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Item 9A. Controls and Procedures

2020-08-31 compared with 2019-08-20 · 1016 added, 1222 removed, 1067 unchanged (68% of the section changed)

15 unchanged sentences

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act ) during the fiscal quarter ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Following the MSGE Distribution , we entered into a transition services agreement and other agreements with MSG Entertainment which provide certain business and administrative functions to the Company that were previously performed by internal resources.

Such services include support with respect to information technology, accounting, accounts payable, payroll, tax, human resources, treasury, insurance and risk management, investor relations, corporate communications, benefit plan administration and reporting, and internal audit.

The Company continues to review and document its internal controls over financial reporting, and may, from time to time, make changes aimed at enhancing their effectiveness.

There were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Other Information

17 unchanged sentences

Distribution Agreement, dated September 11, 2015, between MSG Networks Inc.

and The Madison Square Garden Company (incorporated by reference to Exhibit 2.1 to Amendment No.

and Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) (incorporated by reference to Exhibit 2.1 to Amendment No.

6 to the Company’s Registration Statement on Form 10 filed on September 11, 2015).

Contribution Agreement, dated September 11, 2015, among MSG Networks Inc., MSGN Holdings, L.P.

and The Madison Square Garden Company (incorporated by reference to Exhibit 2.2 to Amendment No.

and Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) (incorporated by reference to Exhibit 2.2 to Amendment No.

6 to the Company’s Registration Statement on Form 10 filed on September 11, 2015).

Amended and Restated Certificate of Incorporation of The Madison Square Garden Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 1, 2015).

Amended By-Laws of The Madison Square Garden Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on October 1, 2015).

Distribution Agreement, dated as of March 31, 2020, between Madison Square Garden Sports Corp.

and Madison Square Garden Entertainment Corp.

(incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on March 31, 2020).

Amended and Restated Certificate of Incorporation of Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 1, 2015).

Amendment to the Amended and Restated Certificate of Incorporation of Madison Square Garden Sports Corp., dated April 17, 2020 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 23, 2020).

Amended By-Laws of Madison Square Garden Sports Corp.

(incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 26, 2020).

Transfer Consent Agreement, dated September 28, 2015 with the NBA (incorporated by reference to Exhibit 4.1 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

Transfer Consent Agreement, dated September 28, 2015 with the NHL (incorporated by reference to Exhibit 4.2 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

Registration Rights Agreement, dated as of September 15, 2015, by and among The Madison Square Garden Company and The Charles F.

Registration Rights Agreement, dated as of September 15, 2015, by and among Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) and The Charles F.

Dolan Children Trusts (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 1, 2015).

Registration Rights Agreement, dated as of September 15, 2015, by and among The Madison Square Garden Company and The Dolan Family Affiliates (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on October 1, 2015).

Description of Capital Stock.

Transition Services Agreement, dated September 11, 2015, by and between MSG Networks Inc.

and The Madison Square Garden Company (incorporated by reference to Exhibit 10.1 to Amendment No.

6 to the Company’s Registration Statement on Form 10 filed on September 11, 2015).

Registration Rights Agreement, dated as of September 15, 2015, by and among Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) and The Dolan Family Affiliates (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on October 1, 2015).

Description of Capital Stock (incorporated by reference to Exhibit 4.5 to the Company’s Form 10-K for the fiscal year ended June 30, 2019 filed on August 20, 2019).

Tax Disaffiliation Agreement, dated September 11, 2015, between MSG Networks Inc.

and The Madison Square Garden Company (incorporated by reference to Exhibit 10.2 to Amendment No.

and Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) (incorporated by reference to Exhibit 10.2 to Amendment No.

6 to the Company’s Registration Statement on Form 10 filed on September 11, 2015).

Employee Matters Agreement, dated September 11, 2015, by and between MSG Networks Inc.

and The Madison Square Garden Company (incorporated by reference to Exhibit 10.3 to Amendment No.

and Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) (incorporated by reference to Exhibit 10.3 to Amendment No.

6 to the Company’s Registration Statement on Form 10 filed on September 11, 2015).

The Madison Square Garden Company 2015 Employee Stock Plan (incorporated by reference to Exhibit 10.4 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

The Madison Square Garden Company 2015 Cash Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

The Madison Square Garden Company 2015 Stock Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.6 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

Standstill Agreement, dated September 15, 2015, by and among The Madison Square Garden Company and The Dolan Family Group (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 1, 2015).

Form of Indemnification Agreement between The Madison Square Garden Company and its Directors and Executive Officers (incorporated by reference to Exhibit 10.8 to Amendment No.

Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) 2015 Employee Stock Plan (incorporated by reference to Exhibit 10.4 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) 2015 Cash Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) 2015 Stock Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.6 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

Form of Indemnification Agreement between Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) and its Directors and Executive Officers (incorporated by reference to Exhibit 10.8 to Amendment No.

3 to the Company’s Registration Statement on Form 10 filed on July 24, 2015).

Form of The Madison Square Garden Company Non-Employee Director Award Agreement (incorporated by reference to Exhibit 10.9 to Amendment No.

Form of Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) Non-Employee Director Award Agreement (incorporated by reference to Exhibit 10.9 to Amendment No.

3 to the Company’s Registration Statement on Form 10 filed on July 24, 2015).

Form of The Madison Square Garden Company Restricted Stock Units Agreement (incorporated by reference to Exhibit 10.10 to Amendment No.

Form of Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) Restricted Stock Units Agreement (incorporated by reference to Exhibit 10.10 to Amendment No.

3 to the Company’s Registration Statement on Form 10 filed on July 24, 2015).

Form of The Madison Square Garden Company Performance Restricted Stock Units Agreement (incorporated by reference to Exhibit 10.11 to Amendment No.

Form of Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) Performance Restricted Stock Units Agreement (incorporated by reference to Exhibit 10.11 to Amendment No.

3 to the Company’s Registration Statement on Form 10 filed on July 24, 2015).

Form of The Madison Square Garden Company Restricted Stock Units Agreement (2018) (incorporated by reference to Exhibit 10.12 to the Company’s Form 10-K for the fiscal year ended June 30, 2018 filed on August 17, 2018).

Form of The Madison Square Garden Company Performance Restricted Stock Units Agreement (2018) (incorporated by reference to Exhibit 10.13 to the Company’s Form 10-K for the fiscal year ended June 30, 2018 filed on August 17, 2018).

Form of The Madison Square Garden Company Restricted Stock Units Agreement (2019).

Form of The Madison Square Garden Company Performance Restricted Stock Units Agreement (2019).

Form of The Madison Square Garden Company Option Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended December 31, 2017 filed on February 8, 2018).

Form of Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) Restricted Stock Units Agreement (2018) (incorporated by reference to Exhibit 10.12 to the Company’s Form 10-K for the fiscal year ended June 30, 2018 filed on August 17, 2018).

Form of Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) Performance Restricted Stock Units Agreement (2018) (incorporated by reference to Exhibit 10.13 to the Company’s Form 10-K for the fiscal year ended June 30, 2018 filed on August 17, 2018).

Form of Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) Restricted Stock Units Agreement (2019) (incorporated by reference to Exhibit 10.14 to the Company’s Form 10-K for the fiscal year ended June 30, 2019 filed on August 20, 2019).

Form of Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) Performance Restricted Stock Units Agreement (2019) (incorporated by reference to Exhibit 10.15 to the Company’s Form 10-K for the fiscal year ended June 30, 2019 filed on August 20, 2019).

Form of Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) Option Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended December 31, 2017 filed on February 8, 2018).

Lease Agreement, dated December 4, 1997, between RCPI Trust and Radio City Productions LLC, relating to Radio City Music Hall, (incorporated by reference to Exhibit 10.14 to Amendment No.

11 unchanged sentences

3 to the Company’s Registration Statement on Form 10 filed on July 24, 2015).

Guaranty of Lease, between MSG Sports & Entertainment, LLC and RCPI Landmark Properties, L.L.C.

Guaranty of Lease, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and RCPI Landmark Properties, L.L.C.

(incorporated by reference to Exhibit 10.19 to Amendment No.

3 to the Company’s Registration Statement on Form 10 filed on July 24, 2015).

Employment Agreement dated as of October 3, 2018, between The Madison Square Garden Company and James L.

Dolan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 4, 2018).

Letter Agreement dated as of December 6, 2018, between The Madison Square Garden Company and Donna Coleman (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 10, 2018).†

Employment Agreement dated as of December 6, 2018, between The Madison Square Garden Company and Victoria M.

Employment Agreement dated as of March 31, 2020 between Madison Square Garden Sports Corp.

Dolan (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on March 31, 2020).

Employment Agreement dated as of April 17, 2020 between Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) and Alexander Shvartsman.

Employment Agreement dated as of December 6, 2018, between Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) and Victoria M.

Mink (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 10, 2018).

Employment Agreement, dated October 25, 2018, between The Madison Square Garden Company and Philip D’Ambrosio (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2018 filed on February 1, 2019).

Employment Agreement, dated September 6, 2018, between The Madison Square Garden Company and Lawrence J.

Employment Agreement, dated October 25, 2018, between Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) and Philip D’Ambrosio (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2018 filed on February 1, 2019).

Employment Agreement, dated September 6, 2018, between Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) and Lawrence J.

Burian (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 7, 2018).

Employment Agreement, dated December 15, 2017, between The Madison Square Garden Company and Andrew Lustgarten (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 18, 2017).

Option Agreement, dated December 15, 2017, between The Madison Square Garden Company and Andrew Lustgarten (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 18, 2017).

Dry Lease Agreement, dated January 11, 2017, between MSG Sports & Entertainment, LLC and Quart 2C, LLC for the G550 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 13, 2017).

Dry Lease Agreement, dated January 11, 2017 between MSG Sports & Entertainment, LLC and Quart 2C, LLC for the G450 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 13, 2017).

Letter Agreement, dated June 19, 2020, between Madison Square Garden Sports Corp.

and Lawrence J.

Burian (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 19, 2020).

Employment Agreement dated as of March 31, 2020 between Madison Square Garden Sports Corp.

and Andrew Lustgarten (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on March 31, 2020).

Option Agreement, dated December 15, 2017, between Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) and Andrew Lustgarten (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 18, 2017).

Employment Agreement dated as of January 23, 2020 between Madison Square Garden Sports Corp.

and Joseph Yospe.

Dry Lease Agreement, dated January 11, 2017, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and Quart 2C, LLC for the G550 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 13, 2017).

Dry Lease Agreement, dated January 11, 2017 between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and Quart 2C, LLC for the G450 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 13, 2017).

Credit Agreement, dated as of September 30, 2016, by and among New York Knicks, LLC, JPMorgan Chase Bank, N.A.

4 unchanged sentences

Security Agreement, dated as of January 25, 2017, between New York Rangers, LLC and JPMorgan Chase Bank, N.A., as collateral agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 27, 2017).

Transaction Agreement, dated as of January 31, 2017, between MSG TG, LLC, TG Merger Sub, LLC, TG Rollover Holdco LLC, TAO Group Holdings LLC, TAO Group Intermediate Holdings LLC, TAO Group Operating LLC, TAO Group Management LLC, TG Member Representative LLC, certain other parties thereto, and solely with respect to specific provisions MSG Entertainment Holdings, LLC and The Madison Square Garden Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 1, 2017).

(formerly, The Madison Square Garden Company) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 1, 2017).

Credit and Guaranty Agreement, dated as of January 31, 2017, among TAO Group Operating LLC, TAO Group Intermediate Holdings LLC, certain subsidiaries of TAO Group Operating LLC, the various lenders thereto, and Goldman Sachs Specialty Lending Group, L.P.

2 unchanged sentences

Amendment No.

1 to Second Amended and Restated Limited Liability Company Agreement of TAO Group Holdings LLC, dated as of May 23, 2019.

1 to Second Amended and Restated Limited Liability Company Agreement of TAO Group Holdings LLC, dated as of May 23, 2019.(incorporated by reference to Exhibit 10.39 to the Company’s Form 10-K for the fiscal year ended June 30, 2019 filed on August 20, 2019).

First Amendment to the Credit and Guaranty Agreement, dated as of January 31, 2017, among TAO Group Operating LLC, TAO Group Intermediate Holdings LLC, certain subsidiaries of TAO Group Operating LLC, the various lenders thereto, and Goldman Sachs Specialty Lending Group, L.P., entered into as of May 19, 2017 (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q for the quarter ended December 31, 2017 filed on February 8, 2018).

Second Amendment to the Credit and Guaranty Agreement, dated as of January 31, 2017, among TAO Group Operating LLC, TAO Group Intermediate Holdings LLC, certain subsidiaries of TAO Group Operating LLC, the various lenders thereto, and Goldman Sachs Specialty Lending Group, L.P., entered into as of January 22, 2018 (incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q for the quarter ended December 31, 2017 filed on February 8, 2018).

Equity Administration Agreement, dated as of September 15, 2015 between Cablevision Systems Corporation and The Madison Square Garden Company (incorporated by reference to Exhibit 10.29 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

Equity Administration Agreement, dated as of September 15, 2015 between AMC Networks Inc.

and The Madison Square Garden Company (incorporated by reference to Exhibit 10.28 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

Summary of Office Space Arrangement, between MSG Sports & Entertainment, LLC and the Knickerbocker Group LLC (incorporated by reference to Exhibit 10.30 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

Summary of Office Space Arrangement, between MSG Sports & Entertainment, LLC and the Charles Dolan Family Office, LLC (incorporated by reference to Exhibit 10.31 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

Time Sharing Agreement, dated December 15, 2017, between MSG Sports & Entertainment, LLC and Andrew Lustgarten (for the G450) (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended December 31, 2017 filed on February 8, 2018).

Time Sharing Agreement, dated December 15, 2017, between MSG Sports & Entertainment, LLC and Andrew Lustgarten (for the G550) (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2017 filed on February 8, 2018).

Time Sharing Agreement, dated December 15, 2017, between MSG Sports & Entertainment, LLC and Andrew Lustgarten (for the GV) (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended December 31, 2017 filed on February 8, 2018).

Aircraft Support Services Agreement, effective July 1, 2018, between MSG Sports & Entertainment, LLC, Sterling Aviation, LLC and Charles F.

Summary of Office Space Arrangement, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and the Knickerbocker Group LLC (incorporated by reference to Exhibit 10.30 to the Company’s Form 10-K for the fiscal year ended June 30, 2016 filed on August 19, 2016).

Time Sharing Agreement, dated December 15, 2017, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and Andrew Lustgarten (for the G450) (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended December 31, 2017 filed on February 8, 2018).

Time Sharing Agreement, dated December 15, 2017, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and Andrew Lustgarten (for the G550) (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended December 31, 2017 filed on February 8, 2018).

Time Sharing Agreement, dated December 15, 2017, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and Andrew Lustgarten (for the GV) (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended December 31, 2017 filed on February 8, 2018).

Aircraft Support Services Agreement, effective July 1, 2018, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC), Sterling Aviation, LLC and Charles F.

Dolan (for the GV) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 29, 2018).

Aircraft Support Services Agreement, effective July 1, 2018, between MSG Sports & Entertainment, LLC and JDSS (for the G450) (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 29, 2018).

Time Sharing Agreement, effective July 1, 2018, between MSG Sports & Entertainment, LLC and Charles F.

Aircraft Support Services Agreement, effective July 1, 2018, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC)and JDSS (for the G450) (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 29, 2018).

Time Sharing Agreement, effective July 1, 2018, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and Charles F.

Dolan (for the G550) (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on June 29, 2018).

Time Sharing Agreement, effective July 1, 2018, between MSG Sports & Entertainment, LLC and QUART 2C, LLC (for the G550) (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on June 29, 2018).

Dry Lease Agreement, effective July 1,2018, between MSG Sports & Entertainment, LLC and Sterling Aviation, LLC (for the GV) (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on June 29, 2018).

Dry Lease Agreement, effective July 1, 2018, between MSG Sports & Entertainment, LLC and QUART 2C, LLC (for the G450) (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on June 29, 2018).

Ground Lease Agreement, dated July 16, 2018, by and among Sands Arena Landlord LLC, Venetian Casino Resort, LLC, MSG Las Vegas, LLC, and MSG Sports & Entertainment, LLC (incorporated by reference to Exhibit 10.60 to the Company’s Form 10-K for the fiscal year ended June 30, 2018 filed on August 17, 2018).

First Amendment to Ground Lease, dated July 16, 2018, by and among Sands Arena Landlord LLC, Venetian Casino Resort, LLC, MSG Las Vegas, LC, and MSG Sports & Entertainment, LLC, dated November 24, 2018.

Aircraft Support Services Agreement, dated December 17, 2018, between MSG Sports & Entertainment, LLC and the Dolan Family Members (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 21, 2018).

Dry Lease Agreement, dated December 17, 2018, between MSG Sports & Entertainment, LLC and Sterling2k LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 21, 2018).

Time Sharing Agreement, dated December 17, 2018, between MSG Sports & Entertainment, LLC and Andrew Lustgarten (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on December 21, 2018).

Dry Lease Agreement, dated May 6, 2019, between MSG Sports & Entertainment, LLC and Brighid Air, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended March 31, 2019 filed on May 8, 2019).

Flight Crew Services Agreement, dated May 6, 2019, between MSG Sports & Entertainment, LLC and Dolan Family Office, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended March 31, 2019 filed on May 8, 2019).

Time Sharing Agreement, dated May 6, 2019, between MSG Sports & Entertainment, LLC and Andrew Lustgarten (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended March 31, 2019 filed on May 8, 2019).

Time Sharing Agreement, effective July 1, 2018, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC)and QUART 2C, LLC (for the G550) (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on June 29, 2018).

Dry Lease Agreement, effective July 1,2018, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC)C and Sterling Aviation, LLC (for the GV) (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on June 29, 2018).

Dry Lease Agreement, effective July 1, 2018, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and QUART 2C, LLC (for the G450) (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on June 29, 2018).

Ground Lease Agreement, dated July 16, 2018, by and among Sands Arena Landlord LLC, Venetian Casino Resort, LLC, MSG Las Vegas, LLC, and MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) (incorporated by reference to Exhibit 10.60 to the Company’s Form 10-K for the fiscal year ended June 30, 2018 filed on August 17, 2018).

First Amendment to Ground Lease, dated July 16, 2018, by and among Sands Arena Landlord LLC, Venetian Casino Resort, LLC, MSG Las Vegas, LC, and MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC), dated November 24, 2018 (incorporated by reference to Exhibit 10.56 to the Company’s Form 10-K for the fiscal year ended June 30, 2019 filed on August 20, 2019).

Aircraft Support Services Agreement, dated December 17, 2018, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and the Dolan Family Members (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 21, 2018).

Dry Lease Agreement, dated December 17, 2018, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and Sterling2k LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 21, 2018).

Time Sharing Agreement, dated December 17, 2018, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and Andrew Lustgarten (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on December 21, 2018).

Dry Lease Agreement, dated May 6, 2019, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and Brighid Air, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended March 31, 2019 filed on May 8, 2019).

Flight Crew Services Agreement, dated May 6, 2019, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and Dolan Family Office, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q for the quarter ended March 31, 2019 filed on May 8, 2019).

Time Sharing Agreement, dated May 6, 2019, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and Andrew Lustgarten (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended March 31, 2019 filed on May 8, 2019).

Credit Agreement, dated as of May 23, 2019, among TAO Group Operating LLC, TAO Group Intermediate Holdings LLC, the various lenders thereto, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 23, 2019).

1 unchanged sentence

Construction Agreement, dated as of May 31, 2019, by and between MSG Las Vegas, LLC and Hunt Construction Group Inc.

(incorporated by reference to Exhibit 10.65 to the Company’s Form 10-K for the fiscal year ended June 30, 2019 filed on August 20, 2019).

Contribution Agreement, dated as of March 31, 2020, between Madison Square Garden Sports Corp., MSG Entertainment Group, LLC and Madison Square Garden Entertainment Corp.

(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 31, 2020).

Transition Services Agreement, dated as of March 31, 2020, between MSG Sports, LLC and MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 31, 2020).

Tax Disaffiliation Agreement, dated as of March 31, 2020, between Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) and Madison Square Garden Entertainment Corp.

(formerly, MSG Entertainment Spinco, Inc.) (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on March 31, 2020).

Employee Matters Agreement, dated March 31, 2020, between Madison Square Garden Sports Corp.

(formerly, The Madison Square Garden Company) and Madison Square Garden Entertainment Corp.

(formerly, MSG Entertainment Spinco, Inc.) (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on March 31, 2020).

Delayed Draw Term Loan Credit Agreement, dated April 17, 2020, between MSG NYK Holdings, LLC and MSG Entertainment Group, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 23, 2020).

Delayed Draw Term Loan Credit Agreement, dated April 17, 2020, between MSG NYR Holdings, LLC and MSG Entertainment Group, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 23, 2020).

Arena License Agreement, dated April 15, 2020, between MSG Arena, LLC and New York Knicks, LLC.**

Arena License Agreement, dated April 15, 2020, between MSG Arena, LLC and New York Rangers, LLC.**

NBA Transaction Agreement, dated April 15, 2020, with the NBA and Madison Square Garden Entertainment Corp.

(formerly, MSG Entertainment Spinco, Inc.).

NHL Transaction Agreement, dated April 15, 2020, with the NHL and Madison Square Garden Entertainment Corp.

(formerly, MSG Entertainment Spinco, Inc.).

Time Sharing Agreement, dated April 15, 2020, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and MSG Sports, LLC (for the G450).

Time Sharing Agreement, dated April 15, 2020, between MSG Entertainment Group, LLC (formerly, MSG Sports & Entertainment, LLC) and MSG Sports, LLC (for the G550).

Madison Square Garden Sports Corp.

Policy Concerning Certain Matters Relating to Madison Square Garden Entertainment Corp., MSG Networks Inc.

and AMC Networks Inc., including Responsibilities of Overlapping Directors and Officers.

Sponsorship Sales and Service Representation Agreement, dated April 15, 2020, between Knicks Holdings, LLC and MSG Entertainment Group, LLC.

Sponsorship Sales and Service Representation Agreement, dated April 15, 2020, between New York Rangers, LLC and MSG Entertainment Group, LLC.

Letter Agreement, dated August 21, 2020, between Madison Square Garden Sports Corp.

and Lawrence J.

Subsidiaries of the Registrant.

11 unchanged sentences

XBRL Taxonomy Extension Presentation Linkbase.

The cover page form the Company’s Annual Report on Form 10-K for the year ended June 30, 2020 formatted in Inline XBRL and contained in Exhibit 101.

_________________

5 unchanged sentences

The Company has elected not to provide summary information.

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

VALUATION AND QUALIFYING ACCOUNTS

4 unchanged sentences

Year ended June 30, 2020

Allowance for doubtful accounts

Deferred tax valuation allowance

Allowance for doubtful accounts (a)

Deferred tax valuation allowance (a)

Year ended June 30, 2019

5 unchanged sentences

_________________

Includes amounts classified as discontinued operations on the consolidated balance sheet.

Includes amounts reflected in discontinued operations of $ 8,769 .

The Company completely offset the taxable income of discontinued operations, including taxable income resulting from the acceleration of deferred revenue with NOLs.

The deferred tax assets for such NOLs had a full valuation allowance.

Therefore, both the deferred tax asset and valuation allowance were reduced with no residual tax expense.

The valuation allowance reduction relating to the NOL utilization was $ 68,000 .

Net decrease in valuation allowance reflects $ 51,015 of reduction to net deferred tax liabilities in connection with the lower federal income tax rate of 21 % and other of $ 2,453 .

Net decrease in valuation allowance is primarily due to the reclassification of tax impact to the accumulated other comprehensive loss.

Pursuant to the requirements of the Section 13 or 15(d) the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 28 th day of August 2020 .

The Madison Square Garden Company

Madison Square Garden Sports Corp.

/ s / VICTORIA M.

Executive Vice President and Chief Financial Officer

Executive Vice President and Chief Financial Officer and Treasurer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Andrew Lustgarten and Victoria M.

Mink, and each of them, as such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for such person in such person’s name, place and stead, in any and all capacities, to sign this report, and file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof.

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Andrew Lustgarten, Victoria M.

Mink and Lawrence J.

Burian, and each of them, as such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for such person in such person’s name, place and stead, in any and all capacities, to sign this report, and file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons in the capacities and on the dates indicated.

Executive Chairman and Chief Executive Officer

(Principal Executive Officer) and Director

/s/ ANDREW LUSTGARTEN

President and Chief Executive Officer

(Principal Executive Officer)

August 28, 2020

Andrew Lustgarten

/ s / VICTORIA M.

Executive Vice President and

Chief Financial Officer (Principal Financial Officer)

Chief Financial Officer (Principal Financial Officer) and Treasurer

August 28, 2020

/ s / JOSEPH F.

/ s / ALEXANDER SHVARTSMAN

Senior Vice President, Controller and

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August 28, 2020

/ s / FRANK J.

Alexander Shvartsman

/ s / JAMES L.

Executive Chairman (Director)

August 28, 2020

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Marianne Dolan Weber

August 28, 2020

/ s / THOMAS C.

August 28, 2020

/ s / JOSEPH J.

/ s / JOSEPH M.

August 28, 2020

/s/ STEPHEN C.

August 28, 2020

/ s / RICHARD D.

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August 28, 2020

/ s / SCOTT M.

/ s / IVAN SEIDENBERG

August 28, 2020

Ivan Seidenberg

/ s / BRIAN G.

2 unchanged sentences

August 28, 2020

/s/ ANTHONY J.

August 28, 2020

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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To the Stockholders and Board of Directors

The Madison Square Garden Company:

Madison Square Garden Sports Corp.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of The Madison Square Garden Company and subsidiaries (the “Company”) as of June 30, 2019 and 2018 , the related consolidated statements of operations, comprehensive income (loss), equity and redeemable noncontrolling interests, and cash flows for each of the years in the three-year period ended June 30, 2019 , and the related notes and financial statement schedule II (collectively, the “ consolidated financial statements ”).

We have audited the accompanying consolidated balance sheets of Madison Square Garden Sports Corp.

and subsidiaries (the “Company”) as of June 30, 2020 and 2019 , the related consolidated statements of operations, comprehensive income (loss), cash flows, and equity and redeemable noncontrolling interests for each of the years in the three-year period ended June 30, 2020 , and the related notes and financial statement schedule II (collectively, the “ consolidated financial statements ”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020 and 2019 , and the results of its operations and its cash flows for each of the years in the three-year period ended June 30, 2020 , in conformity with U.S.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“ PCAOB ”), the Company’s internal control over financial reporting as of June 30, 2020 , based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated August 28, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As described in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for revenue recognition effective July 1, 2018 due to the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers .

Changes in Accounting Principle

As described in Note 2 to the consolidated financial statements, effective July 1, 2019, the Company changed its method of accounting for leases due to the adoption of ASC Topic 842, Leases, and effective July 1, 2018, the Company changed its method of accounting for revenue due to the adoption of ASC Topic 606, Revenue from Contracts with Customers.

Basis for Opinion

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As discussed in Note 17 to the consolidated financial statements, the Dolan family, including trusts for the benefit of members of the Dolan family (collectively, the Dolan Family Group) is the majority beneficial owner of the Company, MSG Networks Inc.

(MSGN), and AMC Networks Inc.

(MSG Networks), Madison Square Garden Entertainment Corp.

(MSG Entertainment), and AMC Networks Inc.

(AMC Networks).

In addition, there are certain overlapping directors and executive officers between the companies.

Each of these entities is a related party.

The Company has entered into a number of transactions with MSGN, including agreements for media rights, advertising sales representation and services, as well as transactions for aircraft timesharing and certain shared executive support costs for the Company’s Executive Chairman and Vice Chairman.

The Company has also entered into transactions with AMC.

Further, the Company has entered into a number of arrangements with members of the Dolan Family Group for shared office space and aircraft services and timesharing.

Additionally, the Company routinely enters into transactions with certain non-consolidated affiliates which are accounted for under the equity method.

Following the distribution of MSG Entertainment, the Company has entered into a number of transactions with MSG Entertainment, including agreements for use of the Madison Square Garden Arena, sales and service representation agreements, sponsorship allocation, transition services and delayed draw term loans, as well as certain shared executive support costs for the Company’s Executive Chairman and Vice Chairman.

The Company has entered into agreements for media rights and other transactions with MSG Networks and the Company has also entered into transactions with AMC

Further, the Company has entered into several arrangements with members of the Dolan Family Group for shared office space and aircraft services and timesharing.

We identified the evaluation of the identification of related parties and related party transactions as a critical audit matter.

Auditor judgment was involved in assessing the sufficiency of the procedures performed to identify related parties and related party transactions of the Company.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s related party process, including controls over the identification of the Company’s related party relationships and transactions.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s related party process, including controls over the identification of the Company’s related party relationships and transactions.

We performed the following procedures to evaluate the identification of related parties and related party transactions by the Company:

Read public filings, external news, and research sources for information related to transactions between the Company and related parties;

Listened to the Company’s quarterly investor relations calls;

Read new agreements and contracts between the Company and related parties

Queried the accounts payable system for transactions with related parties;

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Evaluated the Company’s reconciliation of its applicable accounts to the related parties’ records of transactions and balances;

Inspected the Company’s minutes from meetings of the Board of Directors and related committees;

Read new agreements and contracts between the Company and related parties;

Read the Company’s minutes from meetings of the Board of Directors and related committees;

Inquired with executive officers, key members of management, and the Audit Committee of the Board of Directors regarding related party transactions.

Evaluation of the Adoption of Accounting Standards Codification Topic 606

As discussed in Notes 2 and 3 to the consolidated financial statements, the Company adopted ASC Topic 606 on July 1, 2018.

As part of the adoption, the Company identified three main changes to the nature and pattern of recognition, related to suite license arrangements, multi-year sponsorship arrangements, and local media rights agreements, which significantly influences the timing of revenue recognition.

We identified the adoption of ASC Topic 606 related to these revenue streams as a critical audit matter because the applicability of series guidance and how the revenue should be recognized over the term of the contract involved subjective auditor judgment.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s ASC Topic 606 implementation process, including controls related to the Company’s establishment of new accounting policies, performing contract reviews, and calculating the transition adjustment.

We assessed the evidence underlying the treatment of performance obligations as a series and the recognition of revenue over the term of the contract.

Specifically, we read and evaluated the Company’s ASC Topic 606 accounting memorandums that documented the facts and circumstances in customer contracts referred to by the Company as factors to the accounting treatment applied.

In addition, we read and analyzed a sample of customer contracts and compared the facts and circumstances to the Company’s accounting memorandums.

Received confirmations from related parties and compared responses to the Company’s records;

Read public filings, external news, and research sources for information related to transactions between the Company and related parties;

Listened to the Company’s quarterly investor relations calls.

Assessment of the results from discontinued operations

As discussed in Notes 1 and 3 to the consolidated financial statements, on April 17, 2020, the Company distributed all the outstanding common stock of MSG Entertainment to its stockholders.

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

Management determined that the allocable shared revenue and expenses of MSG Entertainment should be presented as discontinued operations in the consolidated statements of operations for all periods presented.

We identified the assessment of the results from discontinued operations as a critical audit matter.

Given the nature of the transactions and the degree of integration of MSG Entertainment with the Company’s continuing operations in the periods before the distribution, there was a high degree of subjective auditor judgment required to assess management’s identification, segregation, and recording of the allocable shared revenue and expenses for the discontinued businesses.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s discontinued operations assessment process, including controls related to the identification, segregation, and recording of allocable shared revenue and expenses, and the resulting entries made to the income statement account balances.

Specifically, we read the distribution agreements and evaluated the Company’s discontinued operations accounting memorandums that document management’s accounting conclusions.

We tested the recognition and classification of amounts included in discontinued operations by recalculating revenue and expenses using the Company’s historical accounting records.

We read the Company’s disclosure and assessed whether the disclosure appropriately described the determination of discontinued operations.

We have served as the Company’s auditor since 2015.

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To the Stockholders and Board of Directors

The Madison Square Garden Company:

Madison Square Garden Sports Corp.:

Opinion on Internal Control Over Financial Reporting

We have audited The Madison Square Garden Company and subsidiaries’ (the “Company”) internal control over financial reporting as of June 30, 2019 , based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have audited Madison Square Garden Sports Corp.

and subsidiaries’ (the “Company”) internal control over financial reporting as of June 30, 2020 , based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2020 , based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“ PCAOB ”), the consolidated balance sheets of the Company as of June 30, 2019 and 2018 , the related consolidated statements of operations, comprehensive income (loss), equity and redeemable noncontrolling interests, and cash flows for each of the years in the three-year period ended June 30, 2019 , and the related notes and financial statement schedule II (collectively, the “ consolidated financial statements ”), and our report dated August 20, 2019 expressed an unqualified opinion on those consolidated financial statements .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“ PCAOB ”), the consolidated balance sheets of the Company as of June 30, 2020 and 2019 , the related consolidated statements of operations, comprehensive income (loss), cash flows, and equity and redeemable noncontrolling interests for each of the years in the three-year period ended June 30, 2020 , and the related notes and financial statement schedule II (collectively, the “ consolidated financial statements ”), and our report dated August 28, 2020 expressed an unqualified opinion on those consolidated financial statements .

Basis for Opinion

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August 28, 2020

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED BALANCE SHEETS

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Restricted cash

Short-term investments

Accounts receivable, net

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Other current assets

Current assets of discontinued operations

Total current assets

Investments and loans to nonconsolidated affiliates

Property and equipment, net

Right-of-use lease assets

Amortizable intangible assets, net

Indefinite-lived intangible assets

Non-current assets of discontinued operations

See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED BALANCE SHEETS (Continued)

4 unchanged sentences

Net related party payables

Current portion of long-term debt, net of deferred financing costs

Accrued liabilities:

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Other accrued liabilities

Collections due to promoters

Operating lease liabilities, current

Deferred revenue

Current liabilities of discontinued operations

Total current liabilities

Related party payables, noncurrent

Long-term debt, net of deferred financing costs

Defined benefit and other postretirement obligations

Long-term debt

Operating lease liabilities, noncurrent

Defined benefit obligations

Other employee related costs

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Other liabilities

Non-current liabilities of discontinued operations

Total liabilities

Commitments and contingencies (see Note 12)

Redeemable noncontrolling interests

The Madison Square Garden Company Stockholders’ Equity:

Redeemable noncontrolling interests of discontinued operations

Madison Square Garden Sports Corp.

Stockholders’ Equity:

Class A Common stock, par value $0.01, 120,000 shares authorized;

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Retained earnings (accumulated deficit)

Accumulated other comprehensive loss

Total The Madison Square Garden Company stockholders’ equity

Accumulated other comprehensive income (loss)

Total Madison Square Garden Sports Corp.

stockholders’ equity

Nonredeemable noncontrolling interests

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See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

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Depreciation and amortization

Operating income (loss)

Operating loss

Other income (expense):

Earnings (loss) in equity method investments

Interest income (d)

Interest income

Interest expense

Miscellaneous expense, net

Income (loss) from operations before income taxes

Miscellaneous income (expense), net

Loss from continuing operations before income taxes

Income tax benefit (expense)

Income (loss) from continuing operations

Income (loss) from discontinued operations, net of taxes

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

Basic earnings (loss) per common share attributable to The Madison Square Garden Company’s stockholders

Diluted earnings (loss) per common share attributable to The Madison Square Garden Company’s stockholders

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

Continuing operations

Discontinued operations

Basic earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders

Continuing operations

Discontinued operations

Diluted earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders

Weighted-average number of common shares outstanding:

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Include revenues from related parties of $ 138,881 , $ 148,207 and $ 142,319 for the years ended June 30, 2020 , 2019 and 2018 , respectively.

Include net charges from related parties of $ 911 , $ 1,082 and $ 1,284 for the years ended June 30, 2019 , 2018 and 2017 , respectively.

Include net charges to related parties of $ 77 , $ 311 and $ 310 for the years ended June 30, 2020 , 2019 and 2018 , respectively.

Interest income includes interest income from nonconsolidated affiliates of $ 3,105 , $ 5,696 and $ 4,157 for the years ended June 30, 2019 , 2018 and 2017 , respectively.

Include net charges from (to) related parties of $ 3,380 , $( 10,744 ) and $( 9,884 ) for the years ended June 30, 2020 , 2019 and 2018 , respectively.

See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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Net income (loss)

Other comprehensive income (loss), before income taxes:

Other comprehensive loss, before income taxes:

Pension plans and postretirement plan:

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Net changes related to available-for-sale securities

Other comprehensive income (loss), before income taxes

Income tax expense related to items of other comprehensive income

Other comprehensive income (loss), net of income taxes

Other comprehensive loss, before income taxes

Income tax benefit (expense) related to items of other comprehensive loss

Other comprehensive loss, net of income taxes

Comprehensive income (loss)

Comprehensive loss attributable to redeemable noncontrolling interests

Comprehensive income (loss) attributable to nonredeemable noncontrolling interests

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

Comprehensive loss attributable to nonredeemable noncontrolling interests from continuing operations

Comprehensive loss attributable to redeemable noncontrolling interests from discontinued operations

Comprehensive loss attributable to nonredeemable noncontrolling interests from discontinued operations

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

See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Depreciation and amortization

Impairment of intangibles, long-lived assets and goodwill

Share-based compensation expense

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Provision for (benefit from) deferred income taxes

Write-off of deferred production costs

Purchase accounting adjustments associated with rent-related intangibles and deferred rent

Unrealized loss on equity investment with readily determinable fair value

Purchase accounting adjustments associated with amortization of inventory step-up

Provision for doubtful accounts

Loss on extinguishment of debt including deferred financing costs

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Deferred revenue

Operating lease right-of-use assets and lease liabilities

Net cash provided by operating activities

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Capital expenditures, net of acquisitions

Proceeds from insurance recoveries

Payments for acquisition of assets

Purchase of short-term investments

Payments to acquire available-for-sale securities

Proceeds from maturity of short-term investments

Payments for acquisition of businesses, net of cash acquired

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See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

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Repurchases of common stock

Proceeds from stock option exercises

Cash distributed with MSG Entertainment

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

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Payment of contingent consideration

Proceeds from revolving credit facilities

Proceeds from loan facility

Proceeds from revolving credit facility

Repayment of revolving credit facility

Repayment on long-term debt

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Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash from continuing operations, beginning of period

Cash, cash equivalents and restricted cash from discontinued operations, beginning of period

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash from continuing operations, end of period

Cash, cash equivalents and restricted cash from discontinued operations, end of period

Cash, cash equivalents and restricted cash at end of period

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Investments and loans to nonconsolidated affiliates

Non-cash acquisition of additional redeemable noncontrolling interests

Capital expenditures incurred but not yet paid

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See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY

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Comprehensive

Total The Madison Square Garden Company Stockholders ’ Equity

Total Madison Square Garden Sports Corp.

Stockholders ’ Equity

Nonredeemable

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Balance as of June 30, 2017

Adoption of ASU No.

Net income (loss)

Other comprehensive income

Other comprehensive loss

Comprehensive income (loss)

Exercise of stock options

Share-based compensation

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Repurchases of common stock

Distributions to noncontrolling interest holders

Noncontrolling interests from acquisitions

Contribution of joint venture interests

Balance as of June 30, 2018

See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY

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(in thousands)

Accumulated Deficit

Retained Earnings (Accumulated Deficit)

Comprehensive

Total The Madison Square Garden Company Stockholders ’ Equity

Total Madison Square Garden Sports Corp.

Stockholders ’ Equity

Nonredeemable

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Adoption of ASU No.

Adoption of ASC Topic 606

Net income (loss)

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Common stock issued under stock incentive plans

Repurchases of common stock

Distributions to noncontrolling interest holders

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See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY

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Comprehensive

Total The Madison Square Garden Company Stockholders ’ Equity

Total Madison Square Garden Sports Corp.

Stockholders ’ Equity

Nonredeemable

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Balance as of June 30, 2019

Adoption of ASU No.

Adoption of ASC Topic 606

Net income (loss)

Other comprehensive loss

Comprehensive income (loss)

Comprehensive loss

Share-based compensation

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Common stock issued under stock incentive plans

Noncontrolling interest non-cash acquisition

Distributions to noncontrolling interest holders

Noncontrolling interests from acquisition

Contribution of joint venture interests

Adjustments to noncontrolling interests

Redeemable noncontrolling interest adjustment to redemption fair value

Distribution of Madison Square Garden Entertainment Corp.

Balance as of June 30, 2020

See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Description of Business and Basis of Presentation

The Distribution

The Madison Square Garden Company (together with its subsidiaries, the “Company” or “Madison Square Garden”), formerly named MSG Spinco, Inc., was incorporated on March 4, 2015 as an indirect, wholly-owned subsidiary of MSG Networks Inc.

(“ MSG Networks ” or “Former Parent”), formerly known as The Madison Square Garden Company.

On September 11, 2015, MSG Networks’ board of directors approved the distribution of all the outstanding common stock of Madison Square Garden to MSG Networks’ stockholders (the “ 2015 Distribution ”), which occurred on September 30, 2015.

Each holder of record of MSG Networks Class A common stock as of close of business on September 21, 2015 (the “Record Date”) received one share of Madison Square Garden Class A common stock, par value $ 0.01 per share (“Class A Common Stock”), for every three shares of MSG Networks Class A common stock held.

Each holder of record of MSG Networks Class B common stock as of the Record Date received one share of Madison Square Garden Class B common stock, par value $ 0.01 per share (“Class B Common Stock”), for every three shares of MSG Networks Class B common stock held.

Description of Business

Madison Square Garden is a live sports and entertainment business.

The Company classifies its business interests into two reportable segments:

MSG Entertainment and MSG Sports .

MSG Entertainment includes live entertainment events including concerts and other live events, such as family shows, performing arts and special events, which are presented or hosted in the Company’s diverse collection of venues along with live offerings through TAO Group Holdings LLC (“ TAO Group ”) and Boston Calling Events LLC (“ BCE ”).

TAO Group is a hospitality group with globally -recognized entertainment dining and nightlife brands:

TAO, Marquee, Lavo, Avenue, Beauty & Essex and Vandal.

BCE owns and operates New England’s premier Boston Calling Music Festival.

MSG Entertainment also includes the Company’s original production — the Christmas Spectacular Starring the Radio City Rockettes (the “ Christmas Spectacular ”).

MSG Entertainment also includes the results of the third-party production business of Obscura Digital (“ Obscura ”), a creative studio, which the Company has begun to wind down.

MSG Sports includes the Company’s professional sports franchises:

the New York Knicks (the “Knicks”) of the National Basketball Association (the “ NBA ”), the New York Rangers (the “Rangers”) of the National Hockey League (the “NHL”), the Hartford Wolf Pack of the American Hockey League, and the Westchester Knicks of the NBA G League .

These professional sports franchises are collectively referred to herein as the “ sports teams .” 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.

The MSG Sports segment also includes other live sporting events, including professional boxing, college basketball, professional bull riding, mixed martial arts, esports and college wrestling, all of which the Company promotes, produces and/or presents.

In addition, the MSG Sports segment includes Counter Logic Gaming (“ CLG ”), a premier North American esports organization, which the Company acquired in July 2017, and Knicks Gaming , the Company’s franchise that competes in the NBA 2K League.

Madison Square Garden Sports Corp., formerly The Madison Square Garden Company (together with its subsidiaries, the “Company” or “ MSG Sports ”) owns and operates a portfolio assets featuring some of the most recognized teams in all of sports, including the New York Knickerbockers (“Knicks”) of the National Basketball Association (“NBA”) and the New York Rangers (“Rangers”) of the National Hockey League (“NHL”).

Both the Knicks and the Rangers play their home games in Madison Square Garden Arena (“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”).

These professional sports franchises are collectively referred to herein as the “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 the “esports teams,” and together with the sports teams, the “teams.”

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

The Company owns the Madison Square Garden Arena (“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.

Additionally, TAO Group operates various restaurants, nightlife and hospitality venues under long-term leases and management contracts in New York, Las Vegas, Los Angeles, Chicago, Australia and Singapore.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Potential Spin-off Transaction

On June 27, 2018, the Company announced that its board of directors (“Board”) had authorized the Company’s management to explore a possible spin-off that would create a separately-traded public company comprised of its sports business, including the New York Knicks and New York Rangers professional sports franchises (“ Sports Spinco ”).

The Company refers to the potential spin-off as the “ Sports Distribution ”.

On October 4, 2018, in connection with the Sports Distribution , a subsidiary of the Company submitted an initial Registration Statement on Form 10 with the U.S.

Securities and Exchange Commission (“SEC”) (which has been amended).

If the Company proceeds with the Sports Distribution , it would be structured as a tax-free transaction to the Company’s stockholders.

Upon completion of the contemplated separation, record holders of the Company’s common stock would receive a pro-rata distribution, expected to be equivalent, in the aggregate, to an approximately two-thirds economic interest in Sports Spinco .

The remaining common stock, expected to be equivalent to an approximately one-third economic interest in Sports Spinco , would be retained by the Company.

There can be no assurance that the proposed transaction will be completed in the manner described above, or at all.

Completion of the transaction would be subject to various conditions, including certain league approvals, a private letter ruling from the Internal Revenue Service, receipt of a tax opinion from counsel and final Board approval.

The Company will maintain the current operating structure and will continue to report the financial results of its sports business in continuing operations until the Sports Distribution is completed.

The Company operates and reports financial information in one segment.

The Company’s decision to report in one segment is based upon its internal organizational structure;

the manner in which its operations are managed;

the criteria used by the Company’s Executive Chairman, its Chief Operating Decision Maker (“CODM”), to evaluate segment performance.

The Company’s CODM reviews total company operating results to assess overall performance and allocate resources.

The Company was incorporated on March 4, 2015 as an indirect, wholly-owned subsidiary of MSG Networks Inc.

(“ MSG Networks ”).

All the outstanding common stock of the Company was distributed to MSG Networks shareholders (the “ MSGS Distribution ”) on September 30, 2015 (the “ MSGS Distribution Date ”).

On April 17, 2020 (the “ MSGE Distribution Date ”), the Company distributed all of the outstanding common stock of Madison Square Garden Entertainment Corp.

(formerly MSG Entertainment Spinco, Inc., and referred to herein as “ 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.

Reclassifications

Certain reclassifications have been made in order to conform to the current period’s presentation.

The reclassifications primarily relate to:

(i) the presentation in the consolidated statement of cash flows for fiscal years 2018 and 2017 in connection with the adoption of Accounting Standards Update (“ ASU ”) No.

2016-18, Statement of Cash Flows:

Restricted Cash, (ii) the presentation of the non-service cost components of net periodic pension and postretirement benefit cost in the consolidated statement of operations for fiscal years 2018 and 2017 in connection with the adoption of ASU No.

2017-07, Compensation - Retirement Benefits (Topic 715):

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, (iii) segregation of amounts due to promoters from deferred revenue in connection with the adoption of Accounting Standards Codification (“ ASC ”) Topic 606, Revenue from Contracts with Customers (Topic 606) (referred to herein as “ ASC Topic 606 ”), and (iv) an indefinite-lived intangible asset that was previously reported under other assets .

See Note 2 for further details related to the adoption of ASU No.

2016-18, ASU No.

2017-07, and ASC Topic 606 .

Assets and liabilities related to the MSGE Distribution on the Company’s consolidated balance sheet as of June 30, 2019 have been reclassified as assets and liabilities of discontinued operations (see Note 3 ).

All assets and liabilities related to discontinued operations are excluded from the footnotes unless otherwise noted.

In addition, the historical results of Madison Square Garden Entertainment Corp.

have been reflected in the accompanying statements of operations for the years ended June 30, 2020, 2019 and 2018 as discontinued operations.

Impact of COVID-19

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.

These disruptions have materially impacted the Company’s revenues and the Company is recognizing materially less revenues across a number of areas.

Those areas include:

ticket sales;

media rights fees;

the Company’s share of suite licenses;

sponsorships;

signage and in-venue advertising at The Garden;

and food, beverage and merchandise sales for home games played at The Garden.

The Company will not earn certain of these revenues until the Knicks and the Rangers again play

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

home games at The Garden with fans in attendance.

In addition, as a result of government-mandated assembly limitations and closures, 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 their games.

While the Company currently has 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, (iii) reduction in headcount and a companywide hiring freeze and (iv) certain other selling, general and administrative and discretionary expenses, those expense reduction opportunities will not fully offset revenue losses.

The Knicks and Rangers are not currently required to pay license fees to MSG Entertainment under the Arena License Agreements while The Garden is closed due to the government mandated suspension of events as a result of 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.

The Company believes, however, that it has sufficient liquidity, including approximately $ 78,000 in unrestricted cash and cash equivalents as of June 30, 2020, along with available borrowing capacity under existing credit facilities, to fund its operations and repay its outstanding debt that becomes due over the next 12 months.

The Company expects to refinance the Knicks Revolving Credit Facility, as defined in Note 13 , (which is currently due on September 30, 2021) and the Rangers Revolving Credit Facility, as defined in Note 13 (which is currently due on January 25, 2022) prior to the maturity 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, as define in Note 13 ) will be due during fiscal year 2022.

Additionally, as a result of operating disruptions due to COVID-19, the Company’s projected cash flows were directly impacted.

As a result of this disruption along with the macroeconomic industry and market conditions, the Company performed impairment test of goodwill identifiable indefinite-lived intangible assets and determined that there were no impairments identified.

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.

Summary of Significant Accounting Policies

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In these consolidated financial statements, the years ended on June 30, 2020 , 2019 , and 2018 are referred to as “fiscal year 2020 ”, “fiscal year 2019 ”, and “fiscal year 2018 ”, respectively.

The consolidated financial statements of the Company include the accounts of The Madison Square Garden Company and its subsidiaries.

The consolidated financial statements of the Company include the accounts of Madison Square Garden Sports Corp.

and its subsidiaries.

For consolidated subsidiaries where the Company’s ownership is less than 100%, the relevant amounts attributable to investors other than the Company are reflected under “Nonredeemable noncontrolling interests,” “Net income (loss) attributable to nonredeemable noncontrolling interests” and “Comprehensive income (loss) attributable to nonredeemable noncontrolling interests” on the accompanying consolidated balance sheets, consolidated statements of operations and consolidated statements of comprehensive income (loss), respectively.

All significant intracompany transactions and accounts within the Company’s consolidated financial statements have been eliminated.

Business Combinations and Noncontrolling Interests

The acquisition method of accounting for business combinations requires management to use significant estimates and assumptions, including fair value estimates, as of the business combination date and to refine those estimates as necessary during the measurement period (defined as the period, not to exceed one year, in which the Company is allowed to adjust the provisional amounts recognized for a business combination).

Under the acquisition method of accounting, the Company recognizes separately from goodwill the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquiree, generally at the acquisition date fair value.

The Company measures goodwill as of the acquisition date as the excess of consideration transferred, which is also measured at fair value if the consideration is non-cash, over the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed.

Costs that the Company incurs to complete a business combination such as investment banking, legal and other professional fees are not considered part of consideration and the Company charges these costs to selling, general and administrative expense as they are incurred.

In addition, the Company recognizes measurement-period adjustments in the period in which the amount is determined, including the effect on earnings of any amounts the Company would have recorded in previous periods if the accounting had been completed at the acquisition date.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Interests held by third parties in consolidated majority-owned subsidiaries are presented as noncontrolling interests, which represent the noncontrolling stockholders’ interests in the underlying net assets of the Company’s consolidated majority-owned subsidiaries.

Noncontrolling interests that are not redeemable are reported in the equity section of the consolidated balance sheets.

Noncontrolling interests, where the Company may be required to repurchase under put options or other contractual redemption requirements that are not solely within the Company’s control, are reported in the consolidated balance sheets between liabilities and equity, as redeemable noncontrolling interests.

In July 2016 and 2017, the Company acquired controlling interests in BCE and CLG , respectively.

In accordance with FASB ASC Topic 805, Business Combinations (“ASC Topic 805”), and ASC Topic 810, Consolidation (“ASC Topic 810”), the financial position of BCE and CLG has been consolidated with the Company’s consolidated balance sheets as of June 30, 2019 and 2018 .

In addition, the results of operations for BCE and CLG have been included in the Company’s consolidated results of operations from the date of acquisition in the MSG Entertainment segment and MSG Sports segment, respectively.

The relevant amounts attributable to investors other than the Company are reflected under “Nonredeemable noncontrolling interests,” “Net income (loss) attributable to nonredeemable noncontrolling interests” and “Comprehensive income (loss) attributable to nonredeemable noncontrolling interests” on the accompanying consolidated balance sheets, consolidated statements of operations and consolidated statements of comprehensive income (loss), respectively.

On January 31, 2017, the Company acquired a controlling interest in TAO Group .

In accordance with ASC Topic 805 and ASC Topic 810, the financial position of TAO Group has been consolidated with the Company’s consolidated balance sheet as of June 30, 2019 and 2018 .

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 on a three-month lag basis.

Any specific events having significant financial impact that occur during the lag period are included in the Company’s current period results.

TAO Group reports on a fiscal year reflecting the retail-based calendar (containing 4-4-5 week calendar quarters).

Accordingly, the Company’s results of operations for the years ended June 30, 2019 , 2018 and 2017 include TAO Group ’s operating results from April 2, 2018 to March 31, 2019 (a 52-week year), March 27, 2017 to April 1, 2018 (a 53-week year) and February 1, 2017 to March 26, 2017 , respectively, as part of the MSG Entertainment segment.

In addition, the Company’s consolidated balance sheets as of June 30, 2019 and 2018 reflect the financial position of TAO Group as of March 31, 2019 and April 1, 2018 , respectively.

With the exception of the balances and activities pertaining to the TAO Group ’s credit agreements entered into in May 2019, which are recorded as of June 30, 2019 , as well as cash distributions, all other disclosures related to TAO Group 's financial position are therefore reported as of March 31, 2019 and April 1, 2018 , as applicable.

See Note 12 for TAO Group ’s credit agreements entered in May 2019.

The TAO Group purchase agreement contains a put option to require the Company to purchase the other owners’ equity interests under certain circumstances.

The noncontrolling interest combined with the put option is classified as redeemable noncontrolling interest in the consolidated balance sheet, separate from equity.

The relevant amounts attributable to investors other than the Company are reflected under “Redeemable noncontrolling interests,” “Net income (loss) attributable to redeemable noncontrolling interests” and “Comprehensive income (loss) attributable to redeemable noncontrolling interests” on the accompanying consolidated balance sheets, consolidated statements of operations and consolidated statements of comprehensive income (loss), respectively.

The put option can be settled, at the Company’s option, in cash, debt or shares of the Company’s Class A Common Stock.

The ultimate amount paid upon the exercise of the put option will likely be different from the estimated fair value, given the calculation required pursuant to the TAO Group operating agreement.

Use of Estimates

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

Such estimates include the valuation of accounts receivable, investments, goodwill, intangible assets, other long-lived assets, tax accruals and other liabilities.

Such estimates include the valuation of accounts receivable, goodwill, intangible assets, other long-lived assets, deferred tax valuation allowance, tax accruals and other liabilities.

In addition, estimates are used in revenue recognition, revenue sharing expense (net of escrow), luxury tax expense, income tax expense, performance and share-based compensation, depreciation and amortization, litigation matters and other matters, as well as in the valuation of contingent consideration and noncontrolling interests resulting from business combination transactions.

Management believes its use of estimates in the financial statements to be reasonable.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future.

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However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In addition, these estimates are based on management’s best judgment at a point in time and as such these estimates may ultimately differ from actual results.

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Revenue Recognition

See Recently Adopted Accounting Pronouncements below for disclosure related to the transitional impact of adopting ASC Topic 606 and Note 3 for details of accounting policies related to revenue recognition and other disclosures required under ASC Topic 606.

See Note 4 for details of accounting policies related to revenue recognition and other disclosures required under Accounting Standards Codification (“ASC”) Topic 606.

The Company adopted ASC Topic 606 on July 1, 2018, using the modified retrospective method for all contracts not completed as of the date of adoption.

Direct Operating Expenses

Direct operating expenses include, but are not limited to, compensation expense for the Company’s professional sports teams’ players and certain other team personnel, as well as NBA luxury tax, NBA and NHL revenue sharing and league assessments for the MSG Sports segment;

event costs related to the presentation and production of the Company’s live entertainment and sporting events;

and venue lease, maintenance and other operating expenses.

Player Costs and Other Team Personnel Transactions, NBA Luxury Tax, Escrow System/Revenue Sharing and League Assessments for the MSG Sports Segment

After the MSGE Distribution Date , Direct operating expenses include compensation expense for the Company’s professional sports teams’ players and certain other team personnel, as well as NBA luxury tax, if applicable, NBA and NHL revenue sharing (net of escrow) and league assessments for the Company, event costs related to the presentation and production of the Company’s sporting events and other operating expenses, including expenses related to the Arena License Agreements which require the Company to pay arena license fees to MSG Entertainment in exchange for the right to use The Garden for games of the Knicks and Rangers for a 35 -year term.

Player Costs and Other Team Personnel Transactions, NBA Luxury Tax, NBA and NHL Escrow System/Revenue Sharing, League Assessments, and Arena License Expenses

Player Costs and Other Team Personnel Transactions

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The NBA and NHL seasons are typically from mid-October through mid-April and October through mid-April, respectively.

Player salaries are also expensed over the applicable NBA, NHL or WNBA regular season typically on a straight-line basis.

In certain player contracts the annual contractual salary amounts (including any applicable signing bonuses) may fluctuate such that expensing the salary for the entire contract on a straight-line basis over each regular season more appropriately reflects the economic benefit of the services provided.

Annual contractual player salaries are expensed over the applicable NBA, NHL or WNBA regular season typically on a straight-line basis.

In certain player contracts the annual contractual salary amounts (including any applicable signing bonuses) may fluctuate such that expensing the salary for the entire fixed contract period on a straight-line basis over each regular season more appropriately reflects the economic benefit of the services provided.

In instances where a player sustains what is deemed to be a season-ending or career-ending injury, a provision is recorded, when that determination can be reasonably made, for the remainder of the player’s seasonal or contractual salary and related costs, together with any associated NBA luxury tax, net of any anticipated insurance recoveries.

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

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

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).

See Note 21 for summary of the principal aspects of the new NHL CBA and revenue sharing plan.

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 more, sometimes substantially more, than the cap).

The NHL CBA provides for 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 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).

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NBA Luxury Tax

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 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

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$1.00 for each increment.

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.

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

The NHL CBA provides that each season the players receive as player compensation 50% of that season’s league-wide revenues, excluding the impact of agreed-upon aggregate transition payments of $300,000 paid on a deferred basis over three years beginning in 2014.

The NHL CBA provides that each season the players receive as player compensation 50% of that season’s league-wide revenues.

Because the aggregate amount to be paid to the players is based upon league-wide revenues and not on a team-by-team basis, the Company may pay its players a higher or lower percentage of the Rangers’ revenues than other NHL teams pay of their own revenues.

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If the league’s aggregate player compensation for a season exceeds the designated percentage (50%) of that season’s league-wide revenues, the excess is retained by the league.

Any excess funds will be distributed by the NHL to all teams in equal shares.

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 provides for a revenue sharing plan which generally requires the distribution of a pool of funds approximating 6.055% of league-wide revenues to certain qualifying lower-revenue teams.

Under the NHL CBA, the pool 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) 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;

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The Rangers are consistently among the top ten revenue teams and, accordingly, have consistently contributed to the top ten revenue teams component of the plan.

The Company recognizes the amount of its estimated revenue sharing expense associated with the pre-season and regular season, net of the amount the Company expects to receive from the escrow, on a straight-line basis over the applicable NBA and NHL seasons as a component of direct operating expenses.

The Company recognizes the amount of its estimated revenue sharing expense associated with the preseason and regular season, net of the amount the Company expects to receive from the escrow, on a straight-line basis over the applicable NBA and NHL seasons as a component of direct operating expenses.

In years when the Knicks or Rangers participate in the playoffs, the Company recognizes its estimate of the playoff revenue sharing contribution in the periods when the playoffs occur.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

League Assessments

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The Company recognizes its teams’ estimated league assessments on a straight-line basis over the applicable NBA or NHL season.

Production Costs for the MSG Entertainment Segment

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

Deferred production costs are amortized on a straight-line basis over the course of a production’s performance period using the expected life of a show’s assets, which is currently 5 years .

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

During the fourth quarter of fiscal year 2017, the Company wrote off the remaining balance of deferred production costs related to the New York

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Spectacular Starring the Radio City Rockettes (“ New York Spectacular ”) of $ 33,629 due to assessments of the show’s creative direction, timing and scale.

The Company has $ 7,427 and $ 6,288 of net deferred production costs recorded within other current assets and other assets in the accompanying consolidated balance sheets as of June 30, 2019 and 2018 , respectively.

Arena License Expenses

The Knicks and the Rangers play their home games at The Garden pursuant to the Arena License Agreements with MSG Entertainment , which owns and operates The Garden.

The Arena License Agreements are 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.

Prior to the MSGE Distribution , the Company allocated certain costs to the MSG Sports business segment, and attributed direct costs (See Note 3 ).

Generally, the financial statements reflect the monthly payments made for the Arena License Agreements throughout the contract year in equal installments, and straight-line rent expense 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.

However, the teams are not required to pay the license fee during the period in which The Garden is unavailable for home games due to a force majeure event, and the teams have not made any payments or incurred any arena license expense for the year ended June 30, 2020.

See Note 9 for more information on the accounting for leases.

Advertising Expenses

Advertising costs are typically charged to expense when incurred, however, advertising for productions and other live entertainment events are generally deferred within interim periods and expensed over the run of the show, but by no later than the end of the fiscal year.

Total advertising costs classified in direct operating and selling, general and administrative expenses were $ 17,584 , $ 16,314 and $ 18,963 for the years ended June 30, 2019 , 2018 and 2017 , respectively.

Advertising costs are typically charged to expense when incurred , Total advertising costs classified in direct operating and selling, general and administrative expenses were $ 3,064 , $ 4,381 and $ 1,516 for the years ended June 30, 2020 , 2019 and 2018 , respectively.

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC Topic 740”).

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Interest and penalties, if any, associated with uncertain tax positions are included in income tax expense.

The Company accounts for investment tax credits, if any, using the “flow-through” method, under which the tax benefit generated from an investment tax credit is recorded in the period the credit is generated.

Share-based Compensation

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Share-based compensation cost is recognized in earnings over the period during which an employee is required to provide service in exchange for the award, except for restricted stock units granted to non-employee directors which, unless otherwise provided under the applicable award agreement, are fully vested, and are expensed at the grant date.

Prior to the adoption of ASU No.

2016-09, Compensation - Stock Compensation (Topic 718):

Improvements to Employee Share-based Payment Accounting in fiscal year 2018, the Company estimated forfeitures based upon historical experience and its expectations regarding future vesting of awards.

To the extent actual forfeitures were different from the Company’s estimates, share-based compensation was adjusted accordingly.

Beginning in the first quarter of fiscal year 2018, upon the adoption of ASU No.

2016-09, the Company elected on a prospective basis effective July 1, 2017, to account for forfeitures as they occur, rather than estimating expected forfeitures as was required under the prior guidance.

In connection with the adoption of ASU No.

2016-09, the Company used the modified retrospective transition method and recorded a cumulative effect of $ 2,403 , which was an increase in beginning accumulated deficits with the offset by an equal increase in additional paid in capital.

The Company accounts for forfeitures as they occur.

In addition, for the Company’s stock option awards, the Company applies the fair value recognition provisions of ASC Topic 718 “ Compensation — Stock Compensation ”.

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For awards with graded vesting conditions, the values of the awards are determined by valuing all vesting tranches in the aggregate as one award using an average expected term.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company determines its assumptions for option-pricing models in accordance with ASC Topic 718 and SEC Staff Accounting Bulletin (“SAB”) No.

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The expected term of stock options is estimated using the simplified method.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The expected risk-free interest rate is based on the U.S.

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For the periods when a net loss is reported, the computation of diluted EPS equals the basic EPS calculation since common stock equivalents were antidilutive due to losses from continuing operations.

Holders of Class A Common Stock and Class B Common Stock are entitled to receive dividends equally on a per-share basis if and when such dividends are declared.

Cash and Cash Equivalents

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The Company’s restricted cash includes cash deposited in escrow accounts.

For example, the Company has deposited cash in an interest-bearing escrow account as credit support and collateral to its workers compensation and general liability insurance obligations.

Separately, cash is required to be withheld from player salaries and deposited in an escrow account which is in the name of the Company pursuant to the NHL CBA.

Cash is required to be withheld from player salaries and deposited in an escrow account which is in the name of the Company pursuant to the NHL CBA.

That escrow account will be distributed subsequent to the end of the season to the players and NHL teams based on the provisions of the NHL CBA.

The carrying amount of restricted cash approximates fair value due to the short-term maturity of these instruments.

Changes in restricted cash are reflected in cash flows from either operating or investing activities, depending on the circumstances to which the changes in the underlying restricted cash relate.

Short-Term Investments

Short-term investments consist of investments that (i) have original maturities of greater than three months and (ii) the Company expects to convert into cash within one year.

The Company currently has a British pound-denominated time deposit that has an original maturity date of six months from inception.

The Company classified this investment at the time of purchase as “held-to-maturity” and re-evaluates its classification quarterly based on whether the Company has the intent and ability to hold until maturity.

This investment, which is recorded at cost and adjusted for accrued interest, approximates fair value.

Cash inflows and outflows related to the sale and purchase of short-term investments are classified as investing activities in the Company’s consolidated statements of cash flows.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in restricted cash are reflected on the accompanying combined statement of cash flows in accordance with ASU No.

2016-18, Statement of Cash Flows (Topic 230), which is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Company’s consolidated and combined statements of cash flows.

Accounts Receivable

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The Company’s allowance for doubtful accounts was $ 180 and $ 0 as of June 30, 2020 and 2019 , respectively.

Investments in and Loans to Nonconsolidated Affiliates

The Company’s investments in nonconsolidated affiliates are primarily accounted for using the equity method of accounting and are carried at cost, plus or minus the Company’s share of net earnings or losses of the investment, subject to certain other adjustments.

The cost of equity method investments includes transaction costs of the acquisition.

As required by GAAP, to the extent that there is a basis difference between the cost and the underlying equity in the net assets of an equity investment, companies are required to allocate such differences between tangible and intangible assets.

The Company’s share of net earnings or losses of the investment, inclusive of amortization expense for intangible assets associated with the investment, is reflected in equity in earnings (loss) of nonconsolidated affiliates on the Company’s consolidated statements of operations.

Dividends received from the investee reduce the carrying amount of the investment.

Due to the timing of receiving financial information from its nonconsolidated affiliates, the Company records its share of net earnings or losses of such affiliates on a three-month lag basis, with the exception of the amortization expense of intangible assets which are recorded currently.

In addition to the equity method investments, the Company also has other equity investments without readily determinable fair values.

Upon adoption of ASU No.

2016-01 effective July 1, 2018 , the Company elected to measure such investments at cost, less any impairment, adjusted for observable price changes from orderly transactions for identical or similar investments of the same issuer.

Changes in observable price are reflected within Miscellaneous income (expense), net in the accompanying consolidated statement of operations.

Prior to adoption of ASU 2016-01, such investments were recorded at cost, less any impairment.

See Recently Adopted Accounting Pronouncements below for further detail on the accounting policy related to accounting for equity investments after the adoption of ASU No.

The Company also provides revolving credit facilities to certain of its nonconsolidated affiliates.

The outstanding loan balances, including accrued interest, are reflected in investments in and loans to nonconsolidated affiliates in the accompanying consolidated balance sheets.

Interest income on the outstanding loan balances and related facility fees are recorded currently and are reflected in interest income in the accompanying consolidated statements of operations.

Impairment of Investments

The Company reviews its investments at least quarterly to determine whether a decline in fair value below the cost basis is other-than-temporary.

The primary factors the Company considers in its determination are the length of time that the fair value of the investment is below the Company’s carrying value;

future prospects of the investee;

and the Company’s intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.

In addition, the Company considers other factors such as general market conditions, industry conditions, and analysts’ ratings.

If the decline in fair value is deemed to be other-than-temporary, the cost basis of the investment is written down to fair value and the loss is realized as a component of net income.

See Note 7 for further discussion of impairments of investments.

Long-Lived and Indefinite-Lived Assets

The Company’s long-lived and indefinite-lived assets consist of property and equipment, goodwill, indefinite-lived intangible assets and amortizable intangible assets.

The Company’s long-lived and indefinite-lived assets consist of property and equipment, right-of-use assets, goodwill, indefinite-lived intangible assets and amortizable intangible assets.

Property and equipment is stated at cost.

1 unchanged sentence

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 July 2013, the permit for The Garden was renewed for ten years and these financial statements have been prepared assuming further renewal of that permit.

In estimating the useful lives, the Company considers factors such as, but

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

not limited to, risk of obsolescence, anticipated use, plans of the Company, and applicable laws and permit requirements.

Identifiable intangible assets with finite useful lives are amortized on a straight-line basis over their respective estimated useful lives.

Goodwill and identifiable intangible assets that have indefinite useful lives are not amortized.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impairment of Long-Lived and Indefinite-Lived Assets

7 unchanged sentences

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 cannot support such a conclusion or the Company does not elect to perform the qualitative assessment then 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.

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 Company generally determines the fair value of a reporting unit using an income approach, such as the discounted cash flow method, in instances when it does not perform the qualitative assessment of goodwill.

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 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 Sports and MSG Entertainment, consistent with the way management makes decisions and allocates resources to the business.

For the year ended June 30, 2019 , the Company had three reporting units across its two operating segments for goodwill impairment testing purposes:

MSG Sports, MSG Entertainment and TAO Group.

During the first quarter of fiscal year 2019 , the Company performed its annual impairment test of goodwill and determined that there were no impairments of goodwill identified for any of its reporting units as of the impairment test date.

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 performs its goodwill impairment test at the reporting unit level, which is the same as or one level below the operating segment level.

Subsequent to the MSGE Distribution Date, the Company has one operating and reportable segment and one reporting unit for goodwill impairment testing purposes.

Identifiable indefinite-lived intangible assets are tested annually for impairment as of August 31 st and at any time upon the occurrence of certain events or substantive changes in circumstances.

5 unchanged sentences

The Company generally determines the fair value of an indefinite-lived intangible asset using an income approach, such as the relief from royalty method, in instances when it does not perform the qualitative assessment of the intangible asset.

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.

For other long-lived assets, including right-of-use lease assets and 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 Company generally determines the fair value of a finite-lived intangible asset using an income approach, such as the discounted cash flow method.

THE MADISON SQUARE GARDEN COMPANY

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” as of June 30, 2020.

Based on the assessment, management determined that it was not more likely than not

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 additional future impairment charges that management will evaluate as facts and circumstances evolve through time.

Contingencies

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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 Company’s acquisition agreement for CLG included a contingent earn-out arrangement, which is 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.

4 unchanged sentences

Defined Benefit Pension Plans and Other Postretirement Benefit Plan

As more fully described in Note 13 , the Company has both funded and unfunded defined benefit plans, as well as a contributory other postretirement benefit plan, covering certain full-time employees and retirees.

As more fully described in Note 14 , prior to the MSGE Distribution the Company had both funded and unfunded defined benefit plans, as well as a contributory postretirement benefit plan, covering certain full-time employees and retirees.

Currently, the Company has unfunded defined benefit plans, as well as a contributory postretirement benefit plan, covering certain full-time employees and retirees.

The expense recognized by the Company is determined using certain assumptions, including the expected long-term rate of return and discount rates, among others.

9 unchanged sentences

Level III — Instruments whose significant value drivers are unobservable.

Foreign Currency Translations

The consolidated financial statements are presented in U.S.

Assets and liabilities of non-U.S.

subsidiaries and the Company’s foreign-based equity method investments that operate in a local currency environment, where that local currency is the functional currency, are translated to U.S.

Dollars at exchange rates in effect at the balance sheet date.

Operating results of non-U.S.

subsidiaries are translated at weighted-average exchange rates during the year which approximate the rates in effect at the transaction dates.

For the Company’s foreign-based equity method investments, the proportionate share of the investee’s income is translated into U.S.

dollars at the average exchange rate for the period and the investment is translated using the exchange rate as of the end of the reporting period.

Foreign currency translation gains and losses are included as a component of accumulated other comprehensive income (loss) as changes in cumulative translation adjustments in the accompanying consolidated balance sheets.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Adopted Accounting Pronouncements

Adoption of ASC Topic 606

In May 2014 , the Financial Accounting Standards Board (“FASB”) issued ASU No.

2014-09, Revenue from Contracts with Customers (Topic 606) , which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition .

Subsequently, the FASB issued various updates related to ASC Topic 606 including:

2015-14 , Revenue from Contracts with Customers (Topic 606) :

Deferral of the Effective Date, (ii) ASU No.

2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net), (iii) ASU No.

2016-10, Revenue from Contracts with Customers (Topic 606):

Identifying Performance Obligations and Licensing, (iv) ASU No.

2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients, and (v) ASU No.

2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.

The Company adopted ASC Topic 606 in the first quarter of fiscal year 2019 using the modified retrospective method for those contracts with customers which were not completed as of July 1, 2018.

Results for reporting periods beginning after July 1, 2018 are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting guidance under ASC Topic 605.

As a result of the adoption of ASC Topic 606, the Company now accounts for its performance obligations under suite license arrangements as a series and as a result, the related suite license fees for all years during the license term are aggregated for each license agreement and revenue is recognized proportionately when the underlying events at The Garden take place, as opposed to previously being recognized on a straight-line basis over the fiscal year under the prior standard.

In addition, the majority of the Company’s local media rights revenue is now recognized over the course of the teams’ regular seasons, which reflects the Company’s progress towards satisfaction of its performance obligations under such arrangements, as opposed to previously being recognized on a straight-line basis over the fiscal year under the prior standard.

The Company also enters into arrangements with multiple performance obligations, such as multi-year sponsorship agreements.

To the extent these arrangements provide for performance obligations that are consistent over the multi-year contractual term, such performance obligations generally meet the definition of a series as provided for under the provisions of ASC Topic 606.

As a result, the contractual fees for all years during the contract term are aggregated and the related revenue is recognized proportionately as the underlying performance obligations are satisfied.

In general, sponsorship revenue was previously recognized by treating each year of the arrangement as a discrete contract year, and as such the stated contract price was recognized in each year.

Furthermore, the timing of certain fulfillment costs associated with performance obligations, primarily professional sports teams’ operating expenses, were also similarly impacted within the fiscal year.

The adoption of ASC Topic 606 had the following impact on revenues, operating expenses and operating income for the year ended June 30, 2019 :

Year ended June 30, 2019

As reported under

ASC Topic 606

Changes due to

the adoption of

ASC Topic 606 (a)

Amounts without adoption

of ASC Topic 606

Operating expenses:

Direct operating expenses

Selling, general and administrative expenses

Depreciation and amortization

Operating loss

_________________

The Company’s consolidated and segment operating results for the year ended June 30, 2019 were impacted by the adoption of ASC Topic 606.

As a result, the Company’s revenues were lower by $ 22,996 and direct operating expenses were

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

lower by $ 26,239 for the year ended June 30, 2019 .

The impact of the adoption of ASC Topic 606 resulted in a net decrease 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 .

MSG Sports’ revenues increased by $ 1,351 for the year ended June 30, 2019 as a result of the adoption of ASC Topic 606, which is primarily associated with professional sports teams’ sponsorship and signage revenues.

In addition, the adoption of ASC Topic 606 resulted in a decrease in MSG Sports ’ 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 .

In accordance with the new revenue recognition standard disclosure requirements, the following tables summarize the impact of adopting ASC Topic 606 on the Company’s consolidated balance sheet as of July 1, 2018.

Consolidated Balance Sheet As of July 1, 2018

Amounts without

of ASC Topic 606

Changes due to

the adoption of

ASC Topic 606

Adjusted under

ASC Topic 606

Current Assets:

Other current assets

Total current assets

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Current Liabilities:

Employee related costs

Other accrued liabilities

Deferred revenue (a)

Total current liabilities

Total liabilities

The Madison Square Garden Company Stockholders’ Equity:

Retained Earnings (Accumulated deficit)

Total The Madison Square Garden Company stockholders’ equity

Total liabilities, redeemable noncontrolling interests and equity

_________________

Amounts due to third-party promoters of $ 89,513 , which were previously reported as Deferred revenue in the accompanying consolidated balance sheet as of June 30, 2018 , are now reported as Collections due to promoters in the accompanying consolidated balance sheet.

The Company enters into nonmonetary transactions that involve the exchange of goods or services, such as advertising and promotional benefits as well as tickets, for other goods or services.

In accordance with the new revenue recognition standard, such transactions are measured and recorded at the fair value of the goods or services received unless the goods or services surrendered have a more readily determinable fair value.

In addition, the Company enters into other monetary transactions in which nonmonetary consideration is also included and the entire transaction is recorded at fair value.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Adoption of other Accounting Pronouncements

In January 2016, the FASB issued ASU No.

2016-01, Financial Instruments — Overall (Subtopic 825-10):

Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments.

This standard, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income and (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment.

In February 2018, the FASB issued ASU No.

2018-03, Technical Corrections and Improvements to Financial Instruments Overall (Subtopic 825-10):

Recognition and Measurement of Financial Assets and Financial Liabilities , which clarifies certain aspects of the guidance issued in ASU No.

Among other things, the amendment clarifies that an entity that uses the measurement alternative for equity securities without readily determinable fair values can change its measurement approach to fair value.

Once the election is made, the measurement approach is irrevocable and the entity is required to apply the selected approach to that security and all identical or similar investments of the same issuer.

This change in accounting is expected to create greater volatility in the Company’s miscellaneous income (expense) in the future.

The primary impact of the adoption of ASU No.

2016-01 and ASU No.

2018-03 relate to the Company’s available-for-sale equity investment and resulted in unrecognized gains and losses from such investment being reflected in the Company’s consolidated statements of operations beginning in fiscal year 2019.

The Company adopted ASU No.

2016-01 and ASU No.

2018-03 in the first quarter of fiscal year 2019 and recorded a cumulative-effect adjustment to the balance sheet by reclassifying the balance of the Accumulated other comprehensive loss to Accumulated deficit of $ 5,570 including income tax expense effect of $ 3,104 .

See Notes 7 and 11 for more information on the Company’s equity investment with readily determinable fair value in Townsquare Media, Inc.

(“Townsquare”).

In August 2016, the FASB issued ASU No.

2016-15, Statement of Cash Flows (Topic 230).

2016-15 addresses eight specific cash flow issues and is intended to reduce diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows.

The Company adopted this standard in the first quarter of fiscal year 2019 retrospectively.

The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

In October 2016, the FASB issued ASU No.

2016-16, Income Taxes (Topic 740):

Intra-Entity Transfers of Assets Other Than Inventory .

2016-16 requires the recognition of income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.

The Company adopted this standard in the first quarter of fiscal year 2019 on a modified retrospective basis.

The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU No.

2016-18, Statement of Cash Flows:

Restricted Cash .

The primary purpose of ASU No.

2016-18 is to reduce diversity in the classification and presentation of changes in restricted cash on the statement of cash flows.

This standard requires that a statement of cash flows explains the change during the period in total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

The Company adopted this standard in the first quarter of fiscal year 2019 retrospectively and it resulted in a decrease to net cash flows provided by operating activities of $ 3,018 and an increase to net cash flows provided by operating activities of $ 6,909 for the years ended June 30, 2018 and 2017 , respectively.

See Note 6 for a reconciliation of the cash, cash equivalents and restricted cash reported in the Company’s consolidated balance sheets to the amounts as reported on the consolidated statements of cash flows.

In January 2017, the FASB issued ASU No.

2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business .

The primary purpose of this ASU is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses, which will affect many areas of accounting, including acquisitions, disposals, goodwill, and consolidation.

The Company adopted this standard in the first quarter of fiscal year 2019.

The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In March 2017, the FASB issued ASU No.

2017-07, Compensation — Retirement Benefits (Topic 715):

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.

2017-07 requires employers to disaggregate the service cost component from the other components of net benefit cost and disclose by line item the amount of net benefit cost that is included in the statement of operations or capitalized in assets.

The standard requires employers to report the service cost component in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period and to report other components of net benefit cost separately and outside the subtotal of operating income (loss).

The standard also allows only the service cost component to be eligible for capitalization.

The guidance requires application on a retrospective basis for the presentation of the service cost component and the other components of net benefit cost in the statements of operations and on a prospective basis for the capitalization of the service cost component of net benefit cost in assets.

The Company adopted this standard in the first quarter of fiscal year 2019 retrospectively and elected the practical expedient allowed by ASU No.

2017-07 to utilize amounts disclosed in the Company’s pension plans and other postretirement benefit plan (see Note 13 ) for the prior comparative period as the estimation basis for applying the retrospective presentation requirements.

As a result, the Company recorded a prior period adjustment in the accompanying consolidated statements of operations for the year ended June 30, 2018 to decrease Direct operating expenses and Selling, general and administrative expenses by $ 1,152 and $ 3,029 , respectively, which was related to the non-service cost components of net periodic pension and postretirement benefit cost, with a corresponding adjustment of $ 4,181 in Miscellaneous income (expense), net.

For the year ended June 30, 2017 , the Company recorded a similar prior period adjustment in the accompanying consolidated statements of operations to decrease Direct operating expenses and Selling, general and administrative expenses by $ 958 and $ 3,088 , respectively, which was related to the non-service cost components of net periodic pension and postretirement benefit cost, with a corresponding adjustment of $ 4,046 in Miscellaneous income (expense), net.

For the year ended June 30, 2019 , the non-service cost components of net periodic pension and postretirement benefit cost included under Miscellaneous income (expense), net in the accompanying consolidated statements of operations was $ 2,730 .

In June 2018, the FASB issued ASU No.

2018-07, Compensation — Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting , which expands the scope of ASC Topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees.

2018-07 specifies that ASC Topic 718 applies to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment awards.

2018-07 also clarifies that ASC Topic 718 does not apply to share-based payments used to effectively provide (i) financing to the issuer or (ii) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC Topic 606.

The Company early adopted this standard in the third quarter of fiscal year 2019.

The adoption of this standard did not have an impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU No.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-02, Leases (Topic 842) , which supersedes existing guidance on accounting for leases in ASC Topic 840, Leases.

2016-02, among other things, (i) requires lessees to account for leases as either finance leases or operating leases and generally requires all leases to be recorded on the balance sheet, including those leases classified as operating leases under previous accounting guidance, through the recognition of right-of-use assets and corresponding lease liabilities, and (ii) requires extensive qualitative and quantitative disclosures about leasing activities.

2016-02, among other things, requires (i) lessees to account for leases as either finance leases or operating leases and generally requires all leases to be recorded on the balance sheet, including those leases classified as operating leases under previous accounting guidance, through the recognition of right-of-use assets and corresponding lease liabilities and (ii) extensive

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

qualitative and quantitative disclosures about leasing activities.

The accounting applied by a lessor is largely unchanged from that applied under previous accounting guidance.

4 unchanged sentences

2018-11, Leases (Topic 842) Targeted improvements , which provides an additional (and optional) transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings.

The effective date and transition requirements for ASU No.

2018-01, ASU No.

2018-10 and ASU No.

2018-11 are the same as ASU No.

This standard, as amended, will be effective for the Company beginning in the first quarter of fiscal year 2020 and is required to be applied using the modified retrospective approach for all leases existing as of the effective date.

The Company plans to adopt this standard using the optional transition method allowed by ASU No.

2018-11, whereby the Company will initially apply the new leases standard at July 1, 2019, and will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

While the Company’s evaluation of the impact this standard will have on its consolidated financial statements is currently being finalized, the adoption of the standard will result in the recognition of significant right of use assets and lease liabilities related to the Company’s operating leases.

The adoption of this standard will not impact operating income.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In December 2018, the FASB issued ASU No.

2018-20, Leases (Topic 842) (“ASU 2018-20”), Narrow-Scope Improvements for Lessors , which provided clarification for lessors on how to apply the new leases standard when accounting for sales taxes, certain lessor costs, and certain requirements related to variable payments in contracts.

In March 2019, the FASB issued ASU No.

2019-01, Leases (Topic 842) (“ASU 2019-01”), Codification Improvements , which aligned the new leases guidance with existing guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers.

It also clarified an exemption for lessors and lessees from a certain interim disclosure requirement associated with adopting the board’s new lease accounting standard.

The Company adopted ASU No.

2016-02 on July 1, 2019 and elected to apply the standard as of the beginning of the first quarter of fiscal year 2020 under the modified-retrospective transition approach.

In connection with the adoption of this standard, the Company applied the package of practical expedients intended to ease transition for existing leases by not requiring the Company to reassess (i) its initial lease classification conclusions for existing or expired leases, (ii) whether an existing or expired contract is a lease or contains an embedded lease, and (iii) the capitalization of initial direct costs for existing or expired leases.

In addition, the Company elected not to use “hindsight” in accordance with ASC Subtopic 842-10-65-1 (g) in assessing lease terms and impairment of right-of-use (“ROU”) assets for existing or expired leases under the new standard.

Upon adoption of this standard, the Company recorded initial (i) operating lease ROU assets of $ 1,270 (ii) current operating lease liabilities of $ 393 , and (iii) long-term operating lease liabilities of $ 1,007 .

The Company did not record any adjustment to retained earnings.

As of July 1, 2019, there were no material finance leases for which the Company was a lessee.

See Note 9 for further details on disclosure required under ASC Topic 842.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Accounting for Goodwill Impairment.

2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation.

A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

The Company adopted this standard in the third quarter of fiscal year 2020 and applied it prospectively, beginning with the interim goodwill impairment test performed during the quarter ended March 31, 2020.

See Note 10 for further details.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No.

4 unchanged sentences

2019-05, Targeted Transition Relief , which amends ASC Topic 326 to provide an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost.

In November 2019, FASB issued ASU No.

2019-11 to provide clarification guidance in a number of areas, including:

(i) expected recoveries for purchased financial assets with credit deterioration, (ii) transition relief for troubled debt restructuring, (iii) disclosures related to accrued interest receivables, and (iv) financial assets secured by collateral maintenance provisions.

For most financial instruments, the standard will require the use of a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses, which will generally result in the earlier recognition of credit losses on financial instruments.

This standard will be effective for the Company beginning in the first quarter of fiscal year 2021, with early adoption permitted.

In February 2020, the FASB issued ASU No.

2020-02, Financial Instruments - Credit Losses and Leases , which includes amendments pursuant to SEC Staff Accounting Bulletin No.

This standard will be effective for the Company beginning in the first quarter of fiscal year 2021.

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles — Goodwill and Other (Topic 350):

Simplifying the Accounting for Goodwill Impairment.

2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation.

A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

This standard will be effective for the Company beginning in the first quarter of fiscal year 2021 and is required to be applied prospectively.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No.

2 unchanged sentences

2018-13 removes, modifies and adds certain disclosures providing greater focus on requirements that clearly communicate the most important information to the users of the financial statements with respect to fair value measurements.

The standard is effective for the Company beginning in the first quarter of fiscal year 2021, with early adoption permitted.

The standard is

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

effective for the Company beginning in the first quarter of fiscal year 2021, with early adoption permitted.

Most of the disclosure requirements in ASU No.

2018-13 would need to be applied on a retrospective basis except for the guidance related to (i) unrealized gains and loss included in other comprehensive income, (ii) disclosure related to range and weighted average Level 3 unobservable inputs, and (iii) narrative disclosure requirements on measurement uncertainty, which are required to be applied on a prospective basis.

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

The adoption of this standard, which relates to disclosure, is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No.

5 unchanged sentences

2018-14 are required to be applied retrospectively.

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

The adoption of this standard, which relates to disclosure, is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No.

3 unchanged sentences

The guidance also specifies that the balance sheet, income statement, and statement of cash flows presentation of capitalized implementation costs and the related amortization should align with the presentation of the hosting (service) element of the arrangement.

The standard is effective for the Company in the first quarter of fiscal year 2021, with early adoption permitted.

The standard is effective for the Company in the first quarter of fiscal year 2021.

Entities have the option to apply the guidance prospectively to all implementation costs incurred after the date of adoption or retrospectively.

The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

However, to the extent future costs incurred in a cloud computing arrangement are capitalizable, the corresponding amortization will be included in “Direct Operating expenses” or “Selling, General and administrative expenses” in the consolidated statements of operations, rather than “Depreciation and amortization.”

In November 2018, the FASB issued ASU No.

4 unchanged sentences

This effectively means that when a decision maker or service provider has an interest in a related party, regardless of whether they are under common control, it will consider that related party’s interest in a VIE on a proportionate basis throughout the VIE model for both the assessment of a variable interest and the determination of a primary beneficiary.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The standard will be effective for the Company in the first quarter of fiscal year 2021, with early adoption permitted.

The standard will be effective for the Company in the first quarter of fiscal year 2021.

The amendments in ASU No.

2018-17 are required to be applied retrospectively.

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

In November 2018, the FASB issued ASU No.

2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction between Topic 808 and Topic 606.

2018-18 clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC Topic 606 when the counterparty is a customer.

In addition, ASU No.

2018-18 precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction.

The standard will be effective for the Company in the first quarter of fiscal year 2021, with early adoption permitted.

The amendments in ASU No.

2018-18 are required to be applied retrospectively to the date when the Company initially adopted ASC Topic 606 .

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2019, the FASB issued ASU No.

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This ASU provides narrow-scope amendments to help apply these recent standards.

The transition requirements and effective date of this ASU will be effective for the Company in the first quarter of fiscal year 2021 with early adoption permitted for certain amendments.

The transition requirements and effective date of this ASU will be effective for the Company in the first quarter of fiscal year 2021.

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

In November 2019, the FASB issued ASU No.

2019-08, Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606):

Codification Improvements - Share-Based Consideration Payable to a Customer.

This ASU requires that share-based payment awards issued to a customer in connection with a revenue arrangement be recorded as a reduction of the transaction price in revenue.

The amount recorded as a reduction of the transaction price is measured using the grant-date fair value of the award and is classified in accordance with ASC Topic 718.

Changes in the measurement of the share-based payments after the grant date that are due to the form of the consideration are not included in the transaction price and are recorded elsewhere in the statement of operations.

The award is measured and classified under ASC Topic 718 for its entire life, unless the award is modified after it vests and the grantee is no longer a customer.

The new guidance is effective for the Company in the first quarter of fiscal year 2021.

The adoption of this standard is not expected to have an impact on the Company’s consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

This ASU eliminates certain exceptions to the general approach in ASC Topic 740 and includes methods of simplification to the existing guidance.

The new guidance is effective for the Company in the first quarter of fiscal year 2022, with early adoption permitted.

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

In January 2020, the FASB issued ASU No.

2020-01, Investments-Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815):

Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.

The amendments in this ASU clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method.

In addition, the amendments clarify the accounting for certain forward contracts and purchased options accounted for under Topic 815.

The new guidance is effective for the Company in the first quarter of fiscal year 2021.

The adoption of this standard is not expected to have an impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This ASU provides temporary optional expedients and exceptions to the guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate and other interbank offered rates to alternative reference rates.

The new guidance was effective upon issuance, and the Company may elect to apply the amendments prospectively through December 31, 2022.

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

Discontinued Operations

In accordance with ASC 205-20, the Company analyzed the quantitative and qualitative factors relevant to the MSGE Distribution and determined that those held for sale conditions for discontinued operations presentation were met during the fourth quarter of fiscal year 2020.

As a result of the MSGE Distribution , the results of 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 through the MSGE Distribution Date , as well as transaction costs related to the MSGE Distribution , have been classified in the accompanying consolidated financial statements as discontinued operations for all periods presented.

No gain or loss was recognized in connection with the MSGE Distribution .

After the MSGE Distribution , the Company and MSG Entertainment have continuing involvement through their common ownership and related party arrangements, including sharing of certain revenues and expenses.

See Note 17 for additional information on the related party arrangements.

Prior to the MSGE Distribution , the Company’s results from discontinued operations reflect a number of inter-company arrangements that dictate the allocable amounts of shared revenue and operating expenses.

The Company’s continuing revenues include event related revenues for ticket sales and a portion of shared suite license fees generated in connection with the games played at The Garden.

Pursuant to the Arena License Agreements, effective as of the MSGE Distribution Date , the Company’s aggregate share of the suite license fees is 67.5 % .

Thus, for the periods prior to the MSGE Distribution , the allocated percentage of suite license fees of 32.5 % is reported within results of discontinued operations.

In addition, the Company’s multi-year sponsorship agreements may include performance obligations of the Company’s continuing and discontinued operations (see Note 4 ).

Sponsorship revenues reported within discontinued operations are based on the relative value of performance obligations wholly satisfied by the MSG Entertainment businesses.

Sponsorship agreements also include shared performance obligations that are from indoor venue signage and other shared sponsorship performance obligations.

For historically allocated shared signage and other shared sponsorship revenue, the Company calculated MSG Entertainment ’s share to be presented within discontinued operations based on a combined revenue driver.

The Company’s continuing expenses include event costs related to the presentation and production of the Company’s sporting events and other operating expenses, including expenses related to the Arena License Agreements which require the Company to pay arena license fees to MSG Entertainment in exchange for the right to use The Garden for games of the Knicks and the Rangers.

Expenses related to the direct operations of MSG Entertainment , such as The Garden operating expenses related to the presentation and production of events and non-event related costs of operating the venue, are included in discontinued operations on the basis of an allocation of the direct usage of The Garden by the Company’s continuing and discontinued

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unallocated costs of operational support functions that were provided on a centralized basis and not historically recorded at the business unit level by the Company, are also included in discontinued operations, based on a measure of direct usage.

Direct usage was determined based event specific variable expenses for MSG Entertainment events and otherwise on the basis of the proportion of combined revenues, headcount or other objective measures for expenses.

Indirect corporate and administrative costs, including amounts that were historically allocated to the MSG Entertainment business segment, do not qualify for discontinued operations presentation, and these costs are included in continuing operations for the periods prior to the Distribution.

Various types of indirect corporate and administrative expenses that continue after the MSGE Distribution Date and are covered under the Transitions Services Agreement, are included in continuing operations for the period after the MSGE Distribution .

In addition, results from continuing operations, prior to the MSGE Distribution Date , include certain corporate overhead expenses that the Company did not incur in the period after the completion of the MSGE Distribution , and the Company does not expect to incur such expenses in future periods.

Discontinued operations include all depreciation expense for MSG Entertainment ’s venues and other operating assets.

Depreciation expense on certain corporate property and equipment that was transferred to MSG Entertainment in connection with the MSGE Distribution , remained in continuing operations as it did not qualify for discontinued operations reporting.

The table below sets forth, for the periods presented, operating results of discontinued operations.

Amounts presented below differ from historically reported results for the MSG Entertainment business segment due to reclassifications and adjustments made for purposes of discontinued operations.

Years Ended June 30,

Direct operating expenses

Selling, general and administrative expenses

Depreciation and amortization

Impairment of intangibles, long-lived assets and goodwill

Operating income (loss)

Other income (expense):

Earnings (loss) in equity method investments

Interest income

Interest expense

Miscellaneous expense, net

Income (loss) from discontinued operations before income taxes

Income tax benefit (expense)

Net income (loss) from discontinued operations

Net loss attributable to redeemable noncontrolling interests

Net loss attributable to nonredeemable noncontrolling interests

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

The Company’s collections for ticket sales, sponsorships and suite rentals in advance were recorded as deferred revenue and were recognized for tax purposes upon consummation of the MSGE Distribution .

See Note 18 for further information on the tax impact of accelerating deferred revenue for tax purposes.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The assets and liabilities of MSG Entertainment reflect the agreements between the Company and MSG Entertainment concerning the allocation of shared revenue and expense activity prior to the MSGE Distribution .

The assets and liabilities of MSG Entertainment have been classified in the consolidated balance sheet as of June 30, 2019 as assets and liabilities of discontinued operations and consist of the following, by major class:

Cash and cash equivalents

Restricted cash

Short-term investments

Accounts receivable, net

Net related party receivables

Prepaid expenses

Other current assets

Total current assets of discontinued operations

Net related party receivables, noncurrent

Property and equipment, net

Amortizable intangible assets, net

Indefinite-lived intangible assets

Total assets of discontinued operations

Accounts payable

Net related party payables, current

Current portion of long-term debt, net of deferred financing costs

Accrued liabilities:

Employee related costs

Other accrued liabilities

Collections due to promoters

Deferred revenue

Total current liabilities of discontinued operations

Long-term debt, net of deferred financing costs

Defined benefit and other postretirement obligations

Other employee related costs

Deferred tax liabilities, net

Other liabilities

Total liabilities of discontinued operations

Redeemable noncontrolling interests

Net assets of discontinued operations

The amount of cash and restricted cash distributed as of the MSGE Distribution Date to MSG Entertainment is $ 816,896 and $ 10,180 , respectively.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As permitted under ASU 2014-08, the Company has elected not to adjust the consolidated statements of cash flows for the years ended June 30, 2020, 2019 and 2018 to exclude cash flows attributable to discontinued operations.

The table below sets forth, for the periods presented, significant selected financial information related to MSG Entertainment included in the accompanied consolidated statements of cash flows:

Years Ended June 30,

Non-cash items included in net income (loss):

Depreciation and amortization

Impairment of intangibles, long-lived assets and goodwill

Share-based compensation expense

Cash flows from investing activities:

Capital expenditures

Non-cash investing activities:

Non-cash acquisition of additional redeemable noncontrolling interests

Capital expenditures incurred but not yet paid

Revenue Recognition

11 unchanged sentences

Arrangements with Multiple Performance Obligations

The Company has arrangements with multiple performance obligations, such as multi-year sponsorship agreements which may derive revenues for each of the Company’s segments within a single arrangement.

The Company has arrangements with multiple performance obligations, such as multi-year sponsorship agreements which may derive revenues within a single arrangement.

Payment terms for such arrangements can vary by contract, but payments are generally due in installments throughout the contractual term.

The performance obligations included in each sponsorship agreement vary and may include various advertising benefits such as, but not limited to, signage at The Garden and the Company’s other venues, digital advertising, event or property specific advertising, as well as non-advertising benefits such as suite licenses and event tickets.

The performance obligations included in each sponsorship agreement vary and may include various advertising benefits such as, but not limited to, signage, digital advertising, event or property specific advertising, as well as non-advertising benefits such as suite licenses and event tickets.

To the extent the Company’s multi-year arrangements provide for performance obligations that are consistent over the multi-year contractual term, such performance obligations generally meet the definition of a series as provided for under the accounting guidance.

If performance obligations are concluded to meet the definition of a series, the contractual fees for all years during the contract term are aggregated and the related revenue is recognized proportionately as the underlying performance obligations are satisfied.

THE MADISON SQUARE GARDEN COMPANY

If performance obligations are concluded to meet the definition of a series, the contractual fees for all years during the contract

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

term are aggregated and the related revenue is recognized proportionately as the underlying performance obligations are satisfied.

The timing of revenue recognition for each performance obligation is dependent upon the facts and circumstances surrounding the Company’s satisfaction of its respective performance obligation.

11 unchanged sentences

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

In connection with the 2015 Distribution, the Company entered into an advertising sales representation agreement with MSG Networks.

Pursuant to the agreement, the Company has the exclusive right and obligation to sell advertising on behalf of MSG Networks.

The Company is entitled to and earns commission revenue as the advertisements are aired on MSG Networks.

Since the Company acts as an agent, the Company recognizes the advertising commission revenue on a net basis.

The Company’s revenue recognition policies that summarize the nature, amount, timing and uncertainty associated with each of the Company’s revenue sources are discussed further in each respective segment discussion below.

MSG Entertainment

The Company’s MSG Entertainment segment earns event related revenues principally from the sale of tickets for events that the Company produces or promotes/co-promotes, and from venue license fees charged to third-party promoters for events held at the Company’s venues that MSG Entertainment does not produce or promote/co-promote.

The Company’s performance obligations with respect to event-related revenues from the sale of tickets, venue license fees from third-party promoters, sponsorships, concessions and merchandise are satisfied at the point of sale or as the related event occurs.

MSG Entertainment’s revenues also include revenue from the license of The Garden’s suites.

Suite license arrangements are generally multi-year fixed-fee arrangements that include annual fee increases.

Payment terms for suite license arrangements can vary by contract, but payments are generally due in installments prior to each license year.

The Company’s performance obligation under such arrangements is to provide the licensee with access to the suite when events occur at The Garden.

The Company accounts for the performance obligation under these types of arrangements as a series and, as a result, the related suite license fees for all years during the license term are aggregated and revenue is recognized proportionately over the license period as the Company satisfies the related performance obligation.

Progress toward satisfaction of the Company’s annual suite license performance obligations is measured as access to the suite is provided to the licensee for each event throughout the contractual term of the license.

The Company’s MSG Entertainment segment also earns revenues from the sale of advertising in the form of venue signage and other forms of sponsorship, which are not related to any specific event.

The Company’s performance obligations with respect to this advertising are satisfied as the related benefits are delivered over the term of the respective agreements.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenues from dining, nightlife and hospitality offerings through TAO Group are recognized when food, beverages and/or services are provided to the customer as that is the point in which the related performance obligation is satisfied.

In addition, management fee revenues which are earned in accordance with specific venue management agreements are recorded over the period in which the management services are performed as such depicts the measure of progress toward satisfaction of the Company’s venue management performance obligations.

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

Amounts collected in advance of events for which the Company is not the promoter or co-promoter do not represent contract liabilities and are recorded as collections due to promoters on the balance sheet.

The Company’s professional sports teams derive event-related revenues principally from ticket sales which are recognized as the related games occur.

MSG Sports’ revenues also include revenue from the license of The Garden’s suites.

The Company’s revenues also include revenue from the license of The Garden’s suites.

Suite license arrangements are generally multi-year fixed fee arrangements that include annual fee increases.

1 unchanged sentence

The Company’s performance obligation under such arrangements is to provide the licensee with access to the suite when events occur at The Garden.

Because suite and club licenses cover both the Knicks and the Rangers games and events that MSG Entertainment presents at The Garden, suite and club rental revenue is shared between us and MSG Entertainment under Arena License Agreements the Company 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.

Progress toward satisfaction of the Company’s suite license performance obligations is measured as access to the suite is provided to the licensee for each event throughout the contractual term of the license.

Due to the NBA and NHL suspending their season on March 11, and 12, 2020, respectively, suite license holders did not have access to their suites and therefore revenue recognition ceased at this time.

Event-related revenue also includes food, beverage and merchandise sales which are recognized at the point goods are provided to customers.

Subsequent to the MSGE Distribution Date, 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.

Payment is received at the point of sale and sales tax collected from customers is excluded from revenue.

In addition to event-related revenue, MSG Sports maintains local media rights arrangements which provide for the licensing of team-related programming to MSG Networks.

1 unchanged sentence

The transaction price under these arrangements is variable in nature as certain credit provisions exist to the extent that the teams’ games are unavailable for broadcast during an individual league season.

The Company estimates the transaction price at the beginning of each fiscal year, which coincides with the annual contractual term.

The Company estimates the transaction price at the beginning of each fiscal year, which coincides with the annual

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

contractual term.

In estimating the transaction price, the Company considers the contractually agreed upon license fees as well as qualitative considerations with respect to the number of games expected to be available for broadcast by MSG Networks over the upcoming year.

4 unchanged sentences

Receipt of league-wide revenues generally occurs at the time of communication or according to a specified timeline.

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.

At this time, league-wide revenues from the 2019-2020 season have not been finalized.

As a result, approximately $ 42,000 of national media rights fees revenues have not been recognized and are deferred revenue obligations pending the completion of the NBA and NHL seasons.

MSG Sports also earns revenues from the sale of advertising in the form of venue signage and sponsorships, which are not related to any specific event.

The Company’s performance obligations with respect to this advertising are satisfied as the related benefits are delivered over the term of the respective agreements.

The Company’s MSG Sports segment also derives revenue from live sporting events not related to the Company’s teams.

The Company’s performance obligations with respect to event-related revenues from other live sporting events, including the sale of tickets, venue license fees earned in connection with other live sporting events that the Company does not produce or promote, sponsorships, concessions and merchandise are satisfied at the point of sale or as the related event occurs.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Disaggregation of Revenue

The following table disaggregates the Company’s revenue by major source and reportable segment based upon the timing of transfer of goods or services to the customer for the year ended June 30, 2019 :

Year ended June 30, 2019

Entertainment

The following table disaggregates the Company’s revenues by type of goods or services in accordance with the required entity-wide disclosure requirements per FASB ASC Subtopic 280-10-50-38 to 40 and the disaggregation of revenue required disclosures in accordance with ASC Subtopic 606-10-50-5 for the years ended June 30, 2020 , 2019 and 2018 :

Years Ended June 30,

Event-related (a)

Media rights (b)

Sponsorship, signage and suite licenses

League distributions

Local media rights fees from MSG Networks

League distributions and other

Total revenues from contracts with customers

_________________

Consists of (i) ticket sales and other ticket-related revenues, (ii) TAO Group’s entertainment dining and nightlife offerings, (iii) venue license fees from third-party promoters, and (iv) food, beverage and merchandise sales.

Primarily consists of (i) advertising commission revenue from MSG Networks, (ii) TAO Group ’ s managed venue revenues, and (iii) revenues from Obscura ’ s third-party production business.

Consists of (i) ticket sales and other ticket-related revenues, and (ii) food, beverage and merchandise sales.

Consists of (i) local media rights fees from MSG Networks, (ii) revenue from the distribution through league-wide national and international television contracts, and (iii) other local radio rights fees.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheet.

The following table provides information about contract balances from the Company’s contracts with customers as of June 30, 2019 and July 1, 2018.

The following table provides information about contract balances from the Company’s contracts with customers as of June 30, 2020 and 2019 .

Receivables from contracts with customers, net (a)

3 unchanged sentences

Receivables from contracts with customers, which are reported in Accounts receivable, net and Net related party receivables in the Company’s consolidated balance sheets, represent the Company’s unconditional rights to consideration under its contracts with customers.

As of June 30, 2019 and July 1, 2018, the Company’s receivables from contracts with customers above included $ 126 and $ 205 , respectively, related to various related parties.

As of June 30, 2020 and 2019 , the Company’s receivables from contracts with customers above included $ 0 and $ 8 , respectively, related to various related parties.

See Note 17 for further details on these related party arrangements.

4 unchanged sentences

Revenue recognized for the year ended June 30, 2020 relating to the deferred revenue balance as of July 1, 2019 was $ 101,981 .

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Transaction Price Allocated to the Remaining Performance Obligations

7 unchanged sentences

Fiscal year ending June 30, 2025

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Computation of Earnings (Loss) per Common Share

7 unchanged sentences

Team Personnel Transactions

Direct operating and selling, general and administrative expenses in the accompanying consolidated statements of operations include net provisions for transactions relating to players and certain other team personnel on the Company’s sports teams for (i) waivers/contract termination costs, (ii) player trades and (iii) season-ending injuries (“ Team Personnel Transactions ”).

Direct operating and selling, general and administrative expenses in the accompanying consolidated statements of operations include net provisions for transactions relating to the Company’s sports teams for (i) waivers/contract termination costs, (ii) player trades and (iii) season-ending injuries (“ Team Personnel Transactions ”).

Team Personnel Transactions amounted to $ 33,690 , $ 53,134 and $ 27,514 for the years ended June 30, 2020 , 2019 and 2018 , respectively.

Team personnel transactions for the year ended June 30, 2018 are reported net of insurance recoveries of $ 468 .

See Note 22 for details of a subsequent event related to Team Personnel Transactions in July 2019.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash, Cash Equivalent and Restricted Cash

6 unchanged sentences

See Note 2 for more information regarding the nature of restricted cash.

Investments and Loans to Nonconsolidated Affiliates

The Company’s investments and loans to nonconsolidated affiliates which are accounted for under the equity method of accounting, equity investments without readily determinable fair values, and cost method of accounting in accordance with ASC Topic 323, Investments - Equity Method and Joint Ventures , ASC Topic 321, Investments - Equity Securities, and ASC Topic 325, Investments - Other , respectively, consisted of the following:

Ownership Percentage

June 30, 2019

Equity method investments:

SACO Technologies Inc.

Tribeca Enterprises LLC (“Tribeca Enterprises”)

Equity investments without readily determinable fair values (a)

Total investments and loans to nonconsolidated affiliates

June 30, 2018

Equity method investments:

Azoff MSG Entertainment LLC (“AMSGE”)

Tribeca Enterprises LLC (“Tribeca Enterprises”)

Cost method investments (a)

Total investments and loans to nonconsolidated affiliates

_________________

In accordance with the ASU No.

2016-01 and ASU No.

2018-03, which were adopted on July 1, 2018, the cost method accounting for equity investments was eliminated.

Such investments are required to be presented at fair value.

The Company has elected to account for its equity securities without readily determinable fair values at cost, adjusted for impairment and changes resulting from observable price fluctuations in orderly transactions for the identical or a similar investment of the same issuer (“Measurement Alternative”).

The Company applies the Measurement Alternative, which is classified within Level III of the fair value hierarchy, to its equity investments without readily determinable fair values as of

THE MADISON SQUARE GARDEN COMPANY

Property and Equipment

As of June 30, 2020 and 2019 , property and equipment consisted of the following assets:

Estimated Useful Lives

Furniture and fixtures

Leasehold improvements

Shorter of term of lease or life of improvement

Construction in progress

Less accumulated depreciation and amortization

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019 and recorded a $ 3,738 increase in carrying value from observable price fluctuations and an impairment charge of $ 398 .

The Company did not identify any adjustments on July 1, 2018.

Equity Method Investments

The Company determined that these investments are not VIEs and therefore each was analyzed under the voting model.

The Company determined that due to a lack of a voting majority and consistent with the accounting for partnership (or similar entities) interests, it does not control these entities.

Accordingly, the Company accounts for these investments under the equity method of accounting in accordance with ASC Topic 323.

In addition, for an investment in a limited liability company in which the Company has an ownership interest that exceeds 3-5%, the Company also accounts for such investment under the equity method of accounting.

In September 2013, the Company acquired a 50 % interest in AMSGE for $ 125,000 .

AMSGE owns and operates businesses in the entertainment industry and focused on music management, performance rights, strategic marketing and venue management consulting services.

The Company sold its interest in AMSGE (renamed The Azoff Company) to The Azoff Company Holdings (“Azoff Music”) on December 5, 2018 for $ 125,000 .

The Company recorded a gain on the sale of its interest in AMSGE of $ 3,219 (net of transaction costs of $ 2,290 ), which is reported in Earnings (loss) in equity method investments in the accompanying consolidated statement of operations for the year ended June 30, 2019 .

The $ 63,500 outstanding under the revolving credit facility previously extended by the Company to AMSGE was also converted to a subordinated term loan with a maturity date of September 20, 2021 .

This subordinated term loan was assumed by The Azoff Company Equity LLC, a newly-formed holding company that owns, directly or indirectly, the investments previously owned by AMSGE.

The subordinated term loan to The Azoff Company Equity LLC bears interest at a floating rate, which at the option of The Azoff Company Equity LLC, is either (i) a base rate plus a margin of 1.25% per annum or (ii) six-month LIBOR plus a margin of 2.25% per annum.

See Note 11 for more information on this subordinated term loan receivable.

Azoff Music directly or through its affiliates will continue to provide consulting services to the Company, including with respect to the Forum and other venues (including MSG Spheres).

In addition, in connection with the arrangement, until October 8, 2020, the Company has the right to participate in the proceeds of a sale of certain of Azoff Music’s businesses above a specified amount, and Azoff Music has the right to participate in the proceeds of a sale of the Forum above a specified amount.

In August 2013, the Company acquired an interest in Brooklyn Bowl Las Vegas, LLC (“BBLV”).

In March 2014, BBLV opened a new bowling, dining and live music venue in Las Vegas.

The equity investment in BBLV of $ 23,600 was fully written-off in fiscal year 2015.

In May 2019, the Company sold its interest in BBLV for $ 750 and recorded a gain on the sale of its interest for the same amount, which is reported in Earnings (loss) in equity method investments in the accompanying consolidated statements of operations for the year ended June 30, 2019 .

In March 2014, the Company acquired a 50 % interest in Tribeca Enterprises for $ 22,500 .

Tribeca Enterprises owns and operates the Tribeca Film Festival and certain other businesses.

As of the acquisition date the carrying amount of the investment was greater than the Company’s equity in the underlying assets of Tribeca Enterprises.

As such, the Company allocated the difference to indefinite-lived and amortizable intangible assets of $ 5,750 and $ 5,350 , respectively.

The difference attributable to amortizable intangible assets is being amortized straight-line over 10 years , the expected useful life of the intangible asset.

In connection with the Company’s investment in Tribeca Enterprises, the Company has provided a $ 17,500 revolving credit facility to Tribeca Enterprises as of June 30, 2019 .

The Tribeca Enterprises revolving credit facility was fully drawn as of June 30, 2019 and 2018 and the loan outstanding included payments-in-kind (“PIK”) interest of $ 3,516 and $ 2,025 as of June 30, 2019 and 2018 , respectively.

PIK interest owed does not reduce the availability under the revolving credit facility.

During the three months ended June 30, 2019, the Company accepted an offer to sell its 50 % ownership interest in Tribeca Enterprises, including the outstanding loan and PIK interest, for total consideration of $ 18,000 .

The company signed a letter of intent and, as a result, recorded an impairment charge of $ 8,133 , which is reported as Earnings (loss) in equity method investments in the accompanying consolidated statement of operations for the year ended June 30, 2019.

The impairment charge consisted of $ 3,016 in the carrying value of PIK interest and $ 5,117 in the carrying value of the equity method investment.

On August 5, 2019 , the Company contributed to Tribeca Enterprises the $ 18,000 of indebtedness under the Company’s revolving credit facility to the Company’s equity capital in Tribeca Enterprises immediately prior to the sale of the Company’s equity capital in Tribeca Enterprises for $ 18,000 .

THE MADISON SQUARE GARDEN COMPANY

Depreciation and amortization expense on property and equipment for continuing operations was $ 13,979 , $ 15,112 and $ 14,526 for the years ended June 30, 2020 , 2019 and 2018 , respectively, which includes depreciation expense on certain corporate property and equipment that was transferred to MSG Entertainment in connection with the MSGE Distribution , but which did not qualify for discontinued operations reporting.

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 the Company’s 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.

For operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term.

For finance leases, the initial ROU asset is depreciated on a straight-line basis over the lease term, along with recognition of interest expense associated with accretion of the lease liability, which is ultimately reduced by the related fixed payments.

For leases with a term of 12 months or less (“short-term leases”), any fixed lease payments are recognized on a straight-line basis over the lease term and are not recognized on the consolidated balance sheet.

Variable lease costs for both operating and finance leases, if any, are recognized as incurred and such costs are excluded from lease balances recorded on the consolidated balance sheet.

On April 17, 2020, in connection with the MSGE Distribution , the Company entered into a sublease agreement with MSG Entertainment for the Company’s principal executive offices at Two Pennsylvania Plaza in New York.

The sublease 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 the Company entered into the Arena License Agreements with MSG Entertainment that end on 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, the Company is not required to make payments until The Garden is available for use, and on June 30, 2020 the assets and liabilities were remeasured utilizing the same discount rate as of April 17, 2020, taking into account the unpaid monthly installments during the lease period as a resolution of a lease contingency.

The Knicks and the 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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In July 2014, MSG Networks sold Fuse to Fuse Media, Inc., and as part of the transaction MSG Networks received a 15 % equity interest in Fuse Media LLC (“ Fuse Media ”) which was transferred to the Company in connection with the 2015 Distribution .

In the third quarter of fiscal year 2017, certain Fuse Media warrant holders notified Fuse Media of their intent to exercise certain put options (which Fuse Media disputed).

The purported exercise of the put options triggered an assessment of Fuse Media ’s fair value.

This assessment, which was performed during the third quarter of fiscal year 2017, resulted in unfavorable fair value measurements of Fuse Media .

As a result, the Company evaluated whether or not an other-than-temporary impairment of its investment had occurred as of the third quarter of fiscal year 2017.

This evaluation resulted in the Company recording a pre-tax non-cash impairment charge of $ 20,613 to write off the carrying value of its equity investment in Fuse Media , which is reflected in loss in equity method investments in the accompanying consolidated statements of operations for the year ended June 30, 2017.

Fuse Media filed for Chapter 11 bankruptcy protection in April 2019.

Fuse Media emerged from bankruptcy on July 1, 2019 and the Company no longer has any ownership interest in Fuse Media .

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.

The total consideration consisted of a $ 42,444 payment at closing and a $ 4,800 deferred payment, which was made in October 2018.

As of the acquisition date, the carrying amount of the investment was greater than the Company’s equity interest in the underlying net assets of SACO.

As such, the Company allocated the difference to amortizable intangible assets of $ 25,350 and is amortizing these intangible assets on a straight-line basis over the expected useful lives ranging from 6 years to 12 years .

Equity Investment with Readily Determinable Fair Value

In addition to the investments discussed above, the Company holds an investment of 3,208 shares of the common stock of Townsquare.

Townsquare is a leading media, entertainment and digital marketing solutions company that is listed on the New York Stock Exchange (“NYSE”) under the symbol “TSQ.” In accordance with ASC Topic 321, Investments - Equity Securities, this investment is measured at readily determinable fair value and is reported under Other assets in the accompanying consolidated balance sheets as of June 30, 2019 and 2018.

See Note 11 for more information on the fair value of the investment in Townsquare.

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.

The following is summarized financial information for all of the Company’s equity method investments as required by the guidance in SEC Regulation S-X Rule 4-08(g).

The amounts shown below represent 100% of these equity method investments’ financial position and results of operations.

Balance Sheet

June 30, 2019 (a)

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.

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 of June 30, 2020 , the Company’s existing operating leases, which are recorded on the accompanying financial statements, have remaining lease terms ranging from 3 months to 35 years .

In certain instances, leases include options to renew, with varying option terms.

The exercise of lease renewal, if available under the lease options, is generally at the Company’s discretion and is considered in the Company’s assessment of the respective lease term.

The Company’s lease agreements do not contain material residual value guarantees or material restrictive covenants.

The following table summarizes the ROU assets and lease liabilities recorded on the Company’s consolidated balance sheet as of June 30, 2020 :

Line Item in the Company’s Consolidated Balance Sheet

Right-of-use assets:

Operating leases

Right-of-use lease assets

Lease liabilities:

Operating leases, current

Operating lease liabilities, current

Operating leases, noncurrent

Operating lease liabilities, noncurrent

Total lease liabilities

The following table summarizes the activity recorded within the Company’s consolidated statement of operations for the year ended June 30, 2020 :

Line Item in the Company’s Consolidated Statement of Operations

June 30, 2020

Current assets

Noncurrent assets

Current liabilities

Noncurrent liabilities

Noncontrolling interests

Shareholders’ equity

THE MADISON SQUARE GARDEN COMPANY

Operating lease cost

Direct operating expenses

Operating lease cost

Selling, general and administrative expenses

Short-term lease cost

Direct operating expenses

Total lease cost

Supplemental Information

For the year ended June 30, 2020 , cash paid for amounts included in the measurement of lease liabilities was $ 877 .

For the year ended June 30, 2020 , the Company had three ROU assets of $ 717,115 obtained in exchange for new operating lease liabilities.

The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of June 30, 2020 was 34.5 years .

The weighted average discount rate was 7.13 % as of June 30, 2020 and represented the Company’s estimated incremental borrowing rate, assuming a secured borrowing, based on the remaining lease term at the time of either (i) adoption of the standard or (ii) the period in which the lease term expectation commenced or was modified .

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30,

Results of Operations

Income (loss) from continuing operations

Net income (loss)

Net income (loss) attributable to controlling interest

_________________

Balance sheet information did not include equity method investees that were sold during the fiscal year 2019.

For equity method investments that were sold in fiscal year 2019, the results of operations information included the activities for those equity method investees until the date of sale.

Maturities of operating lease liabilities as of June 30, 2020 are as follows:

Fiscal year ending June 30, 2021

Fiscal year ending June 30, 2022

Fiscal year ending June 30, 2023

Fiscal year ending June 30, 2024

Fiscal year ending June 30, 2025

Total lease payments

Less imputed interest

Total lease liabilities

Goodwill and Intangible Assets

The carrying amounts of goodwill, by reportable segment, as of June 30, 2019 and 2018 are as follows:

MSG Entertainment

During the first quarter of fiscal year 2020 , the Company performed its annual impairment test of goodwill and determined that there were no impairments of goodwill identified for any of its reporting units as of the impairment test date, including the goodwill of the MSG Entertainment and TAO Group reporting units that were transferred to MSG Entertainment as part of the MSGE Distribution .

The Company’s goodwill is $ 226,955 and $ 226,955 as of June 30, 2020 and 2019 , respectively.

The Company’s indefinite-lived intangible assets as of June 30, 2020 and 2019 are as follows:

Sports franchises (MSG Sports segment)

Trademarks (MSG Entertainment segment)

Photographic related rights (MSG Sports segment)

During the first quarter of fiscal year 2019 , the Company performed its annual impairment test of identifiable indefinite-lived intangible assets and determined that there were no impairments identified.

Sports franchises

Photographic related rights

During the first quarter of fiscal year 2020 , the Company performed its annual impairment test of identifiable indefinite-lived intangible assets and determined that there were no impairments identified, including Trademarks and a portion of Photographic related rights that were transferred to MSG Entertainment as part of the MSGE Distribution .

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”.

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.

The Company’s intangible assets subject to amortization are as follows:

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Estimated Useful Lives

Venue management contracts

Favorable lease assets

Season ticket holder relationships

Non-compete agreements

Festival rights

Other intangibles

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

Venue management contracts

Favorable lease assets

Season ticket holder relationships

Non-compete agreements

Festival rights

Other intangibles

Amortization expense for intangible assets, excluding the amortization of favorable lease assets of $ 4,696 , $ 4,874 and $ 812 for the years ended June 30, 2019 , 2018 and 2017 , respectively, which is reported in rent expense, was $ 18,404 , $ 20,194 , and $ 7,805 for the years ended June 30, 2019 , 2018 and 2017 , respectively.

Season ticket holder relationship and other intangibles were fully amortized as of June 30, 2020 , and the gross carrying amount and accumulated amortization were written off.

Amortization expense for intangible assets was $ 3,561 , $ 4,965 , and $ 6,281 for the years ended June 30, 2020 , 2019 and 2018 , respectively.

The Company expects its aggregate annual amortization expense for existing intangible assets subject to amortization for each fiscal year from 2021 through 2025 to be as follows:

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Fiscal year ending June 30, 2025

Property and Equipment

As of June 30, 2019 and 2018 , property and equipment consisted of the following assets:

Estimated Useful Lives

Furniture and fixtures

Leasehold improvements

Shorter of term of lease or life of improvement

Construction in progress

Less accumulated depreciation and amortization

The increase in Construction in progress is primarily associated with the development and construction of MSG Spheres in Las Vegas and London.

Depreciation and amortization expense on property and equipment was $ 100,789 , $ 102,292 and $ 99,583 for the years ended June 30, 2019 , 2018 and 2017 , respectively.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

Contractual Obligations and Off Balance Sheet Arrangements

The Company has various long-term noncancelable operating lease agreements, primarily for entertainment venues and office space expiring at various dates through 2038 .

Certain leases include renewal provisions at the Company’s option and provide for additional rent based on sales.

The rent expense associated with such operating leases is recognized on a straight-line basis over the initial lease term.

The difference between rent expense and rent paid is recorded as deferred rent.

Rent expense including amortization of favorable lease assets and an unfavorable lease liability under these lease agreements totaled $ 57,627 , $ 53,591 and $ 39,044 for the years ended June 30, 2019 , 2018 and 2017 , respectively.

In addition, the Company has certain 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 , future minimum rental payments under leases having noncancelable initial lease terms, other cash payments required under contracts entered into by the Company in the normal course of business in excess of one year and outstanding letters of credit are as follows:

Off-Balance Sheet Commitments

Obligations (b)

Fiscal year ending June 30, 2020

Fiscal year ending June 30, 2021

Fiscal year ending June 30, 2022

Fiscal year ending June 30, 2023

Fiscal year ending June 30, 2024

_________________

Includes contractually obligated minimum lease payments for operating leases having an initial noncancelable term in excess of one year for the Company’s venues, including the TAO Group venues, CLG facility, and various corporate offices.

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.

Consist of letters of credit obtained by the Company as collateral for development of MSG Sphere in Las Vegas and lease agreements.

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.

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.

Pension obligations have been excluded from the table above as the timing of the future cash payments is uncertain.

See Note 13 for information on the future funding requirements under our pension obligations.

In addition, see Note 7 for information on 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 as part of the purchase price.

See Note 11 for further details of the amount recorded in the accompanying consolidated balance sheet as of

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019 .

In addition, see Note 12 for the principal repayments required under the long-term debt outstanding as of June 30, 2019 .

Under the terms of lease agreements and related guaranties, subsidiaries of the Company have certain operating requirements, with one of these subsidiaries being also required to meet a certain net worth obligation.

In the event that these subsidiaries were to fail to meet the required obligations and were unable to avail themselves of the cure options, the landlord could terminate the lease.

The Company and a subsidiary of the Las Vegas Sands Corp.

(“Sands”) entered into a 50-year ground lease in Las Vegas pursuant to which the Company has agreed to construct a large-scale venue.

The Company has announced plans to construct an MSG Sphere on that site.

The ground lease will have no fixed rent;

however, if certain return objectives are achieved, Sands will receive 25% of the after-tax cash flow in excess of such objectives.

The Company 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 their equity interests in TAO Group after the fifth anniversary of the closing and, in certain circumstances 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 exercise of such call right shall be, at MSG’s option, in cash, debt, or MSG Class A Common Stock, subject to certain limitations.

Legal Matters

The Company is a defendant in various lawsuits.

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

Fair Value Measurements

The following table presents the Company’s assets that are measured at fair value on a recurring basis, which include cash equivalents, marketable securities and available-for-sale securities:

Fair Value Hierarchy

Commercial paper

Money market accounts

Time deposits

Equity investment with readily determinable fair value

Total assets measured at fair value

All assets listed above are classified within Level I of the fair value hierarchy as they are valued using observable inputs that reflect quoted prices for identical assets in active markets.

The carrying amount of the Company’s commercial paper , money market accounts and time deposits approximates fair value due to their short-term maturities.

The carrying value and fair value of the Company’s financial instruments reported in the accompanying consolidated balance sheets are as follows:

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

June 30, 2019

Notes receivable, including interest accruals

Short-term investments (a)

Equity investment with readily determinable fair value (b)

Subordinated term loan receivable (c)

Long-term debt, including current portion (d)

Long-term debt (a)

_________________

The Company’s short-term investment is an U.K.

pounds sterling denominated time deposit with a banking institution in London that has an original six-month maturity date from inception.

See Note 2 for more information on this short-term investment.

Aggregate cost basis for the Company’s equity investment with readily determinable fair value in Townsquare, including transaction costs, was $ 23,222 as of June 30, 2019 .

The fair value of this investment is determined based on quoted market prices in an active market on the NYSE, which is classified within Level I of the fair value hierarchy.

For the year ended June 30, 2019 , the Company recorded an unrealized loss of $ 3,496 as a result of changes in the market value related to this investment.

The unrealized loss is reported in Miscellaneous expense, net in the accompanying consolidated statement of operations.

In connection with the sale of the Company’s joint venture interest in AMSGE in December 2018, the $ 63,500 outstanding balance under the revolving credit facility extended by the Company to AMSGE was converted to a subordinated term loan with a maturity date of September 20, 2021.

The subordinated loan was assumed by an affiliate of AMSGE.

During the year ended June 30, 2019 , the Company received a $ 4,765 principal repayment.

The Company’s subordinated term loan receivable is classified within Level II of the fair value hierarchy as it is valued using quoted indices of similar securities for which the inputs are readily observable.

On May 23, 2019, TAO Group Intermediate Holdings LLC (“ TAOIH ”) and TAO Group Operating LLC (“ TAOG ”) entered into a $ 40,000 five -year term loan facility and a $ 25,000 five -year revolving facility.

On March 12, 2020, the Company borrowed $ 200,000 under the New York Knicks, LLC and $ 150,000 on the New York Rangers, LLC 5 -year revolving credit facilities.

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

See Note 12 for more information and outstanding balances on this long-term debt.

See Note 13 for more information.

Contingent Consideration Liabilities

In connection with the TAO Group acquisition on January 31, 2017, the Company may be required to pay an earn-out of up to approximately $ 25,500 , if certain performance conditions based upon earnings growth are met during the first five years following the transaction.

The Company recorded $ 7,900 as the initial fair value of contingent consideration liabilities as a part of the purchase price.

The fair value was estimated using a Monte-Carlo simulation model which included significant unobservable Level III inputs such as projected financial performance over the earn-out period ( five years ) along with estimates for market volatility and the discount rate applicable to potential cash payouts.

In connection with the CLG acquisition on July 28, 2017, the Company may be required to make future payments for deferred and contingent consideration up to a total of $ 9,150 based upon the achievement of certain specified objectives during the three years following the transaction as defined under the membership interest purchase agreement.

1 unchanged sentence

The fair values of these deferred and contingent consideration liabilities were estimated using weighted probabilities of achievement for the possible objective and earn-out events and adjusted for a discount rate applicable to the deferred and potential cash payouts.

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a reconciliation of the deferred and contingent consideration liabilities in connection with the acquisitions discussed above:

The following table provides a reconciliation of the deferred and contingent consideration liabilities in connection with the acquisition discussed above:

Balance as of June 30, 2019

Contingent consideration payment

Change in fair value of contingent consideration (a)

2 unchanged sentences

The change in fair value of contingent consideration was recorded within Selling, general and administrative expenses in the accompanying consolidated statement of operations for the year ended June 30, 2020 .

Commitments and Contingencies

Contractual Obligations and Off Balance Sheet Arrangements

The Company has certain 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, 2020 , future cash payments required under contracts entered into by the Company in the normal course of business in excess of one year are as follows:

Off-Balance Sheet Commitments (a)

Fiscal year ending June 30, 2021

Fiscal year ending June 30, 2022

Fiscal year ending June 30, 2023

Fiscal year ending June 30, 2024

Fiscal year ending June 30, 2025

_________________

Consist principally of the Company’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.

Consist primarily of amounts earned under employment agreements that the Company has with certain of its professional sports teams’ personnel.

Pension obligations have been excluded from the table above as the timing of the future cash payments is uncertain.

See Note 14 for information on the future funding requirements under our pension obligations.

In addition, see Note 9 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.

In connection with the CLG acquisition, the Company has accrued contingent consideration as part of the purchase price.

See Note 11 for further details of the amount recorded in the accompanying consolidated balance sheet as of June 30, 2020 .

In addition, see Note 13 for further details of the outstanding balances under the Knicks Revolving Credit Facility (as defined below) and Rangers Revolving Credit Facility (as defined below).

Legal Matters

The Company is a defendant in various lawsuits.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Credit Facilities

4 unchanged sentences

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) LIBOR plus a margin ranging from 1.00% to 1.125% per annum.

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 .

There was no borrowing under the Knicks Revolving Credit Facility as of June 30, 2019 .

The outstanding balance under the Knicks Revolving Credit Facility was $ 200,000 as of June 30, 2020 and was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the Knicks Revolving Credit Facility as of June 30, 2020 was 1.20 % .

During the year ended June 30, 2020 the Company made interest payments of $ 819 .

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.

10 unchanged sentences

and (vi) taking certain actions that would invalidate the secured lenders’ liens on any Knicks LLC’s collateral.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Knicks Unsecured Credit Facility

6 unchanged sentences

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

1 unchanged sentence

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 .

There was no borrowing under the Rangers Revolving Credit Facility as of June 30, 2019 .

The outstanding balance under the Rangers Revolving Credit Facility was $ 150,000 as of June 30, 2020 and was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the Rangers Revolving Credit Facility as of June 30, 2020 was 1.580 % .

During the year ended June 30, 2020 the Company made interest payments of $ 760 .

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.

10 unchanged sentences

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.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TAO Credit Facilities

On May 23, 2019, TAO Group Intermediate Holdings LLC (“ TAOIH ” or “Intermediate Holdings”) and TAO Group Operating LLC (“ TAOG ” or “Senior Borrower”), entered into a credit agreement (the “ TAO Senior Credit Agreement ” ) with JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and a letter of credit issuer, and the lenders party thereto.

Together the TAO Senior Credit Agreement and a $ 49,000 intercompany subordinated credit agreement (the “ TAO Subordinated Credit Agreement ”) between the Company and TAO Group Sun-Holdings LLC, a subsidiary of TAO Group Holdings LLC, replace the Senior Borrower’s prior credit agreement dated January 31, 2017 (“ 2017 TAO Credit Agreement “), which was terminated on May 23, 2019 in its entirety in accordance with its terms in connection with the repayment of all obligations thereunder from the proceeds of the TAO Senior Credit Agreement and the TAO Subordinated Credit Agreement as well as cash on hand.

The balances and interest-related activities pertaining the TAO Subordinated Credit Agreement have been eliminated in the consolidated financial statements in accordance with ASC Topic 810, Consolidation .

In connection with the early termination of the 2017 TAO Credit Agreement , the Company recorded $ 3,977 of loss on extinguishment of debt in the fourth quarter of fiscal year 2019, which is reported as Miscellaneous income (expense) in the accompanying consolidated statements of operations for the year ended June 30, 2019.

The loss on extinguishment of debt consisted of a write off of deferred financing costs and prepayment penalties paid in connection with the 2017 TAO Credit Agreement .

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 (the “ TAO Term Loan Facility ”) and (ii) a $ 25,000 revolving credit facility with a term of five years (the “ TAO Revolving Credit Facility ”).

Up to $ 5,000 of the TAO Revolving Credit Facility is available for the issuance of letters of credit.

All borrowings under the TAO Revolving Credit Facility , including, without limitation, amounts drawn under the revolving line of credit are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representations and warranties.

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 as discussed below).

All obligations under the TAO Senior Credit Agreement are guaranteed by TAOIH and TAOIH ’s existing and future direct and indirect domestic subsidiaries (other than (i) TAOG , (ii) domestic subsidiaries substantially all of whose assets consist of controlled foreign corporations and (iii) subsidiaries designated as immaterial subsidiaries or unrestricted subsidiaries) (the “ TAO Subsidiary Guarantors ”, and together with TAOIH , the “ TAO Guarantors ”).

All obligations under the TAO Senior Credit Agreement , including the guarantees of those obligations, are secured by substantially all of the assets of TAOG and each Guarantor (collectively, “ TAO Collateral ”), including, but not limited to, a pledge of the equity interests in TAOG held directly by TAOIH and the equity interests in each TAO Subsidiary Guarantor held directly or indirectly by TAOIH .

Borrowings under the TAO Senior Credit Agreement bear interest at a floating rate, which at the option of the Senior Borrower may be either (a) a base rate plus an additional rate ranging from 1.50% to 2.50% per annum (determined based on a total leverage ratio) (the “Base Rate”), or (b) a Eurocurrency rate plus an additional rate ranging from 2.50% to 3.50% per annum (determined based on a total leverage ratio) (the “Eurocurrency Rate”) , provided that for the period following the closing date until the delivery of the compliance certificate for the fiscal quarter of TAOIH ending on or about June 30, 2019, the additional rate used in calculating the floating rate is (i) 1.50% per annum for borrowings bearing the Base Rate, and (ii) 2.50% per annum for borrowings bearing the Eurocurrency Rate .

The TAO Senior Credit Agreement requires TAOG to pay a commitment fee of 0.50 % in respect of the daily unused commitments under the TAO Revolving Credit Facility .

TAOG is also required to pay customary letter of credit fees, as well as fronting fees, to banks that issue letters of credit pursuant to the TAO Senior Credit Agreement .

The interest rate on the TAO Senior Credit Agreement as of June 30, 2019 was 4.89 %

During the years ended June 30, 2019 , 2018 and 2017 , the Company made interest payments of $ 13,084 , $ 11,278 and $ 775 , respectively, under the TAO Senior Credit Agreement and 2017 TAO Credit Agreement .

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The TAO Senior Credit Agreement contains certain restrictions on the ability of TAOIH, the TAOG and its restricted subsidiaries to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the TAO Senior Credit Agreement, including, without limitation, the following:

(i) incurring additional indebtedness and contingent liabilities;

(ii) creating liens on certain assets;

(iii) making investments, loans or advances in or to other persons;

(iv) paying dividends and distributions or repurchasing capital stock;

(v) engaging in certain transactions with affiliates;

(vi) amending specified agreements;

(vii) merging or consolidating;

(viii) making certain dispositions;

and (ix) entering into agreements that restrict the granting of liens.

Intermediate Holdings is subject to a customary passive holding company covenant.

The Senior Credit Agreement requires Intermediate Holdings to comply with a maximum total leverage ratio of 4.00:1.00 and a maximum senior leverage ratio of 3.00:1.00 from the closing date until December 31, 2021 and a maximum total leverage ratio of 3.50:1.00 and a maximum senior leverage ratio of 2.50:1.00 from and after December 31, 2021.

In addition, there is a minimum fixed charge coverage ratio of 1.25:1.00 for TAOIH.

TAOIH was in compliance with the financial covenants of the TAO Senior Credit Agreement as of June 30, 2019 .

In addition to the financial covenants described above, the TAO Senior Credit Agreement and the related security agreement contain certain customary representations and warranties, affirmative covenants and events of default.

The outstanding amount drawn on the TAO Revolving Credit Facility was $ 15,000 as of June 30, 2019 , which is reported under Long-term debt, net of deferred financing costs in the accompanying consolidated balance sheet.

Subject to customary notice and minimum amount conditions, TAOG may voluntarily prepay outstanding loans under the TAO Senior Credit Agreement at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to Eurocurrency loans).

The initial TAO Term Loan Facility will amortize quarterly in accordance with its terms from June 30, 2019 through March 31, 2024 with a final maturity date on May 23, 2024.

TAOG is required to make mandatory prepayments of the TAO Term Loan Facility from the net cash proceeds of certain sales of assets (including TAO Collateral) or casualty insurance and/or condemnation recoveries (in each case, subject to certain reinvestment, repair or replacement rights) and the incurrence of certain indebtedness, subject to certain exceptions.

Long-term debt maturities over the next five years for the outstanding balance of $ 40,000 under the TAO Term Loan Facility (a) and the outstanding balance of $ 15,000 under the TAO Revolving Credit Facility (a) as of June 30, 2019 are:

Fiscal year ending June 30, 2020

Fiscal year ending June 30, 2021 (a)

Fiscal year ending June 30, 2022

Fiscal year ending June 30, 2023

Fiscal year ending June 30, 2024

_________________

With respect to the balances and activities associated with the TAO Term Loan Facility and TAO Revolving Credit Facility above, the Company has elected to report the maturities on a current basis consistent with the Company's consolidation policy.

See Business Combinations and Noncontrolling Interests section under Note 2 .

Summary of Significant Accounting Policies for further discussion on consolidation of TAO Group .

In addition, the long-term debt maturities reported above did not include $ 637 of a note with respect to a loan received by BCE from its noncontrolling interest holder that is due in April 2021.

THE MADISON SQUARE GARDEN COMPANY

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred Financing Costs

The following table summarizes the presentation of the TAO Senior Credit Agreement and the related deferred financing costs as of June 30, 2019 and the 2017 TAO Credit Agreement and the related deferred financing cost as of June 30, 2018 in the accompanying consolidated balance sheets.

June 30, 2019

TAO Senior Secured Credit Facilities

Deferred Financing Costs (b)

Current portion of long-term debt, net of deferred financing costs

Long-term debt, net of deferred financing costs (a)

June 30, 2018

2017 TAO Credit Agreement

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 basketball team) 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 .

Deferred Financing Costs

Current portion of long-term debt, net of deferred financing costs

Long-term debt, net of deferred financing costs

_________________

In addition to the outstanding balance associated with the TAO Senior Credit Agreement disclosed above, the Company’ s Long-term debt, net of deferred financing costs in the accompanying consolidated balance sheet as of June 30, 2019 also include $ 637 of a note with respect to a loan received by BCE from its noncontrolling interest holder and $ 15,000 outstanding balance under the TAO Revolving Credit Facility .

With respect to the TAO Term Loan Facility, the deferred financing costs are amortized on a straight-line basis over the five-year term of the facility, which approximates the effective interest method .

The following table summarizes deferred financing costs, net of amortization, related to the Knicks Revolving Credit Facility, Knicks Unsecured Credit Facility, Rangers Revolving Credit Facility, and TAO Revolving Credit Facility as reported on the accompanying consolidated balance sheet:

The following table summarizes deferred financing costs, net of amortization, related to the Knicks Revolving Credit Facility, Knicks Unsecured Credit Facility, and Rangers Revolving Credit Facility as reported on the accompanying consolidated balance sheet:

Other current assets

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Defined Benefit Pension Plans and Postretirement Benefit Plans

The Company sponsors a non-contributory, qualified cash balance retirement plan covering its non-union employees (the “Cash Balance Pension Plan”) and an unfunded non-contributory, non-qualified excess cash balance plan covering certain employees who participate in the underlying qualified plan (collectively, the “Cash Balance Plans”).

Prior to the MSGE Distribution , the Company sponsored a non-contributory, qualified cash balance retirement plan covering its non-union employees (the “Cash Balance Pension Plan”) and an unfunded non-contributory, non-qualified excess cash balance plan (the “Excess Cash Balance Plan”) covering certain employees who participate in the underlying qualified plan (collectively, the “Cash Balance Plans”).

Since March 1, 2011, the Cash Balance Pension Plan has also included the assets and liabilities of a frozen (as of December 31, 2007) non-contributory qualified defined benefit pension plan covering non-union employees hired prior to January 1, 2001.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company also sponsors an unfunded non-contributory, non-qualified defined benefit pension plan for the benefit of certain employees who participate in an underlying qualified plan which was merged into the Cash Balance Pension Plan on March 1, 2011 (the “Excess Plan”).

Also, the Company historically sponsored an unfunded non-contributory, non-qualified defined benefit pension plan for the benefit of certain employees who participate in the underlying qualified plan which was merged into the Cash Balance Pension Plan on March 1, 2011 (the “Excess Plan”).

As of December 31, 2007, the Excess Plan was amended to freeze all benefits earned through December 31, 2007 and to eliminate the ability of participants to earn benefits for future service under these plans.

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Existing account balances under the plans will continue to be credited with monthly interest in accordance with the terms of the plans.

Lastly, the Company sponsors a non-contributory, qualified defined benefit pension plan covering certain of its union employees (the “Union Plan”).

Prior to the MSGE Distribution the Company sponsored a non-contributory, qualified defined benefit pension plan covering certain of its union employees (the “Union Plan”).

Benefits payable to retirees under the Union Plan are based upon years of Benefit Service (as defined in the Union Plan document).

The Cash Balance Plans, Union Plan, and Excess Plan are collectively referred to as the “Pension Plans.”

MSG also sponsors a contributory welfare plan which provides certain postretirement healthcare benefits to certain employees hired prior to January 1, 2001 who are eligible to commence receipt of early or normal benefits under the Cash Balance Pension Plan and their dependents, as well as certain union employees (“Postretirement Plan”).

The following table summarizes the projected benefit obligations, assets, funded status and the amounts recorded on the Company’s consolidated balance sheets as of June 30, 2019 and 2018 , associated with the Pension Plans and Postretirement Plan based upon actuarial valuations as of those measurement dates.

Pension Plans

The Cash Balance Plans, Union Plan, and Excess Plan are collectively referred to as the “MSGE Pension Plans.”

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In addition, the Company also sponsored a contributory welfare plan which provided certain postretirement healthcare benefits to certain employees hired prior to January 1, 2001 who are eligible to commence receipt of early or normal benefits under the Cash Balance Pension Plan and their dependents, as well as certain union employees (“Postretirement Plan”).

As of the MSGE Distribution Date the Company and MSG Entertainment entered into an employee matters agreement (the “Employee Matters Agreement”) which determined each company’s obligations after the MSGE Distribution with regard to historical liabilities under the Company’s former pension and postretirement plans.

Under the Employee Matters Agreement, the MSGE Pension Plans and Postretirement Plan were transferred to MSG Entertainment .

However, the Company has retained liabilities from the Excess Cash Balance Plan and Excess Plan that related to its current employees, former employees (other than employees transferred to MSG Entertainment in connection with the MSGE Distribution ) and employees that are employed in a senior executive capacity by both the MSG Sports and MSG Entertainment.

Such liabilities were transferred to the MSG Sports, LLC Excess Cash Balance Plan (the “MSGS Excess Cash Balance Plan”) and MSG Sports, LLC Excess Retirement Plan (the “MSGS Excess Retirement Plan”), which the Company established in connection with the MSGE Distribution and are collectively referred to the “ MSGS Pension Plans ”.

The following table summarizes the projected benefit obligations, assets, funded status and the amounts recorded on the Company’s consolidated balance sheets as of June 30, 2020 and 2019 , associated with the MSGE Pension Plans, MSGS Pension Plans and Postretirement Plan , based upon actuarial valuations as of those measurement dates.

MSGE Pension Plans & MSGS Pension Plans

Postretirement Plan

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Plan settlements paid

Transfer due to the MSGE Distribution

Benefit obligation at end of period

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Plan settlements paid

Transfer due to the MSGE Distribution

Fair value of plan assets at end of period

Funded status at end of period

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts recognized in the consolidated balance sheets as of June 30, 2020 and 2019 consist of:

Pension Plans

MSGE Pension Plans & MSGS Pension Plans

Postretirement Plan

Current liabilities (included in accrued employee related costs)

Non-current liabilities (included in defined benefit and other postretirement obligations)

Current liabilities (included in accrued employee related costs) of continuing operations

Non-current liabilities (included in defined benefit and other postretirement obligations) of continuing operations

Current liabilities of discontinued operations

Non-current liabilities of discontinued operations

Accumulated other comprehensive loss, before income tax, as of June 30, 2020 and 2019 consists of the following amounts that have not yet been recognized in net periodic benefit cost:

Pension Plans

MSGE Pension Plans & MSGS Pension Plans

Postretirement Plan

Actuarial loss

Prior service credit

The following table presents c omponents of net periodic benefit cost for the Pension Plans and Postretirement Plan included in the accompanying consolidated statements of operations for the years ended June 30, 2019 , 2018 and 2017 .

In connection with the MSGE Distribution , the Company transferred to MSG Entertainment the accumulated other comprehensive income (loss) related to the MSGE Pension Plans and Postretirement Plan.

The following table presents components of net periodic benefit cost for the MSGE Pension Plans, MSGS Pension Plans and Postretirement Plan included in the accompanying consolidated statements of operations for the years ended June 30, 2020 , 2019 and 2018 .

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

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

Pension Plans

MSGE Pension Plans & MSGS Pension Plans

Postretirement Plan

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For the years ended June 30, 2020 , 2019 and 2018, lump-sum payments totaling $ 551 , $ 343 and $ 506 , respectively, were distributed to vested participants of the non-qualified excess cash balance plan , triggering the recognition of settlement losses in accordance with ASC Topic 715.

Due to these pension settlements, the Company was required to remeasure its pension plan liability as of June 30, 2019 and March 31, 2018 for the years ended June 30, 2019 and 2018 , respectively.

Discount rates used for the projected benefit obligation and interest cost were 3.75 % and 3.18 % as of June 30, 2019 , respectively, and 3.53 % and 2.16 % as of March 31, 2018 , respectively.

Additionally, settlement charges of $ 52 and $ 87 were recognized in Miscellaneous income (expense), net for the years ended June 30, 2019 and 2018 .

THE MADISON SQUARE GARDEN COMPANY

Due to these pension settlements, the Company was required to remeasure its pension plan liability as of March 31, 2020, June 30, 2019 and March 31, 2018 for the years ended June 30, 2020 , 2019 and 2018, respectively.

Discount rates used for the projected benefit obligation and interest cost were 3.21 % and 2.55 % as

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of June 30, 2020 , respectively, 3.75 % and 3.18 % as of June 30, 2019, respectively, and 3.53 % and 2.16 % as of March 31, 2018, respectively.

Additionally, settlement charges of $ 67 , $ 52 and $ 87 were recognized in Miscellaneous income (expense), net for the years ended June 30, 2020 , 2019 and 2018, respectively.

Amounts presented in the table above include net periodic benefit cost related to continuing operations and discontinued operations as noted in the following table:

MSGE Pension Plans & MSGS Pension Plans

Postretirement Plan

Years Ended June 30,

Continuing Operations

Discontinued Operations

Total net periodic benefit cost

Other pre-tax changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the years ended June 30, 2020 , 2019 and 2018 are as follows:

Pension Plans

MSGE Pension Plans & MSGS Pension Plans

Postretirement Plan

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Settlement loss recognized

Transfer due to the MSGE Distribution

Total recognized in other comprehensive income (loss)

The estimated net loss for the Pension Plans and Postretirement Plan expected to be amortized from accumulated other comprehensive income (loss) and recognized as a component of net periodic benefit cost over the next fiscal year is $ 1,342 and $ 50 , respectively.

The estimated net loss for the MSGS Pension Plans expected to be amortized from accumulated other comprehensive income (loss) and recognized as a component of net periodic benefit cost over the next fiscal year is $ 103 .

Funded Status

The accumulated benefit obligation for the Pension Plans aggregated to $ 173,569 and $ 161,236 at June 30, 2019 and 2018 , respectively.

As of June 30, 2019 and 2018 , each of the Pension Plans had accumulated benefit obligations and projected benefit obligations in excess of plan assets.

Pension Plans and Postretirement Plan Assumptions

The accumulated benefit obligation for the MSGE Pension Plans aggregated to $ 173,569 at June 30, 2019 .

As of June 30, 2019 , each of the Pension Plans had accumulated benefit obligations and projected benefit obligations in excess of plan assets.

As a result of the MSGE Distribution , effective the MSGE Distribution Date , the Company sponsors only unfunded non-contributory pension plans.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Weighted-average assumptions used to determine benefit obligations (made at the end of the period) as of June 30, 2020 and 2019 are as follows:

Pension Plans

MSGE Pension Plans & MSGS Pension Plans

Postretirement Plan

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Weighted-average assumptions used to determine net periodic benefit cost (made at the beginning of the period) for the years ended June 30, 2020 , 2019 and 2018 are as follows:

Pension Plans

MSGE Pension Plans & MSGS Pension Plans

Postretirement Plan

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Year that the rate reaches the ultimate trend rate

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The discount rates were determined (based on the expected duration of the benefit payments for the plans) from the Willis Towers Watson U.S.

11 unchanged sentences

One percentage point decrease

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Plan Assets and Investment Policy

The weighted-average asset allocation of the Pension Plans’ assets at June 30, 2019 and 2018 was as follows:

Asset Classes (a) :

Fixed income securities

Cash equivalents

_____________________

The Company’s target allocation for pension plan assets is 80 % fixed income securities and 20 % cash equivalents as of June 30, 2019 .

Investment allocation decisions have been made by the Company’s Investment and Benefits Committee, which considers investment advice provided by the Company’s external investment consultant.

The investment consultant takes into account expected long-term risks, returns, correlation, and other prudent investment assumptions when recommending asset classes and investment managers to the Company’s Investment and Benefits Committee.

The investment consultant also considers the pension plans’ liabilities when making investment allocation recommendations.

The Company’s Investment and Benefits Committee’s decisions are influenced by asset/liability studies conducted by the external investment consultant who combines actuarial considerations and strategic investment advice.

The weighted-average asset allocation of the Pension Plans’ assets at June 30, 2019 was as 81 % fixed income securities and 19 % cash equivalents.

As discussed above, in connection with the MSGE Distribution, the Company only retained liabilities associated with unfunded and unqualified pension plans.

Thus, the MSGS Pension Plans did not carry any investments as of June 30, 2020 .

Prior to the MSGE Distribution , investment allocation decisions had been made by the Company’s Investment and Benefits Committee, which considered investment advice provided by the Company’s external investment consultant.

The investment consultant took into account expected long-term risks, returns, correlation, and other prudent investment assumptions when recommending asset classes and investment managers to the Company’s Investment and Benefits Committee.

The investment consultant also considered the pension plans’ liabilities when making investment allocation recommendations.

The Company’s Investment and Benefits Committee’s decisions were influenced by asset/liability studies conducted by the external investment consultant who combined actuarial considerations and strategic investment advice.

The major investment categories of the pension plan assets are in cash equivalents and long duration fixed income securities that are marked-to-market on a daily basis.

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In addition, a portion of the long duration fixed income securities portfolio is invested in non-government securities that are subject to credit risk of the issuers who might default on interest and/or principal payments.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investments at Estimated Fair Value

The cumulative fair values of the individual plan assets at June 30, 2019 and 2018 by asset class are as follows:

The cumulative fair values of the individual plan assets at June 30, 2019 by asset class are as follows:

Fair Value Hierarchy

June 30, 2019

Fixed income securities:

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During the year ended June 30, 2020 , the Company contributed $ 7,000 to the Cash Balance Pension Plan and $ 260 to the Union Plan.

The Company expects to contribute $ 7,000 and $ 260 to the Cash Balance Pension Plan and Union Plan, respectively, in fiscal year 2020 .

As a result of the MSGE Distribution , the Company no longer sponsors funded qualified pension plans.

Estimated Future Benefit Payments

The following table presents estimated future fiscal year benefit payments for the Pension Plans and Postretirement Plan:

Postretirement

The following table presents estimated future fiscal year benefit payments for the MSGS Pension Plans:

Fiscal year ending June 30, 2021

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Fiscal years ending June 30, 2025 – 2029

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Defined Contribution Pension Plans

The Company sponsors The Madison Square Garden 401(k) Savings Plan (the “401(k) Plan”) and the MSG S&E, LLC Excess Savings Plan (collectively referred to as the “Savings Plans”).

The 401(k) Plan is a multiple employer plan.

For the years ended June 30, 2019 , 2018 and 2017 , expenses related to the Savings Plans that are included in the accompanying consolidated statements of operations were $ 10,637 , $ 8,571 and $ 8,374 , respectively.

In addition, the Company sponsors The Madison Square Garden 401(k) Union Plan (the “Union Savings Plan”).

The Union Savings Plan is a multiple employer plan.

Prior to the MSGE Distribution , the Company sponsored The Madison Square Garden 401(k) Savings Plan (the “401(k) Plan”), which is a multiple employer plan and the MSG S&E, LLC Excess Savings Plan (collectively referred to as the “Savings Plans”) and The Madison Square Garden 401(k) Union Plan (the “Union Savings Plan”), which is also a multiple employer plan.

As a result of the MSGE Distribution , the Savings Plans and Union Savings Plan were transferred to MSG Entertainment .

However, MSG Sports employees continue to participate in the 401(k) Plan.

In addition, pursuant to the Employee Matters Agreement the Company established MSG Sports LLC Excess Savings Plan to provide non-qualified retirement benefits to eligible MSG Sports employees and assumed the liabilities associated with MSG Sports employees as of the MSGE Distribution Date of the MSG S&E, LLC Excess Savings Plan.

Expenses related to the Savings Plans that are included in the accompanying consolidated statements of operations for the years ended June 30, 2020 , 2019 and 2018 are as follows:

Years Ended June 30,

Continuing Operations

Discontinued Operations

Total Savings Plan Expenses

For the years ended June 30, 2020 , 2019 and 2018 , expenses related to the Union Savings Plan included in the accompanying consolidated statements of operations were $ 526 , $ 521 and $ 533 , respectively.

These amounts have been classified in the consolidated statements of operations as discontinued operations for all periods presented.

Multiemployer Plans

The Company contributes to a number of multiemployer defined benefit pension plans, multiemployer defined contribution pension plans, and multiemployer health and welfare plans that provide benefits to retired union-represented employees under the terms of CBAs.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Multiemployer Defined Benefit Pension Plans

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The “FIP/RP Status Pending/Implemented” column indicates whether a funding improvement plan (“FIP”) for yellow/orange zone plans or a rehabilitation plan (“RP”) for red zone plans is either pending or has been implemented by the trustees of such plan.

The zone status and any FIP or RP information is based on information that the Company received from the plan, and the zone status is as certified by the plan’s actuary.

The zone status and any FIP or RP information is based on information that the

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company received from the plan, and the zone status is as certified by the plan’s actuary.

The last column lists the expiration date(s) or a range of expiration dates of the CBA to which the plans are subject.

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6/2024 (with certain termination rights becoming effective 6/2023)

Pension Fund of Local No.

1 of I.A.T.S.E.

6/30/2020 - 5/1/2023

National Hockey League Players’ Retirement Benefit Plan

9/2022 (with certain termination rights becoming effective 9/2020)

All Other Multiemployer Defined Benefit Pension Plans

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company was listed in the following plans’ Form 5500’s as providing more than 5 percent of the total contributions for the following plans and plan years:

Year Contributions to Plan Exceeded

5 Percent of Total Contributions

(As of Plan’s Year-End)

Pension Fund of Local No.

1 of I.A.T.S.E

December 31, 2017, 2016 and 2015

Pension Fund of Wardrobe Attendants Union Local 764

December 31, 2015

32BJ/Broadway League Pension Fund

December 31, 2017, 2016 and 2015

Treasurers and Ticket Sellers Local 751 Pension Fund

August 31, 2018, 2017 and 2016

I.A.T.S.E Local No.

33 Pension Trust Fund

December 31, 2017 and 2016

The Company was not listed as providing more than 5 percent of the total contributions in any Form 5500 for the years ended June 30, 2020, 2019 and 2018.

Multiemployer Defined Contribution Pension Plans and Multiemployer Plans That Provide Health and Welfare Benefits

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Share-based Compensation

In connection with the 2015 Distribution , the Company adopted its 2015 Employee Stock Plan (the “Employee Stock Plan”) and its 2015 Stock Plan for Non-Employee Directors (the “Non-Employee Director Plan”).

The Company has two share-based compensation plans:

the 2015 Employee Stock Plan (the “Employee Stock Plan”) and the 2015 Stock Plan for Non-Employee Directors (the “Non-Employee Director Plan”).

Under the Employee Stock Plan, the Company is authorized to grant incentive stock options, non-qualified stock options, restricted shares, restricted stock units (“RSUs”), stock appreciation rights and other equity-based awards.

The Company may grant awards for up to 2,650 shares of Madison Square Garden Class A Common Stock (subject to certain adjustments).

Options and stock appreciation rights under the Employee Stock Plan must be granted with an exercise price of not less than the fair market value of a share of Madison Square Garden Class A Common Stock on the date of grant and must expire no later than 10 years from the date of grant (or up to one additional year in the case of the death of a holder).

The Company may grant awards for up to 2,650 shares of the Company’s Class A Common Stock (subject to certain adjustments).

Options and stock appreciation rights under the Employee Stock Plan must be granted with an exercise price of not less than the fair market value of a share of the Company’s Class A Common Stock on the date of grant and must expire no later than 10 years from the date of grant (or up to one additional year in the case of the death of a holder).

The terms and conditions of awards granted under the Employee Stock Plan, including vesting and exercisability, are determined by the Compensation Committee of the Board of Directors (“Compensation Committee”) and may include terms or conditions based upon performance criteria.

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Under the Non-Employee Director Plan, the Company is authorized to grant non-qualified stock options, restricted shares, restricted stock units, stock appreciation rights and other equity-based awards.

The Company may grant awards for up to 160 shares of Madison Square Garden Class A Common Stock (subject to certain adjustments).

The Company may grant awards for up to 160 shares of the Company’s Class A Common Stock (subject to certain adjustments).

Options under the Non-Employee Director Plan must be granted with an exercise price of not less than the fair market value of a share of the Company’s Class A Common Stock on the date of grant and must expire no later than 10 years from the date of grant (or up to one additional year in the case of the death of a holder).

The terms and conditions of awards granted under the Non-Employee Director Plan, including vesting and exercisability, are determined by the Compensation Committee.

Unless otherwise provided in an applicable award agreement, options granted under this plan will be fully vested and exercisable, and restricted stock units granted under this plan will be fully vested, upon the date of grant and will settle in shares of the Company’s Class A Common Stock (either from treasury or with newly issued shares), or, at the option of the Compensation Committee, in cash, on the first business day after ninety days from the date the director’s service on the Board of Directors ceases or, if earlier, upon the director’s death.

THE MADISON SQUARE GARDEN COMPANY

Unless otherwise provided in an applicable award agreement, options granted under this plan will be fully vested and exercisable upon the date of grant.

Unless otherwise

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

provided in an applicable award agreement, restricted stock units granted under this plan will be fully vested, upon the date of grant and will settle in shares of the Company’s Class A Common Stock (either from treasury or with newly issued shares), or, at the option of the Compensation Committee, in cash, on the first business day after ninety days from the date the director’s service on the Board of Directors ceases or, if earlier, upon the director’s death.

In connection with the MSGE Distribution , pursuant to the terms of the incentive plans and award agreements, (i) each holder of an RSU and performance RSU (“PSU”) granted under the Employee Stock Plan received one MSG Entertainment RSU or PSU in respect of every one Company RSU or PSU owned on the Record Date and continues to be entitled to a share of the Company’s Class A Common Stock (or cash or other property) for each Company RSU or PSU in accordance with the existing award agreement, (ii) one share of MSG Entertainment Class A Common Stock was issued under the MSG Entertainment Non-Employee Director Plan in respect of every one RSU outstanding under the Company’s Non-Employee Director Plan, which remain outstanding and continue to be entitled to a share of the Company’s Class A Common Stock (or cash or other property) in accordance with the existing award agreement, and (iii) each option to purchase the Company’s Class A Common Stock became two options:

one option to acquire MSG Entertainment Class A Common Stock and one option to acquire the Company’s Class A Common Stock.

The existing exercise price was allocated between the Company’s options and the new MSG Entertainment options based upon the volume-weighted average prices of the MSG Entertainment Class A Common Stock and the Company’s Class A Common Stock using the 10 -day volume weighted average trading price immediately following the MSGE Distribution , and the underlying share amount was consistent with the one -to- one distribution ratio in the MSGE Distribution.

Other than the split of the options and the allocation of the existing exercise price, there were no additional adjustments to the existing options in connection with the MSGE Distribution .

The Company’s RSUs/PSUs and/or stock options held by individuals who are solely MSG Entertainment employees will not be expensed by the Company;

however, such RSUs/PSUs and/or stock options do have a dilutive effect on earnings (loss) per share available to the Company’s common stockholders.

Share-based Compensation Expense

Share-based compensation expense is generally recognized straight-line over the vesting term of the award, which typically provides for three-year cliff or graded vesting subject to continued employment.

For awards that are graded vesting and subject to performance conditions to satisfy tax deductibility for executive officers, in addition to continued employment, the Company uses the graded-vesting method to recognize share-based compensation expense.

For awards that are graded vesting and subject to performance conditions, in addition to continued employment, the Company uses the graded-vesting method to recognize share-based compensation expense.

Share-based compensation expense was recognized in the consolidated statements of operations as a component of direct operating expenses or selling, general and administrative expenses.

The following table presents the share-based compensation expense recorded during the years ended June 30, 2019 , 2018 and 2017 .

Years Ended June 30,

Company RSUs and PSUs

Company stock options

MSG Networks RSUs

Total share-based compensation expense

Share-based compensation expense recorded during the years ended June 30, 2020 , 2019 and 2018 was $ 48,693 , $ 49,113 and $ 40,594 , respectively.

There were no costs related to share-based compensation in continuing operations that were capitalized for the years ended June 30, 2020 , 2019 and 2018 .

As of June 30, 2020 , there was $ 18,851 of unrecognized compensation cost related to unvested RSUs and PSUs held by the Company’s employees.

The cost is expected to be recognized over a weighted-average period of approximately 1.9 years for unvested RSUs and PSUs.

In addition, the Company had $ 26,823 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over approximately 3.1 years as of June 30, 2019 .

For the year ended June 30, 2019 , the company capitalized $ 3,946 of share-based compensation expense.

There were no costs related to share-based compensation that were capitalized for the years ended June 30, 2018 and 2017 .

In addition, the Company had $ 7,171 of unrecognized compensation cost related to unvested stock options held by the Company’s employees, which is expected to be recognized over a weighted-average period of approximately 2.1 years as of June 30, 2020 .

Share-based compensation expense for discontinued operations during the years ended June 30, 2020 , 2019 and 2018 was $ 8,303 , $ 10,361 and $ 6,969 , respectively.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Units Award Activity

The following table summarizes activity related to the Company’s RSUs and PSUs for the year ended June 30, 2019 :

The following table summarizes activity related to the Company’s RSUs and PSUs, held by the Company and MSG Entertainment employees, for the year ended June 30, 2020 :

Weighted-Average

Date of Grant

Date of Grant (a)

Nonperformance

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Unvested award balance as of June 30, 2020

_________________

Weighted-average fair value per share at date of grant as of June 30, 2019 and for activity prior to the MSGE Distribution Date does not reflect any adjustment associated with the MSGE Distribution .

See above for a discussion of the treatment of RSUs and PSUs in connection with the MSGE Distribution .

The fair value of RSUs and PSUs that vested during the year ended June 30, 2020 was $ 60,282 .

Upon delivery, RSUs and PSUs granted under the MSG Employee Stock Plan were net share-settled to cover the required statutory tax withholding obligations.

Upon delivery, RSUs and PSUs granted under the Employee Stock Plan were net share-settled to cover the required statutory tax withholding obligations.

To fulfill the employees’ statutory minimum tax withholding obligations for the applicable income and other employment taxes, 104 of these RSUs and PSUs, with an aggregate value of $ 26,777 were retained by the Company and the taxes paid are reflected as financing activity in the accompanying consolidated statement of cash flows for the year ended June 30, 2020 .

1 unchanged sentence

The weighted-average fair value per share at grant date of RSUs and PSUs granted during the years ended June 30, 2019 and 2018 was $ 304.53 and $ 214.08 , respectively.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Options Award Activity

The following table summarizes activity related to the Company’s stock options for the year ended June 30, 2020 :

Weighted-Average Exercise Price Per Share

Weighted-Average Exercise Price Per Share (a)

Weighted-Average Remaining Contractual Term (In Years)

4 unchanged sentences

Exercisable as of June 30, 2020

_________________

Weighted-average exercise price per share as of June 30, 2019 and for activity prior to the MSGE Distribution Date does not reflect any adjustment associated with the MSGE Distribution .

See above for a discussion of the treatment of options in connection with the MSGE Distribution .

During the year ended June 30, 2019, the Company granted 449 stock options that consisted of market priced stock options and premium priced stock options.

The exercise prices of the premium priced stock options were set at a 10% and a 25% premium from the closing stock price at the date of grant.

The exercise prices of the premium priced stock options were set at a 10% and a 25% premium to the closing stock price at the date of grant.

These stock options vest ratably over four years and are being expensed on a straight-line basis over the vesting period.

The maximum contractual term is 7.5 years .

The Company calculated the fair value of the market priced options on the date of grant using the Black-Scholes option pricing model and the premium priced options using the Monte Carlo Simulation.

The Company calculated the fair value of the market priced options on the date of grant using the Black-Scholes option pricing model and the premium priced options

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

using the Monte Carlo Simulation.

The following are key assumptions used to calculate the weighted-average grant date fair value of the stock options:

11 unchanged sentences

As of June 30, 2020 , the Company had $ 259,639 of availability remaining under its stock repurchase authorization.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Related Party Transactions

As of June 30, 2019 , members of the Dolan family including trusts for members of the Dolan family (collectively, the “ Dolan Family Group ”), for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, collectively beneficially own all of the Company’s outstanding Class B Common Stock and own approximately 2.9 % of the Company’s outstanding Class A Common Stock.

As of June 30, 2020 , members of the Dolan family including trusts for members of the Dolan family (collectively, the “ Dolan Family Group ”), for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, collectively beneficially own all of the Company’s outstanding Class B Common Stock and own approximately 3.5 % of the Company’s outstanding Class A Common Stock (inclusive of options exercisable within 60 days of the date hereof).

Such shares of the Company’s Class A Common Stock and Class B Common Stock, collectively, represent approximately 70.9 % of the aggregate voting power of the Company’s outstanding common stock.

Members of the Dolan family are also the controlling stockholders of MSG Networks and AMC Networks Inc.

Members of the Dolan family are also the controlling stockholders of MSG Entertainment , MSG Networks and AMC Networks Inc.

(“ AMC Networks ”).

The Company has various agreements with MSG Networks, including media rights agreements covering the Knicks and the Rangers games, an advertising sales representation agreement , and a services agreement (“ Services Agreement ”).

Pursuant to the Services Agreement, effective July 1, 2018, the Company provides certain services to MSG Networks, such as information technology, accounts payable and payroll, human resources, and other corporate functions, as well as the executive support services described below, in exchange for service fees.

MSG Networks similarly provides certain services to the Company, in exchange for service fees.

In connection with the expiration of the Services Agreement on June 30, 2019 , the Company entered into an interim agreement with MSG Networks , pursuant to which the parties are providing the same services on the same terms.

We expect to enter into a new services agreement this calendar year, which will be retroactive July 1, 2019 .

The Company shares certain executive support costs, including office space, executive assistants, security and transportation costs, for (i) the Company’s Executive Chairman with MSG Networks and (ii) the Company’s Vice Chairman with MSG Networks and AMC Networks.

On June 16, 2016, the Company entered into an arrangement with the Dolan Family Office, LLC (“ DFO ”), AMC Networks and MSG Networks providing for the sharing of certain expenses associated with executive office space which is available to James L.

Dolan ( the Executive Chairman, Chief Executive Officer and a director of the Company , the Executive Chairman and a director of MSG Networks , and a director of AMC Networks ), Charles F.

Dolan (the Executive Chairman and a director of AMC Networks and a director of the Company and MSG Networks ), and the DFO which is controlled by Charles F.

Effective September 2018 , the Company is no longer party to this arrangement.

The Company is a party to various Aircraft Support Services Agreements (the “Support Agreements”), pursuant to which the Company provides certain aircraft support services to entities controlled by (i) the Company’s Executive Chairman, Chief Executive Officer and a director, (ii) Charles F.

Dolan, a director of the Company, and (iii) Patrick Dolan, the son of Charles F.

Current Related Party Arrangements

The Company is party to the following agreements and/or arrangements with MSG Entertainment and MSG Networks , as applicable:

Sponsorship sales and service representation agreements pursuant to which MSG Entertainment has the exclusive right and obligation to sell the Company’s sponsorships for an initial stated term of 10 years for a commission;

Team sponsorship allocation agreement with MSG Entertainment , pursuant to which teams continue receiving an allocation of sponsorship and signage revenues associated with the sponsorship agreements that existed at the MSGE Distribution Date ;

Arena License Agreements pursuant to which MSG Entertainment (i) provides the right to use The Garden for games of the Knicks and Rangers for a 35 -year term in exchange for arena license fees, (ii) shares revenues collected for suite licenses, (iii) operates and manages the sale of the sports teams merchandise at The Garden for a commission, (iv) operates and manages the sale of food and beverage concessions and catering services during the Knicks and Rangers home games, (v) provides day of game services that were historically provided prior to the MSGE Distribution , and (vi) provides other general services within The Garden;

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Media rights agreements, that the Company and MSG Networks entered into in connection with the MSGS Distribution , providing MSG Networks with local telecast rights for the Knicks and Rangers Knicks for a 20 -year term in exchange for media rights fees;

Transition Services Agreement (the “ TSA ”) pursuant to which the Company receives certain services from MSG Entertainment , such as information technology, accounts payable and payroll, human resources, and other corporate functions, as well as the executive support services, in exchange for service fees;

A services agreement with MSG Networks , pursuant to which the Company provides certain legal services to MSG Networks (the “ Current MSGN Services Agreement ”);

Sublease agreement, pursuant to which the Company leases an office space from MSG Entertainment ;

Group ticket sales representation agreement, pursuant to which MSG Entertainment appointed the Company as its sales and service representative to sell group ticket packages related to MSG Entertainment events in exchange for a commission;

Single night rental commission agreement, pursuant to which the Company may, from time to time, sell (or make referrals for sales of) licenses for the use of suites at The Garden for individual MSG Entertainment events in exchange for a commission;

The DDTL Facilities with MSG Entertainment that provide for a $ 110,000 and $ 90,000 senior unsecured delayed draw term loan facilities, for the Knicks and Rangers, respectively.

See Note 13 for more information;

Aircraft sharing agreements pursuant to which MSG Entertainment has agreed from time to time to make its aircraft and an aircraft it leases from another related party available to the Company for lease on a “time sharing” basis;

Other agreements with MSG Entertainment entered into in connection with the MSGE Distribution , including a distribution agreement, a tax disaffiliation agreement, an employee matters agreement, a trademark license agreement and certain other arrangements;

Other agreements with MSG Networks entered into in connection with the MSGE Distribution , including a tax disaffiliation agreement, an employee matters agreement and certain other arrangements.

In addition, the Company shares certain executive support costs, including office space, executive assistants, security and transportation costs for:

(i) the Company’s Executive Chairman with MSG Entertainment and MSG Networks and (ii) the Company’s Vice Chairman with AMC Networks , MSG Entertainment and MSG Networks .

Additionally, the Company, MSG Entertainment , MSG Networks and AMC Networks agreed on an allocation of the costs of certain personal aircraft and helicopter use by their shared executives.

From time to time the Company has entered into, and is expected to continue to enter into, arrangements with 605, LLC.

Dolan, a director of the Company and spouse of James L.

Dolan, is the founder and Chief Executive Officer of 605, LLC.

Dolan, the Company’s Executive Chairman and a director, and Kristin A.

Dolan own 50 % of 605, LLC.

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

Related Party Arrangements Prior to the MSGE Distribution

Following the MSGE Distribution , except as otherwise noted, the Company is no longer party to the arrangements described below.

However, the amounts associated with such arrangements are reflected in the Company’s results of operations for the periods prior to the MSGE Distribution .

The Company had various agreements with MSG Networks , including an advertising sales representation agreement and a services agreement (the “ Prior MSGN Services Agreement ”).

Pursuant to the Prior MSGN Services Agreement , which was effective July 1, 2019, the Company provided certain services to MSG Networks , such as information technology, accounts payable and payroll, human resources, and other corporate functions, as well as the executive support services described below, in exchange for service fees.

MSG Networks also provided certain services to the Company, in exchange for service fees.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Effective as of the MSGE Distribution , this agreement is now between MSG Entertainment and MSG Networks .

The Company separately entered into the Current MSGN Services Agreement .

See “— Current Related Party Arrangements .”

The Company shared certain executive support costs, including office space, executive assistants, security and transportation costs, for (i) the Company’s Executive Chairman with MSG Networks and (ii) the Company’s Vice Chairman with MSG Networks and AMC Networks .

Additionally, the Company, MSG Networks and AMC Networks agreed on an allocation of the costs of certain personal aircraft and helicopter use by their shared executives.

Following the MSGE Distribution , the Company also shares these expenses with MSG Entertainment .

See “— Current Related Party Arrangements .”

Prior to September 2018, the Company had an arrangement with the Dolan Family Office, LLC (“ DFO ”), an entity owned and controlled by Charles F.

Dolan, AMC Networks and MSG Networks providing for the sharing of certain expenses associated with executive office space which was available to James L.

Dolan (the Executive Chairman and a director of the Company, the Executive Chairman, Chief Executive Officer and a director of MSG Entertainment , the Executive Chairman and a director of MSG Networks , and a director of AMC Networks), Charles F.

Dolan (the father of James L.

Dolan and the Executive Chairman and a director of AMC Networks and a director of the Company, MSG Entertainment and MSG Networks ), and the DFO .

The Company was a party to various Aircraft Support Services Agreements (the “Support Agreements”), pursuant to which the Company provided certain aircraft support services to entities controlled by (i) James L.

Dolan, (ii) Charles F.

Dolan, and (iii) Patrick F.

Dolan, the son of Charles F.

Dolan and brother of James L.

1 unchanged sentence

Dolan, and entered into a new agreement with Charles F.

Dolan and certain of his children, specifically:

Dolan and certain of his children, who are siblings of James L.

Dolan, specifically:

Dolan (a director of the Company), Deborah Dolan-Sweeney, Patrick F.

Dolan, Marianne Dolan Weber (a director of the Company), and Kathleen Dolan, which provides substantially the same services as the prior agreement for a new aircraft.

In connection with the Support Agreements, the Company entered into reciprocal time sharing/dry lease agreements with each of (i) Quart 2C, LLC (“Q2C”), a company controlled by the Company’s Executive Chairman, Chief Executive Officer and a director, and Kristin A.

Dolan, his wife and a director of the Company, and (ii) Charles F.

Dolan, a director of the Company, and Sterling Aviation, LLC, a company controlled by Charles F.

Dolan, Marianne Dolan Weber (a director of the Company), and Kathleen M.

Dolan, which provided substantially the same services as the prior agreement for a new aircraft.

In addition, the Company was party to reciprocal time sharing/dry lease agreements with each of (i) Quart 2C, LLC (“ Q2C ”), a company controlled by James L.

Dolan and Kristin A.

Dolan, his spouse and a director of the Company, and (ii) Charles F.

Dolan and Sterling Aviation, LLC, a company controlled by Charles F.

Dolan (collectively, “ CFD ”), pursuant to which the Company has agreed from time to time to make its aircraft available to each of Q2C and CFD , and Q2C and CFD have agreed from time to time to make their aircraft available to the Company.

Pursuant to the terms of the agreements, Q2C and/or CFD may lease on a non-exclusive, “time sharing” basis, the Company’s Gulfstream Aerospace G550 aircraft (the “G550 Aircraft”).

On December 17, 2018, in connection with the purchase of a new aircraft (as noted above), the Company replaced the dry lease agreement with CFD with a new dry lease agreement with Sterling2k LLC, an entity owned and controlled by Deborah Dolan-Sweeney, the daughter of CFD and the sister of the Company’s Executive Chairman and Chief Executive Officer, which provides for the Company’s usage of the new aircraft.

THE MADISON SQUARE GARDEN COMPANY

Dolan, which provides for the Company’s usage of the new aircraft on the same terms as the prior agreement.

On May 6, 2019, the Company entered into a dry lease agreement with Brighid Air, LLC (“Brighid Air”), a company owned and controlled by Patrick F.

Dolan, pursuant to which the Company was permitted to lease on a non-exclusive basis Brighid Air’s Bombardier BD100-1A10 Challenger 350 aircraft (the “Challenger”).

In connection with the dry lease agreement, on May 6, 2019, the Company also entered into a Flight Crew Services Agreement (the “Flight Crew Agreement”) with DFO , an entity owned and controlled by Charles F.

Dolan, pursuant to which the Company was permitted to utilize pilots employed by DFO for purposes of flying the Challenger when the Company was leasing that aircraft under the Company’s dry lease agreement with Brighid Air.

The Company and each of MSG Networks and AMC Networks were party to certain aircraft time sharing agreements, pursuant to which the Company agreed from time to time to make its aircraft available to MSG Networks and/or AMC Networks for lease on a “time sharing” basis.

In addition to the aircraft arrangements described above, certain executives of the Company were party to aircraft time sharing agreements, pursuant to which the Company agreed from time to time to make certain aircraft available for lease on a “time sharing” basis for personal use in exchange for payment of actual expenses of the flight (as listed in the agreement).

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On May 6, 2019 the Company entered into a dry lease agreement with Brighid Air, LLC (“Brighid Air”), a company owned and controlled by Patrick Dolan, the son of Charles F.

Dolan and the brother of James L.

Dolan, pursuant to which the Company may lease on a non-exclusive basis Brighid Air’s Bombardier BD100-1A10 Challenger 350 aircraft (the “Challenger”).

In connection with the dry lease agreement, on May 6, 2019 the Company also entered into a Flight Crew Services Agreement (the “Flight Crew Agreement”) with Dolan Family Office, LLC (“DFO”), an entity owned and controlled by Charles F.

Dolan, pursuant to which the Company may utilize pilots employed by DFO for purposes of flying the Challenger when the Company is leasing such aircraft under the Company’s dry lease agreement with Brighid Air.

The Company and each of MSG Networks and AMC Networks are party to certain aircraft time sharing agreements, pursuant to which the Company has agreed from time to time to make aircraft available to MSG Networks and/or AMC Networks for lease on a “time sharing” basis.

Additionally, the Company, MSG Networks and AMC Networks have agreed on an allocation of the costs of certain helicopter use by its shared executives.

In addition to the aircraft arrangements described above, certain executives of the Company are party to aircraft time sharing agreements, pursuant to which the Company has agreed from time to time to make certain aircraft available for lease on a “time sharing” basis for personal use in exchange for payment of actual expenses of the flight (as listed in the agreement).

From time to time the Company enters into arrangements with 605, LLC.

Kristin Dolan is the Chief Executive Officer of 605, LLC.

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

As of June 30, 2019 , BCE had $ 637 of notes payable.

See Note 12 for further information.

The Company also has certain arrangements with its nonconsolidated affiliates.

See Note 7 for information on outstanding loans provided by the Company to its nonconsolidated affiliates.

Additionally, the Company entered into certain commercial agreements with its nonconsolidated affiliates in connection with MSG Sphere.

As of June 30, 2019 , the Company recorded approximately $ 14,000 of capital expenditures in connection with services provided to the Company under these agreements.

Revenues and Operating Expenses

Revenues and Operating Expenses (Credits)

The following table summarizes the composition and amounts of the transactions with the Company’s affiliates, primarily with MSG Networks.

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Corporate general and administrative expenses, net — MSG Networks

Consulting fees

Advertising expenses

Other operating expenses, net

Revenues from related parties primarily consist of local media rights recognized by the Company’s Sports segment from the licensing of team-related programming to MSG Networks under the media rights agreements covering the Knicks and Rangers, which provide MSG Networks with exclusive media rights to team games in their local markets, as well as commissions earned in connection with the advertising sales representation agreement pursuant to which the Company has the exclusive right and obligation to sell MSG Networks’ advertising availabilities.

In addition, the Company and Tribeca Enterprises have a service agreement pursuant to which the Company provides marketing inventory, advertising sales and consulting services to Tribeca Enterprises for a fee.

The Company is also a party to certain commercial arrangements with AMC Networks and its subsidiaries.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Corporate general and administrative expenses, net — MSG Entertainment

Costs associated with the Sponsorship sales and service representation agreements

Other operating expenses (credits), net

Revenues from related parties primarily consist of local media rights recognized from the licensing of team-related programming to MSG Networks under the media rights agreements covering the Knicks and Rangers, which provide MSG Networks with exclusive media rights to team games in their local markets.

In addition, pursuant to the group ticket sales representation agreement, the Company charges MSG Entertainment a share of the cost of the Company’s sales and service staff and related overhead, which are included in the revenues from related parties in the fiscal year 2020.

Additionally, pursuant to this agreement, the Company earns commission on group ticket packages sales related to MSG Entertainment events.

The Company has not earned such commission during the fiscal year 2020.

Corporate General and Administrative Expenses, net — MSG Networks

The Company’s corporate overhead expenses that are charged to MSG Networks are primarily related to centralized functions, including executive compensation, finance, treasury, tax, internal audit, legal, information technology, human resources and risk management functions.

For the years ended June 30, 2019 and 2018 , Corporate general and administrative expense, net - MSG Networks reflects charges from the Company to MSG Networks under the Services Agreement of $ 10,467 and $ 9,969 .

Furthermore, for the year ended June 30, 2017 , Corporate general and administrative expense, net - MSG Networks reflects charges from the Company to MSG Networks under a transition services agreement (“TSA”) of $ 8,507 , net of general and administrative costs charged to the Company by MSG Networks, under the TSA, which was replaced by the Services Agreement effective July 1, 2017.

Consulting Fees

On December 5, 2018, the Company’s joint venture interest in AMSGE was sold to Azoff Music, which resulted in the Company no longer being an owner of AMSGE (renamed The Azoff Company).

Accordingly, The Azoff Company is not a related party of the Company, and thus the related party transactions disclosed herein that relate to AMSGE were recognized prior to December 5, 2018.

Prior to the sale of AMSGE, the Company paid AMSGE and its nonconsolidated affiliates for advisory and consulting services that AMSGE and its nonconsolidated affiliates provided to the Company, and for the reimbursement of certain expenses in connection with such services.

In the fourth quarter of fiscal year 2016, the Company paid $ 5,000 to AMSGE for work performed towards securing the right to lease property to be developed in Las Vegas.

The Company began amortizing this cost during the three months ended September 30, 2018.

That carrying amount is included in other assets in the accompanying consolidated balance sheets as of June 30, 2019 and 2018 .

Advertising Expenses

The Company incurs advertising expenses for services rendered by its related parties, primarily MSG Networks, most of which are related to the utilization of advertising and promotional benefits by the Company.

The Company’s corporate overhead expenses that were charged to MSG Networks prior to MSGE Distribution are primarily related to centralized functions, including executive compensation, finance, treasury, tax, internal audit, legal, information technology, human resources and risk management functions.

These charges are reflected in the Company’s results of operations for the periods prior to the MSGE Distribution as they do not meet the criteria for inclusion in discontinued operations.

Except for certain legal services, following the MSGE Distribution , the Company no longer provides these services to MSG Networks.

Corporate general and administrative expense, net — MSG Networks reflects charges from the Company to MSG Networks under the Current MSGN Services Agreement and Prior MSGN Services Agreement of $ 8,474 , $ 10,467 , and $ 9,474 , net of general and administrative costs charged to the Company by MSG Networks, for the years ended June 30, 2020, 2019 and 2018, respectively.

Corporate general and administrative expenses, net — MSG Entertainment

Corporate general and administrative expense, net — MSG Entertainment reflects charges of $ 8,916 from MSG Entertainment pursuant to the TSA for certain business functions that were previously performed by internal resources.

These services include information technology, accounting, accounts payable, payroll, tax, legal, human resources, insurance and risk management, investor relations, corporate communications, benefit plan administration and reporting, and internal audit.

Costs associated with the Sponsorship sales and service representation agreements

Pursuant to the Sponsorship sales and service representation agreements, MSG Entertainment charges the Company sales commission fees and sponsorship fulfillment costs, as well as costs of MSG Entertainment sales and service staff and overhead associated with the sales of sponsorship assets.

Other Operating Expenses, net

The Company and its related parties enter into transactions with each other in the ordinary course of business.

Amounts charged to the Company for other transactions with its related parties are net of amounts charged by the Company to the Knickerbocker Group, LLC, an entity owned by James L.

Dolan, the Executive Chairman, Chief Executive Officer and a director of the Company , for office space equal to the allocated cost of such space and the cost of certain technology services.

In addition, other operating expenses include net charges relating to (i) reciprocal aircraft arrangements between the Company and each of Q2C and CFD and (ii) time sharing agreements with MSG Networks and AMC Networks .

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Other Comprehensive Loss

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

Pension Plans and

Postretirement

Cumulative Translation Adjustments

Unrealized Gain (Loss) on Available-for-sale

Comprehensive

Balance as of June 30, 2018

Reclassification of unrealized loss on available-for-sale securities (a)

Other comprehensive loss before reclassifications

Amounts reclassified from accumulated other comprehensive loss (b)

Other comprehensive loss

Balance as of June 30, 2019

Pension Plans and

Postretirement

Cumulative Translation Adjustments

Unrealized Gain (Loss) on Available-for-sale

Comprehensive

Balance as of June 30, 2017

Reclassification of stranded tax effects (c)

Other comprehensive loss before reclassifications

Amounts reclassified from accumulated other comprehensive loss (b)

Other comprehensive loss

Balance as of June 30, 2018

Pension Plans and

Postretirement

Cumulative Translation Adjustments

Unrealized Gain (Loss) on Available-for-sale

Comprehensive

Balance as of June 30, 2016

Other comprehensive income before reclassifications, before income taxes

Amounts reclassified from accumulated other comprehensive loss, before income taxes (b)

Income tax expense

Other comprehensive income

Balance as of June 30, 2017

________________

As of July 1, 2018, upon adoption of ASU No.

2016-01, the Company recorded a transition adjustment to reclassify accumulated other comprehensive loss associated with its investment in Townsquare in the amount of $ 2,466 pre-tax ( $ 5,570 , net of tax) to accumulated deficit.

See Notes 2 and 11 for more information on the Company’s adoption of ASU No.

2016-01 related to its investment in Townsquare and its impact on the Company’s operating results for the year ended June 30, 2019 .

THE MADISON SQUARE GARDEN COMPANY

Other operating expenses, net include net charges relating to (i) reciprocal aircraft arrangements between the Company and each of Q2C and

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amounts reclassified from accumulated other comprehensive loss represent the amortization of net actuarial loss and net unrecognized prior service credit included in net periodic benefit cost, which is reflected in Miscellaneous income (expense), net in the accompanying consolidated statements of operations (see Note 13 ) .

During the fourth quarter of 2018, the Company elected to early adopt ASU No.

2018-02, Income Statement - Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allowed the Company to reclassify the stranded income tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income (loss) to retained earnings (accumulated deficit).

CFD and (ii) time sharing agreements with MSG Networks and AMC Networks .

Following the MSGE Distribution , the Company no longer provides these services to MSG Networks.

However, these charges are reflected in the Company’s results of operations for the periods prior to the MSGE Distribution as they but which do not meet the criteria for inclusion in discontinued operations.

Discontinued operations

Related party transactions included in income (loss) from discontinued operations in the accompanying consolidated statements of operations include the following (i) revenues from related parties of $ 13,106 , $ 16,199 , and $ 14,052 for the years ended June 30, 2020, 2019 and 2018, respectively, (ii) operating expenses charged by related parties of $ 897 , $ 3,542 , and $ 6,088 for the years ended June 30, 2020, 2019 and 2018, respectively, (iii) interest income from nonconsolidated affiliates of $ 3,105 and $ 5,696 , for the years ended June 30, 2019 and 2018, respectively, and (iv) equity in earnings (loss) of equity-method investments of $( 3,739 ) , $ 7,062 , and $( 7,770 ) for the years ended June 30, 2020, 2019 and 2018, respectively.

On December 22, 2017, new tax legislation, commonly referred to as the Tax Cuts and Jobs Act (“ TCJA ”), was enacted, which significantly changed the existing U.S.

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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.

For the fiscal year ended June 30, 2019, the Company used the federal income tax rate of 21 % per the enactment of TCJA to calculate its most recent effective tax rate.

For the fiscal year ended June 30, 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 effective tax rate.

Income tax expense (benefit) is comprised of the following components:

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

Income tax expense (benefit) attributable to continuing operations is comprised of the following components:

Years Ended June 30,

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Income tax expense (benefit)

THE MADISON SQUARE GARDEN COMPANY

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The income tax expense (benefits) differs from the amount derived by applying the statutory federal rate to pre-tax income (loss) principally due to the effect of the following items:

The income tax expense (benefit) attributable to continuing operations differs from the amount derived by applying the statutory federal rate to pre-tax income principally due to the effect of the following items:

Years Ended June 30,

Federal tax expense (benefit) at statutory federal rate

Federal tax benefit at statutory federal rate

State income taxes, net of federal benefit

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Federal tax credits

Gains in other comprehensive income

GAAP income of consolidated partnership attributable to non-controlling interests

Tax effect of indefinite-lived intangible amortization

Change in valuation allowance (a)

Nondeductible officers’ compensation (b)

Change in valuation allowance

Nondeductible officers’ compensation (a)

Nondeductible expenses

2 unchanged sentences

_________________

For the year ended June 30, 2018, the valuation allowance was revalued under provisions contained in the new tax legislation, comprised of the following:

(i) $ 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 and (ii) $ 14,446 , reduction in valuation allowance relating to current operations.

The TCJA included changes to Internal Revenue Code Section 162(m), including elimination of the exception for qualified performance-based compensation over the $1,000 annual limit.

Accordingly, effective January 1, 2018, all compensation for certain officers in excess of $1,000 is generally nondeductible.

THE MADISON SQUARE GARDEN COMPANY

Accordingly, effective January 1, 2018, all compensation for certain officers in excess of $1,000 is nondeductible.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Intangible and other assets

Property and equipment

Prepaid expenses

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In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company’s ability to realize its deferred tax assets depends upon the generation of sufficient future taxable income to allow for the utilization of its net operating loss carryforwards (“ NOL ”) and future deductible temporary differences.

At this time, based on current facts and circumstances, management believes that it is more likely than not that the Company will not realize the benefit for a portion of its deferred tax asset.

a partial valuation allowance has been recorded.

The federal NOL as of June 30, 2019 is approximately $ 155,000 which will primarily expire in 2036 .

The state NOL as of June 30, 2019 is approximately $ 198,000 which will primarily expire in 2036 .

The Company’s ability to realize its deferred tax assets depends upon the generation of sufficient future taxable income to allow for the utilization of its federal net operating loss carryforward (“ NOL ”) and its future deductible temporary differences.

Due primarily to the uncertainty related to operating disruptions due to COVID-19, in the fourth quarter of the fiscal year ended June 30, 2020, management concluded that is more likely than not that the Company will not realize the benefit for a portion of its deferred tax assets.

The Company will continue to assess the realizability of its deferred tax assets on a quarterly basis.

The NOL as of June 30, 2020 is approximately $ 122,000 , including $ 46,000 , that will expire in 2036 .

The Company does not have any recorded unrecognized tax benefit for uncertain tax positions as of June 30, 2020 and 2019 .

The Company was notified during the third quarter of fiscal year 2018 that the Internal Revenue Service was commencing an examination of our federal income tax returns as filed for the tax year ended June 30, 2016.

The Company does not expect the audit to result in any material changes.

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Segment Information

The Company is comprised of two reportable segments:

MSG Entertainment and MSG Sports.

In determining its reportable segments, the Company assessed the guidance of ASC 280-10-50-1, which provides the definition of a reportable segment.

In accordance with the FASB’s guidance, the Company takes into account whether two or more operating segments can be aggregated together as one reportable segment as well as the type of discrete financial information that is available and regularly reviewed by its chief operating decision maker.

The Company has evaluated this guidance and determined that there are two reportable segments.

The Company allocates certain corporate costs and its performance venue operating expenses to each of its reportable segments.

Allocated venue operating expenses include the non-event related costs of operating the Company’s 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 and amortization expense related to The Garden, Hulu Theater at Madison Square Garden, the Forum, and certain corporate property, equipment and leasehold improvements not allocated to the reportable segments is reported in “ Corporate and Other .” Additionally, the Company does not allocate any purchase accounting adjustments to the reporting segments.

The Company evaluates segment performance based on several factors, of which the key financial measure is 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 the 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) .

Because it is based upon operating income (loss), adjusted operating income (loss) also excludes interest expense (including cash interest expense) and other non-operating income and expense items.

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

The Company believes adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of its business segments and the Company on a consolidated basis.

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) .

In addition, the retrospective adoption of ASU No.

2017-07 resulted in an immaterial improvement in operating income (loss) and adjusted operating income (loss) for the years ended June 30, 2018 and 2017 (see Note 2 for further detail).

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information as to the operations of the Company’s reportable segments is set forth below.

Year ended June 30, 2019

Entertainment

Corporate and

Inter-segment eliminations

Direct operating expenses

Selling, general and administrative expenses

Depreciation and amortization

Operating income (loss)

Equity in earnings of equity method investments

Interest income

Interest expense

Miscellaneous expense, net

Loss from operations before income taxes

Reconciliation of operating income (loss) to adjusted operating income (loss):

Operating income (loss)

Share-based compensation expense

Depreciation and amortization

Other purchase accounting adjustments

Adjusted operating income (loss)

Other information:

Capital expenditures

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended June 30, 2018

Entertainment

Corporate and

Purchase accounting adjustments

Inter-segment eliminations

Direct operating expenses

Selling, general and administrative expenses

Depreciation and amortization

Operating income (loss)

Loss in equity method investments

Interest income

Interest expense

Miscellaneous expense, net

Income from operations before income taxes

Reconciliation of operating income (loss) to adjusted operating income (loss):

Operating income (loss)

Share-based compensation expense

Depreciation and amortization

Other purchase accounting adjustments

Adjusted operating income (loss)

Other information:

Capital expenditures

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended June 30, 2017

Entertainment

Corporate and

Purchase accounting adjustments

Direct operating expenses

Selling, general and administrative expenses

Depreciation and amortization

Operating income (loss)

Loss in equity method investments

Interest income

Interest expense

Miscellaneous expense, net

Loss from operations before income taxes

Reconciliation of operating income (loss) to adjusted operating income (loss):

Operating income (loss)

Share-based compensation expense

Depreciation and amortization

Other purchase accounting adjustments

Adjusted operating income (loss)

Other information:

Capital expenditures

_________________

Corporate and Other’s selling, general and administrative expenses primarily consist of unallocated corporate general and administrative costs, including expenses associated with the Company ’ s business development initiatives, as well as costs associated with the development of MSG Sphere, including technology and content development costs.

Corporate and Other principally includes depreciation and amortization on The Garden, Hulu Theater at Madison Square Garden , the Forum, and certain corporate property, equipment and leasehold improvement assets not allocated to the Company’s reportable segments.

Significant majority of Corporate and Other’s capital expenditures for the years ended June 30, 2019 and 2018 are related to the Company’s planned MSG Spheres in Las Vegas and London including the purchase of land in London in fiscal year 2018.

MSG Entertainment’s capital expenditures for the years ended June 30, 2019 and 2018 are primarily associated with the opening of a new TAO Group venue including certain investments with respect to Radio City Music Hall in fiscal year 2018.

MSG Entertainment’s direct operating expenses for the years ended June 30, 2017 include $ 33,629 , of write-offs of deferred production costs associated with the New York Spectacular production (see Note 2 ).

Loss in equity method investments for the year ended June 30, 2017 reflects a pre-tax non-cash impairment charge of $ 20,613 to write off the carrying value of its equity investment in Fuse Media (see Note 7 ).

THE MADISON SQUARE GARDEN COMPANY

Prior to the MSGE Distribution , MSG Entertainment's collection for ticket sales, sponsorships and suite rentals in advance were recorded as deferred revenue and were recognized as revenues when earned for both accounting and tax purposes.

The tax recognition on most of these deferred revenues was accelerated to the MSGE Distribution Date .

The estimated amount of tax on the acceleration of such deferred revenue is approximately $ 56,000 and will be the responsibility of the Company.

MSG Entertainment will not reimburse the Company for such taxes.

However, the Company completely offset the taxable income of discontinued operations, including taxable income resulting from the tax acceleration of deferred revenue with NOLs.

The deferred tax assets for such NOLs had a full valuation allowance.

Therefore, both the deferred tax asset and valuation allowance were reduced by $ 68,000 with no residual tax expense.

In addition, during the quarter ended June 30, 2020 the Company recorded a valuation allowance increase of $ 46,310 that is included in tax expense attributable to continuing operations, which partially offsets the decrease recorded in discontinued operations.

As of June 30, 2019, the valuation allowance attributable to continuing operations equals the amount of historical valuation allowance in excess of the amount required for discontinued operations.

Prior to the MSGE Distribution , the Company and MSG Entertainment entered into a Tax Disaffiliation Agreement (“ TDA ”) that governs the parties’ respective rights, responsibilities and obligations with respect to taxes and tax benefits.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below sets forth, for the periods presented, the Company’s consolidated revenues for the years ended June 30, 2019 , 2018 and 2017 by component.

Years Ended June 30,

Event-related revenues (a)

Media rights revenues (b)

Advertising sales commission, sponsorship and signage revenues (c)

All other revenues (d)

_________________

Primarily consists of professional sports teams’, entertainment and other live sporting events revenues.

These amounts include (i) ticket sales, (ii) other ticket-related revenue, (iii) food, beverage and merchandise sales, (iv) venue license fees, and (v) event-related sponsorship and signage revenues.

Primarily consists of telecast rights fees from MSG Networks and the Company’s share of league distributions.

Amounts exclude event-related sponsorship and signage revenues.

Primarily consists of (i) nonevent-related food and beverage revenues, including TAO Group ’s entertainment dining and nightlife offerings, (ii) playoff revenue, which includes ticket sales, food, beverage and merchandise sales, and suite rental fees, and (iii) other non-media rights related league distributions.

Substantially all revenues and a significant majority of assets of the Company’s reportable segments are attributed to or located in the United States and are primarily concentrated in the New York metropolitan area.

TDA , the Company will generally be responsible for all U.S.

federal, state, local and other applicable income taxes of MSG Entertainment for any taxable period or portion of such period ending on or before the MSGE Distribution Date .

The Company was notified during the third quarter of fiscal year 2018 that the Internal Revenue Service (“IRS”) was commencing an audit of the federal income tax return for the year ended June 30, 2016.

In October 2019, the Company was informed by the IRS that the audit resulted in no changes.

The Company was notified in April 2020 that the City of New York was commencing an audit of the state income tax returns for the fiscal years ended June 30, 2016 and 2017.

The Company does not expect the examination, when finalized, to result in material changes.

The federal and state statute of limitations are currently open on the Company’s tax returns for 2017 and 2016, respectively, and forward.

Concentrations of Risk

Financial instruments that may potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable.

Cash and cash equivalents are invested in commercial paper , money market accounts and time deposits .

The Company monitors the financial institutions and money market funds where it invests its cash and cash equivalents with diversification among counterparties to mitigate exposure to any single financial institution.

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The following individual non-affiliated customers accounted for the following percentages of the Company’s consolidated accounts receivable balances:

Customer B (a)

_________________

A receivable from Customer B as of June 30, 2019 is primarily due to timing of cash recei pts .

The Company did not have any non-affiliated customer that represented 10% or more of its consolidated revenues for the years ended June 30, 2019 , 2018 and 2017 .

The Company had non-affiliated revenues from a customer that represented 13 % , 13 % and 12 % of consolidated revenues for the years ended June 30, 2020 , 2019 and 2018 .

Revenues from MSG Networks amounted to $ 138,173 , $ 148,178 and $ 142,281 for the years ended June 30, 2020 , 2019 and 2018 , which represent 23 % , 20 % and 20 % , respectively, of the Company’s consolidated revenues (see Note 17 ).

As of June 30, 2020 , approximately 94 full-time and part-time employees, who represent approximately 11% of the Company’s workforce, are subject to CBAs.

Approximately 13 % are subject to CBAs that expired as of June 30, 2019 and approximately 36 % are subject to CBAs that will expire by June 30, 2020 if they are not extended prior thereto.

THE MADISON SQUARE GARDEN COMPANY

The current NHL CBA expires on September 15, 2022, but the NHL and 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).

See Note 21 for summary of the principal aspects of the new NHL CBA and revenue sharing plan.

The current NBA CBA expires after the 2023-24 season (although the NBA and NBPA each 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).

There are no union employees subject to CBAs that expired as of June 30, 2020 and no union employees subject to CBAs that will expire by June 30, 2021 if they are not extended prior thereto.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Interim Financial Information (Unaudited)

The Company adopted ASC Topic 606 in the first quarter of fiscal year 2019 using the modified retrospective method for those contracts with customers which were not completed as of July 1, 2018.

The following is a summary of the Company’s selected quarterly financial data for the years ended June 30, 2020 and 2019 :

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Operating income (loss)

Income (loss) from continuing operations

Income (loss) from discontinued operations, net of taxes

Net income (loss)

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

Basic earnings (loss) per common share attributable to The Madison Square Garden Company’s stockholders

Diluted earnings (loss) per common share attributable to The Madison Square Garden Company’s stockholders

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

Earnings (loss) per share:

Continuing operations

Discontinued operations

Basic earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders

Continuing operations

Discontinued operations

Diluted earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

3 unchanged sentences

Operating income (loss)

Income (loss) from continuing operations

Income (loss) from discontinued operations, net of taxes

Net income (loss)

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

Basic earnings (loss) per common share attributable to The Madison Square Garden Company’s stockholders

Diluted earnings (loss) per common share attributable to The Madison Square Garden Company’s stockholders

THE MADISON SQUARE GARDEN COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Earnings (loss) per share:

Continuing operations

Discontinued operations

Basic earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders

Continuing operations

Discontinued operations

Diluted earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders

Subsequent Events

Sale of Interest in Tribeca Enterprises

In July 2020, the NHL and NHLPA agreed to extend the NHL CBA through and including September 15, 2026 (with the possibility of an additional one-year extension in certain circumstances) with certain modifications.

The principal aspects of the NHL CBA and revenue sharing plan are expected to remain unchanged except that the new 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.

Knicks Unsecured Credit Facility

On August 11, 2020, the Company renewed Knicks Unsecured Credit Facility, which matures on September 24, 2021.

See Note 13 for more information.

Team Personnel Transactions

On August 1, 2019, the Company recorded a pre-tax charge of approximately $ 10,200 related to the waiver of a player.

This charge will be reflected in direct operating expenses in the Company’s consolidated statements of operations for the three months ending September 30, 2019.

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 9A. Controls and Procedures