What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-02-03 compared with 2020-11-09 · 374 added, 278 removed, 663 unchanged (50% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

2020 June 30,

7 unchanged sentences

Total current assets 175,480 128,278

Property and equipment, net of accumulated depreciation and amortization of $ 39,756 and $ 38,361 as of September 30, 2020 and June 30, 2020, respectively

Property and equipment, net of accumulated depreciation and amortization of $ 41,098 and $ 38,361 as of December 31, 2020 and June 30, 2020, respectively

37,034 39,597

9 unchanged sentences

(in thousands, except per share data)

September 30,

2020 June 30,

14 unchanged sentences

Deferred tax liabilities, net 57,393 57,721

Deferred revenue, noncurrent 31,978 2,014

Other liabilities 1,000 1,150

4 unchanged sentences

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

19,582 and 19,466 shares outstanding as of September 30, 2020 and June 30, 2020, respectively

19,582 and 19,466 shares outstanding as of December 31, 2020 and June 30, 2020, respectively

Class B Common stock, par value $ 0.01 , 30,000 shares authorized;

4,530 shares outstanding as of September 30, 2020 and June 30, 2020

4,530 shares outstanding as of December 31, 2020 and June 30, 2020

Preferred stock, par value $ 0.01 , 15,000 shares authorized;

none outstanding as of September 30, 2020 and June 30, 2020

none outstanding as of December 31, 2020 and June 30, 2020

Additional paid-in capital 15,432 5,940

Treasury stock, at cost, 866 and 982 shares as of September 30, 2020 and June 30, 2020, respectively

Treasury stock, at cost, 866 and 982 shares as of December 31, 2020 and June 30, 2020, respectively

( 147,585 ) ( 167,431 )

10 unchanged sentences

(in thousands, except per share data)

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2020 2019 2020 2019

$ 28,771 $ 292,798 $ 85,809 $ 342,648

Operating expenses:

11 unchanged sentences

Loss from continuing operations before income taxes ( 40,963 ) ( 884 ) ( 70,476 ) ( 60,578 )

Income tax benefit 498 19,503

Income tax benefit (expense) ( 170 ) ( 2,773 ) 328 16,730

Loss from continuing operations ( 41,133 ) ( 3,657 ) ( 70,148 ) ( 43,848 )

Loss from discontinued operations, net of taxes — ( 40,475 )

Net loss ( 29,015 ) ( 80,666 )

Income from discontinued operations, net of taxes — 96,006 — 55,531

Net income (loss) ( 41,133 ) 92,349 ( 70,148 ) 11,683

Net loss attributable to nonredeemable noncontrolling interests from continuing operations ( 508 ) ( 465 ) ( 1,106 ) ( 915 )

1 unchanged sentence

Net loss attributable to nonredeemable noncontrolling interests from discontinued operations — ( 86 ) — ( 158 )

Net loss attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 28,417 ) $ ( 79,981 )

Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 40,625 ) $ 94,141 $ ( 69,042 ) $ 14,160

Continuing operations

1 unchanged sentence

Discontinued operations

Basic loss per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 1.18 ) $ ( 3.36 )

— 4.07 — 2.39

Basic income (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 1.68 ) $ 3.94 $ ( 2.86 ) $ 0.59

Continuing operations

1 unchanged sentence

Discontinued operations

Diluted loss per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 1.18 ) $ ( 3.36 )

— 4.06 — 2.38

Diluted income (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 1.68 ) $ 3.93 $ ( 2.86 ) $ 0.59

Weighted-average number of common shares outstanding:

2 unchanged sentences

_________________

(a) Includes revenues from related parties of $ 9,061 and $ 6,327 for the three months ended September 30, 2020 and 2019, respectively.

(b) Includes net charges from related parties of $ 614 and $ 0 for the three months ended September 30, 2020 and 2019, respectively.

(c) Includes net charges from (to) related parties of $ 13,747 and $( 2,657 ) for the three months ended September 30, 2020 and 2019, respectively.

(a) Includes revenues from related parties of $ 14,369 and $ 61,119 for the three months ended December 31, 2020 and 2019, respectively, and $ 23,430 and $ 67,446 for the six months ended December 31, 2020 and 2019, respectively.

(b) Includes net charges from (to) related parties of $ 2,650 and $( 137 ) for the three months ended December 31, 2020 and 2019, respectively, and $ 3,264 and $( 137 ) for the six months ended December 31, 2020 and 2019, respectively.

(c) Includes net charges from (to) related parties of $ 10,455 and $( 2,742 ) for the three months ended December 31, 2020 and 2019, respectively, and $ 24,202 and $( 5,399 ) for the six months ended December 31, 2020 and 2019, respectively.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

September 30,

Net loss $ ( 29,015 ) $ ( 80,666 )

Three Months Ended Six Months Ended

December 31, December 31,

2020 2019 2020 2019

Net income (loss) $ ( 41,133 ) $ 92,349 $ ( 70,148 ) $ 11,683

Other comprehensive income (loss), before income taxes:

2 unchanged sentences

Amortization of actuarial loss included in net periodic benefit cost

10 346 20 685

Cumulative translation adjustments — 23,186 — 13,168

Other comprehensive income (loss), before income taxes

Other comprehensive income, before income taxes 10 23,532 20 13,853

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

Other comprehensive income (loss), net of income taxes 10 ( 9,679 )

Comprehensive loss ( 29,005 ) ( 90,345 )

Other comprehensive income, net of income taxes 10 23,532 20 13,853

Comprehensive income (loss) ( 41,123 ) 115,881 ( 70,128 ) 25,536

Comprehensive loss attributable to nonredeemable noncontrolling interests from continuing operations ( 508 ) ( 465 ) ( 1,106 ) ( 915 )

1 unchanged sentence

Comprehensive loss attributable to nonredeemable noncontrolling interests from discontinued operations — ( 86 ) — ( 158 )

Comprehensive loss attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 28,407 ) $ ( 89,660 )

Comprehensive income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 40,615 ) $ 117,673 $ ( 69,022 ) $ 28,013

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

September 30,

Six Months Ended

Cash flows from operating activities:

Net loss $ ( 29,015 ) $ ( 80,666 )

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss) $ ( 70,148 ) $ 11,683

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Depreciation and amortization 3,267 57,202

16 unchanged sentences

Operating lease right-of-use assets and lease liabilities 2,327 ( 609 )

Net cash used in operating activities ( 57,485 ) ( 34,234 )

Net cash (used in) provided by operating activities ( 21,633 ) 111,172

Cash flows from investing activities:

4 unchanged sentences

Proceeds from maturity of short-term investments — 106,587

Investments and loans to nonconsolidated affiliates — ( 63 )

Proceeds from sale of nonconsolidated affiliates — 18,000

Loan repayment received from subordinated note — 58,735

Cash received for notes receivable — 750

4 unchanged sentences

(in thousands)

Three Months Ended

September 30,

Six Months Ended

Cash flows from financing activities:

1 unchanged sentence

Noncontrolling interest holders’ capital contribution — 2,000

Distributions to noncontrolling interest holders — ( 535 )

Proceeds from revolving credit facilities 30,000 —

Repayment of revolving credit facility — ( 15,000 )

Principal repayment on long-term debt — ( 3,750 )

Payment of contingent consideration ( 200 ) ( 200 )

Net cash used in financing activities ( 6,902 ) ( 23,946 )

Payments for financing costs ( 4,546 ) —

Net cash provided by (used in) financing activities 11,363 ( 43,749 )

Effect of exchange rates on cash, cash equivalents and restricted cash — 1,693

15 unchanged sentences

(in thousands)

Three Months Ended September 30, 2020

Three Months Ended December 31, 2020

Issued Additional

6 unchanged sentences

Interests Total Equity

Balance as of June 30, 2020 $ 249 $ 5,940 $ ( 167,431 ) $ ( 43,605 ) $ ( 2,139 ) $ ( 206,986 ) $ 3,551 $ ( 203,435 )

Balance as of September 30, 2020 $ 249 $ — $ ( 147,605 ) $ ( 93,361 ) $ ( 2,129 ) $ ( 242,846 ) $ 2,953 $ ( 239,893 )

Net loss — — — ( 40,625 ) — ( 40,625 ) ( 508 ) ( 41,133 )

1 unchanged sentence

Comprehensive loss — — — — — ( 40,615 ) ( 508 ) ( 41,123 )

— — — — — ( 28,407 ) ( 598 ) ( 29,005 )

Share-based compensation

4 unchanged sentences

— ( 20 ) 20 — — — — —

Balance as of September 30, 2020 $ 249 $ — $ ( 147,605 ) $ ( 93,361 ) $ ( 2,129 ) $ ( 242,846 ) $ 2,953 $ ( 239,893 )

Adjustments to noncontrolling interests — ( 436 ) — — — ( 436 ) 436 —

Balance as of December 31, 2020 $ 249 $ 15,432 $ ( 147,585 ) $ ( 133,986 ) $ ( 2,119 ) $ ( 268,009 ) $ 2,881 $ ( 265,128 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended September 30, 2019

Three Months Ended December 31, 2019

Common Stock Issued Additional

6 unchanged sentences

Noncontrolling

Balance as of September 30, 2019 $ 249 $ 2,819,449 $ ( 186,583 ) $ ( 50,978 ) $ ( 56,602 ) $ 2,525,535 $ 19,447 $ 2,544,982 $ 67,464

Net income (loss) — — — 94,141 — 94,141 ( 551 ) 93,590 ( 1,241 )

Other comprehensive income — — — — 23,532 23,532 — 23,532 —

Comprehensive income (loss)

— — — — — 117,673 ( 551 ) 117,122 ( 1,241 )

Share-based compensation

— 17,926 — — — 17,926 — 17,926 —

Tax withholding associated with shares issued for equity-based compensation

— ( 2,818 ) — — — ( 2,818 ) — ( 2,818 ) —

Common stock issued under stock incentive plans

— ( 690 ) 690 — — — — — —

Contribution from noncontrolling interest holders

— — — — — — 2,000 2,000 —

Distributions to noncontrolling interest holders

— — — — — — ( 535 ) ( 535 ) —

Balance as of December 31, 2019 $ 249 $ 2,833,867 $ ( 185,893 ) $ 43,163 $ ( 33,070 ) $ 2,658,316 $ 20,361 $ 2,678,677 $ 66,223

See accompanying notes to consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (Continued)

(in thousands)

Six Months Ended December 31, 2020

Issued Additional

Capital Treasury

Stock Accumulated Deficit Accumulated

Comprehensive

Loss Total Madison Square Garden Sports Corp.

Stockholders ’ Equity

Noncontrolling

Interests Total Equity

Balance as of June 30, 2020 $ 249 $ 5,940 $ ( 167,431 ) $ ( 43,605 ) $ ( 2,139 ) $ ( 206,986 ) $ 3,551 $ ( 203,435 )

Net loss — — — ( 69,042 ) — ( 69,042 ) ( 1,106 ) ( 70,148 )

Other comprehensive loss — — — — ( 9,679 ) ( 9,679 ) — ( 9,679 ) —

Other comprehensive income — — — — 20 20 — 20

Comprehensive loss

— — — — — ( 69,022 ) ( 1,106 ) ( 70,128 )

Share-based compensation

4 unchanged sentences

— ( 1,375 ) 19,846 ( 18,471 ) — — — —

Adjustments to noncontrolling interests — ( 436 ) — — — ( 436 ) 436 —

Balance as of December 31, 2020 $ 249 $ 15,432 $ ( 147,585 ) $ ( 133,986 ) $ ( 2,119 ) $ ( 268,009 ) $ 2,881 $ ( 265,128 )

See accompanying notes to consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (Continued)

(in thousands)

Six Months Ended December 31, 2019

Common Stock Issued Additional

Capital Treasury

Stock Retained Earnings Accumulated

Comprehensive Loss Total Madison Square Garden Sports Corp.

Stockholders ’ Equity

Noncontrolling

Interests Total Equity Redeemable

Noncontrolling

Balance as of June 30, 2019 $ 249 $ 2,845,961 $ ( 207,790 ) $ 29,003 $ ( 46,923 ) $ 2,620,500 $ 18,260 $ 2,638,760 $ 67,627

Net income (loss) — — — 14,160 — 14,160 ( 1,073 ) 13,087 ( 1,404 )

Other comprehensive income — — — — 13,853 13,853 — 13,853 —

Comprehensive income (loss) — — — — — 28,013 ( 1,073 ) 26,940 ( 1,404 )

Share-based compensation

— 36,067 — — — 36,067 — 36,067 —

Tax withholding associated with shares issued for equity-based compensation

— ( 26,264 ) — — — ( 26,264 ) — ( 26,264 ) —

Common stock issued under stock incentive plans

— ( 21,897 ) 21,897 — — — — — —

Contribution from noncontrolling interest holders

— — — — — — 3,709 3,709 —

Balance as of September 30, 2019 $ 249 $ 2,819,449 $ ( 186,583 ) $ ( 50,978 ) $ ( 56,602 ) $ 2,525,535 $ 19,447 $ 2,544,982 $ 67,464

Distributions to noncontrolling interest holders

— — — — — — ( 535 ) ( 535 ) —

Balance as of December 31, 2019 $ 249 $ 2,833,867 $ ( 185,893 ) $ 43,163 $ ( 33,070 ) $ 2,658,316 $ 20,361 $ 2,678,677 $ 66,223

See accompanying notes to consolidated financial statements.

30 unchanged sentences

The dependence of MSG Sports on revenues from its NBA and NHL sports teams generally means it earns a disproportionate share of its revenues in the second and third quarters of the Company’s fiscal year.

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

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

In July and August 2020, the NBA and NHL, respectively, restarted their seasons.

As a result, the Company recognized certain revenues that otherwise would have been recognized during the third and fourth quarter of fiscal year 2020 during the first quarter of fiscal year 2021.

In addition, depending on when the 2020-21 NBA and NHL seasons commence, the Company may recognize certain revenues during the third and fourth quarters of fiscal year 2021 that otherwise would have been recognized during the second and third quarters of fiscal year 2021, respectively.

In addition, on December 16, 2020 and January 14, 2021, respectively, the Knicks and Rangers resumed playing their home games at The Garden as part of the 2020-21 seasons.

Due to the delayed start of the 2020-21 NBA and NHL seasons, the Company will recognize certain revenues during the third and fourth quarters of fiscal year 2021 that otherwise would have been recognized during the second and third quarters of fiscal year 2021, respectively.

MADISON SQUARE GARDEN SPORTS CORP.

1 unchanged sentence

Reclassifications

The historical results of MSG Entertainment have been reflected in the accompanying statements of operations for the three months ended September 30, 2019 as discontinued operations.

The historical results of MSG Entertainment have been reflected in the accompanying consolidated statements of operations for the three and six months ended December 31, 2019 as discontinued operations.

See Note 3 for more information.

In addition, certain reclassifications have been made in order to conform to the current period’s presentation and relate to the separation of Deferred revenue, noncurrent, which was previously reported in Other liabilities in the consolidated balance sheet as of June 30, 2020.

Impact of COVID-19

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

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

COVID-19 disruptions have materially impacted the Company’s revenues and the Company is recognizing materially less revenues, or in some cases no revenues, across a number of areas.

5 unchanged sentences

and food, beverage and merchandise sales.

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) league revenue sharing expense and NBA luxury tax, and (iv) certain other selling, general and administrative and discretionary expenses, those expense reduction opportunities will not fully offset revenue losses.

In August 2020, the Company implemented cost-reduction measures which included workforce reductions, limits on third-party vendor use and additional cuts to discretionary spending.

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 that it has sufficient liquidity, including approximately $ 23,500 in unrestricted cash and cash equivalents as of September 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.

In addition, the Knicks and Rangers will play fewer games during the 2020-21 regular seasons, with the NBA scheduled to play a 72-game regular season schedule while the NHL is scheduled to play a 56-game regular season schedule.

These compare to traditional 82-game regular season schedules for both the NBA and NHL.

While The Garden was closed due to the government mandated suspension of events as a result of COVID-19, the Knicks and Rangers were not required to pay license fees to MSG Entertainment under the Arena License Agreements.

On December 16, 2020 and January 14, 2021, respectively, the Knicks and Rangers resumed playing their homes games at The Garden as part of the 2020-21 seasons.

However, fans are currently prohibited from attending events due to ongoing government-mandated assembly restrictions.

No assurances can be made that games at The Garden this season will be played with any in-arena audiences or, that if fans are permitted, that audience capacity would not be limited.

When games are played at The Garden by the Knicks and Rangers either without fans in attendance or with limited fans in attendance due to government mandated capacity constraints, the applicable rent paid to MSG Entertainment is reduced by up to 80 %.

During the six months ended December 31, 2020, as a result of COVID-19, the Company implemented cost-reduction measures that included workforce reductions and limits on discretionary spending.

In addition, as a result of the disruptions caused by COVID-19, certain operating expenses are reduced including (i) rent payments to MSG Entertainment under the Arena License Agreements, (ii) NBA league assessments and day-of-game expenses for the Knicks and Rangers games, and (iii) league revenue sharing and team personnel expense.

These expense reductions will not fully offset revenue losses.

Additionally, as the Knicks and Rangers returned to play in December 2020 and January 2021, respectively, and in anticipation of fans returning to the building in the future, certain costs will increase including day-of-game expenses and certain selling, general and administrative costs.

The Company believes that it has sufficient liquidity, including approximately $ 70,800 in Cash and cash equivalents as of December 31, 2020, along with available borrowing capacity under existing credit facilities, to fund its operations and satisfy any obligations with respect to the return or application of deferred revenue over the next 12 months.

At this time, the Company’s management is unable to predict when the Company will be able to resume normal business operations and if there will be any longer-term effects due to these COVID-related disruptions.

6 unchanged sentences

All significant intercompany transactions and balances have been eliminated in consolidation.

In addition, the consolidated financial statements of the Company include the accounts from CLG, in which the Company has controlling voting interests.

In addition, the consolidated financial statements of the Company include the accounts from CLG, in which the Company has a controlling voting interest.

The Company’s consolidation criteria are based on authoritative accounting guidance for voting interest, controlling interest or variable interest entities.

CLG is consolidated with the equity owned by other shareholders shown as nonredeemable noncontrolling interests in the accompanying consolidated balance sheets, and the other shareholders’ portion of net earnings (loss) and other comprehensive income (loss) shown as net income (loss) or comprehensive income (loss) attributable to nonredeemable noncontrolling interests in the accompanying consolidated statements of operations and consolidated statements of comprehensive income (loss), respectively.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Use of Estimates

2 unchanged sentences

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

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.

34 unchanged sentences

2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities.

2018-17 amends the variable interest entities (“VIE”) guidance to align the evaluation of a decision maker’s or service provider’s fee in assessing a variable interest with the guidance in the primary beneficiary test.

Specifically, indirect interests held by a related party that is under common control will now be considered on a proportionate basis, rather than in their entirety, when assessing whether the fee qualifies as a variable interest.

The proportionate basis approach is consistent with the treatment of indirect interests held by a related party under common control when evaluating the primary beneficiary of a VIE.

2018-17 amends the variable interest entities (“VIE”) guidance to align the evaluation of a decision

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

basis throughout the VIE model for both the assessment of a variable interest and the determination of a primary beneficiary.

maker’s or service provider’s fee in assessing a variable interest with the guidance in the primary beneficiary test.

The proportionate basis approach is consistent with the treatment of indirect interests held by a related party under common control when evaluating the primary beneficiary of a VIE.

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 Company adopted this standard as of the beginning of fiscal year 2021, and the adoption did not have an impact on its consolidated financial statements.

31 unchanged sentences

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.

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

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

1 unchanged sentence

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 (“LIBOR”) and other interbank offered rates to alternative reference rates.

In January 2021, the FASB issued ASU 2021-01, which refines the scope of Topic 848 and clarifies some of its guidance as part of FASB’s monitoring of global reference rate activities.

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

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 statement of operations for the three months ended September 30, 2019 as discontinued operations.

See Note 3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2020 for more information.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below sets forth operating results of discontinued operations for the three months ended September 30, 2019.

Discontinued Operations

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 statement of operations for the three and six months ended December 31, 2019 as discontinued operations.

See Note 3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2020 for more information.

The table below sets forth operating results of discontinued operations for the three and six months ended December 31, 2019.

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.

Three Months Ended

September 30, 2019

Three Months Ended Six Months Ended

December 31, 2019 December 31, 2019

Revenues $ 336,260 $ 501,375

2 unchanged sentences

Depreciation and amortization 23,291 47,437

Operating loss ( 29,994 )

Operating income 81,075 51,081

Other income (expense):

3 unchanged sentences

Miscellaneous income, net 9,387 14,551

Loss from discontinued operations before income taxes ( 20,544 )

Income tax expense ( 19,931 )

Net loss from discontinued operations ( 40,475 )

Income from discontinued operations before income taxes 94,409 73,865

Income tax benefit (expense) 1,597 ( 18,334 )

Net income from discontinued operations 96,006 55,531

Net loss attributable to redeemable noncontrolling interests ( 1,241 ) ( 1,404 )

Net loss attributable to nonredeemable noncontrolling interests ( 86 ) ( 158 )

Net loss from discontinued operations attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 40,240 )

As permitted under ASU 2014-08, the Company has elected not to adjust the consolidated statement of cash flows for the three months ended September 30, 2019 to exclude cash flows attributable to discontinued operations.

Net income from discontinued operations attributable to Madison Square Garden Sports Corp.’s stockholders $ 97,333 $ 57,093

As permitted under ASU 2014-08, the Company has elected not to adjust the consolidated statement of cash flows for the six months ended December 31, 2019 to exclude cash flows attributable to discontinued operations.

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

Three Months Ended

September 30, 2019

Six Months Ended

December 31, 2019

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

10 unchanged sentences

All revenue recognized in the consolidated statements of operations is considered to be revenue from contracts with customers.

For the three months ended September 30, 2020 and 2019, the Company did not have any material impairment losses on receivables or contract assets arising from contracts with customers.

For the three and six months ended December 31, 2020 and 2019, the Company did not have any material impairment losses on receivables or contract assets arising from contracts with customers.

Disaggregation of Revenue

The following table disaggregates the Company’s revenues by type of goods or services in accordance with the required entity-wide disclosure requirements set forth in 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 three months ended September 30, 2020 and 2019:

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2020 2019 2020 2019

Event-related (a)

$ — $ 124,046 $ — $ 131,466

Media rights (b)

22,306 101,185 72,495 107,396

Sponsorship, signage and suite licenses 3,995 60,235 6,945 80,376

4 unchanged sentences

(b) 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 (UNAUDITED)

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 September 30, 2020 and June 30, 2020.

September 30, June 30,

The following table provides information about contract balances from the Company’s contracts with customers as of December 31, 2020 and June 30, 2020.

December 31, June 30,

Receivables from contracts with customers, net (a)

4 unchanged sentences

_________________

(a) Receivables from contracts with customers, net, 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 September 30, 2020 and June 30, 2020, the Company’s receivables reported above included $ 709 and $ 632 , respectively, related to various related parties associated with contracts with customers.

See Note 15 for further details on these related party arrangements.

(b) Contract assets, current, which are reported as Other current assets in the Company’s consolidated balance sheets, primarily relate to the Company’s rights to consideration for goods or services transferred to the customer, for which the Company does not have an unconditional right to bill as of the reporting date.

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

As of December 31, 2020 and June 30, 2020, the Company’s receivables reported above included $ 990 and $ 632 , respectively, related to various related parties associated with contracts with customers.

See Note 16 for further details on related party arrangements.

(b) Contract assets, current, which are reported as Other current assets in the Company’s accompanying consolidated balance sheets, primarily relate to the Company’s rights to consideration for goods or services transferred to the customer, for which the Company does not have an unconditional right to bill as of the reporting date.

Contract assets are transferred to accounts receivable once the Company’s right to consideration becomes unconditional.

(c) Deferred revenue, including non-current portion primarily relates to the Company’s receipt of consideration from customers in advance of the Company’s transfer of goods or services to those customers.

(c) Deferred revenue, including non-current portion primarily relates to the Company’s receipt of consideration from customers or billing customers in advance of the Company’s transfer of goods or services to those customers.

Deferred revenue is reduced and the related revenue is recognized once the underlying goods or services are transferred to a customer.

The Company’s deferred revenue related to local media rights with MSG Networks was $ 33,440 and $ 0 as of September 30, 2020 and June 30, 2020, respectively.

The non-current portion of deferred revenue primarily consists of a $ 30,000 receipt from the NBA in December 2020 of league distributions in advance of the Company’s recognition.

The Company’s deferred revenue related to local media rights with MSG Networks was $ 56,341 and $ 0 as of December 31, 2020 and June 30, 2020, respectively.

See Note 16 for further details on these related party arrangements.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(d) Revenue recognized for the three months ended September 30, 2020 relating to the deferred revenue balance as of June 30, 2020 was $ 43,913 .

(d) Revenue recognized for the six months ended December 31, 2020 relating to the deferred revenue balance as of June 30, 2020 was $ 44,392 .

Transaction Price Allocated to the Remaining Performance Obligations

The following table depicts the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2020 and is based on current projections and expectations of the Company’s operations resuming.

The following table depicts the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2020 and is based on current projections.

In developing the estimated revenue, the Company applies the allowable practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

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Thereafter 29,809

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Computation of Earnings (Loss) per Common Share

The following table presents a reconciliation of weighted-average shares used in the calculations of basic and diluted earnings (loss) per common share attributable to the Company’s stockholders (“EPS”) and the number of shares excluded from diluted earnings (loss) per common share, as they were anti-dilutive.

Three Months Ended Six Months Ended

December 31, December 31,

2020 2019 2020 2019

Weighted-average shares (denominator):

Weighted-average shares for basic EPS

24,144 23,913 24,103 23,870

Dilutive effect of shares issuable under share-based compensation plans

Weighted-average shares for diluted EPS

24,144 23,979 24,103 23,977

Weighted-average shares excluded from diluted earnings per share 152 510 403 507

Team Personnel Transactions

Direct operating expenses in the accompanying consolidated statements of operations include a net expense for transactions relating to the Company’s sports teams for waiver/contract termination costs and a player trade (“Team personnel transactions”).

Team personnel transactions expense was $ 10,873 and $ 10,243 for the three months ended September 30, 2020 and 2019, respectively.

Team personnel transactions expense was $ 2,839 and $ 17,644 for the three months ended December 31, 2020 and 2019, respectively, and $ 13,712 and $ 27,887 for the six months ended December 31, 2020 and 2019, respectively.

Cash, Cash Equivalents and Restricted Cash

The following table provides a summary of the amounts recorded as cash, cash equivalents and restricted cash.

September 30,

2020 June 30,

2020 September 30,

2020 December 31,

2019 June 30,

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_________________

(a) Restricted cash as of September 30, 2020 relates to the Company’s revolving credit facilities (see Note 11 for more information).

(a) Restricted cash as of December 31, 2020 relates to the Company’s revolving credit facilities (see Note 12 for more information).

For all prior periods, restricted cash primarily included cash deposited in escrow account (see Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2020 for more information).

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On April 17, 2020, in connection with the MSGE Distribution, the Company entered into the Sublease Agreement.

The sublease right of use (“ROU”) assets and liabilities are recorded on the balance sheet at lease commencement based on the

The sublease right of use (“ROU”) 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.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

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 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 has not been available for use since April 17, 2020 due to the COVID-19 pandemic and local government restrictions on gatherings;

however, the licenses were viewed as a continuation of a relationship that existed prior to the MSGE Distribution 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 September 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.

There were no events and thus no rent expense was recorded during the three months ended September 30, 2020.

As of September 30, 2020, the Company’s existing operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 23 months to 35 years.

The Garden was not available for use between April 17, 2020 and the start of the NBA and NHL seasons in December 2020 and January 2021, respectively, due to the COVID-19 pandemic and local government restrictions on gatherings.

The Company was not required to make license payments while The Garden was unavailable for use.

During the three months ended December 31, 2020, the Company recognized operating lease costs associated with the Knicks Arena License Agreement with respect to Knicks games played at The Garden in December 2020.

On December 31, 2020 the assets and liabilities associated with the Rangers Arena License Agreement 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, since the Rangers did not resume play at The Garden until January 2021.

As of December 31, 2020, the Company’s existing operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 20 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 exercise of lease renewals, 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 accompanying consolidated balance sheets as of September 30, 2020 and June 30, 2020:

Line Item in the Company’s Consolidated Balance Sheet September 30,

The following table summarizes the ROU assets and lease liabilities recorded on the Company’s accompanying consolidated balance sheets as of December 31, 2020 and June 30, 2020:

Line Item in the Company’s Consolidated Balance Sheet December 31,

2020 June 30,

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_________________

(a) As of September 30, 2020, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 38,391 and $ 681,450 , respectively, that are payable to MSG Entertainment.

(a) As of December 31, 2020, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 26,403 and $ 686,978 , respectively, that are payable to MSG Entertainment.

As of June 30, 2020, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 38,770 and $ 678,366 , respectively, that are payable to MSG Entertainment.

The following table summarizes the activity recorded within the Company’s accompanying consolidated statements of operations for the three months ended September 30, 2020 and 2019:

Line Item in the Company’s Consolidated Statement of Operations Three Months Ended September 30, 2020 Three Months Ended September 30, 2019

Operating lease cost

Direct operating expenses $ 90 $ 89

Operating lease cost

Selling, general and administrative expenses

Short-term lease cost

Direct operating expenses 24 42

The following table summarizes the activity recorded within the Company’s accompanying consolidated statements of operations for the three and six months ended December 31, 2020 and 2019:

Line Item in the Company’s Consolidated Statement of Operations Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Operating lease cost Direct operating expenses $ 2,308 $ 96 $ 2,398 $ 185

Operating lease cost Selling, general and administrative expenses

611 — 1,222 —

Short-term lease cost Direct operating expenses 27 42 51 84

Short term lease costs Selling, general and administrative expenses — — — —

Total lease cost $ 2,946 $ 138 $ 3,671 $ 269

Supplemental Information

For the three months ended September 30, 2020 and 2019, cash paid for amounts included in the measurement of lease liabilities was $ 295 and $ 100 , respectively.

The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of September 30, 2020 was 34.4 years.

The weighted average discount rate was 7.13 % as of September 30, 2020 and represented

For the six months ended December 31, 2020 and 2019, cash paid for amounts included in the measurement of lease liabilities was $ 1,299 and $ 200 , respectively.

The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of December 31, 2020 was 34.1 years.

The weighted average discount rate was 7.13 % as of December 31, 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 (UNAUDITED)

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.

Maturities of operating lease liabilities as of September 30, 2020 are as follows:

Maturities of operating lease liabilities as of December 31, 2020 are as follows:

Fiscal Year 2021 (remainder) $ 6,390

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During the first quarter of fiscal year 2021, the Company performed its annual impairment test of goodwill and determined that there were no impairments identified as of the impairment test date.

The carrying amount of goodwill as of September 30, 2020 and June 30, 2020 is $ 226,955 .

The Company’s indefinite-lived intangible assets as of September 30, 2020 and June 30, 2020 are as follows:

The carrying amount of goodwill as of December 31, 2020 and June 30, 2020 is $ 226,955 .

The Company’s indefinite-lived intangible assets as of December 31, 2020 and June 30, 2020 are as follows:

Sports franchises $ 111,064

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The Company’s intangible assets subject to amortization are as follows:

September 30, 2020 Gross Accumulated

December 31, 2020 Gross Accumulated

Amortization Net

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$ 5,900 $ ( 3,146 ) $ 2,754

For the three months ended September 30, 2020 and 2019, amortization expense of intangible assets was $ 265 and $ 1,103 , respectively.

For the three months ended December 31, 2020 and 2019, amortization expense of intangible assets was $ 265 and $ 1,103 , respectively.

For the six months ended December 31, 2020 and 2019, amortization expense of intangible assets was $ 530 and $ 2,205 , respectively.

MADISON SQUARE GARDEN SPORTS CORP.

2 unchanged sentences

The carrying value and fair value of the Company’s financial instruments reported in the accompanying consolidated balance sheets are as follows:

September 30, 2020 June 30, 2020

December 31, 2020 June 30, 2020

Value Carrying

2 unchanged sentences

_________________

(a) On March 12, 2020, the Company borrowed $ 200,000 under the New York Knicks, LLC and $ 150,000 under the New York Rangers, LLC five-year revolving 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.

On November 6, 2020, the Company amended and extended these credit facilities.

(a) 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.

The fair value of the Company’s long-term debt is the same as its carrying amount as the facilities bear interest at a variable rate indexed to current market conditions.

On November 6, 2020, the Company amended and extended these credit facilities and borrowed an additional $ 20,000 under the 2020 Knicks Revolving Credit Facility (as defined in Note 12) and $ 10,000 under the 2020 Rangers Revolving Credit Facility (as defined in Note 12).

See Note 12 for further details.

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The following table provides a reconciliation of the deferred and contingent consideration liabilities in connection with the CLG acquisition:

Three Months Ended September 30, 2020

Six Months Ended December 31, 2020

Balance as of June 30, 2020 $ 336

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Change in fair value of contingent consideration (a)

Balance as of September 30, 2020 $ —

Balance as of December 31, 2020 $ —

_________________

(a) The change in fair value of contingent consideration, including accretion, was recorded within Selling, general and administrative expenses in the accompanying consolidated statement of operations for the three months ended September 30, 2020.

Commitments and Contingencies

1 unchanged sentence

In addition, see Note 8 for more information on the contractual obligations related to future lease payments.

The Company did not have any material changes in its contractual obligations since the end of fiscal year 2020 other than activities in the ordinary course of business.

The Company did not have any material changes in its contractual obligations, including off-balance sheet commitments, since the end of fiscal year 2020 other than the amended and extended credit facilities described in Note 12 and activities in the ordinary course of business.

Legal Matters

6 unchanged sentences

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

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

On November 6, 2020, the Company amended and restated the 2016 Knicks Credit Agreement in its entirety (the “2020 Knicks Credit Agreement”).

Refer to Note 17 for further details.

The 2016 Knicks Revolving Credit Facility required Knicks LLC to comply with a debt service ratio of 1.5 :1.0 over a trailing four quarter period.

As of September 30, 2020, Knicks LLC was in compliance with this financial covenant.

The 2016 Knicks Revolving Credit Facility would have matured and any unused commitments thereunder would have expired on September 30, 2021.

All borrowings under the 2016 Knicks Revolving Credit Facility were subject to the satisfaction of certain customary conditions.

Borrowings bore interest at a floating rate, which at the option of Knicks LLC may have been 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.

Knicks LLC was 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 2016 Knicks Revolving Credit Facility.

The outstanding balance under the 2016 Knicks Revolving Credit Facility was $ 200,000 as of September 30, 2020 and was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2016 Knicks Revolving Credit Facility as of September 30, 2020 was 1.16 %.

During the three months ended September 30, 2020 the Company made interest payments of $ 625 .

All obligations under the 2016 Knicks Revolving Credit Facility were 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.

On November 6, 2020, the Company amended and restated the 2016 Knicks Credit Agreement in its entirety (the “2020 Knicks Credit Agreement”).

The 2020 Knicks Credit Agreement provides for a senior secured revolving credit facility of up to $ 275,000 (the “2020 Knicks Revolving Credit Facility”) to fund working capital needs and for general corporate purposes.

The maturity date of the 2020 Knicks Credit Agreement is November 6, 2023 .

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

All borrowings under the 2020 Knicks Revolving Credit Facility are subject to the satisfaction of certain customary conditions.

Borrowings under the 2020 Knicks Credit Agreement 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 0.500 % to 0.750 % per annum or (ii) LIBOR plus a margin ranging from 1.500 % to 1.750 % per annum.

Knicks LLC is required to pay a commitment fee ranging from 0.250 % to 0.300 % per annum in respect of the average daily unused commitments under the 2020 Knicks Revolving Credit Facility.

The outstanding balance under the 2020 Knicks Revolving Credit Facility was $ 220,000 as of December 31, 2020.

The interest rate on the 2020 Knicks Revolving Credit Facility as of December 31, 2020 was 1.65 %.

During the six months ended December 31, 2020 the Company made interest payments of $ 1,394 .

All obligations under the 2020 Knicks Revolving Credit Facility are secured by a first lien security interest in certain of Knicks LLC’s assets, including, but not limited to, (i) the Knicks LLC’s membership rights in the NBA and (ii) revenues to be paid to the Knicks LLC by the NBA pursuant to certain U.S.

national broadcast agreements.

Subject to customary notice and minimum amount conditions, Knicks LLC may have voluntarily prepaid outstanding loans under the 2016 Knicks Revolving Credit Facility at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to Eurocurrency loans).

Knicks LLC was required to make mandatory prepayments in certain circumstances, including without limitation if the maximum available amount under the 2016 Knicks Revolving Credit Facility was greater than 350 % of qualified revenues.

In addition to the financial covenant described above, the 2016 Knicks Credit Agreement and related security agreements contained certain customary representations and warranties, affirmative covenants and events of default.

The 2016 Knicks Revolving Credit Facility contained certain restrictions on the ability of Knicks LLC to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the 2016 Knicks Revolving Credit Facility, including the following:

Subject to customary notice and minimum amount conditions, Knicks LLC may voluntarily prepay outstanding loans under the 2020 Knicks Revolving Credit Facility at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to Eurocurrency loans).

Knicks LLC is required to make mandatory prepayments in certain circumstances, including without limitation if the maximum available amount under the 2020 Knicks Revolving Credit Facility is greater than 350 % of qualified revenues.

In addition to the financial covenant described above, the 2020 Knicks Credit Agreement and related security agreements contain certain customary representations and warranties, affirmative covenants and events of default.

The 2020 Knicks Revolving Credit Facility contains certain restrictions on the ability of Knicks LLC to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the 2020 Knicks Revolving Credit Facility, including the following:

(i) incurring additional indebtedness and contingent liabilities;

4 unchanged sentences

and (vi) taking certain actions that would invalidate the secured lenders’ liens on any Knicks LLC’s collateral.

The 2020 Knicks Revolving Credit Facility requires Knicks LLC to comply with a debt service ratio of 1.5 :1.0 over a trailing four quarter period.

As of December 31, 2020, Knicks LLC was in compliance with this financial covenant.

Knicks Unsecured Credit Facility

On September 30, 2016, Knicks LLC entered into an unsecured revolving credit facility with a lender for an initial maximum credit amount of $ 15,000 and a 364-day term (the “Knicks Unsecured Credit Facility”).

Knicks LLC renewed this facility with the lender on the same terms in successive years and the facility has been renewed for a new term effective as of September 25, 2020.

There was no borrowing under the Knicks Unsecured Credit Facility as of September 30, 2020.

Knicks LLC renewed this facility with the lender on the same terms in successive years and the facility was renewed for a new term effective as of September 25, 2020.

On November 6, 2020, the Company terminated the Knicks Unsecured Credit Facility in its entirety.

Refer to Note 17 for further details.

2017 Rangers Revolving Credit Facility

On January 25, 2017, New York Rangers, LLC (“Rangers LLC”), a wholly owned subsidiary of the Company, entered into a credit agreement (the “2017 Rangers Credit Agreement”) with a syndicate of lenders providing for a senior secured revolving credit facility of up to $ 150,000 with a term of five years (the “2017 Rangers Revolving Credit Facility”) to fund working capital needs and for general corporate purposes.

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

Knicks Holdings Credit Facility

On November 6, 2020, Knicks Holdings, LLC, an indirect, wholly-owned subsidiary of the Company and the direct parent of Knicks LLC (“Knicks Holdings”), entered into a new credit agreement with a syndicate of lenders (the “2020 Knicks Holdings Credit Agreement”).

The 2020 Knicks Holdings Credit Agreement provides for a revolving credit facility of up to $ 75,000 (the “2020 Knicks Holdings Revolving Credit Facility” to fund working capital needs and for general corporate purposes.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

On November 6, 2020, the Company amended and restated the 2017 Rangers Credit Agreement in its entirety (the “2020 Rangers Credit Agreement”).

Refer to Note 17 for further details.

The 2017 Rangers Revolving Credit Facility required Rangers LLC to comply with a debt service ratio of 1.5 :1.0 over a trailing four quarter period.

As of September 30, 2020, Rangers LLC was in compliance with this financial covenant.

The 2020 Knicks Holdings Revolving Credit Facility requires Knicks Holdings to comply with a debt service ratio of 1.1 :1.0 over a trailing four quarter period.

As of December 31, 2020, Knicks Holdings was in compliance with this financial covenant.

The 2020 Knicks Holdings Revolving Credit Facility will mature and any unused commitments thereunder will expire on November 6, 2023 .

All borrowings under the 2020 Knicks Holdings Revolving Credit Facility are subject to the satisfaction of certain customary conditions.

Borrowings under the 2020 Knicks Holdings Revolving Credit Facility bear interest at a floating rate, which at the option of Knicks Holdings may be either (i) a base rate plus a margin ranging from 1.000 % to 1.250 % per annum or (ii) LIBOR plus a margin ranging from 2.000 % to 2.250 % per annum.

Knicks Holdings is required to pay a commitment fee ranging from 0.375 % to 0.500 % per annum in respect of the average daily unused commitments under the 2020 Knicks Holdings Revolving Credit Facility .

There was no borrowing under the 2020 Knicks Holdings Revolving Credit Facility as of December 31, 2020.

All obligations under the 2020 Knicks Holdings Revolving Credit Facility are secured by debt service and distribution accounts maintained by Knicks Holdings, and includes a guarantee from MSG NYK Holdings, LLC, an indirect wholly-owned subsidiary of the Company and the direct parent of Knicks Holdings.

Subject to customary notice and minimum amount conditions, Knicks Holdings may voluntarily prepay outstanding loans under the 2020 Knicks Holdings Revolving Credit Facility at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to Eurocurrency loans).

Knicks Holdings is required to make mandatory prepayments in certain circumstances, including if the amount of commitments under the 2020 Knicks Holdings Revolving Credit Facility increase above $350,000.

In addition to the financial covenant described above, the 2020 Knicks Holdings Revolving Credit Facility and related security agreements contain certain customary representations and warranties, affirmative covenants and events of default.

