What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-08-19 compared with 2020-08-31 · 310 added, 355 removed, 377 unchanged (64% of the section changed)

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

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

and its direct and indirect subsidiaries (collectively, “we,” “us,” “our,” “MSG Sports,” or the “Company”) including the impact of COVID-19 on our future operations.

See “Part I — Item 1.

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

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

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

• the duration and severity of the coronavirus pandemic and our ability to effectively manage the impacts, including the availability of the Madison Square Garden Arena (“The Garden”) with no or limited fans, league decisions regarding play, the cancellation of games and the impact of restrictions imposed by New York State, New York City, or otherwise;

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

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

the level of our capital expenditures and other investments;

general economic conditions, especially in the New York City;

• general economic conditions, especially in the New York City metropolitan area;

• the demand for sponsorship arrangements and for advertising;

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

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

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

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

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

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

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

• a default by our subsidiaries under their respective credit facilities;

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

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

a default by our subsidiaries under their respective credit facilities;

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

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

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

in fiscal year 2016 and the MSGE Distribution ;

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

(“MSG Networks”) in fiscal year 2016 and the MSGE Distribution (as defined below);

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

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This section provides an analysis of our results of operations for the years ended June 30, 2021 and 2020.

The Company has applied the Securities and Exchange Commission’s recently adopted FAST Act Modernization and Simplification of Regulation S-K, which limits the discussion to the two most recent fiscal years.

For the comparison of our results of operations for the years ended June 30, 2020 and 2019, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2020 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on August 31, 2020.

Liquidity and Capital Resources.

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

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

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

Our professional sports franchises are collectively referred to herein as “our sports teams.” In addition, the Company owns Knicks Gaming, an esports franchise that competes in the NBA 2K League, as well as a controlling interest in Counter Logic Gaming (“CLG”), a North American esports organization.

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

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

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

The concentration of our revenues and expenses, however, was different in fiscal year 2021 due to the effects of the COVID-19 pandemic.

Ticket Sales and Facility and Ticketing Fees

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Under the Arena License Agreements, the Knicks

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

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

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

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

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

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

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

In addition, in connection with the MSGE Distribution we entered into long term leases with MSG Entertainment that end June 30, 2055 and allow the Knicks and the Rangers to continue to play their home games at The Garden (the “Arena License Agreements”).

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.

Absent COVID-19, the stated license fee for the first full contract year ending June 30, 2021 would have been approximately $22,500 for the Knicks and approximately $16,700 for the Rangers, and then for each subsequent year, the license fees are 103% of the license fees for the immediately preceding contract year.

The Garden was not available for use between April 17, 2020 and the start of the NBA and NHL 2020-21 seasons in December 2020 and January 2021, respectively, due to the government-mandated suspension of events in response to COVID-19, and as a result, the Company was 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 the Rangers resumed playing their homes games at The Garden as part of their 2020-21 seasons.

However, fans were initially prohibited from attending games due to government-mandated assembly restrictions.

Effective February 23, 2021, New York venues with at least a 10,000-person capacity were permitted to operate at 10% capacity, and the Knicks and the Rangers began playing games at The Garden with a limited number of fans in attendance on February 23 and 26, respectively.

When games were played at The Garden by the Knicks and the Rangers either without fans in attendance or with limited fans in attendance due to government mandated capacity constraints, the applicable license fees paid to MSG Entertainment under the Arena License Agreements were substantially reduced.

Effective May 19, 2021, event venues such as The Garden were permitted to host guests at full capacity, subject to certain restrictions, including, for example, restrictions for unvaccinated guests.

As a result, the Knicks played three home playoff games with ticket sales of approximately 15,000-16,500 per game during the fiscal year ended June 30, 2021.

As a result of New York City regulations effective August 17, 2021, subject to certain exceptions, all guests 12 years of age or older and employees (other than players who are not residents of New York City) at indoor entertainment venues such as The Garden must show proof that they have received at least one dose of a COVID-19 vaccine.

Guests under the age of 12 must wear masks, provide proof of a negative COVID test and are permitted to enter only when accompanied by a vaccinated parent or guardian.

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

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

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

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

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NBA Escrow System/Revenue Sharing .

The NBA CBA also provides that players collectively receive a designated percentage of league-wide revenues (net of certain direct expenses) as compensation (approximately 51% ), and the teams retain the remainder.

The NBA CBA also provides that players collectively receive a designated percentage of league-wide revenues (net of certain direct expenses) as compensation (approximately 49% to 51%), and the teams retain the remainder.

The percentage of league-wide revenues paid as compensation and retained by the teams does not apply evenly across all teams and, accordingly, the Company may pay its players a higher or lower percentage of the Knicks’ revenues than other NBA teams.

Throughout each season, NBA teams withhold 10% of each player’s salary and contribute the withheld amounts to an escrow account.

Throughout each season, NBA teams withhold 10% of each player’s salary.

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

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

For the 2020-21 season and the remainder of the CBA, the escrow system above was eliminated and a new “Ten-and-Spread” system was put in place.

Under the Ten-and-Spread system, based upon league-wide revenues, aggregate player compensation will be reduced by up to 10% of each player’s salary.

If, for a particular season, compensation reductions in excess of 10% are needed, the excess will be divided by three and recouped via reductions to players’ compensation over the same season, and the subsequent two seasons.

The reduction of players’ salary for any one season is capped at 20% and carried over to the subsequent season as additional compensation reductions.

Each team is entitled to receive an equal one-thirtieth share of the compensation reductions up to 10% and the excess above 10% is allocated in proportion to each team’s player payroll.

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

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and collective league sources, if necessary.

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

assessments on playoff ticket revenues and through collective league sources.

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

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

Our net provision for these items for the year ended June 30, 2021 was approximately $3,575.

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

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

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

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

The actual amounts for the 2020-21 season may vary significantly from the recorded provision based on actual operating results for the league and all NBA teams for the season and other factors.

The current NHL CBA expires after the 2025-26 season (with the possibility of a one year extension in certain circumstances).

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

NHL Escrow System/Revenue Sharing.

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

In order to implement the salary cap system, NHL teams withhold a portion of each player’s salary and contribute the withheld amounts to an escrow account .

In order to implement the escrow system, NHL teams withhold a portion of each player’s salary and contribute the withheld amounts to an escrow account .

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

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

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

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

In addition, the NHL CBA limits the amount of deductions to be withheld from player salaries each year.

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

The NHL CBA also provides for a revenue sharing plan.

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

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

(b) then from payments by teams participating in the playoffs, with each team contributing 35% of its gate receipts for each home playoff game (although this provision was waived for the 2020-21 season);

and (c) the remainder from centrally-generated NHL sources .

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

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

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

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

Our net provisions for these items for the year ended June 30, 2021 was a credit of approximately $35,396.

The actual amounts for the 2020-21 season may vary significantly from the recorded provision based on actual operating results for the league and all NHL teams for the season and other factors.

Other Team Operating Expenses

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

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

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

The governing bodies of each league determine the amount of each season’s league assessments that are required from each member team.

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Other Expenses

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

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

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

Factors Affecting Operating Results

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

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

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

A significant

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

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

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

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

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

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

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

Factors Affecting Results of Operations

MSGE Distribution

In connection with the MSGE Distribution, the Company and MSG Entertainment entered into a number of related party agreements under which both companies will continue sharing certain revenues and expenses.

See Note 17 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for discussions of the Company’s related party transactions.

The terms of certain related party agreements impact the comparability of the results of operations, primarily the following revenues and expenses.

Suite License Fee Revenue

Prior to the MSGE Distribution, suite license fee revenue was recognized based on the allocations between the Company’s MSG Sports and MSG Entertainment segments and was dependent on the total number of events held at The Garden.

After the MSGE Distribution, the Company recognizes suite license fee revenue based on the Arena License Agreements and as games are played by the Knicks and the Rangers.

In addition, pursuant to the Arena License Agreements, the Company’s aggregate share of suite license fee revenue is 67.5%, as compared to a higher percentage allocated to the Knicks and the Rangers prior to the MSGE Distribution.

Venue Sponsorship and Signage

Prior to the MSGE Distribution, revenues from the sale of venue interior and exterior signage and sponsorship rights at The Garden that were not specific to our teams or entertainment events were allocated between the Company’s MSG Sports and MSG Entertainment segments and recognized over a fiscal year.

Subsequent to the MSGE Distribution, pursuant to the Arena License Agreements, the Company no longer recognizes revenue related to exterior signage at The Garden, but rather only from the sale of venue interior signage space and sponsorship rights, which is now recognized over the Knicks and the Rangers seasons.

In addition, prior to the MSGE Distribution, costs associated with sponsorship and signage sales were allocated between the Company’s MSG Sports and MSG Entertainment segments.

Subsequent to the MSGE Distribution, the Company

instead pays sales commission fees along with the fixed fee pursuant to the sponsorship sales and service and representation agreements.

Food, Beverage and Merchandise Sales

Prior to the MSGE Distribution, the Knicks and the Rangers reported revenues earned from food and beverage sales as gross revenue.

The costs of food and beverage sales were reported in direct operating expenses.

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

As such, the Company no longer recognizes costs of sales during the periods after the MSGE Distribution, and reports revenues earned from food and beverage sales as net revenues.

In addition, pursuant to the Arena License Agreements, the Knicks and the Rangers pay MSG Entertainment a 30% commission related to merchandise sales at The Garden.

Corporate Costs

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

See “— Results of Operations — Comparison of the Year Ended June 30, 2021 versus the Year Ended June 30, 2020” and Note 3 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information.

Impact of COVID-19 on Our Business

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

Those areas include:

ticket sales;

the Company’s share of suite licenses;

sponsorships;

signage and in-venue advertising at The Garden;

and food, beverage and merchandise sales.

In addition, the Knicks and the Rangers played fewer games during the 2020-21 regular seasons, with the NBA playing a 72-game regular season schedule and the NHL playing a 56-game regular season schedule.

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

In addition, while games have resumed at The Garden, until May 2021, fan attendance was limited due to ongoing government-mandated assembly restrictions.

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

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

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

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

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

Those areas include:

ticket sales;

media rights fees;

our share of suite licenses;

sponsorships;

signage and in-venue advertising at The Garden;

and food, beverage and merchandise sales.

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

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

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

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

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

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

New York Liberty

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

Renewal of a Ticketing Agreement

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

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

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

In connection with the MSGE Distribution, we entered into the Arena License Agreements with MSG Entertainment.

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

However, fans were initially prohibited from attending games due to government-mandated assembly restrictions.

Effective May 19, 2021, event venues such as The Garden were permitted to host guests at full capacity, subject to certain restrictions, including, for example, restrictions for unvaccinated guests.

As a result, the Knicks played three home playoff games with ticket sales of approximately 15,000-16,500 per game during the fiscal year ended June 30, 2021.

During the fiscal year 2021, 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 were reduced including (i) payments to MSG Entertainment under the Arena License Agreements, (ii) NBA league assessments and day-of-game expenses for Knicks and Rangers games, and (iii) league revenue sharing, net of escrow and team personnel expense.

These expense reductions did not fully offset revenue losses.

Garden must show proof that they have received at least one dose of a COVID-19 vaccine.

Guests under the age of 12 must wear masks, provide proof of a negative COVID test and are permitted to enter only when accompanied by a vaccinated parent or guardian.

Results of Operations

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

Years Ended June 30,

Years Ended June 30, Change (a)

2021 2020 Amount Percentage

Revenues $ 415,721 $ 603,319 $ (187,598) (31) %

Direct operating expenses 281,890 359,970 (78,080) (22) %

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Other income (expense):

Interest expense, net

Miscellaneous income (expense), net

Interest expense, net (10,529) (3,761) (6,768) NM

Miscellaneous expense, net (346) (421) 75 18 %

Loss from continuing operations before income taxes

Income tax benefit (expense)

(89,318) (98,048) 8,730 9 %

Income tax benefit (expense) 73,421 (20,593) 94,014 NM

Loss from continuing operations (15,897) (118,641) 102,744 87 %

Income (loss) from discontinued operations, net of taxes

Loss from discontinued operations, net of taxes — (90,222) 90,222 NM

Net loss (15,897) (208,863) 192,966 92 %

Net loss attributable to nonredeemable noncontrolling interests from continuing operations

(1,943) (2,342) 399 17 %

Net loss attributable to redeemable noncontrolling interests from discontinued operations

— (24,013) 24,013 NM

Net loss attributable to nonredeemable noncontrolling interests from discontinued operations

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

— (120) 120 NM

Net loss attributable to Madison Square Garden Sports Corp.’s stockholders $ (13,954) $ (182,388) $ 168,434 92 %

NM — Percentage is not meaningful

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

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

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

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

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

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

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

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

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

Revenues for the year ended June 30, 2021 decreased $187,598, or 31%, to $415,721 as compared to the prior year.

1 unchanged sentence

Decrease in pre/regular season ticket-related revenues $ (192,393)

Decrease in revenues from league distributions

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

Decrease in sponsorship and signage revenues

Decrease in local media rights fees from MSG Networks

Decrease in suite license fee revenues (67,433)

Decrease in pre/regular season food, beverage and merchandise sales (35,597)

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

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

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

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

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

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

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

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

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

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

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

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

This decrease was partially offset by contractual rate increases.

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

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

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

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

Decrease in sponsorship and signage revenues (11,676)

Increase in revenues from league distributions 98,329

Inclusion of playoff related revenues as the Knicks did not qualify in the prior fiscal year 15,243

Increase in local media rights fees from MSG Networks 7,116

Other net decreases (1,187)

The decrease in pre/regular season ticket-related revenues was a result of government-mandated assembly restrictions and the Knicks and the Rangers playing games at The Garden with no fans in attendance until February 23 and 26, 2021, respectively, and after that, playing games with attendance restricted to 10% capacity.

The year ended June 30, 2020 was impacted by the suspension of the Knicks and the Rangers 2019-20 regular seasons in March 2020.

The decrease in suite license fee revenues was a result of government-mandated assembly restrictions at The Garden, as discussed above.

For Knicks and Rangers games played with a limited number of fans in attendance, access to suites was primarily sold by way of individual tickets, thus minimal suite license fee revenue was recognized for the year ended June 30, 2021.

In addition, the year ended June 30, 2021 includes the impact of the MSGE Distribution.

See “— Factors Affecting Operating Results — MSGE Distribution — Suite License Fee Revenue” for more information.

The decrease in pre/regular season food and beverage sales was a result of government-mandated assembly restrictions at The Garden, as discussed above.

In addition, the year ended June 30, 2021 includes the impact of the MSGE Distribution.

See “— Factors Affecting Operating Results — MSGE Distribution — Food, Beverage and Merchandise Sales” for more information.

The decrease in pre/regular season merchandise sales was a result of government-mandated assembly restrictions at The Garden, as discussed above.

The decrease in sponsorship and signage revenues was primarily due to the impact of the MSGE Distribution as well as lower recognition of existing sponsorship and signage inventory as a result of government-mandated assembly restrictions at The Garden, as discussed above, partially offset by sales of new sponsorship and signage inventory.

The increase in revenues from league distributions was primarily due to higher national media rights fees as a result of the lower recognition in the prior year period of national media rights fees related to the 2019-20 NBA and NHL seasons, which were recognized during the first quarter of fiscal year 2021 that otherwise would have been recognized during the third and fourth quarters of fiscal year 2020 and a $21,043 expansion fee from the NHL.

The increase was partially offset by decreases in other league distributions.

The increase in local media rights fees from MSG Networks was primarily due to the impact of the suspended 2019-20 NBA and NHL seasons which reduced revenue recognized in the prior year period, contractual rate increases, and the recognition of local media rights fees associated with the Rangers’ participation in the Stanley Cup Qualifiers during the first quarter of fiscal year 2021.

After suspending the 2019-20 seasons in March 2020 due to the COVID-19 pandemic, the NHL and NBA subsequently resumed play and completed their seasons in September and October 2020, respectively.

This increase was partially offset by the impact of the reduced NBA and NHL 2020-21 regular season schedules.

Direct operating expenses

Direct operating expenses primarily include:

Direct operating expenses generally include:

• compensation expense for our sports teams’ players and certain other team personnel;

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

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

the cost of merchandise and food and beverage sales.

• arena license fees recognized as operating lease costs associated with the Knicks and the Rangers playing home games at The Garden;

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

• NBA and NHL revenue sharing (net of escrow), league assessments and NBA luxury tax receipts;

• the cost of merchandise and, prior to the MSGE Distribution, food and beverage sales.

Direct operating expenses for the year ended June 30, 2021 decreased $78,080, or 22%, to $281,890 as compared to the prior year.

1 unchanged sentence

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

Decrease in net provisions for certain team personnel transactions

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

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

Increase in team personnel compensation

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

Decrease in team personnel compensation (17,801)

Decrease in net provisions for certain team personnel transactions (5,315)

Inclusion of operating lease costs associated with the Knicks and the Rangers playing home games at The Garden 35,419

Inclusion of playoff related expenses as the Knicks did not qualify in the prior year period 9,792

Other net decreases, including expenses that do not meet the criteria for inclusion in discontinued operations (17,759)

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

Years Ended June 30,

Years Ended June 30, Decrease

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

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

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

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

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

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

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

$ (37,731) $ 6,433 $ (44,164)

The decrease in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax primarily reflects lower provisions for league revenue sharing expense (net of escrow) of $40,953 primarily as a result of the COVID-19 pandemic.

In addition, the year ended June 30, 2021 includes adjustments to revenue sharing expense (net of escrow) for the 2019-20 NBA and NHL seasons.

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

The actual amounts for the 2020-21 season may vary significantly from the recorded provisions based on actual operating results for each league and all teams within each league for the season and other factors.

The Knicks were not a luxury tax payer for the 2019-20 season and, therefore, received an equal share of the portion of luxury tax receipts that were distributed to non-tax paying teams.

The Knicks’ roster as of June 30, 2021 did not result in the team being a luxury tax payer for the 2020-21 season and the company will receive an equal share of the portion of luxury tax receipts that are distributed to non-tax paying teams.

The decrease in other team operating expenses not discussed elsewhere in this table was primarily the result of government-mandated assembly restrictions at The Garden, as discussed above, and the shortened 2020-21 NBA and NHL regular seasons.

The decrease in pre/regular season expense associated with food and beverage sales was due to the impact of the MSGE Distribution.

See “— Factors Affecting Operating Results — MSGE Distribution — Food, Beverage and Merchandise Sales” for more information.

The decrease in pre/regular season expense associated with merchandise sales was a result of government-mandated assembly restrictions at The Garden, as discussed above.

The decrease in team personnel compensation was primarily due to lower player compensation and the net impact of the shortened 2020-21 NBA and NHL regular seasons, slightly offset by the recognition of player compensation expense during the first quarter of fiscal year 2021 that otherwise would have been recognized during the third and fourth quarters of fiscal year 2020 as a result of the NBA completing the 2019-20 season in October 2020.

Net provisions for certain team personnel transactions were as follows:

Years Ended June 30,

Years Ended June 30, Increase (Decrease)

Waivers/contract terminations $ 20,959 $ 27,055 $ (6,096)

Player trades 2,583 1,802 781

Net provisions for certain team personnel transactions $ 23,542 $ 28,857 $ (5,315)

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

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

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

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

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

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

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

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

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

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

Selling, general and administrative expenses

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

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

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

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

Selling, general and administrative expenses primarily consist of administrative costs, including compensation, professional fees, costs under the Company’s transition services agreement with MSG Entertainment and sales and marketing costs.

Selling, general and administrative expenses for the year ended June 30, 2021 decreased $112,975, or 35%, to $206,700 as compared to the prior year primarily due to lower corporate overhead costs, which in the prior year included certain corporate expenses that the Company did not incur during the current year and does not expect to incur in future periods, but which did not meet the criteria for inclusion in discontinued operations.

This decrease in selling, general and administrative expenses was partially offset by higher sports teams’ employee compensation and related benefits, including severance related to team executives, and fees related to the Company’s sponsorship sales and service representation agreements with MSG Entertainment.

Depreciation and amortization

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

Depreciation and amortization for the year ended June 30, 2021 decreased $11,966, or 68%, to $5,574 as compared to the prior year primarily due to depreciation in the prior year period that do not meet the criteria for inclusion in discontinued operations and, to a lesser extent, a certain asset being fully amortized.

Operating loss

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

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

Miscellaneous income (expense), net

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

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

Operating loss for the year ended June 30, 2021 decreased $15,423, or 16%, to $78,443 as compared to the prior year.

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

Interest expense, net

Net interest expense increased $6,768 to $10,529 as compared to the prior year.

The increase was primarily due to the Knicks and the Rangers revolving credit facilities, which were initially drawn on in March 2020, with subsequent additional drawings in November 2020.

Income tax benefit for the year ended June 30, 2021 of $73,421 differs from the income tax benefit derived from applying the statutory federal rate of 21% to pretax loss primarily due to a decrease in valuation allowance of $52,108 and state and local tax benefit of $7,331, partially offset by nondeductible officers’ compensation of $4,081.

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

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

Adjusted operating income (loss)

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

Adjusted operating loss

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

Management believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the Company’s business without regard to the settlement of an obligation that is not expected to be made in cash.

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

In addition, management believes that given the length of the Arena License Agreements and resulting magnitude of the

difference in deferred rent expense and the cash rent payments, the exclusion of deferred rent expense provides investors with a clearer picture of the Company's operating performance.

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

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

investors and analysts to analyze the Company’s performance.

Adjusted operating income (loss) and similar measures with similar titles are common performance measures used by investors and analysts to analyze the Company’s performance.

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

2 unchanged sentences

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

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

Years Ended June 30,

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

Years Ended June 30, Change

2021 2020 Amount Percentage

Operating loss $ (78,443) $ (93,866) $ 15,423 16 %

Share-based compensation (a)

Deferred rent 28,305 —

Depreciation and amortization (a) (b)

Other purchase accounting adjustments

Adjusted operating income (loss)

________________

NM — Percentage is not meaningful

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

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

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

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

Net loss attributable to nonredeemable noncontrolling interests from continuing operations

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

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

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

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

Factors Affecting Operating Results from Acquisitions

CLG’s Operating Results

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

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

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

Years Ended June 30,

Direct operating expenses

Selling, general and administrative expenses

Depreciation and amortization

Operating loss

Other income (expense):

Interest expense, net

Miscellaneous income (expense), net

Loss from operations before income taxes

Income tax benefit

Income (loss) from continuing operations

Income from discontinued operations, net of taxes

Net income (loss)

Net loss attributable to nonredeemable noncontrolling interests from continuing operations

Net loss attributable to redeemable noncontrolling interests from discontinued operations

Net loss attributable to nonredeemable noncontrolling interests from discontinued operations

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

NM — Percentage is not meaningful

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

The net increase is attributable to the following:

Increase in revenues from league distributions

Increase in local media rights fees from MSG Networks

Increase in suite license fee revenues

Decrease in pre/regular season ticket-related revenues

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

Decrease in sponsorship and signage revenues

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

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

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

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

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

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

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

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

Additionally, the Liberty was sold in January 2019.

Direct operating expenses

Direct operating expenses for the year ended June 30, 2019 increased $21,012 , or 5% , to $440,081 as compared to the prior year.

The net increase is attributable to the following:

Increase in net provisions for certain team personnel transactions

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

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

Decrease in team personnel compensation primarily due to roster changes

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

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

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

Additionally, the Liberty was sold in January 2019.

Net provisions for certain team personnel transactions were as follows:

Years Ended June 30,

Net provisions for certain team personnel transactions

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

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

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

Years Ended June 30,

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

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

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

seasons’ revenue sharing expense.

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

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

Selling, general and administrative expenses

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

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

Depreciation and amortization

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

Operating loss

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

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

Interest expense, net

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

Miscellaneous expense, net

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

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

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

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

Adjusted operating income

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

Years Ended June 30,

Operating loss

Share-based compensation (a)

Depreciation and amortization (a) (b)

30,437 48,693

Restructuring charges 1,597 —

Other purchase accounting adjustments — 167

Adjusted operating income

Adjusted operating loss $ (12,530) $ (27,466) $ 14,936 54 %

________________

NM — Percentage is not meaningful

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

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

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

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

Net loss attributable to nonredeemable noncontrolling interests from continuing operations

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

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

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

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

(b) Depreciation and amortization included purchase accounting adjustments of $1,059 and $1,070 for the years ended June 30, 2021 and 2020, respectively.

Adjusted operating loss for the year ended June 30, 2021 decreased $14,936, or 54%, to $12,530 as compared to the prior year.

The decrease was primarily due to lower direct operating expenses, lower selling, general and administrative expenses and lower depreciation and amortization partially offset by lower revenues.

Liquidity and Capital Resources

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In addition, see also Note 1 to the consolidated financial statements included in “Part II — Item 8.

Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further information.

Our primary sources of liquidity are cash and cash equivalents and available borrowing capacity under our credit facilities as well as cash flow from our operations.

There can be no assurance, however, that our expenses will not exceed our revenues, thereby presenting an ongoing use of liquidity.

On November 6, 2020, the Company amended and extended the 2016 Knicks Credit Agreement and the 2017 Rangers Credit Agreement, and entered into the 2020 Knicks Holdings Credit Agreement (together with the 2020 Knicks Credit Agreement and the 2020 Rangers Credit Agreement, the “New Financing”), which provide for additional liquidity.

In addition, the NHL advanced the Company $30,000, which the league made available to each team following the completion of the NHL’s approximately $1,000,000 private placement in January 2021 (the “2021 Rangers NHL Advance Agreement”).

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

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

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

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

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

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

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

As of June 30, 2021, we had approximately $64,900 in Cash and cash equivalents.

In addition, as of June 30, 2021, the Company’s deferred revenue obligations were approximately $146,300, net of billed, but not yet collected deferred revenue.

This balance is primarily comprised of obligations in connection with tickets and suites.

In addition, the Company’s deferred revenue obligations included $30,000 from the NBA, which the league provided to each team following the completion of the NBA’s $900,000 private placement in December 2020.

As a general matter, deferred revenue obligations relating to tickets and suites will be addressed through games played and, to the extent necessary, through credits, make-goods and/or refunds, as applicable.

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

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

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

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

We plan to refinance the Knicks

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

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

We believe we have sufficient liquidity, including approximately $64,900 in Cash and cash equivalents as of June 30, 2021, along with $245,000 of additional available borrowing capacity under existing credit facilities, to fund our operations and satisfy any obligations, including with respect to the return or application of deferred revenue, over the next 12 months.

Financing Agreements and Stock Repurchases

2020 Knicks Revolving Credit Facility

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

On November 6, 2020, New York Knicks, LLC (“Knicks LLC”), a wholly owned subsidiary of the Company, entered into the 2020 Knicks Credit Agreement with a syndicate of lenders providing for the 2020 Knicks Revolving Credit Facility to fund working capital needs and for general corporate purposes.

The 2020 Knicks Revolving Credit Facility increased borrowing capacity from $200,000 to $275,000.

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

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As of June 30, 2021, Knicks LLC was in compliance with this financial covenant.

The Knicks Revolving Credit Facility will mature and any unused commitments thereunder will expire on September 30, 2021.

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

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

Borrowings bear interest at a floating rate, which at the option of Knicks LLC may be either (i) a base rate plus a margin ranging from 0.00% to 0.125% per annum or (ii) the London Inter-Bank Offered Rate (“LIBOR”) plus a margin ranging from 1.00% to 1.125% per annum.

Borrowings bear interest at a floating rate, which at the option of Knicks LLC may be either (i) a base rate plus a margin ranging from 0.50% to 0.75% per annum or (ii) LIBOR plus a margin ranging from 1.50% to 1.75% per annum.

Knicks LLC is required to pay a commitment fee ranging from 0.25% to 0.30% 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 June 30, 2021.

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

national broadcast agreements.

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, (ii) revenues to be paid to the

Knicks LLC by the NBA pursuant to certain U.S.

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

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).

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

Knicks Unsecured Credit Facility

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

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 June 30, 2020 .

This facility does not have financial covenants.

2020 Knicks Holdings Revolving Credit Facility

On November 6, 2020, Knicks Holdings, LLC (“Knicks Holdings”), a wholly-owned subsidiary of the Company, entered into the 2020 Knicks Holdings Credit Agreement with a syndicate of lenders providing for the 2020 Knicks Holdings Revolving Credit Facility to fund working capital needs and for general corporate purposes.

The 2020 Knicks Holdings Revolving Credit Facility provides for $75,000 of borrowing capacity.

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 June 30, 2021, 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 1.00% to 1.25% per annum or (ii) LIBOR plus a margin ranging from 2.00% to 2.25% per annum.

Knicks Holdings is required to pay a commitment fee ranging from 0.375% to 0.50% per annum in respect of the average daily unused commitments under the 2020 Knicks Holdings Revolving Credit Facility.

The 2020 Knicks Holdings Revolving Credit Facility is currently undrawn as of June 30, 2021.

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.

2020 Rangers Revolving Credit Facility

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

On November 6, 2020, New York Rangers, LLC (“Rangers LLC”), a wholly-owned subsidiary of the Company, entered into the 2020 Rangers Credit Agreement with a syndicate of lenders providing for the 2020 Rangers Revolving Credit Facility to fund working capital needs and for general corporate purposes.

The 2020 Rangers Revolving Credit Facility increased borrowing capacity from $150,000 to $250,000.

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

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As of June 30, 2021, Rangers LLC was in compliance with this financial covenant.

The Rangers Revolving Credit Facility will mature and any unused commitments thereunder will expire on January 25, 2022.

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

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

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The outstanding balance under the 2020 Rangers Revolving Credit Facility was $135,000 as of June 30, 2021.

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

During the year ended June 30, 2021, the Company made principal repayments of $25,000.

All obligations under the 2020 Rangers Revolving Credit Facility are, subject to the 2021 Rangers NHL Advance Agreement, 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.

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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.

Delayed Draw Term Loan Credit Facilities

As an additional source of liquidity for the Company in response to the COVID-19 pandemic, on April 17, 2020, MSG NYR Holdings, LLC and MSG NYK Holdings, LLC, two indirect wholly-owned subsidiaries of the Company, each entered into a separate delayed draw term loan credit agreement with MSG Entertainment Group, LLC, a wholly-owned subsidiary of MSG Entertainment, as lender (the “DDTL Lender”).

The credit agreement for MSG NYK Holdings, LLC (the “Knicks DDTL Facility Borrower”) provides for a $110,000 senior unsecured delayed draw term loan facility (the “Knicks DDTL Facility”) and the credit agreement for MSG NYR Holdings, LLC (the “Rangers DDTL Facility Borrower”) provides for a $90,000 senior unsecured delayed draw term loan facility (the “Rangers DDTL Facility” and, together with the Knicks DDTL Facility, the “DDTL Facilities”).

The DDTL Facilities will mature and any unused commitments thereunder will expire on October 17, 2021.

Borrowings under the DDTL Facilities will bear interest at a variable rate equal to either, at the election of the applicable borrower, (i) LIBOR plus 2.00% per annum or (ii) a base rate plus 1.00% per annum.

Subject to the borrowing conditions, each of the DDTL Facilities may be drawn in up to four separate borrowings of $10,000 or more.

Proceeds of borrowings under the DDTL Facilities will be used for general corporate purposes.

The availability of each of the DDTL Facilities to the respective borrowers is subject to certain conditions, including (a) the liquidity, including cash on hand and availability under revolving credit commitments, of the Company, MSG Sports, LLC, the Knicks DDTL Facility Borrower and its subsidiaries and the Rangers DDTL Facility Borrower and its subsidiaries (other than any liquidity that is restricted by law or contractual obligation from being transferred to the relevant DDTL Facility Borrower or its subsidiaries) must be (i) less than $50,000 immediately prior to giving effect to any borrowing, and (ii) less than $75,000 immediately after giving effect to any borrowing, and (b) with respect to the Knicks DDTL Facility, the Knicks DDTL Facility Borrower and its subsidiaries must have used commercially reasonable efforts to raise additional financing (“New Third-Party Debt”), including additional commitments under existing revolving facilities, prior to drawing on the Knicks DDTL Facility to the extent permitted by the debt policies of the NBA.

In addition, the commitments of the DDTL Lender to make advances under the Knicks DDTL Facility will be permanently reduced and the Knicks DDTL Facility will be subject to mandatory prepayments in an amount equal to the net cash proceeds received by the Company, MSG Sports, LLC, the Knicks DDTL Facility Borrower, or the subsidiaries of the Knicks DDTL Facility Borrower from any New Third-Party Debt.

Pursuant to the NBA debt policies, the NBA has consented (the “NBA Consent Letter”) to the incurrence of the indebtedness under the Knicks DDTL Facility.

The NBA Consent Letter provides that the Knicks DDTL Facility Borrower and its subsidiaries (including the Knicks basketball team) will, among other matters, (i) operate the team in a first class manner, consistent with the manner in which NBA teams generally are operated, as determined by the NBA Commissioner in his sole discretion, and (ii) maintain sufficient net working capital and cash reserves to pay expenses, liabilities and obligations of the team in the ordinary

course and in a timely fashion.

In addition, the Knicks DDTL Facility Borrower and its subsidiaries (including the Knicks) have agreed with the NBA to not transfer certain basketball-related assets and to not make distributions to the Company without first providing the NBA with advance notice and not receiving the objection of the NBA Commissioner.

There was no borrowing under the DDTL Facilities as of June 30, 2020 .

Financing Agreements and Stock Repurchases

2021 Rangers NHL Advance Agreement

On March 19, 2021, Rangers LLC, Rangers Holdings, LLC and MSG NYR Holdings LLC entered into the 2021 Rangers NHL Advance Agreement with the NHL, pursuant to which the NHL advanced $30,000 to Rangers LLC.

The advance is to be utilized solely and exclusively to pay for Rangers LLC operating expenses.

All obligations under the 2021 Rangers NHL Advance Agreement are senior to and shall have priority over all secured and other indebtedness of Rangers LLC, Rangers Holdings, LLC, and MSG NYR Holdings LLC.

All borrowings under the 2021 Rangers NHL Advance Agreement were made on a non-revolving basis and bear interest at 3.00% per annum, ending on the date any such advances are fully repaid.

Advances received under the 2021 Rangers NHL Advance Agreement are payable upon demand by the NHL.

It is expected that the advanced amount will be set off against funds that would otherwise be paid, distributed or transferred by the NHL to Rangers LLC.

The outstanding balance under the 2021 Rangers NHL Advance Agreement was $30,000 as of June 30, 2021.

See Note 13 and Note 16 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for discussions of the Company’s debt obligations and various financing agreements, and the Company’s stock repurchases, respectively.

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Years Ended June 30,

Net income (loss)

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

Net loss $ (15,897) $ (208,863)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities (36,744) 264,259

Subtotal $ (52,641) $ 55,396

Changes in working capital assets and liabilities 17,315 (51,828)

Net cash provided by operating activities

Net cash provided by (used in) operating activities $ (35,326) $ 3,568

Net cash used in investing activities (466) (514,863)

Net cash used in financing activities

Net cash provided by (used in) financing activities 17,155 (520,588)

Effect of exchange rates on cash, cash equivalents and restricted cash — 4,655

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Operating Activities

Net cash provided by operating activities for the year ended June 30, 2020 decreased by $157,685 to $3,568 as compared to the prior year primarily due to the decrease in net income, both from continued and discontinued operations, adjusted for non-cash items.

The decrease was driven by the impact of the COVID-19 pandemic and the MSGE Distribution.

As a result of government-mandated assembly limitations and closures due to the COVID-19 pandemic, no events have been held since mid-March at The Garden where the Knicks and Rangers play their home games and the Company had recognized materially less revenues across a number of areas.

In addition, the temporary closure of The Garden and other MSG Entertainment venues had a material impact on the results from discontinued operations.

Net cash provided by operating activities for the year ended June 30, 2019 decreased by $56,376 to $161,253 as compared to the prior year primarily due to changes in certain assets and liabilities, as well as a decrease in net income to a net loss in fiscal year 2019 adjusted for non-cash items.

The changes in certain assets and liabilities are driven by decreases in collections due to promoters and prepaid expenses and other assets, partially offset by higher accrued and other liabilities, all due to timing.

The decrease in net income adjusted for non-cash items was impacted by earnings in equity method investments in fiscal year 2019 as compared to a loss in the prior year and lower depreciation and amortization in fiscal year 2019.

Net cash used in operating activities for the year ended June 30, 2021 was $35,326 as compared to net cash provided by operating activities in the prior year of $3,568.

This was primarily due to the decrease in net loss adjusted for non-cash items partially offset by changes in certain assets and liabilities.

Net cash provided by operating activities for the prior year was not adjusted to exclude net cash provided by discontinued operations.

Investing Activities

Net cash used in investing activities for the year ended June 30, 2020 increased by $281,968 to $514,863 as compared to the prior year, principally driven by investing activities in discontinued operations.

The changes in investing activities included in discontinued operations primarily consisted of (i) an increase in purchase of short-term investments in fiscal year 2020 as compared to the prior year, (ii) higher capital expenditures in fiscal year 2020 as compared to the prior year, of which substantially all are related to the MSG Entertainment planned MSG Spheres in Las Vegas and London, and (iii) lower proceeds received from the sale of interest in a nonconsolidated affiliate in the prior year compared to the sale of interest in a nonconsolidated affiliate in the current year.

This increase was partially offset by (i) proceeds from the maturity of short-term investments, (ii) a loan repayment received from a subordinated note, (iii) lower investments made in nonconsolidated affiliates in the current year as compared to the prior year, and (iv) acquisition of notes receivable during the prior year as compared to none during the current year.

Net cash used in investing activities for the year ended June 30, 2019 increased by $50,538 to $232,895 as compared to the prior year primarily principally driven by investing activities in discontinued operations.

The changes in investing activities included in discontinued operations primarily consisted of the investment in a British pound-denominated time deposit and an investment in a nonconsolidated affiliate, partially offset by proceeds received from the sale of interest in another nonconsolidated affiliate.

Net cash used in investing activities for the year ended June 30, 2021 decreased by $514,397 to $466 as compared to the prior year primarily driven by investing activities in discontinued operations in the prior year.

Investing activities included in discontinued operations in the prior year primarily consisted of purchase of short-term investments and capital expenditures, of which substantially all are related to the MSG Entertainment planned MSG Spheres in Las Vegas and London, partially offset by proceeds from the maturity of short-term investments, a loan repayment received from a subordinated note, and proceeds received from the sale of interest in a nonconsolidated affiliate.

Financing Activities

Net cash used in financing activities for the year ended June 30, 2020 increased by $448,842 to $520,588 as compared to the prior year.

This increase in cash used in financing activities primarily consisted of the distribution of cash to MSG Entertainment, partially offset by the proceeds received from the borrowings under the Knicks Revolving Credit Facility and Rangers Revolving Credit Facility and other net financing activities included in discontinued operations.

Net cash used in financing activities for the year ended June 30, 2019 increased by $20,649 to $71,746 as compared to the prior year.

The increase is driven primarily by financing activities included in discontinued operations partially offset by (i) lower taxes paid in lieu of shares issued for equity-based compensation in fiscal year 2019 as compared to the prior year and (ii) repurchases of shares of the Company’s Class A Common Stock in the prior year as compared to no repurchases in fiscal year 2019, and other net financing activities.

Net cash provided by financing activities for the year ended June 30, 2021 was $17,155 as compared to net cash used in financing activities in the prior year of $520,588.

This change is primarily due to the distribution of cash to MSG Entertainment in the prior year and proceeds received in the current year from the 2021 Rangers NHL Advance Agreement, partially offset by higher initial borrowings in the prior year compared to the additional borrowings in the current year under, the now, amended and extended 2020 Knicks Credit Agreement and 2020 Rangers Credit Agreement.

Contractual Obligations and Off Balance Sheet Arrangements

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Payments Due by Period

Off balance sheet arrangements:

4-5 More Than

Off balance sheet arrangements (a)

$ 330,076 $ 116,937 $ 138,583 $ 66,217 $ 8,339

Contractual obligations reflected on the balance sheet:

2,336,268 43,563 89,966 89,427 2,113,312

Long-term debt (c)

355,000 — 355,000 — —

Contractual obligations (d)

111,751 70,557 27,554 5,392 8,248

Contractual obligations not reflected on the balance sheet consist principally of the Company’s obligations under employment agreements that the Company has with certain of its professional sports teams’ personnel that are to be performed in future periods and that are generally guaranteed regardless of employee injury or termination.

Includes contractually obligated minimum lease payments for operating leases having an initial noncancelable term in excess of one year.

2,803,019 114,120 472,520 94,819 2,121,560

$ 3,133,095 $ 231,057 $ 611,103 $ 161,036 $ 2,129,899

_________________

(a) Contractual obligations not reflected on the balance sheet consist principally of the Company’s obligations under employment agreements that the Company has with certain of its professional sports teams’ personnel that are to be performed in future periods and that are generally guaranteed regardless of employee injury or termination.

(b) Includes contractually obligated minimum license fees under the Arena License Agreement, which fees are characterized as lease payments for operating leases having an initial noncancelable term in excess of one year under GAAP.

These commitments are presented exclusive of the imputed interest used to reflect the payment’s present value.

See Note 8 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for information on the contractual obligations related to future lease payments, which are reflected on the consolidated balance sheet as lease liabilities as of June 30, 2021.

Consists of amounts drawn under the Knicks Revolving Credit Facility and Rangers Revolving Credit Facility .

(c) Consists of amounts drawn under the 2020 Knicks Revolving Credit Facility and 2020 Rangers Revolving Credit Facility.

See Note 13 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further details.

Contractual obligations reflected on the balance sheet consist principally of the Company’s obligations under employment agreements that the Company has with certain of its professional sports teams’ personnel that have been fully performed and that are being paid on a deferred basis.

Pension obligations have been excluded from the table above as the timing of the future cash payments is uncertain.

(d) Contractual obligations reflected on the balance sheet consist principally of the Company’s obligations under employment agreements that the Company has with certain of its professional sports teams’ personnel that have been fully performed and that are being paid on a deferred basis.

(e) Pension obligations have been excluded from the table above as the timing of the future cash payments is uncertain.

See Note 14 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information on the future funding requirements under our pension obligations.

See Note 11 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further details of the amount reflected on the balance sheet as of June 30, 2020 .

Seasonality of Our Business

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

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

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

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

As a result, based on the completion of the 2019-20 NBA and NHL seasons, the Company would recognize certain revenues that otherwise would have been recognized during the third and fourth quarter of fiscal year 2020 during the first quarter of fiscal year 2021.

In July and August 2020, the NBA and NHL, respectively, resumed their seasons and the NHL and NBA subsequently completed their seasons in September and October 2020, respectively.

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

In addition, due to the delayed start of the 2020-21 NBA and NHL seasons in December 2020 and January 2021, respectively, the Company recognized certain revenues during the third and fourth quarters of fiscal year 2021, that otherwise would have typically been recognized during the second and third quarters of fiscal year 2021.

Recently Issued Accounting Pronouncements and Critical Accounting Policies

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Arrangements with Multiple Performance Obligations

See Note 4 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for discussion of the Company’s arrangements with multiple performance obligations, primarily multi-year sponsorship agreements.

The Company has contracts with customers, including multi-year sponsorship agreements, that contain multiple performance obligations.

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

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

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

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

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

The Company allocates the transaction price for such arrangements to each performance obligation within the arrangement based on the estimated relative standalone selling price of the performance obligation.

The Company’s process for determining its estimated standalone selling prices involves management’s judgment and considers multiple factors including company specific and market specific factors that may vary depending upon the unique facts and circumstances related to each performance obligation.

Key factors considered by the Company in developing an estimated standalone selling price for its performance obligations include, but are not limited to, prices charged for similar performance obligations, the Company’s ongoing pricing strategy and policies, and consideration of pricing of similar performance obligations sold in other arrangements with multiple performance obligations.

The Company may incur costs such as commissions to obtain its multi-year sponsorship agreements.

The Company assesses such costs for capitalization on a contract by contract basis.

To the extent costs are capitalized, the Company estimates the useful life of the related contract asset which may be the underlying contract term or the estimated customer life depending on the facts and circumstances surrounding the contract.

The contract asset is amortized over the estimated useful life.

Impairment of Long-Lived and Indefinite-Lived Assets

The Company’s long-lived and indefinite-lived assets accounted for approximately 29% of the Company’s consolidated total assets as of June 30, 2021 and consisted of the following:

Goodwill $ 226,955

Indefinite-lived intangible assets 112,144

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

Excluding discontinued operations, the Company has one operating and reportable segment, and for the year ended June 30, 2020, the Company had one reporting unit for goodwill impairment testing purposes.

The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred.

The Company has one operating and reportable segment, and for the year ended June 30, 2021, the Company had one reporting unit for goodwill impairment testing purposes.

The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have

If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would not need to perform a quantitative impairment test for that reporting unit.

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The estimates of the fair value of the Company’s reporting units are primarily determined using discounted cash flows and comparable market transactions.

These valuations are based on estimates and assumptions including projected future cash flows, discount rates, determination of appropriate market comparables and the determination of

whether a premium or discount should be applied to comparables.

These valuations are based on estimates and assumptions including projected future cash flows, discount rates, determination of appropriate market comparables and the determination of whether a premium or discount should be applied to comparables.

Significant judgments inherent in a discounted cash flow analysis include the selection of the appropriate discount rate, the estimate of the amount and timing of projected future cash flows and identification of appropriate continuing growth rate assumptions.

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

The following table sets forth the amount of identifiable indefinite-lived intangible assets reported in the Company’s consolidated balance sheet as of June 30, 2020 by reportable segment:

The following table sets forth the amount of identifiable indefinite-lived intangible assets reported in the Company’s consolidated balance sheet as of June 30, 2021:

Sports franchises $ 111,064

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In the qualitative assessment, the Company must evaluate the totality of qualitative factors, including any recent fair value measurements, that impact whether an indefinite-lived intangible asset other than goodwill has a carrying amount that more likely than not exceeds its fair value.

The Company must proceed to conducting a quantitative analysis, if the Company (i) determines that such an impairment is more likely than not to exist, or (ii) forgoes the qualitative assessment entirely.

The Company must proceed to conducting a quantitative analysis, if the Company

(i) determines that such an impairment is more likely than not to exist, or (ii) forgoes the qualitative assessment entirely.

Under the quantitative assessment, the impairment test for identifiable indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with its carrying value.

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For all periods presented, the Company elected to perform a qualitative assessment of impairment for the indefinite-lived intangible assets.

These assessments considered the events

and circumstances that could affect the significant inputs used to determine the fair value of the intangible asset.

These assessments considered the events and circumstances that could affect the significant inputs used to determine the fair value of the intangible asset.

Examples of such events and circumstances include:

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For leases with a term exceeding 12 months, a lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of the fixed minimum payment obligations over the lease term.

A corresponding ROU asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received.

A corresponding right of use (“ROU”) asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received.

The Company includes fixed payment obligations related to non-lease components in the measurement of ROU assets and lease liabilities, as the Company has elected to account for lease and non-lease components together as a single lease component.

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The Sublease Agreement right of use assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term, which ends April 30, 2024.

In addition, in connection with the MSGE Distribution we entered into a long term lease with MSG Entertainment that ends June 30, 2055 and will allow the Knicks and the Rangers to continue to play their home games at The Garden.

The Arena License Agreements provide for fixed payments to be made from inception through June 30, 2055 in 12 equal installments during each year of the contractual term.

The Garden was not available for use on April 17, 2020 due to the COVID-19 pandemic and local government restrictions on gatherings;

however, the licenses were viewed as a continuation of an existing pre-spin relationship where the Knicks and Rangers used The Garden through an inter-company cost-sharing arrangement and therefore the licenses were viewed to have commenced on April 17, 2020.

However, due to the force majeure clause, MSG Sports is not required to make payments until The Garden is available for use, and at June 30, 2020 the asset and liability were remeasured utilizing the same discount rate as of April 17, 2020.

The Knicks and Rangers are entitled to use The Garden on home game days, which are usually nonconsecutive, for a pre-defined period of time from before and after the game.

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

However, fans were initially prohibited from attending games due to government-mandated assembly restrictions.

When games were played at The Garden by the Knicks and the Rangers either without fans in attendance or with limited fans in attendance due to government mandated capacity constraints, the applicable license fees to MSG Entertainment under the Arena License Agreements were substantially reduced.

Effective May 19, 2021, event venues such as The Garden were permitted to host guests at full capacity, subject to certain restrictions, including, for example, restrictions for unvaccinated guests.

As a result, the Knicks played three home playoff games with ticket sales of approximately 15,000-16,500 per game during the fiscal year ended June 30, 2021.

Guests under the age of 12 must wear masks, provide proof of a negative COVID test and are permitted to enter only when accompanied by a vaccinated parent or guardian.

The Knicks and the Rangers are entitled to use The Garden on home game days, which are usually nonconsecutive, for a pre-defined period of time from before and after the game.

In evaluating the Company’s lease cost, the Company considered the timing of payments throughout the lease terms and the nonconsecutive periods of use, provided for within each license.

While payments are made throughout the contract year in twelve equal installments under each arrangement, the periods of use only span each of the individual team event days.

As such, the Company concluded that the related straight-line rent expense should be recorded by each team equally over the home game days as each takes place.

As such, the Company concluded that the related straight-line operating lease costs should be recorded by each team equally over the home game days as each takes place.

In the event a team were to qualify for the playoffs in a given season, a prospective adjustment may be recorded to adjust for the additional use days within that season, while the total expense for the team’s season would remain the same.

There were no events and thus no rent expense was recorded during the period from lease inception as of April 17, 2020 to June 30, 2020.

As part of Arena License Agreements, we recognized operating lease liabilities and a right of use assets.

We measured the lease liabilities at the present value of the future lease payments as of April 17, 2020.

As part of Arena License Agreements, we recognized license fees which are characterized as operating lease liabilities and a right of use assets.

We measured the lease liabilities at the present value of the future lease payments as of April 17, 2020 and remeasured the lease liabilities during the period that The Garden was not available for use as discussed above.

We use our incremental borrowing rates based on the remaining lease term to determine the present value of future lease payments.

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Absent a lease modification we will continue to utilize the April 17, 2020 incremental borrowing rate.

The Company’s accounting during the period of force majeure applies FASB Staff Q&A, issued on April 10, 2020, providing guidance on accounting for COVID-19 related rent concessions.

Estimation of the incremental borrowing rate requires judgment by management and reflects an assessment of credit standing to derive an implied secured credit rating and corresponding yield curve.

2 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis