What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2020-08-31 compared with 2019-08-20 · 501 added, 854 removed, 231 unchanged (85% of the section changed)

1 unchanged sentence

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

In this MD&A , there are statements concerning the future operating and future financial performance of The Madison Square Garden Company and its direct and indirect subsidiaries (collectively, “we,” “us,” “our,” “Madison Square Garden,” “MSG,” or the “Company”), including possible impacts from the timing and costs of new venue construction, increased investment in personnel, content and technology for the MSG Spheres, the potential spin-off of the Company’s sports businesses (the “ Sports Distribution ”), and the winding down of Obscura ’ s third-party production business.

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

(formerly The Madison Square Garden Company) and its direct and indirect subsidiaries (collectively, “we,” “us,” “our,” or the “Company”) including, the completion of the National Basketball Association (the “NBA”) and National Hockey League (the “NHL”) 2019-20 and 2020-21 seasons, and the impact of COVID-19 on our future operations.

See “Part I — Item 1.

Business ” for further discussion of the Sports Distribution .

Business ” for further discussion of the MSGE Distribution (defined below).

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

1 unchanged sentence

Factors that may cause such differences to occur include, but are not limited to:

our ability to successfully design, construct, finance and operate new venues in Las Vegas, London and other markets, and the investments, costs and timing associated with those efforts, including the impact of any unexpected construction delays and/or cost overruns;

the level of our revenues, which depends in part on the popularity and competitiveness of our sports teams and the level of popularity of the Christmas Spectacular Starring the Radio City Rockettes (“ Christmas Spectacular ”) and other entertainment events which are presented in our venues;

costs associated with player injuries, and waivers or contract terminations of players and other team personnel;

the duration and severity of the coronavirus pandemic and our ability to effectively manage the impacts, including the unavailability of the Madison Square Garden Arena (“The Garden”) and league decisions regarding the resumption of play;

the impact of the suspension or cancellation of the 2019-20 or 2020-21 NBA and NHL seasons on our ability to recognize revenue from national media rights fees;

the level of our revenues, which depends in part on the popularity and competitiveness of our sports teams;

costs associated with player injuries, waivers or contract terminations of players and other team personnel;

changes in professional sports teams’ compensation, including the impact of signing free agents and trades, subject to league salary caps and the impact of luxury tax;

the level of our capital expenditures and other investments;

general economic conditions, especially in the New York City, Los Angeles, Las Vegas and London metropolitan areas where we have business activities;

general economic conditions, especially in the New York City;

the demand for sponsorship arrangements and for advertising;

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

changes in laws, National Basketball Association (the “ NBA ”) or National Hockey League (the “ NHL ”) rules, regulations, guidelines, bulletins, directives, policies and agreements, including the leagues’ respective collective bargaining agreements (each a “ CBA ”) with their players’ associations, salary caps, revenue sharing, NBA luxury tax thresholds and media rights, or other regulations under which we operate;

any NBA , NHL or other work stoppage;

competition, for example, from other teams, and other sports and entertainment options;

changes in laws, NBA or NHL rules, regulations, guidelines, bulletins, directives, policies and agreements, including the leagues’ respective collective bargaining agreements (each a “ CBA ”) with their players’ associations, salary caps, escrow requirements, revenue sharing, NBA luxury tax thresholds and media rights, or other regulations under which we operate;

any NBA , NHL or other work stoppage in addition to those related to COVID-19 impacts;

any economic, political or other actions, such as boycotts, protests, work stoppages or campaigns by labor organizations;

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

the level of our expenses, including our corporate expenses;

the successful development of new live productions, enhancements or changes to existing productions and the investments associated with such development, enhancements, or changes, as well as investment in personnel, content and technology for the MSG Spheres;

the continued popularity and success of the TAO Group restaurants and nightlife and hospitality venues, as well as its existing brands, and the ability to successfully open and operate new restaurants and nightlife and hospitality venues;

the ability of BCE to attract attendees and performers to its festival;

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

activities or other developments that discourage or may discourage congregation at prominent places of public assembly, including T he Garden where the home games of the New York Knickerbockers (the “Knicks”) and the New York Rangers (the “Rangers”) are played;

the evolution of the esports industry and its potential impact on our esports businesses;

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

our ability to successfully integrate acquisitions, new venues or new businesses into our operations;

the operating and financial performance of our strategic acquisitions and investments, including those we do not control;

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

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

our ability to successfully integrate acquisitions or new businesses into our operations;

the operating and financial performance of our strategic acquisitions and investments, including those we may not control;

the impact of governmental regulations or laws, including changes in how those regulations and laws are interpreted and the continued benefit of certain tax exemptions (including for The Garden) and the ability for us and Madison Square Garden Entertainment Corp.

(“ MSG Entertainment ”) to maintain necessary permits or licenses;

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

a default by our subsidiaries under their respective credit facilities;

business, economic, reputational and other risks associated with, and the outcome of, litigation and other proceedings;

financial community and rating agency perceptions of our business, operations, financial condition and the industry in which we operate;

the ability of our investees and others to repay loans and advances we have extended to them;

our ownership of professional sports franchises in the NBA and NHL and certain related transfer restrictions on our common stock;

the tax free treatment of the 2015 Distribution ;

whether or not we pursue and complete the Sports Distribution and, if so, its impact on our business, financial condition and results of operations;

the tax free treatment of the distribution of the outstanding common stock of the Company to the shareholders of MSG Networks Inc.

in fiscal year 2016 and the MSGE Distribution ;

the performance by MSG Entertainment of its obligations under various agreements with the Company related to the MSGE Distribution and ongoing commercial arrangements;

the factors described under “Part I — Item 1A.

2 unchanged sentences

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

MSGE Distribution

On April 17, 2020 (the “ MSGE Distribution Date ”), the Company distributed all of the outstanding common stock of MSG Entertainment to its stockholders (the “ MSGE Distribution ”).

MSG Entertainment owns, directly or indirectly, the entertainment business previously owned and operated by the Company through its MSG Entertainment business segment and the sports booking business previously owned and operated by the Company through its MSG Sports business segment.

In the MSGE Distribution , (a) each holder of the Company’s Class A common stock, received one share of MSG Entertainment Class A common stock, par value $0.01 per share, for every share of the Company’s Class A common stock held of record as of the close of business, New York City time, on April 13, 2020 (the “Record Date”), and (b) each holder of the Company’s Class B common stock, received one share of MSG Entertainment Class B common stock, par value $0.01 per share, for every share of the Registrant’s Class B common stock held of record as of the close of business, New York City time, on the Record Date.

Subsequent to the MSGE Distribution , the Company no longer consolidates the financial results of MSG Entertainment for purposes of its own financial reporting and the historical financial results of MSG Entertainment have been reflected in the Company’s consolidated financial statements as discontinued operations for all periods presented through the MSGE Distribution Date .

After giving effect to the MSGE Distribution , the Company operates and reports financial information in one segment.

MD&A is provided as a supplement to, and should be read in conjunction with, the audited consolidated financial statements and footnotes thereto included in Item 8 of this Annual Report on Form 10-K to help provide an understanding of our financial condition, changes in financial condition and results of operations .

3 unchanged sentences

Results of Operations.

This section provides an analysis of our results of operations for the years ended June 30, 2019 , 2018 and 2017 on both a consolidated and segment basis .

Our segments are MSG Entertainment and MSG Sports.

This section provides an analysis of our results of operations for the years ended June 30, 2020 , 2019 and 2018.

Liquidity and Capital Resources.

2 unchanged sentences

Seasonality of Our Business.

This section discusses the seasonal performance of our MSG Sports and MSG Entertainment segments .

This section discusses the seasonal performance of our Company .

Recently Issued Accounting Pronouncements and Critical Accounting Policies.

2 unchanged sentences

Business Overview

The Company is a sports and entertainment business comprised of dynamic and powerful assets and brands.

The Company is comprised of two business segments:

MSG Entertainment and MSG Sports, which is built on a foundation of iconic venues and compelling content, including live sports and entertainment events that we create, produce and present.

The Company conducts

a significant portion of its operations at venues that it either owns or operates under long-term leases.

The Company owns Madison Square Garden (“ The Garden ”) and Hulu Theater at Madison Square Garden in New York City, the Forum in Inglewood, CA and The Chicago Theatre in Chicago.

In addition, the Company leases Radio City Music Hall and the Beacon Theatre in New York City.

Description of Our Segments

MSG Entertainment

Our MSG Entertainment segment, which represented approximately 50% of our consolidated revenues for the year ended June 30, 2019 , is one of the country’s leaders in live entertainment .

MSG Entertainment produces, presents and hosts live entertainment events, including (i) concerts and (ii) other live events such as family shows, performing arts events and special events, in our diverse collection of venues.

Those venues include The Garden , Hulu Theater at Madison Square Garden , Radio City Music Hall, the Beacon Theatre, the Forum, and The Chicago Theatre.

The scope of our collection of venues enables us to showcase acts that cover a wide spectrum of genres and popular appeal.

Although we primarily license our venues to third-party promoters for a fee, we also promote or co-promote shows in which case we have economic risk relating to the event.

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

This includes the Christmas Spectacular , which is the top grossing live holiday family show in North America, featuring the Rockettes.

The Christmas Spectacular has been performed at Radio City Music Hall for 86 years and more than one million tickets were sold for performances during the 2018 holiday season.

In July 2016, the Company acquired a controlling interest in BCE , the entertainment production company that owns and operates the Boston Calling Music Festival.

This was followed in January 2017 by the Company’s purchase of a controlling interest in TAO Group, a hospitality group with globally -recognized entertainment dining and nightlife brands.

These companies are part of the MSG Entertainment segment.

In November 2017, the Company acquired a 100% controlling interest in Obscura , a creative studio, recognized for its work in designing and developing next-generation immersive experiences.

Revenues generated by Obscura ’s third-party production business ( and related costs ) are reflected in the MSG Entertainment segment.

The Company has decided to wind down this third-party productions business to focus on MSG Sphere development.

Any costs incurred by Obscura that are associated with MSG Sphere development that are not capitalized are reported in “Corporate and Other”.

Revenue Sources

Our primary sources of revenue in our MSG Entertainment segment are ticket sales to our audiences for live events that we produce or promote/co-promote and license fees for our venues paid by third-party promoters in connection with events that we do not produce or promote/co-promote .

We also generate revenue from other sources, including facility and ticketing fees, concessions, sponsorships and signage, a portion of suite license fees at The Garden, merchandising and tours at certain of our venues.

The amount of revenue and expense we record in our MSG Entertainment segment for a given event depends to a significant extent on whether we are promoting or co-promoting the event or are licensing our venue to a third party.

In addition, a significant component of the MSG Entertainment segment revenues are generated by the TAO Group through entertainment dining and nightlife offerings, which primarily consist of food and beverage sales and venue management fees.

Ticket Sales and Suite Licenses

For our productions and for entertainment events in our venues that we promote, we recognize revenues from the sale of tickets to our audiences.

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

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

During the fiscal year 2017, we implemented significant changes to how we sell Christmas Spectacular tickets.

By eliminating block sales to third party brokers, we brought a significant number of tickets back in-house, which created the opportunity for more customers to buy tickets to the production directly from us.

The Garden has 21 Event Level suites, 58 Lexus Madison Level suites, and 18 Signature Level suites.

Suite licenses at The Garden are generally sold to corporate customers pursuant to multi-year licenses.

Under standard suite licenses, the licensees pay an annual license fee, which varies depending on the location of the suite.

The license fee includes, for each seat in the suite, tickets for events at The Garden for which tickets are sold to the general public, subject to certain exceptions.

In addition, suite holders separately pay for food and beverage service in their suites at The Garden.

Revenues from the sale of suite licenses are shared between our MSG Entertainment and MSG Sports segments.

Venue License Fees

For entertainment events held at our venues that we do not produce, promote or co-promote, we typically earn revenue from venue license fees charged to the third-party promoter of the event.

The amount of license fees we charge varies by venue, as well as by the size of the production and the number of days utilized, among other factors.

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

Facility and Ticketing Fees

For all public and ticketed entertainment events held in our venues, we also earn additional revenues on substantially all tickets sold, whether we promote/co-promote the event or license the venue to a third party.

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

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

In addition to concession-style sales of food and beverages, which represent the majority of our concession revenues, we also generate revenue from catering for our suites at The Garden.

We earn revenues from the sale of merchandise relating to our proprietary productions and other live entertainment events that take place at our venues.

The majority of our merchandise revenues are generated through on-site sales during performances of our productions and other live events.

We also generate revenues from the sales of our Christmas Spectacular merchandise, such as ornaments and apparel, through traditional retail channels.

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

Venue Signage and Sponsorship

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

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

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

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

Entertainment Dining and Nightlife Offerings

We earn revenues from entertainment dining and nightlife offerings through our operations of the TAO Group’s restaurants and nightlife and hospitality venues.

These revenues primarily consist of food and beverage sales and banquet hosting services at TAO Group leased restaurants and nightclubs.

In addition, we earn fees from our real estate partners for operating certain of our restaurants and nightclubs.

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

We charge a portion of our actual expenses associated with the ownership, lease, maintenance and operation of our venues, along with a portion of our corporate expenses, to our MSG Entertainment segment.

However, the operating results of our MSG Entertainment segment benefit from the fact that no rent is charged to the segment for use of the Company’s owned venues.

We do not allocate to our segments depreciation expense on property and equipment related to The Garden, Hulu Theater at Madison Square Garden or the Forum.

Performer Payments

Our productions are performed by talented actors, dancers, singers, musicians and entertainers.

In order to attract and retain this talent, we are required to pay our performers an amount that is commensurate with both their abilities and the demand for their services from other entertainment companies.

Our productions typically feature ensemble casts (such as the Rockettes), where most of our performers are paid based on a standard “scale,” pursuant to CBA s we negotiate with the performers’ unions.

Certain performers, however, have individually negotiated contracts.

Staging Costs

Staging costs for our proprietary events as well as other events that we promote include the costs of sets, lighting, display technologies, special effects, sound and all of the other technical aspects involved in presenting a live entertainment event.

These costs vary substantially depending on the nature of the particular show, but tend to be highest for large-scale theatrical productions, such as the Christmas Spectacular .

For concerts we promote, the performer usually provides a fully-produced show.

Along with performer salaries, the staging costs associated with a given production are an important factor in the determination of ticket prices.

Day-of-Event Costs

For days on which MSG Entertainment stages its productions, promotes an event or provides one of our venues to a third-party promoter under a license fee arrangement, the event is charged the variable costs associated with such event, including box office staff, stagehands, ticket takers, ushers, security, and other similar expenses.

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

Marketing and Advertising Costs

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

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

Entertainment Dining and Nightlife Offerings Costs

Through our ownership in the operations of the TAO Group restaurants and nightlife and hospitality venues, we incur costs for providing food and beverage as well as banquet hosting services to our customers.

Our dining and nightlife offering costs primarily include the following:

labor costs, consisting of restaurant management salaries, hourly staff payroll and other payroll-related items, including taxes and fringe benefits;

food and beverage costs;

operating costs, consisting of maintenance, utilities, bank and credit card charges, and any other restaurant-level expenses;

occupancy costs, consisting of both fixed and variable portions of rent, common area maintenance charges, insurance premiums and taxes.

Factors Affecting Operating Results

The operating results of our MSG Entertainment segment are largely dependent on our ability to attract concerts and other live events to our venues, as well as the continuing popularity of the Christmas Spectacular at Radio City Music Hall.

Our MSG Entertainment segment recognized an operating loss during the year ended June 30, 2017, which includes a $33,629 write-off of deferred production costs related to the New York Spectacular Starring the Radio City Rockettes (“ New York Spectacular ”).

Our MSG Entertainment segment’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 our entertainment and nightlife offerings, suite licenses and tickets to our live productions, concerts, family shows and other events, which would also negatively affect concession and merchandise sales, as well as lower levels of sponsorship and venue signage.

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

An economic downturn could adversely affect our business and results of operations.

The Company continues to explore additional opportunities to expand our presence in the entertainment industry.

Any new investment may not initially contribute to operating income, but is intended to become operationally profitable over time.

Our results will also be affected by investments in, and the success of, new productions.

Our MSG Sports segment, which represented approximately 50% of our consolidated revenues for the year ended June 30, 2019 , owns and operates professional sports franchises, including the New York Knicks (the “Knicks”), a founding member of the NBA, and the New York Rangers (the “Rangers”), one of the “original six” franchises of the NHL.

MSG Sports also owns and operates the Hartford Wolf Pack of the American Hockey League (the “AHL”), which is the primary player development team for the Rangers and is also competitive in its own right in the AHL.

The Company owns and operates an NBA G League

team, named the Westchester Knicks, which plays its home games at the Westchester County Center in White Plains, NY.

The Knicks and Rangers play their home games at The Garden.

In January 2019, the Company sold the New York Liberty (the “Liberty”) of the Women’s National Basketball Association (the “WNBA”).

For all periods through the sale date, MSG Sports includes the Liberty.

Our professional sports franchises are collectively referred to herein as “our sports teams.” The MSG Sports segment also includes CLG , a premier North American esports organization, and Knicks Gaming, MSG’s franchise that competes in the NBA 2K League.

CLG and Knicks Gaming are collectively referred to herein as “our esports teams,” and, together with our sports teams, “our teams.” In addition, our sports business also promotes, produces and/or presents a broad array of live sporting events including professional boxing, college basketball, college hockey, professional bull riding, mixed martial arts, esports, and college wrestling .

The Company owns and operates a portfolio of assets featuring some of the most recognized teams in all of sports, including the Knicks of the NBA and the Rangers of the NHL.

Both the Knicks and the Rangers play their home games at The Garden.

The Company’s other professional franchises include two development league teams - the Hartford Wolf Pack of the American Hockey League (“AHL”) and the Westchester Knicks of the NBA G League (“ NBAGL ”).

Our professional sports franchises are collectively referred to herein as “ our sports teams .” During the periods prior to fiscal year 2020, MSG Sports also included the New York Liberty (the “Liberty”) of the Women’s National Basketball Association (the “WNBA”), which was sold in January 2019.

In addition, the Company owns Knicks Gaming, an esports franchise that competes in the NBA 2K League, as well as a controlling interest in Counter Logic Gaming (“CLG”) , a North American esports organization .

The Company also operates two professional sports team performance centers - the Madison Square Garden Training Center in Greenburgh, NY and the CLG Performance Center in Los Angeles, CA.

CLG and Knicks Gaming are collectively referred to herein as “our esports teams,” and together with the sports teams, the “teams.”

Revenue Sources

We earn revenue in our MSG Sports segment from several primary sources:

ticket sales and a portion of suite rental fees at The Garden, our share of distributions from NHL and NBA league-wide national and international television contracts and other league-wide revenue sources, venue signage and other sponsorships, concessions and merchandising .

Our MSG Sports segment also earns substantial fees from MSG Networks for the local media rights to telecast the games of our professional sports teams .

We also earn venue license fees, primarily from the rental of The Garden to third-party promoters or conferences holding sporting events at our arena .

The amount of revenue we earn is influenced by many factors, including the popularity and on-court or on-ice performance of our sports teams and general economic conditions.

We earn revenue from several primary sources:

We also earn substantial fees from MSG Networks for the local media rights to telecast the games of our sports teams .

The amount of revenue we earn is influenced by many factors, including the impacts of COVID-19, the popularity and on-court or on-ice performance of our sports teams and general economic conditions.

In particular, when our sports teams have strong on-court and on-ice performance, we benefit from increased demand for tickets, potentially greater food and merchandise sales from increased attendance and increased sponsorship opportunities.

When our sports teams qualify for the playoffs, we also benefit from the attendance and in-game spending at the playoff games.

The year-to-year impact of team performance is somewhat moderated by the fact that a significant portion of our revenue derives from rights fees, suite rental fees and sponsorship and signage revenue, all of which are generally contracted on a multi-year basis.

Nevertheless, the long-term performance of our business is tied to the success and popularity of our sports teams and our ability to attract other compelling sports content.

Ticket Sales, Suite Licenses, Venue Licenses, Facility and Ticketing Fees

Ticket sales have historically constituted the largest single source of revenue for our MSG Sports segment .

We sell tickets to our sports teams’ home games through season tickets, which are typically held by long-term season subscribers, through group sales, and through single-game tickets, which are purchased by fans either individually or in multi-game packages .

The prices of our tickets vary, depending on the sports team and the location of the seats .

The year-to-year impact of team performance is somewhat moderated by the fact that a significant portion of our revenue derives from media rights fees, suite rental fees and sponsorship and signage revenue, all of which are generally contracted on a multi-year basis.

Nevertheless, the long-term performance of our business is tied to the success and popularity of our sports teams.

In addition, due to the NBA and NHL playing seasons, revenues from our business are typically concentrated in the second and third quarters of each fiscal year.

The concentration of our revenues and expenses, however, may be different due to the effects of the COVID-19 pandemic.

Ticket Sales and Facility and Ticketing Fees

Ticket sales have historically constituted our largest single source of revenue .

Tickets to our sports teams ’ home games are sold through season tickets (full and partial plans), which are typically held by long-term season subscribers, through group sales, and through single-game tickets, which are purchased by fans either individually or in multi-game packages .

We generally review and set the price of our tickets before the start of each team’s season.

During the fiscal year 2017 we made changes to our ticketing polices, resulting in fewer full season tickets sold and more sales of individual and group tickets, as well as partial season plans.

Revenues from the sale of suite licenses are shared between the MSG Entertainment and MSG Sports segments.

See “— MSG Entertainment — Revenue Sources ” for further discussion.

In addition to our sports teams’ home games, we also present or host other live sporting events at our venues .

When the Company acts as the promoter or co-promoter of such events, the Company typically earns revenues from ticket sales and incurs expenses associated with the event .

When these events are promoted by third-party promoters, the Company typically earns venue license fees from the promoter for use of our venues .

When licensing our venues, the amount recorded as revenue also includes the event’s variable costs such as the costs of front-of-house and back-of-house staffs, including electricians, laborers, box office staff, ushers, security and building services, which we pass along to the promoter .

The number and mix of live sporting events, including whether we are the promoter or co-promoter of an event or license our venues to a third-party promoter, could have a significant impact on the level of revenues and expenses that we record in our MSG Sports segment.

Our MSG Sports segment also earns revenues in the form of certain fees added to ticket prices for events held at our venues, regardless of whether we act as promoter or co-promoter for such events .

This currently includes a facility fee the Company charges on tickets it sells to all events at our venues, except for our sports teams’ season tickets and certain other limited exceptions.

However, we dynamically price our individual tickets based on opponent, seat location, day of the week and other factors.

We do not earn revenue from ticket sales for games played by our teams at their opponents’ arenas.

We also earn revenues in the form of certain fees added to ticket prices, which currently include a facility fee the Company charges on tickets it sells to our sports teams ’ games, except for season tickets.

We earn revenue from the licensing of media rights for our sports teams ’ home and away games and also through the receipt of our share of fees paid for league-wide media rights, which are awarded under contracts negotiated and administered by each league.

The Company and MSG Networks are parties to media rights agreements covering the local telecast rights for the Knicks and Rangers .

The financial success of our MSG Sports segment is significantly dependent on the rights fees we receive from MSG Networks in connection with the telecast of our Knicks and Rangers games.

The financial success of the Company is significantly dependent on the rights fees we receive from MSG Networks in connection with the telecast of our Knicks and Rangers games.

National and international telecast arrangements differ by league .

Fees paid by telecasters under these arrangements are pooled by each league and then generally shared equally among all teams.

Venue Signage and Sponsorships and Ad Sales Commission

We earn revenues through the sale of signage space at The Garden and sponsorship rights in connection with our teams and certain other sporting events .

Our strategy is to develop marketing partnerships with world-class brands by creating customized platforms that achieve our partners’ business objectives.

Signage sales generally involve the sale of advertising space within The Garden during our sports teams’ home games and include the sale of signage on the ice and on the boards of the hockey rink during Rangers games, courtside during Knicks games, and/or on the various scoreboards and display panels at The Garden .

Suites and Clubs

We earn revenue through the sale of suite and premium club licenses at The Garden, which are generally sold by MSG Entertainment to corporate customers pursuant to multi-year licenses.

Under standard licenses, the licensees pay an annual license fee, which varies depending on the location and type of the suite or club.

The license fee includes, for each seat in the suite or club, tickets for our home games and other events at The Garden that are presented by MSG Entertainment for which tickets are sold to the general public, subject to certain exceptions.

In addition, suite holders separately pay for food and beverage service in their suites at The Garden.

Food and non-alcoholic beverage service is included in the annual license fee paid by club members.

Because suite and club licenses cover both our games and events that MSG Entertainment presents at The Garden, suite and club rental revenue is shared between us and MSG Entertainment under the arena license agreements (the “Arena License Agreements”) we entered into in connection with the MSGE Distribution .

Pursuant to the Arena Licenses Agreements, the Knicks and the Rangers are entitled to 35% and 32.5% , respectively, of the revenues received by MSG Entertainment in connection with suite and club licenses.

Venue Signage and Sponsorships

We earn revenues through the sale of sponsorships and signage specific to the teams .

Sales of team specific signage generally involve the sale of advertising space within The Garden during our sports teams ’ home games and include the sale of signage on the ice and on the boards of the hockey rink during Rangers games, courtside during Knicks games, and/or on the various scoreboards and display panels at The Garden .

We offer both television camera-visible and non-camera-visible signage space.

Sponsorship rights generally require us to use the name, logos and other trademarks of a sponsor in our advertising and in promotions for our teams and during our sports events .

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

The Company and MSG Networks are parties to an advertising sales representation agreement .

Pursuant to the agreement, we have the exclusive right and obligation to sell advertising availabilities of MSG Networks .

We are entitled to and earn commission revenue on such sales.

The expense associated with advertising personnel, which was transferred from MSG Networks in connection with this advertising sales representation agreement , is recognized in selling, general and administrative expenses.

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

In addition to concession-style sales of food and beverages, which represent the majority of our concession revenues, we also provide higher-end dining at our full service restaurant and clubs as well as catering for suites at The Garden.

We earn revenues from the sale of our teams’ merchandise both through the in-venue (and in some cases, online) sale of items bearing the logos or other marks of our teams and through our share of sports league distributions of royalties and other revenues from the sports leagues’ licensing of team and sports league trademarks, which revenues are generally shared equally among the teams in the sports leagues .

We also earn a portion of revenues through MSG Entertainment ’s sale of venue indoor signage space and sponsorship rights at The Garden that are not specific to our teams pursuant to the Arena License Agreements.

Sponsorship rights generally require the use of the name, logos and other trademarks of a sponsor in the advertising and in promotions for The Garden in general or our teams specifically during our sports events .

Sponsorship arrangements may be exclusive within a particular sponsorship category or non-exclusive and generally permit a sponsor to use the name, logos and other trademarks of our teams and, in the case of sponsorship arrangements shared with MSG Entertainment , MSG Entertainment ’s venues and brands in connection with their own advertising and in promotions in The Garden or in the community.

Food, Beverage and Merchandise Sales

We earn revenues from the sale of food and beverages during our sports teams ’ games at The Garden .

In addition to concession-style sales of food and beverages, which represent the majority of food and beverage revenues, The Garden also provides higher-end dining at full service restaurants and premium clubs as well as catering for suites.

Pursuant to the Arena License Agreements, the Knicks and the Rangers receive 50% of net profits from the sales of food and beverages during their games at The Garden.

We also earn revenues from the sale of our sports teams ’ merchandise both through the in-venue (and in some cases, online) sale of items bearing the logos or other marks of our teams and through our share of sports league distributions of royalties and other revenues from the sports leagues’ licensing of team and sports league trademarks, which revenues are generally shared equally among the teams in the sports leagues .

Pursuant to the Arena License Agreements, the Knicks and the Rangers pay MSG Entertainment a commission equal to 30% of revenues from the sales of their merchandise at The Garden.

By agreement among the teams, each of the sports leagues in which we operate acts as an agent for the sports teams to license their logos and other marks, as well as the marks of the leagues, subject to certain rights retained by the teams to license these marks within their arenas and the geographic areas in which they operate.

The most significant expenses in our MSG Sports segment are player and other team personnel salaries and charges for transactions relating to players for career-ending and season-ending injuries, trades, and waivers and contract termination costs of players and other team personnel, including team executives.

We also incur costs for travel, player insurance, league operating assessments (including a 6% NBA assessment on regular season ticket sales), NHL and NBA revenue sharing and NBA luxury tax.

We charge a portion of our actual expenses associated with the ownership, lease, maintenance and operation of our venues, along with a portion of our corporate expenses, to our MSG Sports segment.

However, the operating results of our MSG Sports segment benefit from the fact that no rent is charged to the segment for use of the Company’s owned venues.

We do not allocate to our segments depreciation expense on property and equipment related to The Garden, Hulu Theater at Madison Square Garden or the Forum.

Amounts collected for ticket sales, sponsorships, venue signage and suite licenses and clubs in advance of an event are recorded as deferred revenue and are recognized as revenues when earned for both accounting and tax purposes.

The most significant expenses are player and other team personnel salaries and charges for transactions relating to players for career-ending and season-ending injuries, trades, and waivers and contract termination costs of players and other team personnel, including team executives.

We also incur costs for travel, player insurance, league operating assessments (including a 6% NBA assessment on regular season ticket sales), NHL and NBA revenue sharing and, when applicable, NBA luxury tax.

In addition, in connection with the MSGE Distribution , the Company entered into the Arena License Agreements with MSG Entertainment which require the Company to pay arena license fees to MSG Entertainment in exchange for the right to use The Garden for home games of the Knicks and the Rangers for a 35-year term.

Under the Arena License Agreements, the Knicks

and the Rangers will pay an annual license fee in connection with their respective use of The Garden.

The license fee for the first full contract year ending June 30, 2021 will be approximately $22,500 for the Knicks and approximately $16,700 for the Rangers, and then for each subsequent year, the license fees will be 103% of the license fees for the immediately preceding contract year.

The teams are not, however, required to pay the license fee during a period in which The Garden is unavailable for home games due to a force majeure event (including the government mandated suspension of events at The Garden as a result of the disruptions caused by COVID-19).

As a result, we have not been required to make any rent payments under the Arena License Agreements since the MSGE Distribution Date and will continue not to be required to make any rent payments during the government mandated suspension of events at The Garden as a result of the disruptions caused by COVID-19.

If The Garden reopens without capacity limitations, future monthly rent payments due under the Arena License Agreements will be payable by the Knicks and the Rangers, even if the NBA or NHL seasons do not resume simultaneously or at all.

If the Knicks or Rangers play games at the Garden subject to government mandated capacity constraints due to COVID-19, the applicable rent for such periods will be reduced by up to 80% depending on the size of the capacity constraint.

See “— Factors Affecting Results of Operations — Impact of COVID-19 on Our Business ” for more information.

Player Salaries, Escrow System/Revenue Sharing and NBA Luxury Tax

1 unchanged sentence

The leagues’ CBAs typically contain restrictions on when players may move between league clubs following expiration of their contracts and what rights their current and former clubs have.

The NBA CBA expires after the 2023-24 season (although the NBA and the National Basketball Players Association (“ NBPA ”) each have the right to terminate the CBA following the 2022-23 season).

The NBA CBA expires after the 2023-24 season (although each of the NBA and the National Basketball Players Association (“ NBPA ”) has the right to terminate the CBA effective following the 2022-23 season).

In addition, the NBA and the NBPA currently have the right to terminate the CBA through October 15, 2020 (unless extended).

The NBA CBA contains a salary floor (i.e., a floor on each team’s aggregate player salaries with a requirement that the team pay any deficiency to the players on its roster) and a “soft” salary cap (i.e., a cap on each team’s aggregate player salaries but with certain exceptions that enable teams to pay players more, sometimes substantially more, than the cap).

1 unchanged sentence

Amounts in this paragraph are in thousands, except for luxury tax rates.

The NBA CBA provides for a luxury tax that is applicable to all teams with aggregate player salaries exceeding a threshold that is set prior to each season based upon projected league-wide revenues (as defined under the CBA).

The NBA CBA generally provides for a luxury tax that is applicable to all teams with aggregate player salaries exceeding a threshold that is set prior to each season based upon projected league-wide revenues (as defined under the NBA CBA).

The luxury tax rates for teams with aggregate player salaries above such threshold start at $1.50 for each $1.00 of team salary above the threshold up to $5,000 and scale up to $3.25 for each $1.00 of team salary that is from $15,000 to $20,000 over the threshold, and an additional tax rate increment of $0.50 applies for each additional $5,000 (or part thereof) of team salary in excess of $20,000 over the threshold.

In addition, for teams that are taxpayers in at least three of four previous seasons, the above tax rates are increased by $1.00 for each increment.

Fifty percent of the aggregate luxury tax payments is a funding source for the revenue sharing plan and the remaining 50% of such payments is distributed in equal shares to non-taxpaying teams.

Fifty percent of the aggregate luxury tax payments is a funding source for the revenue sharing plan (described below) and the remaining 50% of such payments is distributed in equal shares to non-taxpaying teams.

For the 2019-20 , 2018-19, and 2017-18 seasons, the Knicks were not a luxury tax payer and we recorded approximately $230 , $3,100 , and $2,200 , respectively, of luxury tax proceeds from tax-paying teams .

6 unchanged sentences

If the league’s aggregate player compensation exceeds the designated percentage of league-wide revenues, some or all of such escrowed amounts are distributed equally to all NBA teams.

In the event that the league’s aggregate player compensation is below the designated percentage of league-wide revenues, the teams will remit the shortfall to the NBPA for distribution to the players.

In the event that the league’s aggregate player compensation is below the designated percentage of league-wide revenues, the teams with the shortfall will remit the shortfall in equal shares to the NBPA for distribution to the players.

The NBA also has a revenue sharing plan that generally requires the distribution of a pool of funds to teams with below-average net revenues (as defined in the plan), subject to reduction or elimination based on individual team market size and profitability.

2 unchanged sentences

and collective league sources, if necessary.

Additional amounts may also be distributed on a discretionary basis, funded by assessments on playoff ticket revenues and through collective league sources.

Additional amounts may also be distributed on a discretionary basis, funded by

assessments on playoff ticket revenues and through collective league sources.

We record our revenue sharing expense net of the amount we expect to receive from the escrow.

Our net provision for these items for the year ended June 30, 2020 was approximately $6,529 .

The actual amounts for the 2018-19 season may vary significantly from the recorded provision based on actual operating results for the league and all NBA teams for the season and other factors.

The NHL CBA expires September 15, 2022 (although the NHL and NHL Players’ Association each have the right to terminate the CBA effective following the 2019-20 season).

The NHL CBA provides for a salary floor (i.e., a floor on each team’s aggregate player salaries) and a “hard” salary cap (i.e., teams may not exceed a stated maximum that was negotiated for the 2013-14 season and has been adjusted each season thereafter based upon league-wide revenues ) .

The actual amounts for the 2019-20 season may vary significantly from the recorded provision based on actual operating results for the league and all NBA teams for the season and other factors, including the NBA’s return-to-play plans to complete the 2019-20 season.

The current NHL CBA was set to expire on September 15, 2022, but the NHL and NHL Players’ Association (“NHLPA”) have recently agreed on terms by which the CBA will be extended through and including September 15, 2026 (with the possibility of an additional one year extension in certain circumstances).

The NHL CBA provides for a salary floor (i.e., a floor on each team’s aggregate player salaries) and a “hard” salary cap (i.e., teams may not exceed a stated maximum, which has been adjusted each season thereafter based upon league-wide revenues).

See Note 21 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for summary of the principal aspects of the new NHL CBA and revenue sharing plan.

NHL Escrow System/Revenue Sharing.

4 unchanged sentences

Any such excess funds are distributed to all teams in equal shares.

As of July 2020, the NHL CBA limits the amount of deductions to be withheld from player salaries each year.

If annual excess deductions from player salaries are insufficient to limit league-wide player salaries to 50% of that season’s league-wide revenues, any shortfall will be carried forward to future seasons and remain due from the players to the league.

The NHL CBA also provides for a revenue sharing plan.

The plan generally requires the distribution of a pool of funds approximating 6.055% of league-wide revenues to certain qualifying lower-revenue teams and is funded as follows:

(a) 50% from contributions by the top ten revenue earning teams (based on pre-season and regular season revenues) in accordance with a formula;

(a) 50% from contributions by the top ten revenue earning teams (based on preseason and regular season revenues, net of arena costs) in accordance with a formula;

(b) then from payments by teams participating in the playoffs, with each team contributing 35% of its gate receipts for each home playoff game;

1 unchanged sentence

We record our revenue sharing expense net of the amount we expect to receive from the escrow.

Our net provisions for these items for the years ended June 30, 2019 and 2018 were approximately $23,300 and $21,100 , respectively.

The actual amounts for the 2018-19 and 2017-18 seasons may vary significantly from the recorded provision based on actual operating results for the league and all NHL teams for the season and other factors.

Our net provisions for these items for the year ended June 30, 2020 was approximately $133 .

The actual amounts for the 2019-20 season may vary significantly from the recorded provision based on actual operating results for the league and all NHL teams for the season and other factors, including the NHL’s return-to-play plans to complete the 2019-20 season.

Other Team Operating Expenses

Our teams also pay expenses associated with day-to-day operations, including for travel, equipment maintenance and player insurance.

Direct variable day-of-event costs incurred at The Garden, such as the costs of front-of-house and back-of-house staff, including electricians, laborers, box office staff, ushers, security, and event production are charged to our MSG Sports segment.

Operating costs of the Company’s training center in Greenburgh, NY are also charged to our MSG Sports segment.

The operation of the Hartford Wolf Pack is also a net Rangers player development expense for our MSG Sports segment.

In addition, our team operating expenses include operating costs of the Company’s training center in Greenburgh, NY.

The operation of the Hartford Wolf Pack is reported as a net Rangers player development expense.

As members of the NBA and NHL, the Knicks and Rangers, respectively, are also subject to league assessments.

1 unchanged sentence

The NBA imposed on each team a 6% assessment on regular season ticket revenue.

Our MSG Sports segment also incurs costs associated with VIP amenities provided to certain ticket holders.

We also incur costs associated with VIP amenities provided to certain ticket holders.

Other Expenses

MSG Sports also incurs selling, general and administrative expenses.

Selling, general and administrative (“SG&A”) expenses primarily consist of administrative costs, including compensation, professional fees, as well as sales and marketing costs, including non-event related advertising expenses.

SG&A expenses for periods prior to the MSGE Distribution include certain corporate overhead expenses that do not meet the criteria for inclusion in discontinued operations.

Factors Affecting Operating Results

The operating results of our MSG Sports segment are largely dependent on the continued popularity and/or on-ice or on-court competitiveness of our Rangers and Knicks teams, which have a direct effect on ticket sales for the teams’ home games and are each team’s largest single source of revenue, as well as our ability to attract high-caliber sporting events.

Our operating results are largely dependent on the continued popularity and/or on-ice or on-court competitiveness of our Rangers and Knicks teams, which have a direct effect on ticket sales for the teams’ home games and are each team’s largest single source of revenue.

As with other sports teams, the competitive positions of our sports teams depend primarily on our ability to develop, obtain and retain talented players, for which we compete with other professional sports teams.

A significant factor in our ability to attract and retain talented players is player compensation.

Our MSG Sports segment results reflect the impact of high costs for player salaries (including NBA luxury tax, if any) and salaries of non-player team personnel .

A significant

factor in our ability to attract and retain talented players is player compensation.

The Company’s operating results reflect the impact of high costs for player salaries (including NBA luxury tax, if any) and salaries of non-player team personnel .

In addition, we have incurred significant charges for costs associated with transactions relating to players on our sports teams for season-ending and career-ending injuries and for trades, waivers and contract terminations of players and other team personnel, including team executives .

2 unchanged sentences

For example, the expense for these items was $33,690 , $53,134 and $27,514 for fiscal years 2020 , 2019 and 2018 , respectively .

These expenses add to the volatility of the results of our MSG Sports segment .

These expenses add to the volatility of our operating results .

We expect to continue to pursue opportunities to improve the overall quality of our sports teams and our efforts may result in continued significant expenses and charges .

Such expenses and charges may result in future operating losses for our MSG Sports segment although it is not possible to predict their timing or amount.

Our MSG Sports segment’s performance has been, and may in the future be, impacted by work stoppages.

Such expenses and charges may result in future operating losses although it is not possible to predict their timing or amount.

Our performance has been, and may in the future be, impacted by work stoppages.

See “Part I — Item 1A.

Risk Factors — General Risks — Organized Labor Matters May Have a Material Negative Effect on Our Business and Results of Operations .”

In addition to our MSG Sports segment’s future performance being dependent upon the continued popularity and/or on-ice or on-court competitiveness of our Rangers and Knicks teams, it is also dependent on general economic conditions, in particular those in the New York City metropolitan area, and the effect of these conditions on our customers.

Risk Factors — Organized Labor Matters May Have a Material Negative Effect on Our Business and Results of Operations .”

In addition to our future performance being dependent upon the continued popularity and/or on-ice or on-court competitiveness of our Rangers and Knicks teams, it is also dependent on general economic conditions, in particular those in the New York City metropolitan area, and the effect of these conditions on our customers.

An economic downturn could adversely affect our business and results of operations as it may lead to lower demand for suite licenses and tickets to the games of our sports teams, which would also negatively affect merchandise and concession sales, as well as decrease levels of sponsorship and venue signage revenues.

These conditions may also affect the number of other live sporting events that this segment is able to present.

Factors Affecting Results of Operations

Adoption of ASC Topic 606, Revenue From Contracts With Customers

The Company’s consolidated and segment operating results for the year ended June 30, 2019 were impacted by the adoption of Accounting Standards Codification ( “ ASC ”) Topic 606.

As a result, the Company’s revenues were lower by $22,996 and direct operating expenses were lower by $26,239 for the year ended June 30, 2019 .

The impact of the adoption of ASC Topic 606 resulted in net decreases in MSG Entertainment’s revenues and direct operating expenses of $24,347 and $24,545 , respectively, for the year ended June 30, 2019 , primarily due to the application of principal versus agent revenue recognition on event-related food, beverage and merchandise activities .

For the MSG Sports’ operating results, the adoption of ASC Topic 606 resulted in a net increase in revenues of $1,351 for the year ended June 30, 2019 primarily associated with professional sports teams’ sponsorship and signage revenues.

In addition, the adoption of ASC Topic 606 resulted in a decrease in direct operating expenses of $1,694 for the year ended June 30, 2019 , due to the application of principal versus agent revenue recognition on event-related food, beverage and merchandise activities .

Prior year period results have not been adjusted to reflect the adoption of ASC Topic 606 and, therefore, the Company’s consolidated and segment operating results for the year ended June 30, 2019 are not directly comparable to results for the year ended June 30, 2018 .

Under ASC Topic 606, the suite license revenues for the Company’s MSG Entertainment and MSG Sports segments are now recognized proportionately as events at The Garden take place, as opposed to being recognized on a straight-line basis over the fiscal year under the prior standard.

In addition, most of local media rights revenue is now recognized over the course of the regular season, as opposed to being recognized on a straight-line basis over the fiscal year under the prior standard.

Financial Statements and Supplementary Data — Consolidated Financial Statements — Notes to Consolidated Financial Statements — Note 2 .

Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements and Note 3 .

Revenue Recognition for further discussion of the adoption of ASC Topic 606.

Impact of COVID-19 on Our Business

On March 11 and 12, 2020, the NBA and NHL, respectively, suspended their 2019-20 seasons due to COVID-19.

At the time the seasons were suspended, the Knicks had 16 games remaining, including eight home games, and the Rangers had 12 games remaining, including five home games.

On May 26, 2020, the NHL announced return-to-play plans for 24 teams which began August 1, 2020.

The Rangers were among the teams that returned to play in a 24-team tournament.

On June 4, 2020, the NBA announced plans to resume play on July 30, 2020 with 22 teams.

The Knicks were not among the teams that returned to competition.

As a result of government-mandated assembly limitations and closures due to the COVID-19 pandemic, no events are currently permitted to be held at The Garden where the Knicks and Rangers play their home games, and some or all of these mandated restrictions may remain in effect even after the NBA and/or NHL resume for the 2020-21 seasons.

No assurances can be made that games will be played at The Garden or will be played with any in-arena audiences or without limited-capacity in-arena audiences.

COVID-19 disruptions have materially impacted the Company’s revenues and we are recognizing materially less revenues across a number of areas.

Those areas include:

ticket sales;

media rights fees;

our share of suite licenses;

sponsorships;

signage and in-venue advertising at The Garden;

and food, beverage and merchandise sales.

While we currently have the ability to reduce certain operating expenses as a result of the disruptions caused by COVID-19, including (i) rent payments to MSG Entertainment under the Arena License Agreements while The Garden remains closed, (ii) NBA league assessments and day-of-game expenses for the Knicks and Rangers games and (iii) certain other selling, general and administrative and discretionary expenses, those expense reduction opportunities will not fully offset revenue losses.

Subsidiaries of the Company are parties to the Arena License Agreements with a subsidiary of MSG Entertainment that requires the Knicks and the Rangers to play their home games at The Garden.

Under the Arena License Agreements, the Knicks and the Rangers will pay an annual license fee in connection with their respective use of The Garden.

The Garden, however, is currently closed due to the COVID-19 pandemic and monthly rent is not required to be paid by the Knicks or Rangers.

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

Risk Factors — Our Operations and Operating Results Have Been, and Continue to be, Materially Impacted by the COVID-19 Pandemic and Government and League Actions Taken in Response .”

New York Liberty

The Company’s operating results for fiscal year 2019 also included the Liberty of the Women’s National Basketball Association, which was sold in January 2019.

Renewal of a Ticketing Agreement

The Company’s consolidated and segment operating results for the year ended June 30, 2019 were impacted by the recognition of revenue for events that took place during prior year due to the renewal of the agreement with the Company’s ticketing platform provider during fiscal year 2019.

The following table presents the impact on the Company’s consolidated revenues, operating income and adjusted operating income for the year ended June 30, 2019 from events in the prior year as a result of the ticketing agreement renewal.

MSG Entertainment segment

MSG Sports segment

Corporate Expenses and Venue Operating Costs

The Company allocates certain corporate costs and its performance venues operating expenses to both reportable segments.

Allocated performance venue operating expenses include the non-event related costs of operating the Company’s performance venues, and include such costs as rent for the Company’s leased venues, real estate taxes, insurance, utilities, repairs and maintenance, and labor related to the overall management of the venues.

Depreciation expense on property and equipment related to The Garden, Hulu Theater at Madison Square Garden and the Forum is not allocated to the reportable segments.

Purchase Accounting Adjustments

In connection with the BCE, TAO Group, CLG and Obscura acquisitions in the fiscal years 2017 and 2018 (“ Recent Business Acquisitions ”), the Company recorded certain fair value adjustments related to acquired assets and liabilities in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations.

For the Company’s Recent Business Acquisitions , the Company recognized fair value adjustments primarily for (i) recognition of intangible assets such as trade names, venue management contracts, favorable leases, and festival rights, (ii) step-up of property and equipment, (iii) step-up of inventory, (iv) unfavorable lease obligation, and (v) goodwill.

The aforementioned fair value adjustments, except for goodwill, will be expensed as incremental non-cash expenses in the Company’s consolidated statements of operations based on their estimated useful lives (“ Purchase Accounting Adjustments ”).

The Company does not allocate any Purchase Accounting Adjustments to the reporting segments and reports any Purchase Accounting Adjustments as reconciliation items in reporting segment operating results.

See “Part II — Item 8 .

Financial Statements and Supplementary Data — Consolidated Financial Statements — Notes to Consolidated Financial Statements — Note 19 .

Segment Information ” for more information on the presentation of Purchase Accounting Adjustments .

Investments in Nonconsolidated Affiliates

In July 2018, the Company acquired a 30% interest in SACO, a global provider of high-performance LED video lighting and media solutions for a total consideration of approximately $47,244 .

The Company is utilizing SACO as a preferred display technology provider for MSG Spheres and is benefiting from agreed upon commercial terms.

In addition, the Company also has other investments in various sports and entertainment companies and related technologies, accounted for either under the equity method or at fair value.

See Note 7 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information on our investments in nonconsolidated affiliates.

The Company’s operating results for the year ended June 30, 2019 were impacted by the recognition of revenue for events that took place during the prior year due to the renewal of the agreement with the Company’s ticketing platform provider during fiscal year 2019.

The impact on the Company’s consolidated revenues, operating income and adjusted operating income for the year ended June 30, 2019 from games played in the prior year as a result of the ticketing agreement renewal was $2,753 .

Results of Operations

Comparison of the Year Ended June 30, 2020 versus the Year Ended June 30, 2019

Consolidated Results of Operations

The table below sets forth, for the periods presented, certain historical financial information.

3 unchanged sentences

Depreciation and amortization

Operating income (loss)

Operating loss

Other income (expense):

Earnings (loss) in equity method investments

Interest income, net

Miscellaneous expenses, net

Income (loss) from operations before income taxes

Interest expense, net

Miscellaneous income (expense), net

Loss from continuing operations before income taxes

Income tax benefit (expense)

Net income (loss)

Net loss attributable to redeemable noncontrolling interests

Net loss attributable to nonredeemable noncontrolling interests

Net income attributable to The Madison Square Garden Company’s stockholders

Loss from continuing operations

Income (loss) from discontinued operations, net of taxes

Net loss attributable to nonredeemable noncontrolling interests from continuing operations

Net loss attributable to redeemable noncontrolling interests from discontinued operations

Net loss attributable to nonredeemable noncontrolling interests from discontinued operations

Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders

NM — Percentage is not meaningful

The following is a summary of changes in segments’ operating results for the year ended June 30, 2019 as compared to the prior year.

Changes attributable to

administrative

income (loss)

MSG Entertainment segment (a)

MSG Sports segment (a)

Corporate and Other

Purchase accounting adjustments

Inter-segment eliminations

See “Business Segment Results” for a more detailed discussion of the operating results of our segments .

(a) Operating results were materially impacted by the coronavirus pandemic.

Please see “— Factors Affecting Results of Operations — Impact of COVID-19 on Our Business ” for more information.

For all periods through the MSGE Distribution , the reported financial results of the Company reflect the results of the MSG Entertainment business segment and the sports booking business, previously owned and operated by the Company through its MSG Sports business segment, as discontinued operations.

In addition, results from continuing operations for these periods include certain corporate overhead expenses that the Company did not incur in the period after the completion of the MSGE Distribution and does not expect to incur in future periods, but which do not meet the criteria for inclusion in discontinued operations.

The reported financial results of the Company for the periods after the MSGE Distribution reflect the Company’s results on a standalone basis, including the Company’s actual corporate overhead.

Revenues for the year ended June 30, 2020 decreased $126,085 , or 17% , to $603,319 as compared to the prior year.

The net decrease is attributable to the following:

Decrease in pre/regular season ticket-related revenues

Decrease in revenues from league distributions

Decrease in suite license fee revenues primarily due to the impact of the suspensions of the 2019-20 NBA and NHL regular seasons

Decrease in sponsorship and signage revenues

Decrease in local media rights fees from MSG Networks

Decrease in pre/regular season food, beverage and merchandise sales

Other net increases, including revenues that do not meet the criteria for inclusion in discontinued operations

The decrease in pre/regular season ticket-related revenues was primarily due to fewer Knicks and Rangers home games as compared to the prior year due to the suspensions of the 2019-20 NBA and NHL regular seasons .

The Knicks and Rangers played 36 and 39 home games, respectively, at The Garden during the 2019-20 seasons as compared to 44 home games each during the 2018-19 seasons.

To a lesser extent, the decrease also reflects the impact of the recognition of additional revenue during the prior year as a result of the ticketing agreement renewal during the third quarter of fiscal year 2019.

We will not receive professional sports teams’ pre/regular season ticket revenues until the Knicks and the Rangers again play home games at The Garden with fans in attendance.

The decrease in revenues from league distributions was primarily due to lower recognition of national media rights fees in fiscal year 2020 as compared to the prior year.

This was primarily due to the suspensions of the 2019-20 NBA and NHL regular seasons.

Based on the completion of the 2019-20 NBA and NHL seasons, the Company would recognize the remainder of national media rights fees related to those seasons that otherwise would have been recognized during the third and fourth quarters of fiscal year 2020 in the first quarter of fiscal year 2021.

The decrease in sponsorship and signage revenues was primarily due to fewer Knicks and Rangers home games at The Garden in fiscal year 2020 as compared to the prior year due to the suspensions of the 2019-20 NBA and NHL regular seasons .

We will continue earning significantly lower sponsorship and signage revenues until the Knicks and Rangers resume playing home games at The Garden with fans in attendance.

To a lesser extent, the decrease also reflects lower sales of existing sponsorship and signage inventory.

The decrease in local media rights fees from MSG Networks was due to the impact of the Knicks and Rangers not achieving the contractually obligated minimum threshold of games delivered for broadcast to MSG Networks for the 2019-20 seasons.

This decrease was partially offset by contractual rate increases.

Based on the leagues’ return-to-play plans, MSG Networks broadcasted play-in games of the Rangers and, as a result, a portion of local media rights fees associated with the Rangers will be recognized during the first quarter of fiscal year 2021.

The decrease in pre/regular season food, beverage and merchandise sales was due to fewer Knicks and Rangers home games at The Garden in fiscal year 2020 as compared to the prior year due to the suspensions of the 2019-20 NBA and NHL regular seasons .

This decrease was slightly offset by higher average per-game revenue.

We will not receive revenues from professional sports teams’ pre/regular season food, beverage and merchandise sales until the Knicks and Rangers again play home games at The Garden with fans in attendance.

Direct operating expenses

Direct operating expenses primarily include:

1 unchanged sentence

cost of team personnel transactions for season-ending player injuries (net of anticipated insurance recoveries), trades, and waivers/contract termination costs of players and other team personnel;

NBA luxury tax, NBA and NHL revenue sharing and league assessments for the MSG Sports segment;

event costs related to the presentation, production and marketing of our live entertainment and other live sporting events;

venue lease, maintenance and other operating expenses;

the cost of concessions, merchandise and food and beverage sold at our venues;

restaurant operating expenses, inclusive of labor costs.

NBA luxury tax, NBA and NHL revenue sharing and league assessments;

the cost of merchandise and food and beverage sales.

Direct operating expenses for the year ended June 30, 2020 decreased $80,111 , or 18% , to $359,970 as compared to the prior year.

The net decrease is attributable to the following:

Decrease in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax

Decrease in net provisions for certain team personnel transactions

Decrease in other team operating expenses not discussed elsewhere in this table

Decrease in pre/regular season expense associated with food, beverage and merchandise sales

Increase in team personnel compensation

Other net increases, including expenses that do not meet the criteria for inclusion in discontinued operations

Net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax were as follows:

Years Ended June 30,

Net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax

The decrease in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax reflect lower provisions for league revenue sharing expense of $52,654 offset by a lower estimated NBA luxury tax credit in the current year as compared to the prior year of $2,903 .

Lower provisions for league revenue sharing expense primarily reflects lower estimated NBA and NHL revenue sharing expense for the 2019-20 season and higher estimated net player escrow recoveries due to the impact of the suspensions of the 2019-20 NBA and NHL regular seasons, as well as the format and timing of the leagues’ return-to-play .

Based on the completion of the 2019-20 NBA and NHL seasons, the Company would recognize a portion of revenue sharing expense (net of escrow) related to those seasons that otherwise would have been recognized during the third and fourth quarters of fiscal year 2020 in the first quarter of fiscal year 2021.

We expect that our revenue sharing expense will be lower in the 2020-21 season if the NBA and NHL play their games without fans in attendance and/or if the NBA and NHL either shorten their seasons or if the 2020-21 season extends beyond the end of our 2021 fiscal year.

The Knicks were not a luxury tax payer for the 2018-19 season and, therefore, received an equal share of the portion of luxury tax receipts that were distributed to non-tax paying teams.

The Knicks’ roster as of June 30, 2020 would not result in the team being a luxury tax payer for the 2019-20 season and the estimated luxury tax receipt is currently anticipated to be lower than the luxury tax receipt for the 2018-19 season.

The actual amounts for the 2019-20 season may vary significantly from the recorded provisions based on actual operating results for each league and all teams within each league for the season and other factors.

Net provisions for certain team personnel transactions were as follows:

Years Ended June 30,

Net provisions for certain team personnel transactions

Team personnel transactions for the year ended June 30, 2020 reflect provisions for waivers/contract terminations of $27,055 , which are net of credits due to the recoveries associated with previously recorded waivers/contract termination costs and player trades of $1,802 .

Team personnel transactions for the year ended June 30, 2019 reflect (i) waivers/contract terminations of $46,950 , which are net of credits due to the recoveries associated with previously recorded waivers/contract termination costs, (ii) player trades of $5,642 , and (iii) season-ending player injuries of $542 .

The decrease in other team operating expenses was due to the impact of the suspensions of the 2019-20 NBA and NHL regular seasons partially offset by an increase in league assessments.

We expect that our team operating expenses during the 2020-21 season will be proportionally lower (relative to the number of games played) if the NBA and NHL either shorten their seasons or if the 2020-21 season extends beyond the end of our 2021 fiscal year.

The decrease in pre/regular season expense associated with food, beverage and merchandise sales was primarily due to the Knicks and Rangers playing fewer home games at The Garden in fiscal year 2020 as compared to the prior year, a result of the suspensions of the 2019-20 NBA and NHL regular seasons .

This decrease was slightly offset by higher average per-game expenses.

We will not incur professional sports teams’ pre/regular season expense associated with food, beverage and merchandise sales until the Knicks and Rangers again play home games at The Garden with fans in attendance.

The increase in team personnel compensation was primarily due to roster changes at the Company’s sports teams and other team personnel compensation partially offset by the impact of the suspensions of the 2019-20 NBA and NHL regular seasons, as well as the format and timing of the leagues’ return-to-play .

Based on the completion of the 2019-20 NBA and NHL seasons, the Company would recognize a portion of the expense that otherwise would have been recognized during the third and fourth quarters of fiscal year 2020 in the first quarter of fiscal year 2021.

We expect that our team personnel compensation during the 2020-21 season will be proportionally lower (relative to the number of games played) if the NBA and NHL either shorten their seasons or if the 2020-21 season extends beyond the end of our 2021 fiscal year.

Selling, general and administrative expenses

Selling, general and administrative expenses primarily consist of administrative costs, including compensation, professional fees, sales and marketing costs, including non-event related advertising expenses, business development costs, as well as costs associated with the development of MSG Sphere, including technology and content development costs.

Selling, general and administrative expenses in Corporate and Other for the year ended June 30, 2019 increased $31,507 , or 34% , to $123,347 as compared to the prior year.

The increase was primarily due to (i) an increase in employee compensation and related benefits, (ii) higher professional fees, inclusive of costs associated with the potential Sports Distribution , and (iii) the inclusion of Obscura’s selling, general and administrative costs not related to its third-party production business .

In connection with its MSG Sphere initiative, the Company expects to continue increasing its investment in personnel, content and technology.

Based on the timing of these efforts, the Company expects increased expenses in Corporate and Other in fiscal year 2020.

Selling, general and administrative expenses primarily consist of administrative costs, including compensation, professional fees, and sales and marketing costs.

Selling, general and administrative expenses for the year ended June 30, 2020 decreased $7,766 , or 2% , to $319,675 as compared to the prior year primarily due to lower corporate overhead costs.

The results for the periods prior to the MSGE Distribution include certain corporate expenses that the Company does not expect to incur in future periods.

Partially offsetting this decrease are corporate costs incurred during the period following the MSGE Distribution (April 18, 2020 through June 30, 2020), as well as an increase in employee compensation and related benefits, including severance-related costs attributable to a separation agreement with a team executive and higher professional fees.

Depreciation and amortization

Depreciation and amortization for the year ended June 30, 2020 decreased $2,537 , or 13% , to $17,540 as compared to the prior year primarily due to certain assets being fully depreciated and amortized.

Operating loss - Corporate and Other

Operating loss in Corporate and Other for the year ended June 30, 2019 increased $29,276 , or 17% , to $199,592 as compared to the prior year.

The increase was primarily due to higher selling, general and administrative expenses as discussed above, partially offset by lower depreciation and amortization as a result of certain assets being fully depreciated and amortized.

See Note 19 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for discussion of depreciation and amortization under Corporate and Other.

Earnings (loss) in equity method investments

Earnings in equity method investments for the year ended June 30, 2019 were $7,062 as compared to a loss of $7,770 in the prior year.

The year-over-year improvement is primarily due to (i) the improvement in the net earnings attributable to the Company’s investees as compared to the prior year, (ii) the gain on the sale of an Azoff MSG Entertainment LLC (“ AMSGE ”) investment during the current year prior to the Company’s sale of its interest in AMSGE, and (iii) a gain on the sale of the Company’s interest in AMSGE during the current year.

The increase was partially offset by an impairment charge recorded for the Company’s investment in Tribeca Enterprises LLC (“ Tribeca Enterprises ”) and the amortization of basis difference attributable to intangible assets for the new investments in the current year.

The Company sold its interest in Tribeca Enterprises , including the outstanding loan and PIK, effective August 5, 2019.

See Note 7 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion of an impairment charge recorded for the Company’s investment in Tribeca Enterprises .

Interest income, net

Net interest income for the year ended June 30, 2019 increased $3,628 , or 59% , to $9,795 as compared to the prior year primarily due to higher interest income earned by the Company as a result of higher interest rate.