The 2020 Knicks Holdings Revolving Credit Facility contains certain restrictions on the ability of Knicks Holdings to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the 2020 Knicks Holdings Revolving Credit Facility , including the following:

(i) incurring additional indebtedness and contingent liabilities;

(ii) creating liens on certain assets;

(iii) making restricted payments during the continuance of an event of default under the 2020 Knicks Holdings Revolving Credit Facility ;

(iv) engaging in sale and leaseback transactions;

(v) merging or consolidating;

and (vi) taking certain actions that would invalidate the secured lenders’ liens on any Knicks Holdings’ collateral.

Rangers Revolving Credit Facility

The 2017 Rangers Revolving Credit Facility would have matured and any unused commitments thereunder would have expired on January 25, 2022.

On November 6, 2020, the Company amended and restated the 2017 Rangers Credit Agreement in its entirety (the “2020 Rangers Credit Agreement”).

The 2020 Rangers Credit Agreement provides for a senior secured revolving credit facility of up to $ 250,000 (the “2020 Rangers Revolving Credit Facility”) to fund working capital needs and for general corporate purposes.

The maturity date of the 2020 Rangers Credit Agreement is November 6, 2023 .

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

All borrowings under the 2020 Rangers Revolving Credit Facility were subject to the satisfaction of certain customary conditions.

Borrowings bore interest at a floating rate, which at the option of Rangers LLC may have been either (i) a base rate plus a margin ranging from 0.125 % to 0.50 % per annum or (ii) LIBOR plus a margin ranging from 1.125 % to 1.50 % per annum.

Rangers LLC was 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 2017 Rangers Revolving Credit Facility.

The outstanding balance under the 2017 Rangers Revolving Credit Facility was $ 150,000 as of September 30, 2020 and was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2017 Rangers Revolving Credit Facility as of September 30, 2020 was 1.540 %.

During the three months ended September 30, 2020 the Company made interest payments of $ 617 .

All obligations under the 2017 Rangers Revolving Credit Facility were 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.

Borrowings under the 2020 Rangers Credit Agreement bear interest at a floating rate, which at the option of Rangers LLC may be either (i) a base rate plus a margin ranging from 0.750 % to 1.250 % per annum or (ii) LIBOR plus a margin ranging from 1.750 % to 2.250 % per annum.

Rangers LLC is required to pay a commitment fee ranging from 0.375 % to 0.625 % per annum in respect of the average daily unused commitments under the 2020 Rangers Revolving Credit Facility.

The outstanding balance under the 2020 Rangers Revolving Credit Facility was $ 160,000 as of December 31, 2020.

The interest rate on the 2020 Rangers Revolving Credit Facility as of December 31, 2020 was 2.15 %.

During the six months ended December 31, 2020 the Company made interest payments of $ 1,361 .

All obligations under the 2020 Rangers Revolving Credit Facility are secured by a first lien security interest in certain of Rangers LLC’s assets, including, but not limited to, (i) Rangers LLC’s membership rights in the NHL, (ii) revenues to be paid to Rangers LLC by the NHL pursuant to certain U.S.

and Canadian national broadcast agreements, and (iii) revenues to be paid to Rangers LLC pursuant to local media contracts.

Subject to customary notice and minimum amount conditions, Rangers LLC may have voluntarily prepaid outstanding loans under the 2017 Rangers Revolving Credit Facility at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to Eurocurrency loans).

Rangers LLC was required to make mandatory prepayments in certain circumstances, including without limitation if qualified revenues are less than 17 % of the maximum available amount under the 2017 Rangers Revolving Credit Facility.

In addition to the financial covenant described above, the 2017 Rangers Credit Agreement and related security agreements contained certain customary representations and warranties, affirmative covenants and events of default.

The 2017 Rangers Revolving Credit Facility contained certain restrictions on the ability of Rangers LLC to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the 2017 Rangers Revolving Credit Facility, including the following:

Subject to customary notice and minimum amount conditions, Rangers LLC may voluntarily prepay outstanding loans under the 2020 Rangers Revolving Credit Facility at any time, in whole or in part, without premium or penalty (except for customary

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

breakage costs with respect to Eurocurrency loans).

Rangers LLC is required to make mandatory prepayments in certain circumstances, including without limitation if qualified revenues are less than 17 % of the maximum available amount under the 2020 Rangers Revolving Credit Facility.

In addition to the financial covenant described above, the 2020 Rangers Credit Agreement and related security agreements contain certain customary representations and warranties, affirmative covenants and events of default.

The 2020 Rangers Revolving Credit Facility contains certain restrictions on the ability of Rangers LLC to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the 2020 Rangers Revolving Credit Facility, including the following:

(i) incurring additional indebtedness and contingent liabilities;

4 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 2020 Rangers Revolving Credit Facility.

The 2020 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 December 31, 2020, Rangers LLC was in compliance with this financial covenant.

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”) provided 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”) provided 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 credit agreement for MSG NYK Holdings, LLC provided for a $ 110,000 senior unsecured delayed draw term loan facility and the credit agreement for MSG NYR Holdings, LLC provided for a $ 90,000 senior unsecured delayed draw term loan facility.

On November 6, 2020, the Company terminated the DDTL Facilities in their entirety.

Refer to Note 17 for further details.

The DDTL Facilities would have matured and any unused commitments thereunder would have expired on October 17, 2021.

Borrowings under the DDTL Facilities bore 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 have been drawn in up to four separate borrowings of $ 10,000 or more.

Proceeds of borrowings under the DDTL Facilities would have been used for general corporate purposes.

The availability of each of the DDTL Facilities to the respective borrowers was 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 have been (i) less than $ 50,000 immediately prior to giving effect to any borrowing, and (ii) less than

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

$ 75,000 immediately after giving effect to any borrowing, and (b) with respect to the Knicks DDTL Facility, the Knicks DDTL Facility Borrower and its subsidiaries must have used commercially reasonable efforts to raise additional financing (“New Third-Party Debt”), including additional commitments under existing revolving facilities, prior to drawing on the Knicks DDTL Facility to the extent permitted by the debt policies of the NBA.

In addition, the commitments of the DDTL Lender to make advances under the Knicks DDTL Facility would have been permanently reduced and the Knicks DDTL Facility would have been 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 provided 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) 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 September 30, 2020.

Deferred Financing Costs

The following table summarizes deferred financing costs, net of amortization, related to the 2016 Knicks Revolving Credit Facility, Knicks Unsecured Credit Facility and 2017 Rangers Revolving Credit Facility as reported on the accompanying consolidated balance sheet:

September 30,

2020 June 30,

The following table summarizes deferred financing costs, net of amortization, related to the Company’s credit facilities as reported on the accompanying consolidated balance sheet:

December 31, 2020 (a)

Other current assets $ 1,756 $ 675

Other assets 3,219 264

Pension Plans and Other Postretirement Benefit Plan

(a) In connection with the 2020 Knicks Revolving Credit Facility , 2020 Knicks Holdings Revolving Credit Facility and 2020 Rangers Revolving Credit Facility, the Company incurred $ 4,553 in deferred financing costs during the six months ended December 31, 2020.

Benefit Plans

Defined Benefit Pension Plans and Postretirement Benefit Plan

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.

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.

The Cash Balance Plans were amended to freeze participation and future benefit accruals effective December 31, 2015 for all employees.

Therefore, after December 31, 2015, no employee of the Company who was not already a participant may become a participant in the plans and no further annual pay credits will be made for any future year.

Existing account balances under the plans will continue to be credited with monthly interest in accordance with the terms of the plans.

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”).

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The Cash Balance Plans, Union Plan and Excess Plan are collectively referred to as the “MSGE Pension Plans.”

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”).

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 and MSG Sports, LLC 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 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 three months ended September 30, 2020 and 2019.

See Note 14 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2020 for more information with regard to the liabilities retained by the Company from the Excess Cash Balance Plan and Excess Plan, which were transferred to the MSG Sports, LLC Excess Cash Balance Plan and MSG Sports, LLC Excess Retirement Plan, which the Company established in connection with the MSGE Distribution and are collectively referred to the “MSGS Pension Plans.”

Service cost is recognized in direct operating expenses and selling, general and administrative expenses.

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Three Months Ended Three Months Ended

September 30, September 30,

December 31, December 31,

2020 2019 2020 2019

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Net periodic benefit cost $ 70 $ 364 $ — $ 46

MSGE Pension Plans & MSGS Pension Plans Postretirement Plan

Six Months Ended Six Months Ended

December 31, December 31,

2020 2019 2020 2019

Service cost $ — $ 48 $ — $ 35

Interest cost 120 2,656 — 55

Expected return on plan assets — ( 2,659 ) — —

Recognized actuarial loss 20 680 — 5

Net periodic benefit cost $ 140 $ 725 $ — $ 95

Amounts presented in the table above include net periodic benefit cost related to continuing operations and discontinued operations as noted in the following table:

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Three Months Ended Three Months Ended

September 30, September 30,

December 31, December 31,

2020 2019 2020 2019

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$ 70 $ 364 $ — $ 46

Defined Contribution Pension Plans

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MSGE Pension Plans & MSGS Pension Plans Postretirement Plan

Six Months Ended Six Months Ended

December 31, December 31,

2020 2019 2020 2019

Continuing Operations $ 140 $ 172 $ — $ —

Discontinued Operations — 553 — 95

Total net periodic benefit cost

$ 140 $ 725 $ — $ 95

Defined Contribution Plans

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.

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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 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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

senior executive capacity by both MSG Sports and MSG Entertainment 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 three months ended September 30, 2020 and 2019 are as follows:

Three Months Ended

September 30,

In addition, pursuant to the Employee Matters Agreement the Company established the MSG Sports LLC Excess Savings Plan to provide non-qualified retirement benefits to eligible MSG Sports employees.

Expenses related MSG Sports LLC Excess Savings Plan and Savings Plans that are included in the accompanying consolidated statements of operations for the three and six months ended December 31, 2020 and 2019 are as follows:

Three Months Ended Six Months Ended

December 31, December 31,

2020 2019 2020 2019

Continuing Operations $ 506 $ 2,096 $ 1,104 $ 4,006

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$ 506 $ 2,883 $ 1,104 $ 5,510

For the three months ended September 30, 2019, expenses related to the Union Savings Plan of $ 22 have been classified in the accompanying consolidated statement of operations as discontinued operations.

For the three and six months ended December 31, 2019, expenses related to the Union Savings Plan of $ 31 and $ 53 , respectively, have been classified in the accompanying consolidated statement of operations as discontinued operations.

Share-based Compensation

See Note 15 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2020 for more information regarding the Company’s 2015 Employee Stock Plan (the “Employee Stock Plan”) and its 2015 Stock Plan for Non-Employee Directors.

Share-based compensation expense was $ 6,345 and $ 13,796 for the three months ended September 30, 2020 and 2019, respectively.

There were no costs related to share-based compensation in continuing operations that were capitalized for the three months ended September 30, 2020 and 2019, respectively.

Share-based compensation expense for discontinued operations was $ 3,095 for the three months ended September 30, 2019.

Share-based compensation expense was $ 15,981 and $ 22,326 for the three and six months ended December 31, 2020, respectively.

Share-based compensation expense was $ 14,255 and $ 28,051 for the three and six months ended December 31, 2019, respectively.

There were no costs related to share-based compensation in continuing operations that were capitalized for the three and six months ended December 31, 2020 and 2019, respectively.

Share-based compensation expense for discontinued operations was $ 2,439 and $ 5,534 for the three and six months ended December 31, 2019, respectively.

As a result of an agreement to settle an action (the “Settlement”) filed by a purported stockholder of the Company derivatively on behalf of the Company against certain directors of the Company who are members of the Dolan family and against the directors of the Company who were members of the Compensation Committee, Mr.

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32 target performance stock units and three grants of stock options to purchase an aggregate of 449 shares of Class A Common Stock, which were to vest over a four-year period.

The Settlement became effective October 8, 2020 and therefore the Company will reverse share-based compensation expense of approximately $ 18,500 related to this award in the second quarter of fiscal year 2021.

The Settlement became effective October 8, 2020 and therefore, upon cancellation, the Company recorded previously unrecognized share-based compensation expense of approximately $ 7,400 related to this award during the three and six months ended December 31, 2020.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Restricted Stock Units Award Activity

The following table summarizes activity related to the Company’s restricted stock units and performance restricted stock units, collectively referred to as “RSUs,” held by the Company and MSG Entertainment employees, for the three months ended September 30, 2020:

Number of Weighted-Average

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Vested ( 110 ) ( 100 ) $ 239.33

Forfeited ( 10 ) ( 13 ) $ 254.57

Unvested award balance, September 30, 2020 279 262 $ 239.65

Forfeited / Cancelled ( 12 ) ( 48 ) $ 284.89

Unvested award balance, December 31, 2020 276 227 $ 235.04

_____________________

(a) Weighted-average fair value per share at date of grant does not reflect any adjustments to awards granted prior to the MSGE Distribution.

The fair value of RSUs that vested during the three months ended September 30, 2020 was $ 32,779 .

The fair value of RSUs that vested during the six months ended December 31, 2020 was $ 34,668 .

Upon delivery, RSUs granted under the Employee Stock Plan were net share-settled to cover the required statutory tax withholding obligations.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

fulfill the employees’ required statutory tax withholding obligations for the applicable income and other employment taxes, 84 of these RSUs, with an aggregate value of $ 13,798 were retained by the Company.

Taxes paid related to the Company’s employees are reflected as financing activity, while the taxes paid related to MSG Entertainment employees (who vested in the Company’s RSUs) are reflected as operating activity in the accompanying consolidated statement of cash flows for the three months ended September 30, 2020.

The fair value of RSUs that vested during the three months ended September 30, 2019 was $ 53,522 .

The weighted-average fair value per share at grant date of RSUs granted during the three months ended September 30, 2019 was $ 246.54 .

To fulfill the Company’s and MSG Entertainment’s employees’ required statutory tax withholding obligations for the applicable income and other employment taxes, 84 of these RSUs, with an aggregate value of $ 13,891 , inclusive of $ 7,106 related to MSG Entertainment employees (who vested in the Company’s RSUs), were retained by the Company and the taxes paid are reflected as a financing activity in the accompanying consolidated statement of cash flows for the six months ended December 31, 2020.

The fair value of RSUs that vested during the six months ended December 31, 2019 was $ 59,032 .

The weighted-average fair value per share at grant date of RSUs granted during the six months ended December 31, 2019 was $ 247.18 .

Stock Options Award Activity

The following table summarizes activity related to the Company’s stock options for the three months ended September 30, 2020:

The following table summarizes activity related to the Company’s stock options for the six months ended December 31, 2020:

Time Vesting Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (In Years) Aggregate Intrinsic Value

Balance as of June 30, 2020 543 $ 225.79

Balance as of September 30, 2020 543 $ 225.79 5.80 $ 441

Exercisable as of September 30, 2020 287 $ 221.43 5.88 $ 294

Granted — $ —

Cancelled ( 449 ) $ 242.51

Balance as of December 31, 2020 94 $ 145.78 6.96 $ 3,595

Exercisable as of December 31, 2020 94 $ 145.78 6.96 $ 3,595

Stock Repurchase Program

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The timing and amount of purchases will depend on market conditions and other factors.

During the three months ended September 30, 2020, the Company did no t engage in any share repurchase activities under its share repurchase program.

As of September 30, 2020, the Company had $ 259,639 of availability remaining under its stock repurchase authorization.

During the three and six months ended December 31, 2020, the Company did no t engage in any share repurchase activities under its share repurchase program.

As of December 31, 2020, the Company had $ 259,639 of availability remaining under its stock repurchase authorization.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Related Party Transactions

As of September 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 100 % of the Company’s outstanding Class B Common Stock and own approximately 3.0 % of the Company’s outstanding Class A Common Stock (inclusive of options exercisable within 60 days of September 30, 2020).

As of December 31, 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 100 % of the Company’s outstanding Class B Common Stock and own approximately 3.0 % of the Company’s outstanding Class A Common Stock.

Such shares of the Company’s Class A Common Stock and Class B Common Stock, collectively, represent approximately 70.7 % of the aggregate voting power of the Company’s outstanding common stock.

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• Media rights agreements, that the Company and MSG Networks entered into in July 2015 with stated terms of 20 years, providing MSG Networks with local telecast rights for the Knicks and Rangers games in exchange for media rights fees;

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

• 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;

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• 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;

• Sublease agreement, pursuant to which the Company leases 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 provided for a $ 110,000 and $ 90,000 senior unsecured delayed draw term loan facilities, for the Knicks and Rangers, respectively.

The DDTL facilities were terminated on November 6, 2020.

See Notes 11 and 17 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;

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(ii) the Company’s Vice Chairman with AMC Networks, MSG Entertainment and MSG Networks;

and (iii) the Company’s President and Chief Executive Officer with MSG Entertainment.

and (iii) the Company’s President

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

and Chief Executive Officer with MSG Entertainment.

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.

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See “— Current Related Party Arrangements.”

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

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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).

Dolan, pursuant to which the Company was permitted to utilize pilots employed by DFO

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

for purposes of flying the Challenger when the Company was leasing that aircraft under the Company’s dry lease agreement with Brighid Air.

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.

These amounts are reflected in revenues and operating expenses in the accompanying consolidated statements of operations for the three months ended September 30, 2020 and 2019:

Three Months Ended September 30,

These amounts are reflected in revenues and operating expenses in the accompanying consolidated statements of operations for the three and six months ended December 31, 2020 and 2019:

Three Months Ended December 31, Six Months Ended December 31,

2020 2019 2020 2019

Revenues $ 14,369 $ 61,119 $ 23,430 $ 67,446

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Costs associated with the Sponsorship sales and service representation agreements 2,322 — 4,680 —

Costs associated with the Arena License Agreements 2,494 — 2,854 —

Other operating expenses (credits), net 52 ( 277 ) 52 ( 332 )

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.

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 three months ended September 30, 2020.

Corporate General and Administrative Expenses, net — MSG Networks

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Except for certain legal services, following the MSGE Distribution, the Company no longer provides these services to MSG Networks.

Corporate general and administrative expenses, net — MSG Networks reflects charges from the Company to MSG Networks under the Current MSGN Services Agreement and Prior MSGN Services Agreement of $ 219 and $ 2,641 for the three months ended September 30, 2020 and 2019, net of general and administrative costs charged to the Company by MSG Networks, respectively.

Corporate general and administrative expenses, net — MSG Networks reflects charges from the Company to MSG Networks under the Current MSGN Services Agreement of $ 219 and $ 438 for the three and six months ended December 31, 2020, net of general and administrative costs charged to the Company by MSG Networks, respectively.

In addition, it reflects charges from the Company to MSG Networks under the Prior MSGN Services Agreement of $ 2,641 and $ 5,282 , for the three and six months ended December 31, 2019, net of general and administrative costs charged to the Company by MSG Networks, respectively.

Corporate general and administrative expenses, net — MSG Entertainment

Corporate general and administrative expense, net — MSG Entertainment reflects charges of $ 11,036 from MSG Entertainment pursuant to the TSA for certain business functions that were previously performed by internal resources.

Corporate general and administrative expense, net — MSG Entertainment reflects net charges of $ 7,913 and $ 18,949 from MSG Entertainment pursuant to the TSA for certain business functions that were previously performed by internal resources for the three and six months ended December 31, 2020, respectively.

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.

In addition, Corporate general and administrative expense, net — MSG Entertainment reflects rent expense of $ 674 and $ 1,369 associated with the lease of office space from

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MSG Entertainment for the three and six months ended December 31, 2020, respectively.

See Note 8 for more information regarding the lease of office space from MSG Entertainment.

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.

Costs associated with the Arena License Agreements

For the three and six months ended December 31, 2020, costs associated with the Arena License Agreements include $ 2,210 recorded as operating lease cost.

See Note 8 for more information regarding Arena License Agreements.

Other Operating Expenses, net

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However, 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.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Discontinued operations

Related party transactions included in Loss from discontinued operations, net of taxes in the accompanying consolidated statements of operations for the three months ended September 30, 2019 include (i) revenues from related parties of $ 738 , (ii) operating expenses charged by related parties of $ 187 , and (iii) loss in equity-method investments of $ 1,473 .

Income tax benefit for the three months ended September 30, 2020 of $ 498 differs from income tax benefit derived from applying the statutory federal rate of 21% to the pretax loss primarily due to tax expense of $ 7,621 related to an increase in the valuation allowance and tax expense of $ 861 from nondeductible officers’ compensation, partially offset by state income tax benefit of $ 2,834 .

Income tax benefit for the three months ended September 30, 2019 of $ 19,503 differs from income tax benefit derived from applying the statutory federal rate of 21% to the pretax income primarily due to state income tax benefit of $ 5,479 and excess tax benefit of $ 2,752 related to share-based compensation awards, partially offset by tax expense of $ 1,461 resulting from nondeductible officers’ compensation.

Related party transactions included in Income from discontinued operations, net of taxes in the accompanying consolidated statements of operations for the three months ended December 31, 2019 include (i) revenues from related parties of $ 6,381 , (ii) operating expenses charged by related parties of $ 275 , and (iii) loss in equity-method investments of $ 1,170 .

Related party transactions included in Income from discontinued operations, net of taxes in the accompanying consolidated statements of operations for the six months ended December 31, 2019 include (i) revenues from related parties of $ 7,119 , (ii) operating expenses charged by related parties of $ 462 , and (iii) loss in equity-method investments of $ 2,643 .

Income tax expense for the three months ended December 31, 2020 of $ 170 differs from income tax benefit derived from applying the statutory federal rate of 21 % to the pretax loss primarily due to tax expense of $ 9,842 related to an increase in the valuation allowance, tax expense of $ 1,558 resulting from the acceleration of share-based compensation expense in connection with the cancellation of certain awards and tax expense of $ 533 resulting from nondeductible officers’ compensation, partially offset by state income tax benefit of $ 3,427 .

Income tax benefit for the six months ended December 31, 2020 of $ 328 differs from income tax benefit derived from applying the statutory federal rate of 21 % to the pretax loss primarily due to tax expense of $ 17,463 related to an increase in the valuation allowance, tax expense of $ 1,558 resulting from the acceleration of share-based compensation expense in connection with the cancellation of certain awards and tax expense of $ 1,393 resulting from nondeductible officers’ compensation, partially offset by state income tax benefit of $ 6,261 .

Income tax expense for the three months ended December 31, 2019 of $ 2,773 differs from income tax benefit derived from applying the statutory federal rate of 21 % to the pretax loss primarily due to tax expense of $ 1,547 resulting from nondeductible officers’ compensation and state income tax expense of $ 1,099 .

Income tax benefit for the six months ended December 31, 2019 of $ 16,730 differs from income tax benefit derived from applying the statutory federal rate of 21 % to the pretax loss primarily due to state income tax benefit of $ 4,380 and excess tax benefit of $ 3,185 related to share-based compensation awards, partially offset by tax expense of $ 3,008 resulting from nondeductible officers’ compensation.

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.

Subsequent Events

Canceled Equity Awards

On October 8, 2020, as a result of the Settlement filed by a purported stockholder of the Company derivatively on behalf of the Company, certain equity awards were canceled.

See Note 13 for more information.

Credit Facilities

On November 6, 2020, subsidiaries of the Company entered into the 2020 Knicks Credit Agreement, which amended and restated the 2016 Knicks Credit Agreement in its entirety, and the 2020 Rangers Credit Agreement, which amended and restated the 2017 Rangers Credit Agreement in its entirety.

Further, Knicks Holdings, LLC, an indirect, wholly-owned subsidiary of the Company and the direct parent of Knicks LLC (“Knicks Holdings”), entered into a new credit agreement with a syndicate of lenders (the “2020 Knicks Holdings Credit Agreement”).

In connection with entry into the facilities above, the Company terminated the DDTL Facilities and the Knicks Unsecured Credit Facility in their entirety.

The maturity date of the 2020 Knicks Credit Agreement is November 6, 2023.

Borrowings under the 2020 Knicks Credit Agreement 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 0.50 % to 0.75 % per annum or (ii) LIBOR plus a margin ranging from 1.50 % to 1.75 % per annum.

The $ 200,000 in borrowings outstanding under the 2016 Knicks Revolving Credit Facility as of September 30, 2020 were refinanced on a long-term basis with proceeds from the 2020 Knicks Credit Agreement.

The outstanding balance under the 2020 Knicks Revolving Credit Facility was $ 220,000 as of November 9, 2020.

The maturity date of the 2020 Rangers Credit Agreement is November 6, 2023.

Borrowings under the 2020 Rangers Credit Agreement bear interest at a floating rate, which at the option of Rangers LLC may be either (i) a base rate plus a margin ranging from 0.75 % to 1.25 % per annum or (ii) LIBOR plus a margin ranging from 1.75 % to 2.25 % per annum.

The $ 150,000 in borrowings outstanding under the 2017 Rangers Revolving Credit Facility as of September 30, 2020 were refinanced on a long-term basis with proceeds from the 2020 Rangers Credit Agreement.

The outstanding balance under the 2020 Rangers Revolving Credit Facility was $ 160,000 as of November 9, 2020.

The maturity date of the 2020 Knicks Holdings Credit Agreement is November 6, 2023.

Borrowings under the 2020 Knicks Holdings Credit Agreement bear interest at a floating rate, which at the option of Knicks Holdings may be either (i) a base rate plus a margin ranging from 1.00 % to 1.25 % per annum or (ii) LIBOR plus a margin ranging from 2.00 % to 2.25 % per annum.

The 2020 Knicks Holdings Credit Agreement is currently undrawn as of November 9, 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements