainment offerings, arena license fees, and other leasing direct operating expenses on the Company’s condensed consolidated statement of operations. D. Recently Issued and Adopted Accounting Pronouncements Recently Issued Accounting Pronouncements In November 2023 , the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Improvement to Reportable Segment Disclosures . This ASU aims to improve segment disclosures through enhanced disclosures about significant segment expenses. The standard requires disclosure of significant expense categories and amounts for such expenses, including those segment expenses that are regularly provided to the chief operating decision maker, easily computable from information that is regularly provided, or significant expenses that are expressed in a form other than actual amounts. This standard will be effective for the Company as of and for Fiscal Year 2025 and is required to be applied retrospectively to all prior periods presented in the financial statements. This standard will not have an impact on the Company’s consolidated financial statements, but will result in changes to certain of the Company’s segment reporting disclosures, the impacts of which the Company continues to evaluate . In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , a final standard on improvements to income tax disclosures which applies to all entities subject to income taxes. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be helpful to understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, assess income tax information that affects cash flow forecasts and capital allocation decisions, and identify potential opportunities to increase future cash flows. This standard will be effective for the Company in Fiscal Year 2026 and should be applied prospectively. The Company is currently evaluating the impact of the additional disclosure requirements on the Company’s income tax disclosures . 10 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , as amended by ASU 2025-01, which was issued in January 2025, requiring disclosu re, in the notes to financial statements, of specified information about certain costs and expenses at each interim and annual reporting period. This ASU provided an effective date for the standard to be for annual periods beginning with the Company’s Fiscal Year ending June 30, 2028, and interim reporting periods beginning in the Company’s Fiscal Year Ending June 30, 2029. Early adoption of ASU 2024-03 is permitted. This amended ASU may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this guidance on the Company’s financial statement disclosures. Note 3. Revenue Recognition Contracts with Customers All revenue recognized in the condensed consolidated statements of operations is considered to be revenue from contracts with customers in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue From Contracts with Customers , except for revenues from the Arena License Agreements, leases and subleases that are accounted for in accordance with ASC Topic 842, Leases . Disaggregation of Revenue The following table disaggregates the Company’s revenues by revenue category for the three and nine months ended March 31, 2025 and 2024. The footnotes to the table provide additional disclosure with respect to the timing of transfer of goods or services to the customer for each category. Three Months Ended Nine Months Ended March 31, March 31, 2025 2024 2025 2024 Ticketing and venue license fee revenues (a) $ 78,497 $ 74,502 $ 379,677 $ 384,586 Sponsorship and signage, suite license, and advertising commission revenues (b) 80,848 71,374 209,430 192,438 Other (c) 869 345 4,464 4,001 Total revenues from entertainment offerings 160,214 146,221 593,571 581,025 Food, beverage, and merchandise revenues (d) 45,808 45,380 124,104 127,379 Total revenues from contracts with customers 206,022 191,601 717,675 708,404 Arena license fees and other leasing revenue 36,443 36,712 70,921 64,787 Total revenues $ 242,465 $ 228,313 $ 788,596 $ 773,191 _________________ (a) Amounts include ticket sales, including other ticket-related revenue, and venue license fees from the Company’s events such as (i) concerts, (ii) the presentation of the Christmas Spectacular and (iii) other live entertainment and sporting events. Revenues from entertainment offerings are generally recognized at a point in time. (b) Sponsorship and signage, suite license, and advertising commission revenues are generally recognized over time. (c) Other primarily consists of revenues from sponsorship sales representation agreements and venue tours which are generally recognized over time and at a point in time, respectively. (d) Food, beverage, and merchandise revenues are generally recognized at a point in time. Contract Balances The following table provides information about the opening and closing contract balances from the Company’s contracts with customers as of March 31, 2025 and June 30, 2024: As of March 31, 2025 June 30, 2024 Receivables from contracts with customers, net (a) $ 93,877 $ 74,113 Contract assets, current (b) $ 8,812 $ 7,844 Deferred revenue, including non-current portion (c) $ 238,293 $ 215,581 ________________ (a) Receivables from contracts with customers, net, which are reported in Accounts receivable, net and Related party receivables, current in the Company’s accompanying condensed consolidated balance sheets, represent the Company’s unconditional rights to consideration under its contracts with customers. As of March 31, 2025 and June 30, 2024, the Company’s receivables from contracts with customers above included $ 9,807 and $ 2,432 , respectively, related to various 11 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) related parties. See Note 12. Related Party Transactions for further details on related party arrangements. (b) Contract assets, current, which are reported in Prepaid expenses and other current assets in the Company’s accompanying condensed consolidated balance sheets, primarily relate to the Company’s rights to consideration for goods or services transferred to customers, for which the Company does not have an unconditional right to bill as of the reporting date. Contract assets are transferred to accounts receivable once the Company’s right to consideration becomes unconditional. (c) Deferred revenue primarily relates to the Company’s receipt of consideration from customers in advance of the Company’s transfer of goods or services to the customers. Deferred revenue is reduced and the related revenue is recognized once the underlying goods or services are transferred to a customer. Revenue recognized for the three and nine months ended March 31, 2025 relating to the Deferred revenue balance as of June 30, 2024 was $ 19,845 and $ 178,188 , respectively. Transaction Price Allocated to the Remaining Performance Obligations As of March 31, 2025, the Company’s remaining performance obligations under contracts were $ 577,885 , of which 40 % is expected to be recognized over the next two years and an additional 60 % of the balance is expected to be recognized thereafter. This primarily relates to performance obligations under sponsorship and suite license agreements that have original expected durations longer than one year and for which the consideration is not variable. In developing the estimated revenue, the Company applies the allowable practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less. Note 4. Restructuring Charges During the three and nine months ended March 31, 2025, the Company recognized restructuring charges of $ 84 and $ 14 , respectively, related to termination benefits for certain corporate executives and employees. During the three and nine months ended March 31, 2024, the Company recorded restructuring charges of $ 2,362 and $ 14,803 , respectively, inclusive of $ 0 and $ 6,788 of share-based compensation expenses, respectively, which are accrued in Accounts payable, accrued and other current liabilities and Additional paid-in-capital on the accompanying condensed consolidated balance sheets. Changes to the Company’s restructuring liability through March 31, 2025 were as follows: Restructuring Liability June 30, 2024 $ 7,140 Restructuring charges 14 Payments ( 7,154 ) March 31, 2025 $ — Note 5. Investments As of March 31, 2025, the Company held an investment in Townsquare Media, Inc. (“Townsquare”). The Company also previously held an investment in DraftKings Inc. (“DraftKings”), which was sold during the first quarter of Fiscal Year 2024: • Townsquare is a media, entertainment and digital marketing solutions company that is listed on the New York Stock Exchange (“NYSE”) under the symbol “TSQ.” • DraftKings is a fantasy sports contest and sports gambling provider that is listed on the Nasdaq Stock Market (“NASDAQ”) under the symbol “DKNG.” As of March 31, 2025, the Company also held other equity investments held in trust under the Company’s Executive Deferred Compensation Plan. Refer to Note 10. Pension Plans and Other Postretirement Benefit Plans for further details regarding the plan. The fair value of the Company’s equity investments with readily determinable fair value was determined based on quoted market prices in active markets on the NYSE and NASDAQ, respectively, which are classified within Level I of the fair value hierarchy. 12 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The carrying value of the Company’s investments, which is reported under Other non-current assets in the accompanying condensed consolidated balance sheets as of March 31, 2025 and June 30, 2024, is as follows: As of March 31, 2025 June 30, 2024 Equity investments with readily determinable fair values: Townsquare Class A common stock $ 1,031 $ 1,438 Other equity investments with readily determinable fair values held in trust under the Company’s Executive Deferred Compensation Plan 4,737 4,226 Equity method investments and equity investments without readily determinable fair values (a) 783 656 Total investments $ 6,551 $ 6,320 _______________ (a) Inclusive of the Company’s investment in Oak View Group’s Crown Properties Collection, LLC ("CPC”). The following table summarizes the realized and unrealized (loss) gain on equity investments with readily determinable fair value, which is reported in Other (expense) income, net for the three and nine months ended March 31, 2025 and 2024: Three Months Ended Nine Months Ended March 31, March 31, 2025 2024 2025 2024 Unrealized (loss) gain — Townsquare $ ( 120 ) $ 717 $ ( 357 ) $ ( 1,589 ) Unrealized (loss) gain — Executive Deferred Compensation Plan ( 45 ) 233 149 432 Realized gain from shares sold — DraftKings — — — 1,548 Realized gain from shares sold — Townsquare — — 5 — Total realized and unrealized (loss) gain $ ( 165 ) $ 950 $ ( 203 ) $ 391 Supplemental information on realized gain: Shares of common stock sold — DraftKings — — — 425 Cash proceeds from common stock sold — DraftKings $ — $ — $ — $ 12,844 Shares of common stock sold — Townsquare — — 5 — Cash proceeds from common stock sold — Townsquare $ — $ — $ 55 $ — Note 6. Property and Equipment, Net As of March 31, 2025 and June 30, 2024, Property and equipment, net consisted of the following: As of March 31, 2025 June 30, 2024 Land $ 62,768 $ 62,768 Buildings 1,015,673 1,011,308 Equipment, furniture, and fixtures 358,211 348,075 Leasehold improvements 164,178 133,267 Construction in progress 567 10,193 Total Property and equipment $ 1,601,397 $ 1,565,611 Less: accumulated depreciation and amortization ( 974,415 ) ( 932,078 ) Property and equipment, net $ 626,982 $ 633,533 The Company recorded depreciation and amortization expense on property and equipment of $ 14,372 and $ 42,336 for the three and nine months ended March 31, 2025, respectively, and $ 13,182 and $ 39,972 for the three and nine months ended March 31, 2024, respectively, which is recognized in Depreciation and amortization in the accompanying condensed consolidated statements of operations. 13 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 7. Goodwill and Intangible Assets As of March 31, 2025 and June 30, 2024, the carrying amount of Goodwill was $ 69,041 and does not reflect any historical impairment charges. The Company’s Indefinite-lived intangible assets as of March 31, 2025 and June 30, 2024 were as follows: As of March 31, 2025 June 30, 2024 Trademarks $ 61,881 $ 61,881 Photographic related rights 1,920 1,920 Total indefinite-lived intangible assets $ 63,801 $ 63,801 During the first quarter of Fiscal Year 2025, the Company performed its annual qualitative impairment test of Goodwill and Indefinite-lived intangible assets and determined that there were no impairments of Goodwill or Indefinite-lived intangible assets identified as of the impairment test date. Note 8. Commitments and Contingencies Commitments See Note 11. Commitments and Contingencies, included in the Company’s Audited Consolidated and Combined Annual Financial Statements, for details on the Company’s commitments. The Company’s commitments as of June 30, 2024 included a total of $ 323,178 (primarily related to contractual obligations). During the nine months ended March 31, 2025, the Company did not have any material changes in its non-cancelable contractual obligations (other than activities in the ordinary course of business). See Note 9. Credit Facilities for details of the principal repayments required under the Company’s credit facilities. Delayed Draw Term Loan Facility On April 20, 2023, a subsidiary of the Company, MSG Entertainment Holdings, LLC (“MSG Entertainment Holdings”), entered into a delayed draw term loan facility (the “DDTL Facility”) with Sphere Entertainment. Pursuant to the DDTL Facility, MSG Entertainment Holdings committed to lend up to $ 65,000 in delayed draw term loans to Sphere Entertainment on an unsecured basis until October 20, 2024. See Note 11. Commitments and Contingencies included in the Company’s Audited Consolidated and Combined Annual Financial Statements for more information regarding the DDTL Facility. On July 14, 2023, Sphere Entertainment drew down the full amount of $ 65,000 under the DDTL Facility. On August 9, 2023, Sphere Entertainment repaid the full principal amount of the DDTL Facility and accrued interest and commitment fees by delivering 1,923 shares of the Company’s Class A Common Stock held by Sphere Entertainment, as permitted as payment under the DDTL Facility. Such shares have been classified by the Company pursuant to the Stock Repurchase Program (as defined and further explained in Note 13. Additional Financial Information ) as treasury shares and are no longer outstanding on the date of repayment. Legal Matters The Company is a defendant in various lawsuits. Although the outcome of these lawsuits cannot be predicted with certainty (including the extent of available insurance, if any), management does not believe that resolution of these lawsuits will have a material adverse effect on the Company. 14 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 9. Credit Facilities See Note 12. Credit Facilities, included in the Company’s Audited Consolidated and Combined Annual Financial Statements for more information regarding the Company’s credit facilities. The following table summarizes the presentation of the outstanding balances under the Company’s credit facilities as of March 31, 2025 and June 30, 2024: As of March 31, 2025 June 30, 2024 Current Portion National Properties Term Loan Facility $ 28,438 $ 16,250 Current portion of long-term debt $ 28,438 $ 16,250 As of March 31, 2025 June 30, 2024 Principal Unamortized Deferred Financing Costs Net Principal Unamortized Deferred Financing Costs Net Non-current Portion National Properties Term Loan Facility $ 585,000 $ ( 7,213 ) $ 577,787 $ 609,375 $ ( 9,624 ) $ 599,751 National Properties Revolving Credit Facility — ( 378 ) ( 378 ) — ( 503 ) ( 503 ) Long-term debt, net of deferred financing costs $ 585,000 $ ( 7,591 ) $ 577,409 $ 609,375 $ ( 10,127 ) $ 599,248 National Properties Facilities General. MSG National Properties, LLC (“MSG National Properties”), MSG Entertainment Holdings and certain subsidiaries of MSG National Properties are party to a credit agreement dated June 30, 2022 (as amended, the “National Properties Credit Agreement”) with JP Morgan Chase Bank, N.A., as administrative agent and the lenders and L/C issuers party thereto, providing for a five-year , $ 650,000 senior secured term loan facility (the “National Properties Term Loan Facility”) and a five-year , $ 150,000 revolving credit facility (the “National Properties Revolving Credit Facility” and, together with the National Properties Term Loan Facility, the “National Properties Facilities”). Up to $ 25,000 of the National Properties Revolving Credit Facility is available for the issuance of letters of credit. 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. Borrowings under the current National Properties Facilities bear interest at a floating rate, which at the option of MSG National Properties may be either (a) a base rate plus an applicable margin ranging from 1.50 % to 2.50 % per annum, determined based on the total leverage ratio of MSG National Properties and its restricted subsidiaries, or (b) adjusted Term SOFR (i.e., Term SOFR plus 0.10 %) plus an applicable margin ranging from 2.50 % to 3.50 % per annum, determined based on the total leverage ratio of MSG National Properties and its restricted subsidiaries. The National Properties Credit Agreement requires MSG National Properties to pay a commitment fee ranging from 0.30 % to 0.50 % in respect of the daily unused commitments under the National Properties Revolving Credit Facility. MSG National Properties is also required to pay customary letter of credit fees, as well as fronting fees, to banks that issue letters of credit pursuant to the National Properties Credit Agreement. The interest rate on the National Properties Facilities as of March 31, 2025 was 6.92 %. Principal Repayments . Subject to customary notice and minimum amount conditions, the Company may voluntarily repay outstanding loans under the National Properties Facilities or terminate commitments under the National Properties Revolving Credit Facility, at any time, in whole or in part, subject only to customary breakage costs in the case of prepayment of Term SOFR loans. The National Properties Facilities will mature on June 30, 2027. The principal obligations under the National Properties Term Loan Facility are to be repaid in quarterly installments beginning with the fiscal quarter ended March 31, 2023, in an aggregate amount equal to 2.50 % per annum ( 0.625 % per quarter), stepping up to 5.0 % per annum ( 1.25 % per quarter) in the fiscal quarter ending September 30, 2025, with the balance due at the maturity of the facility. The principal obligations under the National Properties Revolving Credit Facility are due at the maturity of the facil ity. Under certain circumstances, MSG National Properties is required to make mandatory prepayments on loans outstanding, including prepayments in an amount equal to the net cash proceeds of certain sales of assets or casualty insurance and/or condemnation recoveries (subject to certain reinvestment, repair or replacement rights), subject to certain exceptions. 15 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Covenants. 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. The minimum liquidity level is set at $ 50,000 , and is tested based on the level of average daily liquidity, consisting of cash and cash equivalents and available revolving commitments, over the last month of each quarter over the life of the National Properties Facilities. The debt service coverage ratio covenant began testing in the fiscal quarter ended December 31, 2022, and was set at a ratio of 2 :1 before stepping up to 2.5 :1 in the fiscal quarter ended September 30, 2024. The leverage ratio covenant began testing in the fiscal quarter ended June 30, 2023. It is tested based on the ratio of MSG National Properties and its restricted subsidiaries’ consolidated total indebtedness to adjusted operating income, with an initial maximum ratio of 6 :1, 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 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. The National Properties Credit Agreement contains certain restrictions on the ability of MSG National Properties and its restricted subsidiaries to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the National Properties Credit Agreement, including the following: (i) incur additional indebtedness; (ii) create liens on certain assets; (iii) make investments, loans or advances in or to other persons; (iv) pay dividends and distributions or repurchase capital stock (which will restrict the ability of MSG National Properties to make cash distributions to the Company); (v) repay, redeem or repurchase certain indebtedness; (vi) change its lines of business; (vii) engage in certain transactions with affiliates; (viii) amend their respective organizational documents; (ix) merge or consolidate; and (x) make certain dispositions. Guarantors and Collateral. All obligations under the National Properties Facilities are guaranteed by MSG Entertainment Holdings and MSG National Properties’ existing and future direct and indirect domestic subsidiaries, other than the subsidiaries that own The Garden and certain other excluded subsidiaries (the “Subsidiary Guarantors”). 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 or the Beacon Theatre. Interest payments and loan principal repayments made by the Company under the National Properties Credit Agreement were as follows: Interest Payments Principal Repayments Nine Months Ended Nine Months Ended March 31, March 31, 2025 2024 2025 2024 National Properties Facilities $ 36,367 $ 40,742 $ 67,188 $ 102,288 The carrying value and fair value of the Company’s debt reported in the accompanying condensed consolidated balance sheets were as follows: As of March 31, 2025 June 30, 2024 Carrying Value (a) Fair Value Carrying Value (a) Fair Value National Properties Facilities $ 613,438 $ 604,236 $ 625,625 $ 622,497 ________________ (a) The total carrying value of the Company’s debt as of March 31, 2025 and June 30, 2024 is equal to the current and non-current principal payments for the Company’s credit agreements excluding unamortized deferred financing costs of $ 7,591 and $ 10,127 , respectively. The Company’s long-term debt is classified within Level II of the fair value hierarchy as it is valued using quoted indices of similar instruments for which the inputs are readily observable. Note 10. Pension Plans and Other Postretirement Benefit Plans See Note 13. Pension Plans and Other Postretirement Benefit Plans, included in the Company’s Audited Consolidated and Combined Annual Financial Statements for more information regarding the Pension Plans, Postretirement Plan, the Madison Square Garden 401(k) Savings Plans, The Madison Square Garden 401(k) Savings Plan (the “401(k) Plan”), the MSG Entertainment Holdings, LLC 16 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Excess Savings Plan (together with the 401(k) Plan, the “Savings Plans”), together with the associated excess savings plan, and the Madison Square Garden 401(k) Union Plan (the “Union Savings Plan”). Defined Benefit Pension Plans and Other Postretirement Benefit Plans The following tables present components of net periodic benefit cost for the Pension Plans and Postretirement Plan included in the accompanying condensed consolidated statements of operations for the three and nine months ended March 31, 2025 and 2024. Service cost is recognized in direct operating expenses and selling, general and administrative expenses. All other components of net periodic benefit cost are reported in Other (expense) income, net. Pension Plans Postretirement Plan Three Months Ended Three Months Ended March 31, March 31, 2025 2024 2025 2024 Service cost $ 18 $ 17 $ 5 $ 6 Interest cost 1,668 1,469 30 24 Expected return on plan assets ( 1,292 ) ( 1,090 ) — — Recognized actuarial loss 446 450 5 — Net periodic cost $ 840 $ 846 $ 40 $ 30 Pension Plans Postretirement Plan Nine Months Ended Nine Months Ended March 31, March 31, 2025 2024 2025 2024 Service cost $ 53 $ 51 $ 15 $ 18 Interest cost 5,005 4,407 90 72 Expected return on plan assets ( 3,876 ) ( 3,273 ) — — Recognized actuarial loss 1,339 1,350 17 — Net periodic cost $ 2,521 $ 2,535 $ 122 $ 90 Contributions for Qualified Defined Benefit Pension Plans During the three and nine months ended March 31, 2025, the Company contributed $ 0 and $ 3,300 , respectively, to a non-contributory, qualified cash balance retirement plan covering the Company’s non-union employees. Defined Contribution Plans For the three and nine months ended March 31, 2025 and 2024, expenses related to the Savings Plans and Union Savings Plan included in the accompanying condensed consolidated statements of operations are as follows: Three Months Ended Nine Months Ended March 31, March 31, 2025 2024 2025 2024 Savings Plans $ 2,159 $ 1,526 $ 6,352 $ 5,825 Union Savings Plan $ 612 $ 490 $ 1,092 $ 621 Executive Deferred Compensation See Note 13. Pension Plans and Other Postretirement Benefit Plans, included in the Company’s Audited Consolidated and Combined Annual Financial Statements, for more information regarding the Company’s Executive Deferred Compensation Plan (the “Deferred Compensation Plan”). The Company recorded compensation income of $ 45 for the three months ended March 31, 2025 and compensation expense of $ 149 for the nine months ended March 31, 2025 and compensation expense of $ 233 and $ 432 , respectively, for the three and nine months ended March 31, 2024, each within Selling, general, and administrative expenses to reflect the remeasurement of the Deferred Compensation Plan liability. In addition, the Company recorded a loss of $ 45 for the three months ended March 31, 2025 and a gain of $ 149 for the nine months ended March 31, 2025 and gains of $ 233 and $ 432 , respectively, for the three and nine months ended March 31, 2024, within Other (expense) income, net to reflect remeasurement of the fair value of assets under the Deferred Compensation Plan. 17 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) The following table summarizes amounts recognized related to the Deferred Compensation Plan in the accompanying condensed consolidated balance sheets: As of March 31, 2025 June 30, 2024 Deferred Compensation Plan assets (included in Other non-current assets) $ 4,737 $ 4,226 Deferred Compensation Plan liabilities (included in Other non-current liabilities) $ ( 4,760 ) $ ( 4,226 ) Note 11. Share-based Compensation The Company has two share-based compensation plans: the 2023 Employee Stock Plan and the 2023 Stock Plan for Non-Employee Directors. See Note 14. Share-based Compensation, included in the Company’s Audited Consolidated and Combined Annual Financial Statements, for more information on these plans. Share-based compensation expense for the Company’s restricted stock units (“RSUs”) and performance stock units (“PSUs”) are recognized in the condensed consolidated statements of operations as a component of direct operating expenses or selling, general, and administrative expenses. The following table summarizes the Company’s share-based compensation expense: Three Months Ended Nine Months Ended March 31, March 31, 2025 2024 2025 2024 Share-based compensation expense (a) $ 6,250 $ 5,611 $ 21,834 $ 19,561 Fair value of awards vested (b) $ 1,130 $ 2,004 $ 37,028 $ 31,155 ________________ (a) The expense shown excludes $ 6,788 for the nine months ended March 31, 2024, which was reclassified to Restructuring charges in the accompanying condensed consolidated statements of operations a s detailed in Note 4. Restructuring Charges. (b) To fulfill required statutory tax withholding obligations for the applicable income and other employment taxes, RSUs and PSUs with an aggregate value of $ 693 and $ 15,062 , and $ 993 and $ 13,222 , respectively, were retained by the Company during the three and nine months ended March 31, 2025 and 2024, respectively. For the three and nine months ended March 31, 2025, weighted-average shares used in the calculation for diluted earnings per share (“EPS”) consisted of 48,271 and 48,445 weighted-average shares of Class A Common Stock, respectively, comprised of basic EPS weighted-average shares of Class A Common Stock of 47,955 and 48,171 respectively, and the dilutive effect of 316 and 274 shares of Class A Common Stock, respectively, issuable under share-based compensation plans. For the three and nine months ended March 31, 2025, weighted-average anti-dilutive shares primarily consisted of 701 and 618 RSUs and stock options, respectively, and were excluded in the calculation of diluted EPS because their effect would have been anti-dilutive. As of March 31, 2025, there was $ 40,672 of unrecognized compensation cost related to unvested RSUs and PSUs held by the Company’s direct employees. The cost is expected to be recognized over a weighted-average period of approximately 2.0 years. Award Activity RSUs During the nine months ended March 31, 2025 and 2024 , 484 and 624 RSUs were granted, respectively, and 542 and 688 RSUs vested, respectively. PSUs During the nine months ended March 31, 2025 and 2024, 386 and 506 PSUs were granted, respectively, and 400 and 273 PSUs vested, respectively. Note 12. Related Party Transactions As of March 31, 2025 , members of the Dolan family, including trusts for the benefit of members of the Dolan family (collectively, the “Dolan Family Group”) collectively beneficially owned 100 % of the Company’s outstanding Class B Common Stock, $ 0.01 par value per share (“Class B Common Stock”) and approximately 3.6 % of the Company’s outstanding Class A Common Stock (inclusive of options exercisable within 60 days of March 31, 2025) for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended. Such shares of Class A Common Stock and Class B Common Stock, collectively, represent approximately 64.1 % of the aggregate voting power of the Company’s outstanding common stock. Members of the Dolan Family Group are also the controlling stockholders of Sphere Entertainment, MSG Sports, and AMC Networks Inc. 18 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) See Note 17. Related Party Transactions, included in the Company’s Audited Consolidated and Combined Annual Financial Statements for a description of the Company’s current related party arrangements. There have been no material changes in such related party arrangements as of March 31, 2025, except as described below. In the third quarter of Fiscal Year 2024, the Company entered into a commercial agreement with CPC, under which CPC provided sponsorship sales services. The Company recorded commission expense of $ 1,345 and $ 2,848 , and $ 854 and $ 1,013 for the three and nine months ended March 31, 2025 and 2024, respectively. As of March 31, 2025 and June 30, 2024, prepaid expenses associated with this arrangement were $ 5,968 and $ 5,993 , respectively, and are reported under Prepaid expenses and other current assets, and Other non-current assets in the accompanying condensed consolidated balance sheets. The Company provided a notice of termination with respect to the commercial agreement on September 20, 2024 and has subsequently negotiated a wind down. From time to time the Company enters into arrangements with 605, LLC (“605”). James L. Dolan, the Company’s Executive Chairman, Chief Executive Officer and a director, and his spouse, Kristin A. Dolan, owned 605 until September 13, 2023. Kristin A. Dolan is also the founder and was the Chief Executive Officer of 605. 605 provides audience measurement and data analytics services to the Company and its subsidiaries in the ordinary course of business. In August 2022, a subsidiary of Sphere Entertainment entered into a three-year agreement with 605, valued at $ 750 , covering several customer analysis projects per year in connection with events held at the Company’s venues, which was assigned to the Company in connection with the Distribution. Pursuant to this arrangement, the Company recognized $ 0 and $ 34 of expense for the three and nine months ended March 31, 2024, respectively. On September 13, 2023, 605 was sold to iSpot.tv, and James L. Dolan and Kristin A. Dolan now hold a minority interest in iSpot.tv. As a result, as of September 13, 2023, 605 is no longer considered to be a related party. Revenues and Operating Expenses The following table summarizes the composition and amounts of the transactions with the Company’s affiliates. The significant components of these amounts are discussed below. These amounts are reflected in revenues and operating expenses in the accompanying condensed consolidated statements of operations for the three and nine months ended March 31, 2025 and 2024: Three Months Nine Months Ended March 31, March 31, 2025 2024 2025 2024 Revenues $ 47,709 $ 46,396 $ 94,470 $ 85,185 Operating credits (expenses): Revenue sharing expenses $ ( 8,968 ) $ ( 8,521 ) $ ( 16,963 ) $ ( 15,988 ) Reimbursement under Arena License Arrangements 10,509 10,959 19,260 19,266 Cost reimbursement from MSG Sports 10,673 9,483 27,353 28,871 Cost reimbursement from Sphere Entertainment 16,350 27,494 62,336 84,171 Other operating expenses, net ( 406 ) ( 1,266 ) ( 1,836 ) ( 4,120 ) Total operating credits (expenses), net (a) $ 28,158 $ 38,149 $ 90,150 $ 112,200 _________________ (a) Of the total operating credits (expenses), net, $ 1,145 and $( 3 ) for the three and nine months ended March 31, 2025 and $ 1,661 and $( 895 ) for the three and nine months ended March 31, 2024 , respectively, are included in direct operating expenses in the accompanying condensed consolidated statements of operations, and $ 27,013 and $ 90,153 for the three and nine months ended March 31, 2025 and $ 36,488 and $ 113,095 for the three and nine months ended March 31, 2024 , respectively , are included in selling, general, and administrative expenses in the accompanying condensed consolidated statements of operations. Revenues The Company recorded $ 33,595 and $ 61,880 of revenues under the Arena License Agreements for the three and nine months ended March 31, 2025, respectively . In addition to the Arena License Agreements, during the three and nine months ended March 31, 2025, the Company’s revenues from related parties primarily reflected amounts earned under sponsorship sales and service representation agreements of $ 8,227 and $ 16,892 , respectively , and merchandise sharing revenues of $ 2,547 and $ 5,518 , respectively, with MSG Sports. The Company also earned sublease revenue from related parties of $ 1,719 and $ 8,359 during the three and nine months ended March 31, 2025 , respectively. The Company recorded $ 35,588 and $ 61,441 of revenues under the Arena License Agreements for the three and nine months ended March 31, 2024, respectively . In addition, during the three and nine months ended March 31, 2024, the Company recorded revenues under sponsorship sales and service representation agreements of $ 7,234 and $ 15,503 , and merchandise sharing revenues of $ 2,789 and $ 5,087 , respectively, with MSG Sports. The Company also earned sublease revenue from related parties of $ 761 and $ 2,258 during the three and nine months ended March 31, 2024, respectively . 19 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 13. Additional Financial Information The following table provides a summary of the amounts recorded as Cash, cash equivalents, and restricted cash: As of March 31, 2025 June 30, 2024 Cash and cash equivalents $ 88,953 $ 33,255 Restricted cash 521 300 Total cash, cash equivalents, and restricted cash $ 89,474 $ 33,555 The Company’s Cash, cash equivalents, and restricted cash are classified within Level I of the fair value hierarchy as they are valued using observable inputs that reflect quoted prices for identical assets in active markets. The Company’s restricted cash includes cash deposited in escrow and operating accounts. The Company has deposited cash in escrow and operating accounts related to general liability insurance obligations. Prepaid expenses and other current assets consisted of the following: As of March 31, 2025 June 30, 2024 Prepaid revenue sharing expense $ 62,289 $ 54,326 Other prepaid expenses 22,893 19,632 Current contract assets 8,812 7,844 Inventory (a) 4,068 3,871 Other 3,694 5,128 Total prepaid expenses and other current assets $ 101,756 $ 90,801 _________________ (a) Inventory is mostly comprised of food and liquor for the venues. Other non-current assets consisted of the following: As of March 31, 2025 June 30, 2024 Unbilled lease receivable (a) $ 126,149 $ 98,473 Investments (b) 6,551 6,320 Deferred costs 6,365 3,649 Other 1,845 1,841 Total other non-current assets $ 140,910 $ 110,283 _________________ (a) Unbilled lease receivable relates to the amounts recorded under the Arena License Agreement. (b) See Note 5. Investments for more information on long-term investments. Accounts payable, accrued and other current liabilities consisted of the following: As of March 31, 2025 June 30, 2024 Accounts payable $ 20,778 $ 26,594 Accrued payroll and employee related liabilities 43,337 71,145 Cash due to promoters 68,576 67,697 Accrued expenses and other current liabilities 42,779 38,314 Total accounts payable, accrued and other current liabilities $ 175,470 $ 203,750 20 MADISON SQUARE GARDEN ENTERTAINMENT CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Concentration of Risk As of March 31, 2025, the Company had no customers that made up 10% or more of Accounts receivable, net on the accompanying condensed consolidated balance sheets. As of June 30, 2024, there was one customer that made up 12 % of Accounts receivable, net on the accompanying condensed consolidated balance sheets. For the three and nine months ended March 31, 2025 and March 31, 2024, the Company had no customers that made up 10% or more of total revenues in the accompanying condensed consolidated statements of operations. Leases In February 2025, the Company recognized a right-of-use lease asset of $ 116,963 and an additional lease obligation of $ 115,335 as the Company took possession of additional space in its New York corporate office. Subsequently, the Company recognized a partial impairment of $ 9,700 which was reported in Impairment of long-lived assets for the three and nine months ended March 31, 2025. Stock Repurchase Program On March 29, 2023, the Company’s Board of Directors authorized a share repurchase program to repurchase up to $ 250,000 of the Company’s Class A Common Stock (the “Stock Repurchase Program”). Pursuant to the Stock Repurchase Program, shares of Class A Common Stock may be purchased from time to time in open market or private transactions, block trades or such other manner as the Company may determine in accordance with applicable insider trading and other securities laws and regulations. The timing and amount of purchases will depend on market conditions and other factors. For the three and nine months ended March 31, 2025, the Company repurchased 436,008 and 1,117,601 shares of Class A Common Stock for $ 14,692 and $ 39,692 , excluding excise tax, respectively. As of March 31, 2025, the Company had approximately $ 70,000 remaining available under its Stock Repurchase Program for repurchases. Other (expense) income, net Other (expense) income, net includes the following: Three Months Ended Nine Months Ended March 31, March 31, 2025 2024 2025 2024 Net periodic benefit costs (excluding service costs) $ ( 857 ) $ ( 853 ) $ ( 2,575 ) $ ( 2,556 ) Realized and unrealized (loss) gain on investments ( 165 ) 950 ( 203 ) 391 Other 73 ( 19 ) 15 620 Total other (expense) income, net $ ( 949 ) $ 78 $ ( 2,763 ) $ ( 1,545 ) Income Taxes During the nine months ended March 31, 2025 and March 31, 2024, the Company made income tax payments of $ 13,453 and $ 58 , respectively. 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 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 %. 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 and local taxes. 21