The increase was partially offset by higher interest expense incurred under the TAO Senior Credit Agreement and 2017 TAO Credit Agreement .

See Note 12 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion of the TAO Senior Credit Agreement entered in May 2019.

Miscellaneous expenses, net

Miscellaneous expenses, net in the current year principally consist of (i) a loss on extinguishment of debt in connection with the 2017 TAO Credit Agreement in the fourth quarter of fiscal year 2019, (ii) non-service components of net period pension and post retirement benefit cost in accordance with ASU No.

2017-07, and (iii) dividend income from the Company’s investment in TSQ.

Miscellaneous expenses, net in the prior year principally consist of non-service components of net period pension and postretirement benefit cost in accordance with ASU No.

See Note 12 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion of the 2017 TAO Credit Agreement and Note 2 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion of the retrospective adoption of ASU No.

On December 22, 2017, the enactment of the Tax Cuts and Jobs Act (“ TCJA ”) significantly changed U.S.

tax law and included a reduction in the corporate federal income tax rate from 35% to 21% effective January 1, 2018.

Income tax expense for the year ended June 30, 2019 was $1,348 and income tax benefit for the year ended June 30, 2018 was $116,872 .

Income tax expense for the year ended June 30, 2019 of $1,348 differs from income tax benefits derived from applying the statutory federal rate of 21% to pretax loss primarily due to a decrease in valuation allowance of $9,421 , tax expense of $8,651 relating to nondeductible officers’ compensation and tax expense of $3,054 relating to noncontrolling interests.

Operating loss

Operating loss for the year ended June 30, 2020 increased $35,671 , or 61% , to $93,866 as compared to the prior year.

The increase was primarily due to lower revenue slightly offset by lower direct operating expenses and, to a lesser extent, lower selling, general and administrative expenses and depreciation and amortization as discussed above.

Miscellaneous income (expense), net

The decrease of $1,754 in miscellaneous income, net for the year ended June 30, 2020 to miscellaneous expense, net of $421 primarily reflects changes in miscellaneous income (expense) that the Company did not earn or incur, and does not expect to earn or incur in future periods, but which do not meet the criteria for inclusion in discontinued operations.

Income tax expense for the year ended June 30, 2020 of $20,593 differs from the income tax benefit derived from applying the statutory federal rate of 21% to pretax loss primarily due to an increase in valuation allowance of $46,310 tax expense of $492 relating to noncontrolling interests, and tax expense of $762 relating to nondeductible expenses, partially offset by state and local tax benefit of $7,332 .

See Note 18 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further details on the components of income tax and a reconciliation of the statutory federal rate to the effective tax rate.

For the year ended June 30, 2018, the Company used a blended statutory federal income rate of 28% based upon the number of days that it would be taxed at the former rate of 35% and the number of days it would be taxed at the new rate of 21%, effective January 1, 2018.

Income tax benefit for the year ended June 30, 2018 of $116,872 differs from the income tax expense derived from applying the blended statutory federal rate of 28% to pretax income primarily as a result of a deferred income tax benefit of $113,494 related to the revaluation of the Company’s deferred tax assets and liabilities under provisions contained in the new tax legislation, of which (i) $51,015 was due to the reduction of net deferred tax liabilities in connection with the lower federal income tax rate of 21% , and (ii) $62,479 was due to a reduction in the valuation allowance attributable to the new rules, which provide that future federal net operating losses have an unlimited carry-forward period.

These rules on future federal net operating losses allow the Company to recognize a portion of its unrecognized deferred tax assets for future deductible items.

Other decreases to the statutory rate include $13,211 of income tax benefit related to a decrease in the valuation allowance, which offsets the income tax expense attributable to most of the operating income, and $1,974 of income tax benefit related to the vesting of restricted stock units.

These decreases were partially offset by (i) $1,800 of tax expense related to state and local income taxes (net of federal benefit), (ii) $1,998 of tax expense primarily related to non-deductible expenses, (iii) $2,006 of tax expense related to consolidated partnership book income attributable to non-controlling interests, (iv) $846 of tax expense related to a change in state tax rates and (v) $223 of other.

Adjusted operating income

The Company evaluates segment performance based on several factors, of which the key financial measure is their operating income (loss) before (i) depreciation, amortization and impairments of property and equipment and intangible assets, (ii) share-based compensation expense or benefit, (iii) restructuring charges or credits, and (iv) gains or losses on sales or dispositions of businesses, which is referred to as adjusted operating income (loss), a non-GAAP measure.

In addition to excluding the impact of items discussed above, the impact of purchase accounting adjustments related to business acquisitions is also excluded in evaluating the Company’s consolidated adjusted operating income (loss).

The Company has presented the components that reconcile operating income (loss) to adjusted operating income (loss).

The following is a reconciliation of operating income (loss) to adjusted operating income:

Income tax benefit for the year ended June 30, 2019 of $12,619 differs from the income tax benefit derived from applying the statutory federal rate of 21% to pretax loss primarily due to state income tax benefit of $2,873 , excess tax benefit on share-based payment awards of $4,555 , partially offset by tax expense of $8,521 relating to nondeductible officers’ compensation.

Adjusted operating income (loss)

The Company evaluates performance based on several factors, of which the key financial measure is operating income (loss) excluding (i) deferred rent expense under the arena license agreements with MSG Entertainment, (ii) depreciation, amortization and impairments of property and equipment, goodwill and other intangible assets, (iii) share-based compensation expense or benefit, (iv) restructuring charges or credits, (v) gains or losses on sales or dispositions of businesses, and (vi) the impact of purchase accounting adjustments related to business acquisitions, which is referred to as adjusted operating income (loss), a non-GAAP measure.

Management 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.

In addition, management believes that given the length of the arena license agreements and resulting magnitude of the difference in deferred rent expense and the cash rent payments, the exclusion of deferred rent expense provides investors with a clearer picture of the Company's operating performance.

The Company believes adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of the Company.

Adjusted operating income (loss) and similar measures with similar titles are common performance measures used by

investors and analysts to analyze the Company’s performance.

The Company uses revenues and adjusted operating income (loss) measures as the most important indicators of its business performance and evaluates management’s effectiveness with specific reference to these indicators.

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

Since adjusted operating income (loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies.

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

The following is a reconciliation of operating loss to adjusted operating income (loss):

Years Ended June 30,

Operating income (loss)

Share-based compensation

Depreciation and amortization (a)

Other purchase accounting adjustments (b)

Adjusted operating income

Operating loss

Share-based compensation (a)

Depreciation and amortization (a) (b)

Other purchase accounting adjustments

Adjusted operating income (loss)

________________

NM — Percentage is not meaningful

For periods through the MSGE Distribution , share-based compensation includes expenses that the Company does not expect to incur in future periods, but which do not meet the criteria for inclusion in discontinued operations.

Depreciation and amortization included purchase accounting adjustments of $1,070 and $1,630 for the years ended June 30, 2020 and 2019 , respectively.

Other purchase accounting adjustments for the years ended June 30, 2019 and 2018 primarily included the amortization of favorable leases in connection with the TAO Group acquisition.

Adjusted operating income for the year ended June 30, 2019 decreased $28,206 , or 14% , to $169,758 as compared to the prior year.

The net decrease is attributable to the following:

Decrease in adjusted operating income of the MSG Entertainment segment

Decrease in adjusted operating income of the MSG Sports segment

Increase in adjusted operating loss in Corporate and Other

Inter-segment eliminations

Increase in adjusted operating loss in Corporate and Other was lower than the increase in operating loss in Corporate and Other primarily due to higher share-based compensation expenses, partially offset by lower depreciation and amortization.

Net loss attributable to redeemable and nonredeemable noncontrolling interests

For the year ended June 30, 2019 , the Company recorded a net loss attributable to redeemable noncontrolling interests of $7,299 and a net loss attributable to nonredeemable noncontrolling interests of $7,245 as compared to $628 of net loss attributable to redeemable noncontrolling interests and $6,518 of net loss attributable to nonredeemable noncontrolling interests for the year ended June 30, 2018 .

These amounts represent the share of net loss of TAO Group, BCE, and CLG that are not attributable to the Company.

In addition, the net loss attributable to redeemable and nonredeemable noncontrolling interests includes a proportional share of expenses related to purchase accounting adjustments.

Business Segment Results

MSG Entertainment

The table below sets forth, for the periods presented, certain historical financial information and a reconciliation of operating income to adjusted operating income for the Company’s MSG Entertainment segment.

Adjusted operating income for the year ended June 30, 2020 decreased $38,661 to an adjusted operating loss of $27,466 as compared to the prior year.

The decrease was higher than the increase in operating loss primarily due to lower depreciation and amortization and share-based compensation.

Net loss attributable to nonredeemable noncontrolling interests from continuing operations

For the year ended June 30, 2020 , the Company recorded a net loss attributable to nonredeemable noncontrolling interests from continuing operations of $2,342 as compared to $2,300 of net loss attributable to nonredeemable noncontrolling interests from continuing operations for the year ended June 30, 2019 .

These amounts represent the share of net loss of CLG that are not attributable to the Company.

In addition, the net loss attributable to nonredeemable noncontrolling interests from continuing operations includes a proportional share of expenses related to purchase accounting adjustments.

Comparison of the Year Ended June 30, 2019 versus the Year Ended June 30, 2018

Factors Affecting Operating Results from Acquisitions

CLG’s Operating Results

The results of operations of the Company for the year ended June 30, 2018 include CLG’s results of operations from the date of acquisition, which was July 28, 2017.

The Company’s results for the year ended June 30, 2017 do not include any of CLG’s operating results.

The table below sets forth, for the periods presented, certain historical financial information.

Years Ended June 30,

2 unchanged sentences

Depreciation and amortization

Operating income

Reconciliation to adjusted operating income:

Share-based compensation

Depreciation and amortization

Adjusted operating income

Operating loss

Other income (expense):

Interest expense, net

Miscellaneous income (expense), net

Loss from operations before income taxes

Income tax benefit

Income (loss) from continuing operations

Income from discontinued operations, net of taxes

Net income (loss)

Net loss attributable to nonredeemable noncontrolling interests from continuing operations

Net loss attributable to redeemable noncontrolling interests from discontinued operations

Net loss attributable to nonredeemable noncontrolling interests from discontinued operations

Net income attributable to Madison Square Garden Sports Corp.’s stockholders

NM — Percentage is not meaningful

The results of operations of the MSG Entertainment segment for the year ended June 30, 2018 include Obscura’s results of operations associated with its third-party production business from the date of acquisition, which was November 20, 2017.

The current year results include activities from Obscura for a full fiscal year as compared to approximately seven months (from November 20, 2017 to June 30, 2018) in fiscal year 2018.

The Company made a decision to wind down Obscura’s third-party production business to focus on MSG Sphere development.

Revenues for the year ended June 30, 2019 increased $16,989 , or 2% , to $729,404 as compared to the prior year.

The net increase is attributable to the following:

Increase in event-related revenues from concerts

Increase in revenues from the presentation of the Christmas Spectacular

Increase in revenues associated with entertainment dining and nightlife offerings

Increase in venue-related sponsorship and signage and suite rental fee revenues

Increase in revenues from Obscura

Decrease in event-related revenues from other live events

Decrease in BCE event-related revenues

Other net decreases

The increase in event-related revenues from concerts was primarily due to additional events and higher per event revenue during the current year, and to a lesser extent, the impact from the recognition during the current year of $1,278 of revenue associated with events that took place in prior year as a result of the ticketing agreement renewal.

The increase was partially offset by the impact of the new revenue recognition standard in the current year.

The increase in revenues from the presentation of the Christmas Spectacular was primarily due to (i) higher ticket-related revenue mainly as a result of higher average ticket prices, (ii) an increase in paid attendance in the current year as compared to the prior year, and (iii) the recognition during the current year of $880 of revenue associated with performances that took place in prior year as a result of the ticketing agreement renewal.

The Company had 210 performances of the production in fiscal year 2019, as compared to 200 performances in fiscal year 2018 due to an extension of the show’s run announced in December 2018.

For fiscal year 2019, more than one million tickets were sold, representing a mid-single digit percentage increase as compared to the prior year.

The increase in revenues associated with entertainment dining and nightlife offerings was primarily due to the impact of the opening of a new venue, partially offset by (i) the impact of the current year containing 52 weeks of operations as compared to 53 weeks during the prior year, due to the timing of the retail calendar, (ii) closing of one venue, and other decreases.

TAO Group’s operating results are recorded in the Company’s consolidated statements of operations on a three-month lag basis.

As a result, TAO Group’s related revenues for fiscal year 2019 are for the period from April 2, 2018 to March 31, 2019 , as compared to TAO Group’s related revenues for fiscal year 2018, which are for the period from March 27, 2017 to April 1, 2018 .

The increase in venue-related sponsorship and signage and suite rental fee revenues was due to increased sales of existing sponsorship and signage inventory and rate increases in suite licenses.

Revenues from Obscura are included as a result of its acquisition by the Company on November 20, 2017.

The current year results include revenues from Obscura for a full fiscal year as compared to approximately seven months (from November 20, 2017 to June 30, 2018) in fiscal year 2018.

Revenues from Obscura are principally related to its third-party production business .

The decrease in event-related revenues from other live events was primarily due to (i) the impact of a large-scale special event series held at The Garden and Hulu Theater at Madison Square Garden during the prior year, (ii) lower per-event revenue during the current year as compared to the prior year and, to a lesser extent, (iii) the impact of the new revenue recognition standard in the current year.

The decrease was slightly offset by additional events held at the Company’s venues during the current year as compared to the prior year.

The decrease in BCE event-related revenues was primarily due to lower ticket-related revenues from the Boston Calling Music Festival.

Direct operating expenses

Direct operating expenses for the year ended June 30, 2019 increased $24,218 , or 5% , to $507,091 as compared to the prior year.

The net increase is attributable to the following:

Increase in direct operating expenses associated with entertainment dining and nightlife offerings

Increase in direct operating expenses associated with Obscura

Increase in direct operating expenses associated with the presentation of the Christmas Spectacular

Increase in direct operating expenses associated with the Company’s exploration of a new theatrical production

Increase in direct operating expenses associated with venue-related sponsorship and signage and suite licenses

Decrease in event-related direct operating expenses associated with other live events

Decrease in BCE event-related direct operating expenses

Decrease in event-related direct operating expenses associated with concerts

Other net increases

The increase in direct operating expenses associated with entertainment dining and nightlife offerings was primarily due to the costs associated with the opening of a new venue inclusive of increases in (i) employee compensation and related benefits, (ii) costs of food and beverage, and (iii) performer costs, as well as (iv) the impact of certain costs being reported as direct operating expenses during the current year as compared to being reported as selling, general and administrative expenses during the prior year.

Direct operating expenses from Obscura are included as a result of its acquisition by the Company on November 20, 2017.

The current year results include direct operating expenses from Obscura for a full fiscal year as compared to approximately seven months (from November 20, 2017 to June 30, 2018) in fiscal year 2018.

Direct operating expenses from Obscura are principally related to third-party production business .

The increase in direct operating expenses associated with the presentation of the Christmas Spectacular was primarily due to (i) higher labor costs, (ii) higher costs associated with more performances in the current year, (iii) costs related to show enhancements, and (iv) higher marketing expenses during the current year as compared to the prior year.

The Company had 210 performances of the production in fiscal year 2019, as compared to 200 performances in fiscal year 2018 due to an extension of the show’s run announced in December 2018.

The increase in direct operating expenses associated with the venue-related sponsorship and signage and suite licenses was primarily due to increased sales of existing sponsorship inventory.

The decrease in event-related direct operating expenses from other live events was primarily due to (i) the impact of a large-scale special event series held at The Garden and Hulu Theater at Madison Square Garden during the prior year, (ii) the impact of the new revenue recognition standard in the current year, and (iii) to a lesser extent, lower per event expenses during the current year as compared to prior year.

The decrease was slightly offset by additional events held at the Company's venues during the current year as compared to prior year.

The decrease in BCE event-related direct operating expenses was due to lower costs related to the Boston Calling Music Festival in the current year as compared to prior year.

The decrease in event-related direct operating expenses from concerts was primarily due to the impact of the new revenue recognition standard in the current year.

The decrease was largely offset by additional events held at the Company’s venues and higher per event expenses during the current year as compared to prior year.

Selling, general and administrative expenses

Selling, general and administrative expenses for the year ended June 30, 2019 increased $16,576 , or 9% , to $208,577 as compared to the prior year mainly due to (i) higher employee compensation and related benefits, (ii) an increase in professional fees, (iii) venue pre-opening costs associated with entertainment dining and nightlife offerings, and (iv) the inclusion of Obscura’s selling, general and administrative costs related to its third-party production business for a full fiscal year as compared to approximately seven months (from November 20, 2017 to June 30, 2018) in fiscal year 2018.

The increase was partially offset by the impact of certain costs being reported as direct operating expenses during the current year as compared to being reported as selling, general and administrative expenses during the prior year.

Operating income

Operating income for the year ended June 30, 2019 decreased $1,245 , or 1% , to $86,092 as compared to the prior year due to increases in direct operating expenses and selling, general and administrative expenses largely offset by higher revenues as discussed above.

Adjusted operating income

Adjusted operating income for the year ended June 30, 2019 decreased $4 to $118,348 as compared to the prior year.

The decrease was lower than a decrease in operating income primarily due to higher share-based compensation expense and, to a lesser extent, an increase in depreciation and amortization.

Years Ended June 30,

Direct operating expenses

Selling, general and administrative expenses

Depreciation and amortization

Operating income

Reconciliation to adjusted operating income:

Share-based compensation

Depreciation and amortization

Adjusted operating income

Revenues for the year ended June 30, 2019 increased $34,093 , or 4% , to $812,746 as compared to the prior year.

The net increase is attributable to the following:

Increase in event-related revenues from other live sporting events

Increase in revenues from league distributions

1 unchanged sentence

Increase in suite license fee revenues

Increase in professional sports teams’ sponsorship and signage revenues and ad sales commission

Decrease in professional sports teams’ pre/regular season ticket-related revenues

Decrease in professional sports teams’ pre/regular season food, beverage and merchandise sales

Other net increases

The increase in event-related revenues from other live sporting events was due to higher per event revenue, slightly offset by fewer events during the current year as compared to the prior year.

Decrease in pre/regular season ticket-related revenues

Decrease in pre/regular season food, beverage and merchandise sales

Decrease in sponsorship and signage revenues

Other net increases, including revenues that do not meet the criteria for inclusion in discontinued operations

The increase in revenues from league distributions included the impact of timing.

1 unchanged sentence

The increase in suite license fee revenue was primarily due to rate increases, partially offset by lower sales of suite products.

The increase in professional sports teams’ sponsorship and signage revenues and ad sales commission was primarily due to higher ad sales commission revenue and the impact of the new revenue recognition standard in the current year, partially offset by decreased sales of existing sponsorship and signage inventory.

The decrease in professional sports teams’ pre/regular season ticket-related revenues was primarily due to lower average Rangers, Knicks and Liberty per-game revenue, partially offset by the impact of the recognition of $2,753 during the current year associated with games played in the prior year as a result of the ticketing agreement renewal.

The decrease in professional sports teams’ pre/regular season food, beverage and merchandise sales was primarily due to lower average per-game revenue during the current year as compared to the prior year and the Liberty playing fewer games at The Garden during the current year as compared to the prior year.

The Liberty played ten fewer regular season games at The Garden during the current year as compared to the prior year, as the Liberty played the majority of their home games at the Westchester County Center, located in White Plains, NY, during the current year.

The decrease in sponsorship and signage revenues was primarily due to the impact of the new revenue recognition standard in fiscal year 2019 , partially offset by decreased sales of existing sponsorship and signage inventory.

The decrease in pre/regular season ticket-related revenues was primarily due to lower average Rangers, Knicks and Liberty per-game revenue, partially offset by the impact of the recognition of $2,753 during fiscal year 2019 associated with games played in the prior year as a result of the ticketing agreement renewal.

The decrease in pre/regular season food, beverage and merchandise sales was primarily due to lower average per-game revenue during fiscal year 2019 as compared to the prior year and the Liberty playing fewer games at The Garden during fiscal year 2019 as compared to the prior year.

The Liberty played ten fewer regular season games at The Garden during fiscal year 2019 year as compared to the prior year, as the Liberty played the majority of their home games at the Westchester County Center, located in White Plains, NY, during fiscal year 2019 .

Additionally, the Liberty was sold in January 2019.

3 unchanged sentences

Increase in net provisions for certain team personnel transactions

Increase in event-related expenses associated with other live sporting events

Increase in other team operating expenses not discussed elsewhere in this table

Increase in net provisions for league revenue sharing expense (excluding playoffs) and NBA luxury tax

Decrease in team personnel compensation

Other net decreases

Net provisions for certain team personnel transactions and for league revenue sharing expense (excluding playoffs) and NBA luxury tax were as follows:

Decrease in team personnel compensation primarily due to roster changes

Other net increases, including expenses that do not meet the criteria for inclusion in discontinued operations

The increase in other team operating expenses was primarily due to an increase in league assessments and other net increases, partially offset by lower player insurance costs and lower day-of-event costs, primarily driven by the Liberty playing fewer games at The Garden during the fiscal year 2019 as compared to the prior year.

During fiscal year 2019 , the majority of the Liberty’s home games were played at the Westchester County Center, located in White Plains, NY.

Additionally, the Liberty was sold in January 2019.

Net provisions for certain team personnel transactions were as follows:

Years Ended June 30,

Net provisions for certain team personnel transactions

Net provisions for league revenue sharing expense (excluding playoffs) and NBA luxury tax

Team personnel transactions for the year ended June 30, 2019 reflect provisions, net of recoveries recorded in the current year associated with prior year team personnel provisions, recorded for (i) waivers/contract terminations of $46,950 , (ii) player trades of $5,642 , and (iii) season-ending player injuries of $542 .

Team personnel transactions for the year ended June 30, 2019 reflect provisions, net of recoveries recorded in fiscal year 2019 associated with prior year team personnel provisions, recorded for (i) waivers/contract terminations of $46,950 , (ii) player trades of $5,642 , and (iii) season-ending player injuries of $542 .

Team personnel transactions for the year ended June 30, 2018 reflect provisions recorded for (i) waivers/contract terminations of $21,559 , (ii) season-ending player injuries of $4,273, which is net of insurance recoveries of $468 and (iii) player trades of $1,682 .

Net provisions for league revenue sharing expense (excluding playoffs) and NBA luxury tax were as follows:

Years Ended June 30,

Net provisions for league revenue sharing expense (excluding playoffs) and NBA luxury tax

The increase in net provisions for league revenue sharing expense (excluding playoffs) and NBA luxury tax reflects higher provisions for league revenue sharing expense of $1,647 , partially offset by higher estimated NBA luxury tax credit of $914 .

Higher league revenue sharing expense primarily reflected higher estimated NHL and NBA revenue sharing expense for the 2018-19 season, partially offset by higher estimated net player escrow recoveries and, to a lesser extent, net adjustments to prior seasons’ revenue sharing expense.

seasons’ revenue sharing expense.

The actual amounts for the 2018-19 season may vary significantly from the recorded provisions based on actual operating results for each league and all teams within each league for the season and other factors.

The Knicks were not a luxury tax payer for the 2018-19 and 2017-18 seasons and, therefore, received equal share of the portion of luxury tax receipts that were distributed to non-tax paying teams.

The increase in event-related expenses associated with other live sporting events was due to higher per event expenses, slightly offset by fewer events during the current year as compared to the prior year.

During the current year, the majority of the Liberty’s home games were played at the Westchester County Center, located in White Plains, NY.

Additionally, the Liberty was sold in January 2019.

The decrease in team personnel compensation was primarily due to roster changes at the Company’s sports teams.

Selling, general and administrative expenses

Selling, general and administrative expenses for the year ended June 30, 2019 increased $11,409 , or 6% , to $196,548 as compared to the prior year primarily due to higher employee compensation and related benefits and an increase in marketing costs.

Operating income

Operating income for the year ended June 30, 2019 decreased $6,580 , or 5% , to $122,521 as compared to the prior year primarily due to higher direct operating expenses, and to a lesser extent, an increase in selling, general and administrative expenses, partially offset by an increase in revenues, as discussed above.

Adjusted operating income

Adjusted operating income for the year ended June 30, 2019 decreased $5,408 , or 4% , to $146,672 , as compared to the prior year.

The decrease was lower than the decrease in operating income primarily due to higher share-based compensation expense and, to a lesser extent, an increase in depreciation and amortization.

Comparison of the Year Ended June 30, 2018 versus the Year Ended June 30, 2017

Factors Affecting Operating Results from Acquisitions

TAO Group’s Operating Results

The Company completed the TAO Group acquisition on January 31, 2017.

TAO Group’s financial statements are not available within the time constraints the Company requires to ensure the financial accuracy of the operating results.

Therefore, the Company records TAO Group’s operating results in its consolidated statements of operations under the MSG Entertainment segment on a three-month lag basis.

As a result, TAO Group’s related operating results for the year ended June 30, 2018 are for the period from March 27, 2017 to April 1, 2018 .

TAO Group’s related operating results for the year ended June 30, 2017 are for the period from February 1, 2017 to March 26, 2017 .

CLG’s Operating Results

The results of operations of the Company and the MSG Sports segment for the year ended June 30, 2018 include CLG’s results of operations from the date of acquisition, which was July 28, 2017.

The Company’s results for the year ended June 30, 2017 do not include any of CLG’s operating results.

Obscura’s Operating Results

The results of operations of the Company and the MSG Entertainment segment for the year ended June 30, 2018 include Obscura’s results of operations from the date of acquisition, which was November 20, 2017.

The Company’s results for the year ended June 30, 2017 do not include any of Obscura’s operating results.

Consolidated Results of Operations

The table below sets forth, for the periods presented, certain historical financial information.

Years Ended June 30,

Direct operating expenses

Selling, general and administrative expenses

Depreciation and amortization

Operating income (loss)

Other income (expense):

Loss in equity method investments

Interest income, net

Miscellaneous expense, net

Income (loss) from operations before income taxes

Income tax benefit

Net income (loss)

Net loss attributable to redeemable noncontrolling interests

Net income (loss) attributable to nonredeemable noncontrolling interests

Net income (loss) attributable to The Madison Square Garden Company’s stockholders

NM — Percentage is not meaningful

The following is a summary of changes in segments’ operating results for the year ended June 30, 2018 as compared to the prior year.

Changes attributable to

administrative

income (loss)

MSG Entertainment segment (a)

MSG Sports segment (a)

Corporate and Other

Purchase accounting adjustments (b)

Inter-segment eliminations

See “Business Segment Results” for a more detailed discussion of the operating results of our segments .

In connection with the purchase price allocation of the TAO Group acquisition on January 31, 2017, the inventory value was increased by $8,705 and was fully expensed to direct operating expenses for the year ended June 30, 2017 as the related inventory was consumed.

In addition, the direct operating expenses for the year ended June 30, 2018 principally reflect the amortization of favorable leases in connection with the TAO Group acquisition.

Selling, general and administrative expenses - Corporate and Other

Selling, general and administrative expenses in Corporate and Other for the year ended June 30, 2018 increased $12,400 , or 16% , to $91,840 as compared to prior year.

The increase was primarily due to higher employee compensation and related benefits, as well as the inclusion of Obscura’s selling, general and administrative costs not related to its third-party production business .

The increase was partially offset by a management fee earned for providing management and strategic services to TAO Group (see “ — Factors Affecting Operating Results from Acquisitions — TAO Group’s Operating Results ” for further discussion), which is eliminated in the Company’s consolidated results of operations presented above, as well as certain favorable adjustments related to contingent payments for the Company’s business acquisitions.

Selling, general and administrative expenses for the year ended June 30, 2019 increased $36,723 , or 13% , to $327,441 as compared to prior year.

The increase was primarily due to (i) higher corporate overhead costs for the periods prior to the MSGE Distribution that the Company does not expect to incur in future periods and, to a lesser extent, (ii) higher employee compensation and related benefits, and (iii) an increase in marketing costs.

Depreciation and amortization

Depreciation and amortization for the year ended June 30, 2018 increased $15,098 , or 14% , to $122,486 as compared to the prior year primarily due to purchase accounting adjustments and the inclusion of depreciation and amortization expense related to property and equipment associated with the business acquisitions (see “ — Factors Affecting Operating Results from Acquisitions ” for further discussion), partially offset by certain assets being fully depreciated and amortized.

Operating loss - Corporate and Other

Operating loss in Corporate and Other for the year ended June 30, 2018 increased $7,298 , or 4% , to $170,316 as compared to the prior year.

See Note 19 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for discussion of depreciation and amortization under Corporate and Other.

Loss in equity method investments

Loss in equity method investments for the year ended June 30, 2018 improved $22,206 , or 74% , to $7,770 as compared to the prior year.

The year-over-year improvement is primarily due to a pre-tax non-cash impairment charge of $20,613 recorded during the prior year to write off the carrying value of the equity method investment in Fuse Media.

Interest income, net

Net interest income for the year ended June 30, 2018 decreased $1,480, or 19%, to $6,167 as compared to the prior year primarily due to interest expense incurred under the 2017 TAO Credit Agreement .

See “— Factors Affecting Operating Results from Acquisitions — TAO Group’s Operating Results ” for discussion.

The decrease was partially offset by higher interest income earned by the Company as a result of higher interest rates and a change in investment mix.

In addition, during the year ended June 30, 2018 , the Company recognized interest income of $938, which was received in connection with the repayment of a loan receivable from one of the Company’s nonconsolidated affiliates that was on a nonaccrual status.

Depreciation and amortization for the year ended June 30, 2019 decreased $730 , or 4% , to $20,077 as compared to the prior year.

Operating loss

Operating loss for the year ended June 30, 2019 increased $40,016 to $58,195 as compared to the prior year.

The increase was primarily due to higher selling, general and administrative expenses and direct operating expenses, slightly offset by higher revenue as discussed above.

Interest expense, net

Net interest expense for the year ended June 30, 2019 increased $1,188 , or 46% , to $3,779 as compared to the prior year.

Miscellaneous expense, net

Miscellaneous expense, net for the year ended June 30, 2018 principally consist of non-service components of net period pension and postretirement benefit cost in accordance with ASU No.

Miscellaneous income in the prior year consists principally of (i) non-service components of net period pension and postretirement benefit cost in accordance with ASU No.

2017-07 and (ii) the recovery of certain claims in connection with a third-party bankruptcy proceeding.

See Note 2 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion of the retrospective adoption of ASU No.

On December 22, 2017, TCJA was enacted, which significantly changed the existing U.S.

tax laws, including a reduction in the corporate federal income tax rate from 35% to 21% effective January 1, 2018.

During the second quarter of fiscal year 2018, the Company was required to recognize the effect of tax law changes in the period of enactment even though certain key aspects of the new law became effective January 1, 2018.

The Company used a blended statutory federal income tax rate of 28% based upon the number of days that it will be taxed at the former rate of 35% and the number of days it will be taxed at the new rate of 21% to calculate its most recent effective tax rate.

The decrease of $1,851 in miscellaneous expense, net for the year ended June 30, 2019 to miscellaneous income, net of $1,333 primarily reflects lower net periodic benefit costs associated pension plans and postretirement benefit plan.

Income tax benefit for the year ended June 30, 2019 was $12,619 and income tax benefit for the year ended June 30, 2018 was $59,392 .

Income tax benefit for the year ended June 30, 2018 of $116,872 differs from the income tax expense derived from applying the blended statutory federal rate of 28% to pretax income primarily as a result of a deferred income tax benefit of $113,494 related to the revaluation of the Company’s deferred tax assets and liabilities under provisions contained in the new tax legislation, of which (i) $51,015 was due to the reduction of net deferred tax liabilities in connection with the lower federal income tax rate of 21%, and (ii) $62,479 was due to a reduction in the valuation allowance attributable to the new rules, which provide that future federal net operating losses have an unlimited carry-forward period.

These rules on future federal net operating losses allow the Company to recognize a portion of its unrecognized deferred tax assets for future deductible items.

Income tax benefit for the year ended June 30, 2017 of $4,404 differs from the income tax expense derived from applying the statutory federal rate of 35% to pretax income primarily as a result of (i) an increase of $30,697 in recorded federal and state valuation allowances, (ii) tax expense of $3,449 related to non-deductible expenses, (iii) the tax impact of consolidated partnership book income attributable to non-controlling interests of $1,414 , (iv) deferred expense of $1,329 based on tax amortization on indefinite-lived intangibles that are not available as a source of taxable income to support the realization of deferred tax assets, and (v) expense of $672 recorded due to a state rate change computed as a result of filed state tax returns.

This tax expense is offset by (i) $6,716 of state tax benefit (net of federal effect), (ii) $6,477 of tax benefit related to other comprehensive income gains recorded in continuing operations and (iii) $354 of other.

For the fiscal year ended June 30, 2018, the Company used a blended statutory federal income rate of 28% based upon the number of days that it would be taxed at the former rate of 35% and the number of days it would be taxed at the new rate of 21%, effective January 1, 2018.

Income tax benefit for the year ended June 30, 2018 of $59,392 differs from the income tax benefit derived from applying the blended statutory Federal rate of 28% to pretax loss primarily as a result of a deferred income tax benefit of $50,169 related to the reduction of net deferred tax liabilities in connection with the lower Federal income tax rate of 21% and state and local income tax expense of $1,909.

Adjusted operating income

The following is a reconciliation of operating income (loss) to adjusted operating income:

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

Years Ended June 30,

Operating income (loss)

Share-based compensation

Depreciation and amortization (a)

Other purchase accounting adjustments (b)

Operating loss

Share-based compensation (a)

Depreciation and amortization (a) (b)

Other purchase accounting adjustments

Adjusted operating income

1 unchanged sentence

NM — Percentage is not meaningful

For periods through the MSGE Distribution , includes expenses that the Company did not incur and does not expect to incur in future periods, but which do not meet the criteria for inclusion in discontinued operations.

Depreciation and amortization included purchase accounting adjustments of $1,630 and $2,946 for the years ended June 30, 2019 and 2018 , respectively.

Other purchase accounting adjustments for the year ended June 30, 2018 primarily included the amortization of favorable leases in connection with the TAO Group acquisition.

Other purchase accounting adjustments for the year ended June 30, 2017 primarily included an inventory adjustment of $8,705 that was expensed to direct operating expenses and associated with the TAO Group acquisition on January 31, 2017 as the related inventory was consumed.

Adjusted operating income for the year ended June 30, 2018 increased $96,291 , or 95% , to $197,964 as compared to the prior year.

The net increase is attributable to the following:

Increase in adjusted operating income of the MSG Entertainment segment

Increase in adjusted operating income of the MSG Sports segment

Increase in adjusted operating loss in Corporate and Other

Inter-segment eliminations

Increase in adjusted operating loss in Corporate and Other were primarily due to higher employee compensation and related benefits, excluding share-based compensation expense, and the inclusion of Obscura expenses associated with the Company’s business development initiatives partially offset by a management fee earned for providing management and strategic services to TAO Group (see “ — Factors Affecting Operating Results from Acquisitions — TAO Group’s Operating Results ” for further discussion), which is eliminated in the Company’s consolidated results of operations presented above.

These increases were offset by certain favorable adjustments related to contingent payments for the Company’s business acquisitions.

Net income (loss) attributable to redeemable and nonredeemable noncontrolling interests

For the year ended June 30, 2018 , the Company recorded net loss attributable to redeemable noncontrolling interests of $628 and a net loss attributable to nonredeemable noncontrolling interests of $6,518 as compared to $4,370 of net loss attributable to redeemable noncontrolling interests and $ 304 of net income attributable to nonredeemable noncontrolling interests for the year ended June 30, 2017.

These amounts represent the share of net income (loss) of TAO Group, BCE, and CLG that are not attributable to the Company.

In addition, the net income (loss) attributable to redeemable and nonredeemable noncontrolling interests includes a proportional share of expenses related to purchase accounting adjustments.

See “— Factors Affecting Operating Results from Acquisitions ” for further discussion.

Business Segment Results

MSG Entertainment

The table below sets forth, for the periods presented, certain historical financial information and a reconciliation of operating income (loss) to adjusted operating income for the Company’s MSG Entertainment segment.

Years Ended June 30,

Direct operating expenses

Selling, general and administrative expenses

Depreciation and amortization

Operating income (loss)

Reconciliation to adjusted operating income:

Share-based compensation

Depreciation and amortization

Adjusted operating income

NM — Percentage is not meaningful

Revenues for the year ended June 30, 2018 increased $274,258 , or 54% , to $780,726 as compared to the prior year.

The net increase is attributable to the following:

Inclusion of revenues associated with entertainment dining and nightlife offerings

Increase in event-related revenues at The Garden

Increase in event-related revenues at Radio City Music Hall, excluding the Christmas Spectacular and the New York Spectacular

Increase in event-related revenues at the Forum

Increase in event-related revenues at Hulu Theater at Madison Square Garden

Increase in event-related revenues at The Chicago Theatre

Increase in revenues from the presentation of the Christmas Spectacular

Increase in venue-related sponsorship and signage and suite rental fee revenues

Decrease in revenues from the presentation of the New York Spectacular as a result of no scheduled performances in the current year

Decrease in BCE event-related revenues

Other net increases, primarily due to the inclusion of revenue associated with the acquisition of Obscura

The inclusion of revenues associated with entertainment dining and nightlife offerings is the result of the acquisition of a 62.5% interest in TAO Group on January 31, 2017, and primarily reflects revenues generated from food and beverage sales.

TAO Group’s operating results are recorded in the Company’s consolidated statements of operations on a three-month lag basis.

As a result, TAO Group’s related revenues for fiscal year 2018 are for the period from March 27, 2017 to April 1, 2018, as compared to TAO Group’s related revenues for fiscal year 2017, which are for the period from February 1, 2017 to March 26, 2017.

See “ — Factors Affecting Operating Results from Acquisitions — TAO Group’s Operating Results ” for further discussion.

The increase in event-related revenues at The Garden was due to a change in the mix of events (including the impact of a large-scale event held during the current year) and additional events held at the venue during fiscal year 2018 as compared to the prior year.

The increase in event-related revenues at Radio City Music Hall, excluding the Christmas Spectacular and the New York Spectacular , was primarily due to additional events held at the venue during fiscal year 2018 as compared to the prior year.

The increase in event-related revenues at the Forum was due to a change in the mix of events and an additional event held at the venue during fiscal year 2018 as compared to the prior year.

The increase in event-related revenues at Hulu Theater at Madison Square Garden was primarily due to a change in the mix of events partially offset by fewer events held at the venue during fiscal year 2018 as compared to the prior year.

The increase in event-related revenues at The Chicago Theatre was primarily due to additional events held at the venue during fiscal year 2018 as compared to the prior year.

The increase in revenues from the presentation of the Christmas Spectacular was primarily due to higher ticket-related revenue, mainly as a result of higher average ticket prices and the impact of additional scheduled performances, partially offset by a decrease in average per-show paid attendance in fiscal year 2018 as compared to the prior year.

The Company had 200 scheduled performances of the production during the 2018 holiday season as compared to 197 scheduled performances during the 2017 holiday season.

For the 2017 holiday season, more than one million tickets were sold, representing a low single digit percentage decrease as compared to the 2016 holiday season.

The increase in venue-related sponsorship and signage and suite rental fee revenues was due to higher suite rental fee revenue mainly driven by contractual rate increases.

The decrease in revenues from the presentation of the New York Spectacular was driven by no scheduled performances in fiscal year 2018 as compared to 56 scheduled performances presented in the prior year.

This was a result of the Company’s decision to suspend the planned 2017 presentation announced in February 2017.

The decrease in BCE event-related revenues was primarily due to a decrease in ticket-related revenue.

Direct operating expenses

Direct operating expenses for the year ended June 30, 2018 increased $104,911 , or 28% , to $482,873 as compared to the prior year.

The net increase is attributable to the following:

Inclusion of direct operating expenses associated with entertainment dining and nightlife offerings

Increase in event-related direct operating expenses at The Garden

Increase in event-related direct operating expenses at the Forum

Increase in event-related direct operating expenses at Radio City Music Hall, excluding the Christmas Spectacular and the New York Spectacular

Increase in BCE event-related direct operating expenses

Increase in event-related direct operating expenses at The Chicago Theatre

Increase in venue operating costs

Increase in event-related direct operating expenses at The Hulu Theater at Madison Square Garden

Increase in direct operating expenses associated with the presentation of the Christmas Spectacular

Decrease in direct operating expenses associated with the presentation of the New York Spectacular as a result of no scheduled performances in the current year

Other net increases, principally the inclusion of direct expenses related to Obscura’s third-party production business

The inclusion of direct operating expenses associated with entertainment dining and nightlife offerings is the result of the acquisition of a 62.5% interest in TAO Group on January 31, 2017, and primarily reflects costs associated with food and beverage sales, inclusive of labor costs, as well as venue-related operating expenses.

TAO Group’s operating results are recorded in the Company’s consolidated statements of operations on a three-month lag basis.

As a result, TAO Group’s related direct operating expenses for fiscal year 2018 are for the period from March 27, 2017 to April 1, 2018, as compared to TAO Group’s related direct operating expenses for fiscal year 2017, which are for the period from February 1, 2017 to March 26, 2017.

See “ — Factors Affecting Operating Results from Acquisitions — TAO Group’s Operating Results ” for further discussion.

The increase in event-related direct operating expenses at The Garden was due to a change in the mix of events (including the impact of a large-scale event held during the current year) and additional events held at the venue during fiscal year 2018 as compared to the prior year.

The increase in event-related direct operating expenses at the Forum was due to a change in the mix of events as well as one additional event held at the venue during fiscal year 2018 as compared to the prior year.

The increase in event-related direct operating expenses at Radio City Music Hall, excluding the Christmas Spectacular and the New York Spectacular , was due to additional events partially offset by a change in the mix of events held at the venue during fiscal year 2018 as compared to the prior year.

The increase in BCE event-related direct operating expenses was due to higher costs related to the Boston Calling Music Festival in fiscal year 2018.

The increase in event-related direct operating expenses at The Chicago Theatre was primarily due to additional events held at the venue during fiscal year 2018 as compared to the prior year.

The increase in venue operating costs was primarily due to higher labor-related costs at our venues during fiscal year 2018 as compared to the prior year.

The increase in event-related direct operating expenses at Hulu Theater at Madison Square Garden was due to a change in the mix of events partially offset by fewer events held at the venue during fiscal year 2018 as compared to the prior year.

The increase in direct operating expenses associated with the presentation of the Christmas Spectacular was primarily due to higher labor costs and an increase in deferred production cost amortization, partially offset by lower marketing expenses during fiscal year 2018 as compared to the prior year.

The Company had 200 scheduled performances of the production during the 2018 holiday season as compared to 197 scheduled performances during the 2017 holiday season.

The decrease in direct operating expenses associated with the presentation of the New York Spectacular was driven by no scheduled performances in fiscal year 2018 as compared to 56 scheduled performances presented in the prior year.

This was a result of the Company’s decision to suspend the planned 2017 presentation announced in February 2017.

Selling, general and administrative expenses

Selling, general and administrative expenses for the year ended June 30, 2018 increased $72,449 , or 61% , to $192,001 as compared to the prior year mainly due to (i) inclusion of TAO Group’s selling, general and administrative costs, including a management fee incurred by TAO Group payable to the Company for providing management and strategic services and, to a lesser extent, (ii) higher professional fees and (iii) an increase in corporate general and administrative costs.

See “ — Factors Affecting Operating Results from Acquisitions — TAO Group’s Operating Results ” for further discussion.

Depreciation and amortization

Depreciation and amortization for the year ended June 30, 2018 increased $7,176 , or 63% , to $18,515 as compared to the prior year primarily due to the inclusion of depreciation and amortization expenses for TAO Group’s property and equipment before the purchase accounting adjustments.

See “ — Factors Affecting Operating Results from Acquisitions — TAO Group’s Operating Results ” for further discussion.

Operating income (loss)

Operating income for the year ended June 30, 2018 improved $89,722 to $87,337 as compared to the prior year due to higher revenues, partially offset by increases in direct operating expenses, selling, general and administrative expenses and depreciation and amortization expenses, as discussed above.

Adjusted operating income

Adjusted operating income for the year ended June 30, 2018 improved by $95,075 to $118,352 as compared to the prior year due to higher revenues, partially offset by increases in direct operating expenses and selling, general and administrative expenses, as discussed above, excluding share-based compensation expense.

Years Ended June 30,

Direct operating expenses

Selling, general and administrative expenses

Depreciation and amortization

Operating income

Reconciliation to adjusted operating income:

Share-based compensation

Depreciation and amortization

Adjusted operating income

Revenues for the year ended June 30, 2018 decreased $33,331 , or 4% , to $778,653 as compared to the prior year.

The net decrease is attributable to the following:

Decrease in professional sports teams’ playoff related revenues

Decrease in revenues from league distributions

Decrease in event-related revenues from other live sporting events

Increase in professional sports teams’ sponsorship and signage revenues and ad sales commission

Increase in local media rights fees from MSG Networks

Increase in professional sports teams’ pre/regular season ticket-related revenues

Increase in suite rental fee revenues

Other net increases, inclusive of certain revenues from CLG

The decrease in professional sports team’s playoff related revenues was primarily due to the Rangers playing six home playoff games as the team advanced to the second round of the playoffs in the prior year versus not qualifying for playoffs in fiscal year 2018.

The decrease in revenues from league distributions primarily reflects an NHL expansion fee of $ 15,500 and approximately $15,000 of non-recurring distributions from the NHL and NBA, which were both recorded by the Company in fiscal year 2017.

These decreases were partially offset by other net increases, inclusive of league distributions related to CLG, which was acquired on July 28, 2017.

The decrease in event-related revenues from other live sporting events was due to a change in the mix of events held during the fiscal year 2018 as compared to the prior year and one event that generated lower revenue during fiscal year 2018 as compared to the prior year.

The increase in professional sports teams’ sponsorship and signage revenues and ad sales commissions was primarily due to sales of new sponsorship and signage inventory, increased sales of existing sponsorship and signage inventory and the impact of a marketing partner, upon renewal of its agreement, shifting its marketing partnership spend from a combination of entertainment and sports entirely to sports.

The increase in local media rights fees from MSG Networks was primarily due to contractual rate increases.

The increase in professional sports teams’ pre/regular season ticket-related revenues was primarily due to higher average Rangers per-game revenue, partially offset by lower average Liberty and Knicks per-game revenue.

The increase in suite rental fee revenue was primarily due to contractual rate increases.

Direct operating expenses

Direct operating expenses for the year ended June 30, 2018 decreased $16,063 , or 3% , to $456,932 as compared to the prior year.

The net decrease is attributable to the following:

Decrease in professional sports teams’ playoff related expenses

Decrease in event-related expenses associated with other live sporting events

Decrease in team personnel compensation

Decrease in net provisions for NBA and NHL revenue sharing expense (excluding playoffs) and NBA luxury tax

Increase in net provisions for certain team personnel transactions

Increase in other team operating expenses

Other net increases

The decrease in professional sports teams’ playoff related expenses was primarily due to the Rangers playing six home playoff games as the team advanced to the second round of the playoffs in the prior year versus not qualifying for playoffs in fiscal year 2018.

The decrease in event-related expenses associated with other live sporting events was primarily due to a change in the mix of events during fiscal year 2018 as compared to the prior year, and to a lesser extent, one event that generated lower expense during the fiscal year 2018 as compared to the prior year.

The decrease in team personnel compensation was primarily due to lower overall player salaries during fiscal year 2018 as a result of roster changes, partially offset by higher other team personnel compensation and the inclusion of team personnel compensation for CLG, which was acquired on July 28, 2017.

Net provisions for NBA and NHL revenue sharing expense (excluding playoffs) and NBA luxury tax and for certain team personnel transactions were as follows:

Years Ended June 30,

Increase (Decrease)

Net provisions for NBA and NHL revenue sharing expense (excluding playoffs) and NBA luxury tax

Net provisions for certain team personnel transactions

The decrease in net provisions for NBA and NHL revenue sharing expense (excluding playoffs) and NBA luxury tax reflects a lower provision for NBA and NHL revenue sharing expense of $1,878 and a higher estimated NBA luxury tax receipt of $1,712 .

Lower NBA and NHL revenue sharing expense primarily reflects an increase in estimated net player escrow recoveries, partially offset by higher estimated NBA and NHL revenue sharing expense for the 2017-18 season and, to a lesser extent, net adjustments to prior season’s revenue sharing expense.

The increase in estimated NBA luxury tax receipt is based on the Knicks’ roster, which as of June 30, 2018 did not result in luxury tax for the 2017-18 season.

The Knicks were not a luxury tax payer for the 2016-17 season and, therefore, received an equal share of the portion of luxury tax receipts that were distributed to non-tax paying teams.

The actual amounts for the 2017-18 season may vary significantly from the recorded provisions based on actual operating results for each league and all teams within each league for the season and other factors.

Team personnel transactions for the year ended June 30, 2018 reflect provisions recorded for (i) waivers/contract terminations of $21,559 , (ii) season-ending player injuries of $4,273 , which is net of insurance recoveries of $468 and (iii) player trades of $1,682 .

Team personnel transactions for the year ended June 30, 2017 reflect provisions recorded for waivers/contract terminations and player trades of $13,979 and $8,000 , respectively.

The increase in other team operating expenses was primarily due to higher day-of-event costs and league expenses.

Selling, general and administrative expenses

Selling, general and administrative expenses for the year ended June 30, 2018 decreased $22,820 , or 11% , to $185,139 as compared to the prior year, primarily due to lower employee compensation and related benefits, and to a lesser extent, lower marketing costs, partially offset by an increase in corporate general and administrative costs.

The reduction in employee compensation and related benefits as compared to the prior year is primarily driven by severance-related costs in the prior year, which were attributable to a separation agreement with a team executive.

Depreciation and amortization

Depreciation and amortization for the year ended June 30, 2018 decreased $1,838 , or 20% , to $7,481 as compared to the prior year primarily as a result of an intangible asset becoming fully amortized.

Operating income

Operating income for the year ended June 30, 2018 increased $7,390 , or 6% , to $129,101 as compared to the prior year primarily due to lower selling, general and administrative expenses and direct operating expenses, partially offset by a decrease in revenues, as discussed above.

Adjusted operating income

Adjusted operating income for the year ended June 30, 2018 increased $6,502 , or 4% , to $152,080 , as compared to the prior year primarily due to lower selling, general and administrative expenses, excluding share-based compensation expense, and direct operating expenses, partially offset by a decrease in revenues.

Adjusted operating income for the year ended June 30, 2019 decreased $32,117 , or 74% , to $11,195 as compared to the prior year.

The decrease was lower than the increase in operating loss primarily due to higher share-based compensation.

Net loss attributable to nonredeemable noncontrolling interests from continuing operations

For the year ended June 30, 2019 , the Company recorded a net loss attributable to nonredeemable noncontrolling interests from continuing operations of $2,300 as compared to $2,136 of net loss attributable to nonredeemable noncontrolling interests from continuing operations for the year ended June 30, 2018 .

These amounts represent the share of net loss of CLG that are not attributable to the Company.

In addition, the net loss attributable to nonredeemable noncontrolling interests from continuing operations includes a proportional share of expenses related to purchase accounting adjustments.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents, cash flows from the operations of our businesses and maximum borrowing capacity under our $390,000 revolving credit facilities.

Our principal uses of cash include working capital-related items, capital spending (including our planned construction of large-scale venues in Las Vegas and London), investments and related loans that we may fund from time to time, repurchases of shares of the Company’s Class A Common Stock, repayment of debt, and the payment of earn-out obligations and mandatory purchases from prior acquisitions.

The decisions of the Company as to the use of its 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.

To the extent the Company desires to access alternative sources of funding through the capital and credit markets, challenging U.S.

and global economic conditions could adversely impact its ability to do so at that time.

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

Without regard to the impact of the potential Sports Distribution, which would have a positive impact on the Company’s liquidity, if and when it is completed, we believe we have sufficient liquidity, including approximately $1,086,000 in unrestricted cash and cash equivalents and $108,000 of short-term investments as of June 30, 2019 , along with available borrowing capacity under our revolving credit facilities combined with operating cash flows, over the next 12 months, to fund our operations, to pursue the development of the new venues discussed below and other new business opportunities and to repurchase shares of the Company’s Class A Common Stock (see Note 2 and Note 11 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for a discussion of the Company’s short-term investments).

TAO Group’s principal uses of cash include working capital related-items, investments in new venues, tax-related cash distributions, interest expense payments and repayment of debt.

TAO Group plans to continue to grow its business through the opening of new venues.

TAO Group regularly monitors and assesses its ability to meet its funding and investment requirements.

Over the next 12 months, the Company believes that TAO Group has sufficient liquidity from cash on hand, cash generated from operations and its revolving credit facility to fund its operations, service debt obligations and pursue new business opportunities.

The Company has made significant progress on MSG Sphere at The Venetian, its state-of-the-art entertainment venue currently under construction in Las Vegas.

We view both innovative design and cost management as key imperatives to the construction process.

While it is always difficult to provide a definitive construction cost estimate for large-scale construction projects, it is particularly challenging for one as unique as MSG Sphere.

In May, our Board of Directors approved a preliminary cost estimate of $1,200,000 based upon schematic designs for purposes of developing the Company’s budget and financial projections.

We expect the estimation process for MSG Sphere construction costs will be dynamic as the project moves forward.

The actual construction costs for MSG Sphere in Las Vegas incurred through June 30, 2019 were approximately $109,000 .

In June, the Company announced that it engaged AECOM — a leading builder known for creating bold, innovative projects — as its general contractor for the Las Vegas project.

We made the strategic decision to enter into a “cost plus” construction contract with AECOM.

While this type of contract adds to the complexity of the cost estimation process, we believe our “cost plus” construction contract with AECOM will help our efforts to maximize the quality of the work, while permitting us to play a more vigilant role in managing the project’s costs, including full transparency into the selection of, negotiations with, and labor and materials utilized by subcontractors.

In order to further drive cost control, under the terms of the construction contract, AECOM will receive lower fees if the “hard” construction costs come in greater than an “incentive benchmark” agreed upon by the Company and AECOM.

The process of setting the incentive benchmark began in July when AECOM provided the Company with its proposal, representing its estimate of the hard construction costs of the project.

AECOM’s initial benchmark proposal, together with the costs of additional core technology and estimated soft costs, results in a project cost estimate that is approximately $1,700,000 .

We believe this cost estimate is too high and are now in the contractual process of reviewing, testing and challenging the elements of AECOM’s estimates and assumptions.

We are also value engineering aspects of the project to further reduce costs.

We intend to do this in a granular fashion using, among other resources, our outside project manager.

We believe we will be successful in achieving significant cost reductions through this process, while noting that there are no assurances that we will reach an agreement on the incentive benchmark.

The above cost estimates for the MSG Sphere in Las Vegas have been reduced to reflect the $75,000 that the Las Vegas Sands Corp.

has agreed to pay the Company to defray the construction costs of a pedestrian bridge that will link the venue to the Sands Expo Convention Center.

The estimates and costs also do not contain significant capitalized and non-capitalized costs for items

such as content creation, internal labor costs, and furniture and equipment.

As with any major construction project, the construction of MSG Spheres is subject to potential unexpected delays, costs or other complications.

Our goal is to open MSG Sphere in Las Vegas in calendar year 2021 .

See Exhibit 10.65 to this Form 10-K for a copy of the Construction Agreement, dated May 13, 2019, by and between MSG Las Vegas, LLC and Hunt Construction Group Inc.

In February 2018, we announced the purchase of land in Stratford, London, which we expect will become home to the Company’s second MSG Sphere and first large-scale international venue.

Cost estimates for MSG Sphere in London are still in development as the Company continues to refine its design, which it currently expects will be substantially similar to MSG Sphere in Las Vegas, including having approximately the same seating capacity.

The Company submitted a planning application to the local planning authority in March 2019 and expects a planning determination by the end of calendar year 2019 (which may become the subject of further discussions with the planning authority).

Our plan is to begin construction on the MSG Sphere venue in London only once we have received all necessary approvals and have further advanced our design for the venue.

We anticipate that MSG Sphere in Las Vegas will generate substantial incremental revenue and adjusted operating income on an annual basis.

For additional information regarding the Company’s capital expenditures related to the MSG Spheres, see Note 19 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.

In connection with these efforts, the Company will need to pursue additional capital beyond that which is available from cash on hand, cash flows from operations and borrowings under our revolving credit facilities.

There is no assurance that the Company will be able to obtain such capital.

The potential Sports Distribution, if consummated, will provide the Company with additional liquidity, some or all of which could be used to finance part of the cost of constructing the MSG Spheres.

The current plan for the Sports Distribution contemplates that the Company would retain up to about one-third of the common stock of Sports Spinco.

Some or all of that interest could be sold for cash by the Company.

We will continue to explore additional domestic and international markets where we believe next-generation venues such as the MSG Sphere can be successful.

Financing Agreements, Revolving Credit Facilities Provided to Nonconsolidated Affiliates and Stock Repurchases

Financing Agreements

Our operations and operating results have been, and continue to be, materially impacted by the COVID-19 pandemic and government and league actions taken in response.

The NBA and NHL suspended their 2019-20 seasons on March 11 and 12, 2020, respectively.

On May 26, 2020, the NHL announced return-to-play plans for 24 teams which began August 1, 2020.

The Rangers were among the teams that returned to play in a 24-team tournament.

On June 4, 2020, the NBA announced plans to resume play on July 30, 2020 with 22 teams.

The Knicks were not among the teams that returned to competition.

For more information about the impacts and risks to the Company as a result of COVID-19, see “— Impact of COVID-19 on Our Business” and “Item 1A.

Risk Factors – Our Operations and Operating Results Have Been, and Continue to be, Materially Impacted by the COVID-19 Pandemic and Government and League Actions Taken in Response ”

Prior to the suspension of the NBA and NHL seasons and the MSGE Distribution, our primary sources of liquidity had been cash and cash equivalents, cash flows from the operations of our businesses and maximum borrowing capacity under our $365,000 revolving credit facilities which are described below.

In connection with the MSGE Distribution, we (i) borrowed the full $350,000 available under the Knicks Revolving Credit Facility and the Rangers Revolving Credit Facility (each as defined below) and (ii) entered into the $200,000 DDTL Facilities ” (as defined below).

As a result, until the 2020-21 NBA and NHL seasons commence, our primary sources of liquidity are cash and cash equivalents, $15,000 of borrowing capacity under the Knicks Unsecured Credit Facility (which expires on September 24, 2021) and $200,000 of borrowing capacity under the DDTL Facilities (which expire on October 17, 2021).

The ability to draw down on the delayed draw term loan facilities depends on the liquidity of MSG Entertainment, which may be materially impacted by the COVID-19 pandemic.

Once the 2020-21 NBA and NHL seasons commence, we also expect to have access to cash flow from our operations as a source of liquidity.

Our principal uses of cash include the operation of our businesses, working capital-related items, the repayment of outstanding debt, and potential repurchases of shares of the Company’s Class A Common Stock.

As of June 30, 2020, we had $78,000 in unrestricted cash and cash equivalents.

As of June 30, 2020, the Company had approximately $126,000 in current deferred revenue obligations.

Of this amount, approximately $61,000 is related to the 2019-20 NBA and NHL seasons, including approximately $42,000 associated with national media rights fees.

Based on the completion of the 2019-20 NBA and NHL seasons, the Company would recognize national media rights fees in the first quarter of fiscal year 2021.

The balance of deferred revenue obligations related to the 2019-20 seasons is comprised of obligations in connection with suites and sponsorships, which will be addressed, to the extent necessary, through credits, make-goods and/or refunds, as applicable.

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

The decisions of the Company as to the use of its available liquidity will be based upon the ongoing review of the funding needs of the business, management’s view of a favorable allocation of cash resources, and the timing of cash flow generation.

To the extent the Company desires to access alternative sources of funding through the capital and credit markets, restrictions imposed by the NBA and NHL and challenging U.S.

and global economic and market conditions could adversely impact its ability to do so at that time.

We believe we have sufficient liquidity, including approximately $78,000 in unrestricted cash and cash equivalents as of June 30, 2020 , along with available borrowing capacity under $15,000 Knicks Unsecured Credit Facility and $200,000 DDTL Facilities, to fund our operations and repay any outstanding debt that becomes due over the next 12 months.

We plan to refinance the Knicks

Revolving Credit Facility (which is currently due on September 30, 2021) and the Rangers Revolving Credit Facility (which is currently due on January 25, 2022) prior to the maturities thereof.

If we were not able to do so, $350,000 of indebtedness outstanding as of June 30, 2020 (plus any amount borrowed under the DDTL Facilities) will be due during fiscal 2022.

Financing Agreements and Stock Repurchases

Knicks Revolving Credit Facility

On September 30, 2016, New York Knicks, LLC (“ Knicks LLC ”), a wholly owned subsidiary of the Company, entered into a credit agreement with a syndicate of lenders providing for a senior secured revolving credit facility of up to $200,000 with a term of five years (the “ Knicks Revolving Credit Facility ”) to fund working capital needs and for general corporate purposes.

Amounts borrowed may be distributed to the Company except during an event of default.

There was no borrowing under the Knicks Revolving Credit Facility as of June 30, 2019 .

As of June 30, 2019 , Knicks LLC was in compliance with the required financial covenant.

The Knicks Revolving Credit Facility requires Knicks LLC to comply with a debt service ratio of 1.5:1.0 over a trailing four quarter period .

As of June 30, 2020 , Knicks LLC was in compliance with this financial covenant.

The Knicks Revolving Credit Facility will mature and any unused commitments thereunder will expire on September 30, 2021.

All borrowings under the Knicks Revolving Credit Facility are subject to the satisfaction of certain customary conditions.

Borrowings bear interest at a floating rate, which at the option of Knicks LLC may be either (i) a base rate plus a margin ranging from 0.00% to 0.125% per annum or (ii) the London Inter-Bank Offered Rate (“LIBOR”) plus a margin ranging from 1.00% to 1.125% per annum.

Knicks LLC is required to pay a commitment fee ranging from 0.20% to 0.25% per annum in respect of the average daily unused commitments under the Knicks Revolving Credit Facility .

The outstanding balance under the Knicks Revolving Credit Facility was $200,000 as of June 30, 2020 .

All obligations under the Knicks Revolving Credit Facility are secured by a first lien security interest in certain of Knicks LLC ’s assets, including, but not limited to, (i) the Knicks LLC ’s membership rights in the NBA and (ii) revenues to be paid to the Knicks LLC by the NBA pursuant to certain U.S.

national broadcast agreements.

Subject to customary notice and minimum amount conditions, Knicks LLC may voluntarily prepay outstanding loans under the Knicks Revolving Credit Facility at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to Eurocurrency loans).

Knicks LLC is required to make mandatory prepayments in certain circumstances, including without limitation if the maximum available amount under the Knicks Revolving Credit Facility is greater than 350% of qualified revenues.

In addition to the financial covenant described above, the Knicks Credit Agreement and related security agreements contain certain customary representations and warranties, affirmative covenants and events of default.

The Knicks Revolving Credit Facility contains certain restrictions on the ability of Knicks LLC to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the Knicks Revolving Credit Facility, including the following:

(i) incurring additional indebtedness and contingent liabilities;

(ii) creating liens on certain assets;

(iii) making restricted payments during the continuance of an event of default under the Knicks Revolving Credit Facility;

(iv) engaging in sale and leaseback transactions;

(v) merging or consolidating;

and (vi) taking certain actions that would invalidate the secured lenders’ liens on any Knicks LLC’s collateral.

Knicks Unsecured Credit Facility

On September 30, 2016, Knicks LLC entered into an unsecured revolving credit facility with a lender for an initial maximum credit amount of $15,000 and a 364-day term (the “ Knicks Unsecured Credit Facility ”).

2 unchanged sentences

This facility does not have financial covenants.

On January 25, 2017, New York Rangers, LLC (“ Rangers LLC ”), a wholly owned subsidiary of the Company, entered into a credit agreement with a syndicate of lenders providing for a senior secured revolving credit facility of up to $150,000 with a term of five years (the “ Rangers Revolving Credit Facility ”) to fund working capital needs and for general corporate purposes.

Rangers Revolving Credit Facility

On January 25, 2017, New York Rangers, LLC (“ Rangers LLC ”), a wholly owned subsidiary of the Company, entered into a credit agreement (the “Rangers Credit Agreement”) with a syndicate of lenders providing for a senior secured revolving credit facility of up to $150,000 with a term of five years (the “ Rangers Revolving Credit Facility ”) to fund working capital needs and for general corporate purposes.

Amounts borrowed may be distributed to the Company except during an event of default.

There was no borrowing under the Rangers Revolving Credit Facility as of June 30, 2019 .

As of June 30, 2019 , Rangers LLC was in compliance with the required financial covenant.

On May 23, 2019, TAO Group Intermediate Holdings LLC (“ TAOIH ”) and TAO Group Operating LLC (“ TAOG ”), entered into a credit agreement (the “ TAO Senior Credit Agreement ”) with JPMorgan Chase Bank, N.A., and the lenders party thereto.

The TAO Senior Credit Agreement provides TAOG with senior secured credit facilities (the “ TAO Senior Secured Credit Facilities ”) consisting of:

(i) an initial $40,000 term loan facility with a term of five years and (ii) a $25,000 revolving credit facility with a term of five years (the “ TAO Revolving Credit Facility ”).

The TAO Senior Secured Credit Facilities were obtained without recourse to the Company or any of its affiliates (other than TAOG , TAOIH and its subsidiaries).

The outstanding amount drawn

on the TAO Revolving Credit Facility was $15,000 as of June 30, 2019 .

As of June 30, 2019 , TAOIH was in compliance with the required financial covenants.

On May 23, 2019, a subsidiary of the Company and a subsidiary of TAO Group Holdings LLC entered into an intercompany subordinated term loan credit agreement providing for a credit facility of $49,000 that matures in August 2024 (the “TAO Subordinated Credit Facility”).

The balances and interest-related activities pertaining to the TAO Subordinated Credit Agreement have been eliminated in the consolidated financial statements in accordance with ASC Topic 810, Consolidation .

As of June 30, 2019 , TAO Group Holdings LLC was in compliance with the required financial covenants.

See Note 12 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information on the Knicks Revolving Credit Facility , Knicks Unsecured Credit Facility , Rangers Revolving Credit Facility and the TAO Senior Secured Credit Facility.

Revolving Credit Facilities Provided to Nonconsolidated Affiliates, Financing Agreements and Stock Repurchases

See Note 7 and Note 15 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for discussions of the Company’s revolving credit facility extended to a nonconsolidated affiliate and the Company’s stock repurchases, respectively.

Bilateral Letters of Credit Lines

The Company has established bilateral credit lines with a bank to issue letters of credit in support of the Company’s business operations.

The Company pays fees for the letters of credit that are credited against interest income the Company receives in return from its investments in notes receivable with the same bank.

As of June 30, 2019 , the Company had $12,512 of letters of credit outstanding pursuant to which fees were credited against note investments.

Of which, TAO Group had two letters of credit outstanding for $750 as of March 31, 2019.

The Rangers Revolving Credit Facility requires Rangers LLC to comply with a debt service ratio of 1.5:1.0 over a trailing four quarter period .

As of June 30, 2020 , Rangers LLC was in compliance with this financial covenant.

The Rangers Revolving Credit Facility will mature and any unused commitments thereunder will expire on January 25, 2022.

All borrowings under the Rangers Revolving Credit Facility are subject to the satisfaction of certain customary conditions.

Borrowings bear interest at a floating rate, which at the option of Rangers LLC may be either (i) a base rate plus a margin ranging from 0.125% to 0.50% per annum or (ii) LIBOR plus a margin ranging from 1.125% to 1.50% per annum.

Rangers LLC is required to pay a commitment fee ranging from 0.375% to 0.625% per annum in respect of the average daily unused commitments under the Rangers Revolving Credit Facility .

The outstanding balance under the Rangers Revolving Credit Facility was $150,000 as of June 30, 2020 .

All obligations under the Rangers Revolving Credit Facility are secured by a first lien security interest in certain of Rangers LLC’s assets, including, but not limited to, (i) Rangers LLC’s membership rights in the NHL, (ii) revenues to be paid to Rangers LLC by the NHL pursuant to certain U.S.

and Canadian national broadcast agreements, and (iii) revenues to be paid to Rangers LLC pursuant to local media contracts.

Subject to customary notice and minimum amount conditions, Rangers LLC may voluntarily prepay outstanding loans under the Rangers Revolving Credit Facility at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to Eurocurrency loans).

Rangers LLC is required to make mandatory prepayments in certain circumstances, including without limitation if qualified revenues are less than 17% of the maximum available amount under the Rangers Revolving Credit Facility.

In addition to the financial covenant described above, the Rangers Credit Agreement and related security agreements contain certain customary representations and warranties, affirmative covenants and events of default.

The Rangers Revolving Credit Facility contains certain restrictions on the ability of Rangers LLC to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the Rangers Revolving Credit Facility, including the following:

(i) incurring additional indebtedness and contingent liabilities;

(ii) creating liens on certain assets;

(iii) making restricted payments during the continuance of an event of default under the Rangers Revolving Credit Facility;

(iv) engaging in sale and leaseback transactions;

(v) merging or consolidating;

and (vi) taking certain actions that would invalidate the secured lenders’ liens on any of Rangers LLC’s assets securing the obligations under the Rangers Revolving Credit Facility.

Delayed Draw Term Loan Credit Facilities

As an additional source of liquidity for the Company in response to the COVID-19 pandemic, on April 17, 2020, MSG NYR Holdings, LLC and MSG NYK Holdings, LLC, two indirect wholly-owned subsidiaries of the Company, each entered into a separate delayed draw term loan credit agreement with MSG Entertainment Group, LLC, a wholly-owned subsidiary of MSG Entertainment, as lender (the “DDTL Lender”).

The credit agreement for MSG NYK Holdings, LLC (the “Knicks DDTL Facility Borrower”) provides for a $110,000 senior unsecured delayed draw term loan facility (the “Knicks DDTL Facility”) and the credit agreement for MSG NYR Holdings, LLC (the “Rangers DDTL Facility Borrower”) provides for a $90,000 senior unsecured delayed draw term loan facility (the “Rangers DDTL Facility” and, together with the Knicks DDTL Facility, the “DDTL Facilities”).

The DDTL Facilities will mature and any unused commitments thereunder will expire on October 17, 2021.

Borrowings under the DDTL Facilities will bear interest at a variable rate equal to either, at the election of the applicable borrower, (i) LIBOR plus 2.00% per annum or (ii) a base rate plus 1.00% per annum.

Subject to the borrowing conditions, each of the DDTL Facilities may be drawn in up to four separate borrowings of $10,000 or more.

Proceeds of borrowings under the DDTL Facilities will be used for general corporate purposes.

The availability of each of the DDTL Facilities to the respective borrowers is subject to certain conditions, including (a) the liquidity, including cash on hand and availability under revolving credit commitments, of the Company, MSG Sports, LLC, the Knicks DDTL Facility Borrower and its subsidiaries and the Rangers DDTL Facility Borrower and its subsidiaries (other than any liquidity that is restricted by law or contractual obligation from being transferred to the relevant DDTL Facility Borrower or its subsidiaries) must be (i) less than $50,000 immediately prior to giving effect to any borrowing, and (ii) less than $75,000 immediately after giving effect to any borrowing, and (b) with respect to the Knicks DDTL Facility, the Knicks DDTL Facility Borrower and its subsidiaries must have used commercially reasonable efforts to raise additional financing (“New Third-Party Debt”), including additional commitments under existing revolving facilities, prior to drawing on the Knicks DDTL Facility to the extent permitted by the debt policies of the NBA.

In addition, the commitments of the DDTL Lender to make advances under the Knicks DDTL Facility will be permanently reduced and the Knicks DDTL Facility will be subject to mandatory prepayments in an amount equal to the net cash proceeds received by the Company, MSG Sports, LLC, the Knicks DDTL Facility Borrower, or the subsidiaries of the Knicks DDTL Facility Borrower from any New Third-Party Debt.

Pursuant to the NBA debt policies, the NBA has consented (the “NBA Consent Letter”) to the incurrence of the indebtedness under the Knicks DDTL Facility.

The NBA Consent Letter provides that the Knicks DDTL Facility Borrower and its subsidiaries (including the Knicks basketball team) will, among other matters, (i) operate the team in a first class manner, consistent with the manner in which NBA teams generally are operated, as determined by the NBA Commissioner in his sole discretion, and (ii) maintain sufficient net working capital and cash reserves to pay expenses, liabilities and obligations of the team in the ordinary

course and in a timely fashion.

In addition, the Knicks DDTL Facility Borrower and its subsidiaries (including the Knicks) have agreed with the NBA to not transfer certain basketball-related assets and to not make distributions to the Company without first providing the NBA with advance notice and not receiving the objection of the NBA Commissioner.

There was no borrowing under the DDTL Facilities as of June 30, 2020 .

Financing Agreements and Stock Repurchases

See Note 13 and Note 16 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for discussions of the Company’s debt obligations and various financing agreements, and the Company’s stock repurchases, respectively.

Cash Flow Discussion

As of June 30, 2019 , cash, cash equivalents and restricted cash totaled $1,117,901 , as compared to $1,256,620 as of June 30, 2018 .

The following table summarizes the Company’s cash flow activities for the years ended June 30, 2020 , 2019 and 2018 :

Years Ended June 30,

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities

Changes in working capital assets and liabilities

Net cash provided by operating activities

4 unchanged sentences

Operating Activities

Net cash provided by operating activities for the year ended June 30, 2019 decreased by $56,376 to $161,253 as compared to the prior year primarily due to changes in certain assets and liabilities, as well as a decrease in net income to a net loss in the current year adjusted for non-cash items.

Net cash provided by operating activities for the year ended June 30, 2020 decreased by $157,685 to $3,568 as compared to the prior year primarily due to the decrease in net income, both from continued and discontinued operations, adjusted for non-cash items.

The decrease was driven by the impact of the COVID-19 pandemic and the MSGE Distribution.

As a result of government-mandated assembly limitations and closures due to the COVID-19 pandemic, no events have been held since mid-March at The Garden where the Knicks and Rangers play their home games and the Company had recognized materially less revenues across a number of areas.

In addition, the temporary closure of The Garden and other MSG Entertainment venues had a material impact on the results from discontinued operations.

The changes in certain assets and liabilities are driven by decreases in collections due to promoters and prepaid expenses and other assets, partially offset by higher accrued and other liabilities, all due to timing.

The decrease in net income adjusted for non-cash items was impacted by earnings in equity method investments in the current year as compared to a loss in the prior year and lower depreciation and amortization in the current year.

Net cash provided by operating activities for the year ended June 30, 2018 decreased by $5,903 to $217,629 as compared to the prior year primarily due to higher net income adjusted for non-cash items including (i) a reduction in net deferred tax liabilities as a result of the recently enacted Tax Cuts and Jobs Act effective January 1, 2018, (ii) a write-off of deferred production costs associated with the New York Spectacular in the prior year, and (iii) an impairment charge to write off the carrying value of the Company’s equity investment in Fuse Media in the prior year, partially offset by increases in depreciation and amortization and share-based compensation expense in fiscal year 2018 as compared to the prior year.

This increase was offset by a severance-related payment in fiscal year 2018 attributable to a separation agreement with a team executive which was accrued for as of June 30, 2017 and a decrease in cash received related to deferred revenue primarily due to timing.

The decrease in net income adjusted for non-cash items was impacted by earnings in equity method investments in fiscal year 2019 as compared to a loss in the prior year and lower depreciation and amortization in fiscal year 2019.

Investing Activities

Net cash used in investing activities for the year ended June 30, 2019 increased by $50,538 to $232,895 as compared to the prior year primarily due to the Company’s investment in a British pound-denominated time deposit and an investment in SACO, partially offset by proceeds received from the sale of the Company’s 50% interest in AMSGE.

Net cash used in investing activities for the year ended June 30, 2018 decreased by $81,944 to $182,357 as compared to the prior year primarily due to (i) a net decrease in business acquisitions, (ii) repayments received from loans to nonconsolidated affiliates, and (iii) the acquisition of available-for-sale securities in the prior year.

These decreases were partially offset by (i) higher capital expenditures in fiscal year 2018, primarily associated with the purchase of land in London and costs incurred in developing the Company’s new venues in Las Vegas and London, (ii) new investments made in nonconsolidated affiliates, and (iii) a franchise fee payment made in fiscal year 2018 associated with CLG’s membership in the “League of Legends” North American League Championship Series.

Net cash used in investing activities for the year ended June 30, 2020 increased by $281,968 to $514,863 as compared to the prior year, principally driven by investing activities in discontinued operations.

The changes in investing activities included in discontinued operations primarily consisted of (i) an increase in purchase of short-term investments in fiscal year 2020 as compared to the prior year, (ii) higher capital expenditures in fiscal year 2020 as compared to the prior year, of which substantially all are related to the MSG Entertainment planned MSG Spheres in Las Vegas and London, and (iii) lower proceeds received from the sale of interest in a nonconsolidated affiliate in the prior year compared to the sale of interest in a nonconsolidated affiliate in the current year.

This increase was partially offset by (i) proceeds from the maturity of short-term investments, (ii) a loan repayment received from a subordinated note, (iii) lower investments made in nonconsolidated affiliates in the current year as compared to the prior year, and (iv) acquisition of notes receivable during the prior year as compared to none during the current year.

Net cash used in investing activities for the year ended June 30, 2019 increased by $50,538 to $232,895 as compared to the prior year primarily principally driven by investing activities in discontinued operations.

The changes in investing activities included in discontinued operations primarily consisted of the investment in a British pound-denominated time deposit and an investment in a nonconsolidated affiliate, partially offset by proceeds received from the sale of interest in another nonconsolidated affiliate.

Financing Activities

Net cash used in financing activities for the year ended June 30, 2019 increased by $20,649 to $71,746 as compared to the prior year due to the repayment of all obligations under the 2017 TAO Credit Agreement partially offset by (i) proceeds received from borrowings under the TAO Senior Credit Agreement , (ii) lower taxes paid in lieu of shares issued for equity-based compensation in the current year as compared to the prior year, (iii repurchases of shares of the Company’s Class A Common Stock in the prior year as compared to no repurchases in the current year, and other financing activities.

Net cash used in investing activities for the year ended June 30, 2018 decreased by $107,428 to $51,097 as compared to the prior year largely due to lower repurchases of shares of the Company’s Class A Common Stock in the current year as compared to the prior year.

This decrease was partially offset by (i) higher taxes paid in lieu of shares issued for equity-based compensation in fiscal year 2018 as compared to the prior year, (ii) distributions to noncontrolling interest holders related to the acquisition of TAO Group in fiscal year 2018 and (iii) a contingent consideration payment related to the acquisition of CLG in fiscal year 2018.

Net cash used in financing activities for the year ended June 30, 2020 increased by $448,842 to $520,588 as compared to the prior year.

This increase in cash used in financing activities primarily consisted of the distribution of cash to MSG Entertainment, partially offset by the proceeds received from the borrowings under the Knicks Revolving Credit Facility and Rangers Revolving Credit Facility and other net financing activities included in discontinued operations.

Net cash used in financing activities for the year ended June 30, 2019 increased by $20,649 to $71,746 as compared to the prior year.

The increase is driven primarily by financing activities included in discontinued operations partially offset by (i) lower taxes paid in lieu of shares issued for equity-based compensation in fiscal year 2019 as compared to the prior year and (ii) repurchases of shares of the Company’s Class A Common Stock in the prior year as compared to no repurchases in fiscal year 2019, and other net financing activities.

Contractual Obligations and Off Balance Sheet Arrangements

Future cash payments required under contracts entered into by the Company in the normal course of business and outstanding letters of credit as of June 30, 2019 are summarized in the following table:

Future cash payments required under contracts entered into by the Company in the normal course of business as of June 30, 2020 are summarized in the following table:

Payments Due by Period

Off balance sheet arrangements:

Contractual obligations (b)

Operating lease obligations (c)

Letters of credit (d)

Contractual obligations reflected on the balance sheet (e)

Contractual obligations reflected on the balance sheet

Long-term debt (c)

Contractual obligations (d)

_________________

Off balance sheet arrangements disclosed in the table above do not include MSG Sphere related commitments that are not reflected on the balance sheet of $1,049,781 .

Such arrangements are associated with the development and construction of MSG Sphere in Las Vegas.

The timing of the future cash payments disclosed is uncertain and may change as the development and construction of MSG Sphere in Las Vegas progresses.

Contractual obligations not reflected on the balance sheet consist principally of the MSG Sports segment’s obligations under employment agreements that the Company has with its professional sports teams’ personnel that are generally guaranteed regardless of employee injury or termination.

Operating lease obligations primarily represent future minimum rental payments on various long-term, noncancelable leases for the Company’s venues, including the TAO Group venues, CLG facility, and various corporate offices.

Consist of letters of credit obtained by the Company as collateral for development of MSG Sphere in Las Vegas and lease agreements.

Consist primarily of amounts earned under employment agreements that the Company has with certain of its professional sports teams’ personnel in the MSG Sports segment.

In addition, the amount includes MSG Sphere related commitments of approximately $19,700 , all due within fiscal year 2020.

Contractual obligations not reflected on the balance sheet consist principally of the Company’s obligations under employment agreements that the Company has with certain of its professional sports teams’ personnel that are to be performed in future periods and that are generally guaranteed regardless of employee injury or termination.

Includes contractually obligated minimum lease payments for operating leases having an initial noncancelable term in excess of one year.

These commitments are presented exclusive of the imputed interest used to reflect the payment’s present value.

See Note 9 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for information on the contractual obligations related to future lease payments, which are reflected on the consolidated balance sheet as lease liabilities as of June 30, 2020.

Consists of amounts drawn under the Knicks Revolving Credit Facility and Rangers Revolving Credit Facility .

See Note 13 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further details.

Contractual obligations reflected on the balance sheet consist principally of the Company’s obligations under employment agreements that the Company has with certain of its professional sports teams’ personnel that have been fully performed and that are being paid on a deferred basis.

Pension obligations have been excluded from the table above as the timing of the future cash payments is uncertain.

See Note 14 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information on the future funding requirements under our pension obligations.

See Note 7 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for discussion of the revolving credit facilities provided by the Company to Tribeca Enterprises.

In connection with the TAO Group and CLG acquisitions, the Company has accrued contingent consideration liabilities as part of the purchase price.

See Note 11 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further details of the amount reflected on the balance sheet as of June 30, 2020 .

In addition, see Note 12 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further details of the principal repayments required under the TAO Senior Secured Credit Facilities and the TAO Revolving Credit Facility .

MSG and a subsidiary of the Las Vegas Sands Corp.

entered into a 50-year ground lease in Las Vegas pursuant to which MSG has agreed to construct a large-scale venue.

MSG has announced plans to construct an MSG Sphere on that site.

Business — Our Business — Our Performance Venues — MSG Sphere .”

MSG has the right to increase its equity interest in TAO Group through a call right on the equity of the other TAO Group equityholders after the fifth anniversary of the closing date (January 31, 2022) and prior to such date in certain events.

The other TAO Group equityholders have the right to put to TAO Group their equity interests in TAO Group after the fifth anniversary of the closing and, in certain circumstances to put to MSG prior to the fifth anniversary.

The put and call prices are at fair market value (or in certain circumstances, subject to a discount).

Consideration paid upon the exercise of any such put or call right shall be, at MSG’s option, in cash, debt, or MSG Class A Common Stock, subject to certain limitations.

Seasonality of Our Business

The dependence of the MSG Sports segment on revenues from its NBA and NHL sports teams generally means it earns a disproportionate share of its revenues in the second and third quarters of the Company’s fiscal year.

The dependence of the MSG Entertainment segment on revenues from the Christmas Spectacular generally means it earns a disproportionate share of its revenues and operating income in the second quarter of the Company’s fiscal year.

In addition, while it does not have a material impact on seasonality of our business, the first and third calendar quarters are seasonally lighter quarters for TAO Group as compared to its second and fourth calendar quarters.

As the Company consolidates TAO Group results of operations on a three-month lag basis, the seasonally lighter quarters for TAO will be reflected in the second and fourth quarters of the Company’s fiscal year.

The Company’s dependence on revenues from its NBA and NHL sports teams generally means that we earn a disproportionate share of its revenues in the second and third quarters of the Company’s fiscal year.

On March 11 and 12, 2020, respectively, the NBA and NHL suspended their 2019-20 seasons due to COVID-19.

In July 2020, the NBA and NHL restarted their seasons.

As a result, based on the completion of the 2019-20 NBA and NHL seasons, the Company would recognize certain revenues that otherwise would have been recognized during the third and fourth quarter of fiscal year 2020 during the first quarter of fiscal year 2021.

Recently Issued Accounting Pronouncements and Critical Accounting Policies

20 unchanged sentences

Goodwill is tested annually for impairment as of August 31 st and at any time upon the occurrence of certain events or changes in circumstances.

The Company performs its goodwill impairment test at the reporting unit level, which is one level below the operating segment level.

The Company has two operating and reportable segments, MSG Entertainment and MSG Sports, consistent with the way management makes decisions and allocates resources to the business.

For purposes of evaluating goodwill for impairment, the Company has three reporting units across its two operating segments, which are MSG Sports, MSG Entertainment and TAO Group.

TAO Group was acquired after the annual goodwill impairment test for fiscal year 2017 and represents a separate reporting unit within the MSG Entertainment segment for goodwill impairment testing.

The goodwill balance reported on the Company’s consolidated balance sheet as of June 30, 2019 by reporting unit was as follows:

MSG Entertainment

_________________

The Company performs its goodwill impairment test at the reporting unit level, which is the same as or one level below the operating segment level.

Excluding discontinued operations, the Company has one operating and reportable segment, and for the year ended June 30, 2020, the Company had one reporting unit for goodwill impairment testing purposes.

The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred.

If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would not need to perform the two-step impairment test for that reporting unit.

If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would not need to perform a quantitative impairment test for that reporting unit.

If the Company cannot support such a conclusion or the Company does not elect to perform the qualitative assessment, the first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill.

The estimates of the fair value of the Company’s reporting units are primarily determined using discounted cash flows and comparable market transactions.

These valuations are based on estimates and assumptions including projected future cash flows, discount rates, determination of appropriate market comparables and the determination of whether a premium or discount should be applied to comparables.

These valuations are based on estimates and assumptions including projected future cash flows, discount rates, determination of appropriate market comparables and the determination of

whether a premium or discount should be applied to comparables.

Significant judgments inherent in a discounted cash flow analysis include the selection of the appropriate discount rate, the estimate of the amount and timing of projected future cash flows and identification of appropriate continuing growth rate assumptions.

The discount rates used in the analysis are intended to reflect the risk inherent in the projected future cash flows.

If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any.

The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill.

If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

The implied fair value of goodwill is determined in the same manner as the amount of goodwill that would be recognized in a business combination.

The Company elected to perform the qualitative assessment of impairment for all of the Company’s reporting units for the fiscal year 2019 impairment test.

Subsequent to the adoption of ASU No.

2017-04 in the third quarter of fiscal year 2020, the amount of an impairment loss is measured as the amount by which a reporting unit’s carrying value exceeds its fair value determined in step one, not to exceed the carrying amount of goodwill.

Prior to the adoption of ASU No.

2017-04, if the carrying amount of a reporting unit exceeded its fair value, the second step of the goodwill impairment test was performed to measure the amount of impairment loss, if any.

The second step of the goodwill impairment test compared the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill.

If the carrying amount of the reporting unit’s goodwill exceeded the implied fair value of that goodwill, an impairment loss was recognized in an amount equal to that excess.

The implied fair value of goodwill was determined in the same manner as the amount of goodwill that would be recognized in a business combination.

The Company elected to perform the qualitative assessment of impairment for the Company’s reporting unit for the fiscal year 2020 impairment test.

These assessments considered factors such as:

1 unchanged sentence

industry and market considerations;

market capitalization;

cost factors;

2 unchanged sentences

relevant reporting unit specific events such as changes in the carrying amount of net assets.

The Company performed its most recent annual impairment test of goodwill during the first quarter of fiscal year 2019 , and there was no impairment of goodwill identified for any of its reporting units.

Based on these impairment tests, the Company’s MSG Sports, MSG Entertainment and TAO Group reporting units had sufficient safety margins, defined as the excess of the amount by which the estimated fair value of each reporting unit exceeded the respective carrying value of each reporting unit (including goodwill allocated to each respective reporting unit).

For MSG Sports and MSG Entertainment the most recent quantitative assessments were used in making this determination and due to the proximity of the acquisition date for TAO Group to the goodwill impairment test date, the initial purchase price was assumed to be the fair value of the TAO Group reporting unit for purposes of the goodwill impairment test.

The Company performed its most recent annual impairment test of goodwill during the first quarter of fiscal year 2020 , and there was no impairment of goodwill.

Based on this impairment test, the Company’s reporting unit had sufficient safety margins, defined as the excess of the amount by which the estimated fair value of the reporting unit exceeded the carrying value of the reporting unit, including goodwill.

The most recent quantitative assessments were used in making this determination.

The Company believes that if the fair value of a reporting unit exceeds its carrying value by greater than 10%, a sufficient safety margin has been realized.

As a result of operating disruptions due to COVID-19, the Company’s projected cash flows were directly impacted.

This disruption along with the macroeconomic industry and market conditions, resulted in the evaluation of whether there was a “triggering event”, which required the Company to assess the carrying value of its goodwill and intangible assets for impairment.

Based on the assessment, management determined that it was not more likely than not that an impairment exists and there was no goodwill or intangible asset balance that was impaired as of June 30, 2020.

However, the duration and impact of the COVID-19 pandemic may result in future impairment charges that management will evaluate as facts and circumstances evolve through time.

Identifiable Indefinite-Lived Intangible Assets

1 unchanged sentence

The following table sets forth the amount of identifiable indefinite-lived intangible assets reported in the Company’s consolidated balance sheet as of June 30, 2020 by reportable segment:

Sports franchises (MSG Sports segment)

Trademarks (MSG Entertainment segment)

Photographic related rights (MSG Sports segment)

Sports franchises

Photographic related rights

The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred.

3 unchanged sentences

If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

For all periods presented, the Company elected to perform a qualitative assessment of impairment for the indefinite-lived intangible assets in the MSG Sports segment and the majority of the trademarks in the MSG Entertainment segment.

These assessments considered the events and circumstances that could affect the significant inputs used to determine the fair value of the intangible asset.

For all periods presented, the Company elected to perform a qualitative assessment of impairment for the indefinite-lived intangible assets.

These assessments considered the events

and circumstances that could affect the significant inputs used to determine the fair value of the intangible asset.

Examples of such events and circumstances include:

6 unchanged sentences

The Company performed its most recent annual impairment test of identifiable indefinite-lived intangible assets during the first quarter of fiscal year 2020 , and there were no impairments identified.

Based on these impairment tests, the Company’s indefinite-lived intangible assets had sufficient safety margins, representing the excess of each identifiable indefinite-lived intangible asset’s estimated fair value over its respective carrying value.

Based on this impairment test, the Company’s indefinite-lived intangible assets had sufficient safety margins, representing the excess of each identifiable indefinite-lived intangible asset’s estimated fair value over its respective carrying value.

The Company believes that if the fair value of an indefinite-lived intangible asset exceeds its carrying value by greater than 10%, a sufficient safety margin has been realized.

Other Long-Lived Assets

For other long-lived assets, including intangible assets that are amortized, the Company evaluates assets for recoverability when there is an indication of potential impairment.

If the undiscounted cash flows from a group of assets being evaluated is less than the carrying value of that group of assets, the fair value of the asset group is determined and the carrying value of the asset group is written down to fair value.

The estimated useful lives and net carrying values of the Company’s intangible assets subject to amortization as of June 30, 2019 are as follows:

Venue management contracts

Favorable lease assets

Season ticket holder relationships

Non-compete agreements

Festival rights

Other intangibles

The Company has recognized intangible assets for trade names, venue management contracts, favorable lease assets, season ticket holder relationships, non-compete agreements, festival rights and other intangibles as a result of purchase accounting.

The Company has determined that these intangible assets have finite lives.

The useful lives of the Company’s long-lived assets are based on estimates of the period over which the Company expects the assets to be of economic benefit to the Company.

In estimating the useful lives, the Company considers factors such as, but not limited to, risk of obsolescence, anticipated use, plans of the Company, and applicable laws and permit requirements.

In light of these facts and circumstances, the Company has determined that its estimated useful lives are appropriate.

Contingent Consideration

Some of the Company’s acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future operating targets.

The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates.

For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration that the Company will pay to the former owners as a liability in Other liabilities on the consolidated balance sheets.

The Company measures its contingent earn-out liabilities at fair value on a recurring basis using significant unobservable inputs classified within Level III of the fair value hierarchy, which can result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earn-out obligation.

Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate and amount paid will be recorded in earnings.

See Note 11 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information regarding the fair value of the Company’s contingent consideration liabilities related to the acquisition of TAO Group and CLG.

Defined Benefit Pension Plans and Other Postretirement Benefit Plan

The Company utilizes actuarial methods to calculate pension and other postretirement benefit obligations and the related net periodic benefit cost which are based on actuarial assumptions.

Key assumptions, the discount rates and the expected long-term rate of return on plan assets, are important elements of the plans’ expense and liability measurement and we evaluate these key assumptions annually.

Other assumptions include demographic factors, such as mortality, retirement age and turnover.

The actuarial assumptions used by the Company may differ materially from actual results due to various factors, including, but not limited to, changing economic and market conditions.

Differences between actual and expected occurrences could significantly impact the actual amount of net periodic benefit cost and the benefit obligation recorded by the Company.

Material changes in the costs of the plans may occur in the future due to changes in these assumptions, changes in the number of the plan participants, changes in the level of benefits provided, changes in asset levels and changes in legislation.

Our assumptions reflect our historical experience and our best estimate regarding future expectations.

Accumulated and projected benefit obligations reflect the present value of future cash payments for benefits.

We use the Willis Towers Watson U.S.

40-90 Discount Rate Model (which is developed by examining the yields on selected highly rated corporate bonds) to discount these benefit payments on a plan by plan basis, to select a rate at which we believe each plan’s benefits could be effectively settled.

Additionally, the Company measures service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows (“Spot Rate Approach”).

The Company believes the Spot Rate Approach provides a more accurate measurement of service and interest costs by improving the correlation between projected benefit cash flows and their corresponding spot rates on the yield curve.

Lower discount rates increase the present value of benefit obligations and will usually increase the subsequent year’s net periodic benefit cost.

The weighted-average discount rates used to determine benefit obligations as of June 30, 2019 for the Company’s Pension Plans and Postretirement Plan were 3.58% and 3.18% , respectively.

A 25 basis point decrease in each of these assumed discount rates would increase the projected benefit obligations for the Company’s Pension Plans and Postretirement Plan at June 30, 2019 by $5,950 and $80 , respectively.

The weighted-average discount rates used to determine service cost, interest cost and the projected benefit obligation components of net periodic benefit cost were 4.25% , 3.90% and 4.19% , respectively, for the year ended June 30, 2019 for the Company’s Pension Plans.

The weighted-average discount rates used to determine service cost, interest cost and the projected benefit obligation components of net periodic benefit cost were 4.25% , 3.67% and 4.06% , respectively, for the year ended June 30, 2019 for the Company’s Postretirement Plan.

A 25 basis point decrease in these assumed discount rates would increase the total net periodic benefit cost for the Company’s Pension Plans by $100 and decrease net periodic benefit cost for Postretirement Plan by $6 for the year ended June 30, 2019 .

The expected long-term return on plan assets is based on a periodic review and modeling of the plans’ asset allocation structures over a long-term horizon.

Expectations of returns for each asset class are the most important of the assumptions used in the review and modeling, and are based on comprehensive reviews of historical data, forward-looking economic outlook, and economic/financial market theory.

The expected long-term rate of return was selected from within the reasonable range of rates determined by (a) historical real returns, net of inflation, for the asset classes covered by the investment policy, and (b) projections of inflation over the long-term period during which benefits are payable to plan participants.

The expected long-term rate of return on plan assets for the Company’s funded pension plans was 3.72% for the year ended June 30, 2019 .

Performance of the capital markets affects the value of assets that are held in trust to satisfy future obligations under the Company’s funded plans.

Adverse market performance in the future could result in lower rates of return for these assets than projected by the Company which could increase the Company’s funding requirements related to these plans, as well as negatively affect the Company’s operating results by increasing the net periodic benefit cost.

A 25 basis point decrease in the long-term return on pension plan assets assumption would increase net periodic pension benefit cost by $300 for the year ended June 30, 2019 .

Another important assumption for our Postretirement Plan is healthcare cost trend rates.

We developed our estimate of the healthcare cost trend rates through examination of the Company’s claims experience and the results of recent healthcare trend surveys.

Assumptions for healthcare cost trend rates used to determine the net periodic benefit cost and benefit obligation for our Postretirement Plan as of and for the year ended June 30, 2019 are as follows:

Healthcare cost trend rate assumed for next year

Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)

Year that the rate reaches the ultimate trend rate

A one percentage point change in assumed healthcare cost trend rates would have the following effects on the net periodic postretirement benefit cost and benefit obligation for our postretirement plan as of and for the year ended June 30, 2019 :

(Decrease) on

Total of Service

and Interest Cost

(Decrease) on

Benefit Obligation

One percentage point increase

One percentage point decrease

GAAP includes mechanisms that serve to limit the volatility in the Company’s earnings that otherwise would result from recording changes in the value of plan assets and benefit obligations in our consolidated financial statements in the periods in which those changes occur.

For example, while the expected long-term rate of return on the plans’ assets should, over time, approximate the actual long-term returns, differences between the expected and actual returns could occur in any given year.

These differences contribute to the deferred actuarial gains or losses, which are then amortized over time.

See Note 13 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information on our pension plans and other postretirement benefit plan.

Lease Accounting

The Company’s leases primarily consist of the lease of the Company’s corporate offices under the Sublease Agreement with MSG Entertainment (the “Sublease Agreement”) for our principal executive offices at Two Pennsylvania Plaza in New York and the lease of CLG Performance Center.

In, addition, the Company accounts for the rights of use of The Garden pursuant to the Arena License Agreements as leases under the Accounting Standards Codification Topic 842, Leases.

The Company determines whether an arrangement contains a lease at the inception of the arrangement.

If a lease is determined to exist, the lease term is assessed based on the date when the underlying asset is made available for the Company’s use by the lessor.

The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain not to exercise, as well as periods covered by renewal options which the Company is reasonably certain of exercising.

The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term.

For leases with a term exceeding 12 months, a lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of the fixed minimum payment obligations over the lease term.

A corresponding ROU asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received.

The Company includes fixed payment obligations related to non-lease components in the measurement of ROU assets and lease liabilities, as the Company has elected to account for lease and non-lease components together as a single lease component.

ROU assets associated with finance leases are presented separate from operating leases ROU assets and are included within Property and equipment, net on the Company’s consolidated balance sheet.

For purposes of measuring the present value of the Company’s fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in the underlying leasing arrangements are typically not readily determinable.

The Company’s incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment surrounding the associated lease.

On April 17, 2020, in connection with the MSGE Distribution, we entered into a sublease agreement with MSG Entertainment (the “Sublease Agreement”) for our principal executive offices at Two Pennsylvania Plaza in New York.

The Sublease Agreement right of use assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term, which ends April 30, 2024.

In addition, in connection with the MSGE Distribution we entered into a long term lease with MSG Entertainment that ends June 30, 2055 and will allow the Knicks and the Rangers to continue to play their home games at The Garden.

The Arena License Agreements provide for fixed payments to be made from inception through June 30, 2055 in 12 equal installments during each year of the contractual term.

The Garden was not available for use on April 17, 2020 due to the COVID-19 pandemic and local government restrictions on gatherings;

however, the licenses were viewed as a continuation of an existing pre-spin relationship where the Knicks and Rangers used The Garden through an inter-company cost-sharing arrangement and therefore the licenses were viewed to have commenced on April 17, 2020.

However, due to the force majeure clause, MSG Sports is not required to make payments until The Garden is available for use, and at June 30, 2020 the asset and liability were remeasured utilizing the same discount rate as of April 17, 2020.

The Knicks and Rangers are entitled to use The Garden on home game days, which are usually nonconsecutive, for a pre-defined period of time from before and after the game.

In evaluating the Company’s lease cost, the Company considered the timing of payments throughout the lease terms and the nonconsecutive periods of use, provided for within each license.

While payments are made throughout the contract year in twelve equal installments under each arrangement, the periods of use only span each of the individual team event days.

As such, the Company concluded that the related straight-line rent expense should be recorded by each team equally over the home game days as each takes place.

In the event a team were to qualify for the playoffs in a given season, a prospective adjustment may be recorded to adjust for the additional use days within that season, while the total expense for the team’s season would remain the same.

There were no events and thus no rent expense was recorded during the period from lease inception as of April 17, 2020 to June 30, 2020.

As part of Arena License Agreements, we recognized operating lease liabilities and a right of use assets.

We measured the lease liabilities at the present value of the future lease payments as of April 17, 2020.

We use our incremental borrowing rates based on the remaining lease term to determine the present value of future lease payments.

Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

This rate is also used for the Sublease Agreement.

Our incremental borrowing rate is calculated as the weighted average risk-free rate plus a spread to reflect our current unsecured credit rating.

We subsequently measure the lease liability at the present value of the future lease payments as of the reporting date with a corresponding adjustment to the right-to-use asset.

Absent a lease modification we will continue to utilize the April 17, 2020 incremental borrowing rate.

The Company’s accounting during the period of force majeure applies FASB Staff Q&A, issued on April 10, 2020, providing guidance on accounting for COVID-19 related rent concessions.

Estimation of the incremental borrowing rate requires judgment by management and reflects an assessment of credit standing to derive an implied secured credit rating and corresponding yield curve.

Changes in management’s estimates of discount rate assumptions could result in a significant overstatement or understatement of right of use assets or lease liabilities, resulting in an adverse impact to MSG Sports’ financial position.

See Note 9 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information on our leases.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis