What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-09 compared with 2021-05-06 · 227 added, 592 removed, 491 unchanged (63% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

2021 June 30,

2 unchanged sentences

Restricted cash 6,668 7,134

Accounts receivable, net 82,518 7,403

Accounts receivable, net of allowance for doubtful accounts of $ 0 and $ 0 as of September 30, 2021 and June 30, 2021, respectively

54,872 74,197

Net related party receivables 9,545 6,420

2 unchanged sentences

Total current assets 165,951 185,246

Property and equipment, net of accumulated depreciation and amortization of $ 42,406 and $ 38,361 as of March 31, 2021 and June 30, 2020, respectively

Property and equipment, net of accumulated depreciation and amortization of $ 43,834 and $ 42,673 as of September 30, 2021 and June 30, 2021, respectively

34,734 35,716

3 unchanged sentences

Goodwill 226,955 226,955

Deferred income tax assets, net 37,101 15,943

Other assets 47,016 28,719

4 unchanged sentences

(in thousands, except per share data)

September 30,

2021 June 30,

12 unchanged sentences

Operating lease liabilities, noncurrent 681,007 691,152

Defined benefit and other postretirement obligations 6,544 7,014

Defined benefit obligations 6,251 6,283

Other employee related costs 54,842 57,740

Deferred tax liabilities, net 57,446 57,721

Deferred revenue, noncurrent 31,497 31,603

5 unchanged sentences

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

19,587 and 19,466 shares outstanding as of March 31, 2021 and June 30, 2020, respectively

19,689 and 19,587 shares outstanding as of September 30, 2021 and June 30, 2021, respectively

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

4,530 shares outstanding as of March 31, 2021 and June 30, 2020

4,530 shares outstanding as of September 30, 2021 and June 30, 2021

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

none outstanding as of March 31, 2021 and June 30, 2020

none outstanding as of September 30, 2021 and June 30, 2021

Additional paid-in capital — 23,102

Treasury stock, at cost, 861 and 982 shares as of March 31, 2021 and June 30, 2020, respectively

Treasury stock, at cost, 759 and 861 shares as of September 30, 2021 and June 30, 2021, respectively

( 129,426 ) ( 146,734 )

10 unchanged sentences

(in thousands, except per share data)

Three Months Ended Nine Months Ended

March 31, March 31,

2021 2020 2021 2020

Three Months Ended

September 30,

$ 18,794 $ 57,038

1 unchanged sentence

Direct operating expenses (b)

126,510 161,388 182,957 377,590

Selling, general and administrative expenses (c)

1 unchanged sentence

Depreciation and amortization 1,426 1,660

Operating income (loss) 8,124 10,625 ( 57,686 ) ( 48,932 )

Operating loss ( 34,938 ) ( 27,404 )

Other income (expense):

3 unchanged sentences

( 3,116 ) ( 2,109 )

Income (loss) from continuing operations before income taxes 5,148 9,781 ( 65,328 ) ( 50,797 )

Income tax benefit (expense) ( 53 ) ( 5,598 ) 275 11,132

Income (loss) from continuing operations 5,095 4,183 ( 65,053 ) ( 39,665 )

Loss from discontinued operations, net of taxes — ( 145,249 ) — ( 89,718 )

Net income (loss) 5,095 ( 141,066 ) ( 65,053 ) ( 129,383 )

Net loss attributable to nonredeemable noncontrolling interests from continuing operations ( 373 ) ( 785 ) ( 1,479 ) ( 1,700 )

Net loss attributable to redeemable noncontrolling interests from discontinued operations — ( 22,447 ) — ( 23,851 )

Net income attributable to nonredeemable noncontrolling interests from discontinued operations — 195 — 37

Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ 5,468 $ ( 118,029 ) $ ( 63,574 ) $ ( 103,869 )

Continuing operations

$ 0.23 $ 0.20 $ ( 2.64 ) $ ( 1.58 )

Discontinued operations

— ( 5.12 ) — ( 2.76 )

Basic income (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 0.23 $ ( 4.92 ) $ ( 2.64 ) $ ( 4.34 )

Continuing operations

$ 0.22 $ 0.20 $ ( 2.64 ) $ ( 1.58 )

Discontinued operations

— ( 5.12 ) — ( 2.76 )

Diluted income (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 0.22 $ ( 4.92 ) $ ( 2.64 ) $ ( 4.34 )

Loss from operations before income taxes ( 38,054 ) ( 29,513 )

Income tax benefit 21,169 498

Net loss ( 16,885 ) ( 29,015 )

Net loss attributable to nonredeemable noncontrolling interests ( 480 ) ( 598 )

Net loss attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 16,405 ) $ ( 28,417 )

Basic loss per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 0.68 ) $ ( 1.18 )

Diluted loss per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 0.68 ) $ ( 1.18 )

Weighted-average number of common shares outstanding:

2 unchanged sentences

_________________

(a) Includes revenues from related parties of $ 80,322 and $ 57,827 for the three months ended March 31, 2021 and 2020, respectively, and $ 103,752 and $ 125,273 for the nine months ended March 31, 2021 and 2020, respectively.

(b) Includes net charges from (to) related parties of $ 24,855 and $( 125 ) for the three months ended March 31, 2021 and 2020, respectively, and $ 28,119 and $( 262 ) for the nine months ended March 31, 2021 and 2020, respectively.

(c) Includes net charges from (to) related parties of $ 14,957 and $( 2,729 ) for the three months ended March 31, 2021 and 2020, respectively, and $ 39,214 and $( 8,128 ) for the nine months ended March 31, 2021 and 2020, respectively.

(a) Includes revenues from related parties of $ 7,247 and $ 9,061 for the three months ended September 30, 2021 and 2020, respectively.

(b) Includes net charges from related parties of $ 2,158 and $ 614 for the three months ended September 30, 2021 and 2020, respectively.

(c) Includes net charges from related parties of $ 12,247 and $ 13,747 for the three months ended September 30, 2021 and 2020, respectively.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended Nine Months Ended

March 31, March 31,

2021 2020 2021 2020

Net income (loss) $ 5,095 $ ( 141,066 ) $ ( 65,053 ) $ ( 129,383 )

Other comprehensive income (loss), before income taxes:

Pension plans and postretirement plan:

Three Months Ended

September 30,

Net loss $ ( 16,885 ) $ ( 29,015 )

Other comprehensive income, before income taxes:

Pension plans:

Amounts reclassified from accumulated other comprehensive loss:

Amortization of actuarial loss included in net periodic benefit cost

57 342 77 1,027

Settlement loss recognized — 67 — 67

Cumulative translation adjustments — ( 19,946 ) — ( 6,778 )

Other comprehensive income (loss), before income taxes 57 ( 19,537 ) 77 ( 5,684 )

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

Other comprehensive income (loss), net of income taxes 57 ( 19,537 ) 77 ( 5,684 )

Comprehensive income (loss) 5,152 ( 160,603 ) ( 64,976 ) ( 135,067 )

Comprehensive loss attributable to nonredeemable noncontrolling interests from continuing operations ( 373 ) ( 785 ) ( 1,479 ) ( 1,700 )

Comprehensive loss attributable to redeemable noncontrolling interests from discontinued operations — ( 22,447 ) — ( 23,851 )

Comprehensive income attributable to nonredeemable noncontrolling interests from discontinued operations — 195 — 37

Comprehensive income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ 5,525 $ ( 137,566 ) $ ( 63,497 ) $ ( 109,553 )

Other comprehensive income, before income taxes 33 10

Income tax expense related to items of other comprehensive income ( 11 ) —

Other comprehensive income, net of income taxes 22 10

Comprehensive loss ( 16,863 ) ( 29,005 )

Comprehensive loss attributable to nonredeemable noncontrolling interests ( 480 ) ( 598 )

Comprehensive loss attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 16,383 ) $ ( 28,407 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine Months Ended

Three Months Ended

September 30,

Cash flows from operating activities:

Net loss $ ( 16,885 ) $ ( 29,015 )

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

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

Depreciation and amortization 1,426 1,660

Impairment of intangibles, long-lived assets and goodwill — 102,211

Benefits from deferred income taxes ( 21,169 ) ( 498 )

Share-based compensation expense 4,851 6,345

Loss in equity method investments, net of income distributions — 3,739

Purchase accounting adjustments associated with leases

Unrealized loss on equity investment with readily determinable fair value — 2,471

(Recovery of) provision for doubtful accounts ( 175 ) 6,990

Recovery of doubtful accounts — ( 175 )

Other non-cash adjustments 437 127

6 unchanged sentences

Accrued and other liabilities ( 45,826 ) ( 11,668 )

Collections due to promoters — 15,924

Deferred revenue 88,597 11,663

Operating lease right-of-use assets and lease liabilities ( 8,755 ) 409

Net cash (used in) provided by operating activities ( 54,367 ) 111,133

Net cash used in operating activities ( 19,310 ) ( 57,485 )

Cash flows from investing activities:

Capital expenditures ( 181 ) ( 80 )

Proceeds from insurance recoveries — 476

Payments for acquisition of assets — ( 1,000 )

Purchase of short-term investments — ( 405,935 )

Proceeds from maturity of short-term investments — 176,661

Investments and loans to nonconsolidated affiliates — ( 75 )

Proceeds from sale of nonconsolidated affiliates — 18,000

Loan repayment received from subordinated note — 58,735

Cash received for notes receivable — 750

Other investing activities ( 125 ) —

Net cash used in investing activities ( 306 ) ( 80 )

See accompanying notes to consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(in thousands)

Nine Months Ended

Cash flows from financing activities:

Taxes paid in lieu of shares issued for equity-based compensation ( 12,142 ) ( 6,702 )

Proceeds from share issuance 808 —

Noncontrolling interest holders’ capital contribution — 4,000

Distributions to noncontrolling interest holders — ( 535 )

Proceeds from revolving credit facilities 30,000 350,000

Proceeds from NHL advance 30,000 —

Repayment of revolving credit facility — ( 15,000 )

Principal repayment on long-term debt — ( 5,000 )

Payment of contingent consideration — ( 200 )

Payments for financing costs ( 4,562 ) —

Net cash provided by financing activities 42,155 306,818

Effect of exchange rates on cash, cash equivalents and restricted cash — 3,916

Net cash used in financing activities ( 12,142 ) ( 6,902 )

Net decrease in cash, cash equivalents and restricted cash ( 31,758 ) ( 64,467 )

Cash, cash equivalents and restricted cash from continuing operations, beginning of period 90,673 25,836

Cash, cash equivalents and restricted cash from discontinued operations, beginning of period — 1,092,065

Cash, cash equivalents and restricted cash at beginning of period 72,036 90,673

90,673 1,117,901

Cash, cash equivalents and restricted cash from continuing operations, end of period 78,024 23,289

Cash, cash equivalents and restricted cash from discontinued operations, end of period — 1,021,848

Cash, cash equivalents and restricted cash at end of period $ 40,278 $ 26,206

Non-cash investing and financing activities:

Non-cash acquisition of additional redeemable noncontrolling interests $ — $ 37,715

Capital expenditures incurred but not yet paid $ 41 $ —

Tenant improvement paid by landlord

Share-based compensation capitalized in property and equipment $ — $ 3,790

See accompanying notes to consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

(in thousands)

Three Months Ended March 31, 2021

Issued Additional

Capital Treasury

Stock Accumulated Deficit Accumulated

Comprehensive

Loss Total Madison Square Garden Sports Corp.

Stockholders ’ Equity

Noncontrolling

Interests Total Equity

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

Net income (loss) — — — 5,468 — 5,468 ( 373 ) 5,095

Other comprehensive income — — — — 57 57 — 57

Comprehensive income (loss) — — — — — 5,525 ( 373 ) 5,152

Share-based compensation

— 3,867 — — — 3,867 — 3,867

Common stock issued under stock incentive plans

— ( 43 ) 851 — — 808 — 808

Adjustments to noncontrolling interests — 71 — — — 71 ( 71 ) —

Balance as of March 31, 2021 $ 249 $ 19,327 $ ( 146,734 ) $ ( 128,518 ) $ ( 2,062 ) $ ( 257,738 ) $ 2,437 $ ( 255,301 )

See accompanying notes to consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (Continued)

(in thousands)

Three Months Ended March 31, 2020

Common Stock Issued Additional

Capital Treasury

Stock Retained Earnings (Accumulated Deficit) Accumulated

Comprehensive Loss Total Madison Square Garden Sports Corp.

Stockholders ’ Equity

Noncontrolling

Interests Total Equity Redeemable

Noncontrolling

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

Net loss — — — ( 118,029 ) — ( 118,029 ) ( 590 ) ( 118,619 ) ( 22,447 )

Other comprehensive loss — — — — ( 19,537 ) ( 19,537 ) — ( 19,537 ) —

Comprehensive loss — — — — — ( 137,566 ) ( 590 ) ( 138,156 ) ( 22,447 )

Share-based compensation

— 15,163 — — — 15,163 — 15,163 —

Tax withholding associated with shares issued for equity-based compensation

— ( 183 ) — — — ( 183 ) — ( 183 ) —

Common stock issued under stock incentive plans

— ( 374 ) 374 — — — — — —

Adjustments to noncontrolling interests — ( 1,424 ) — — — ( 1,424 ) 1,424 — —

Noncontrolling interest non-cash acquisition

— 20,262 17,453 — — 37,715 — 37,715 ( 37,715 )

Redeemable noncontrolling interest adjustment to redemption fair value

— ( 16,939 ) — — — ( 16,939 ) — ( 16,939 ) 16,939

Balance as of March 31, 2020 $ 249 $ 2,850,372 $ ( 168,066 ) $ ( 74,866 ) $ ( 52,607 ) $ 2,555,082 $ 21,195 $ 2,576,277 $ 23,000

See accompanying notes to consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (Continued)

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

Nine Months Ended March 31, 2021

Three Months Ended September 30, 2021

Issued Additional

10 unchanged sentences

Comprehensive loss — — — — — ( 16,383 ) ( 480 ) ( 16,863 )

— — — — — ( 63,497 ) ( 1,479 ) ( 64,976 )

Share-based compensation

5 unchanged sentences

Adjustments to noncontrolling interests — ( 271 ) — — — ( 271 ) 271 —

Balance as of March 31, 2021 $ 249 $ 19,327 $ ( 146,734 ) $ ( 128,518 ) $ ( 2,062 ) $ ( 257,738 ) $ 2,437 $ ( 255,301 )

Balance as of September 30, 2021 $ 249 $ — $ ( 129,426 ) $ ( 103,235 ) $ ( 2,005 ) $ ( 234,417 ) $ 2,233 $ ( 232,184 )

See accompanying notes to consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (Continued)

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(in thousands)

Nine Months Ended March 31, 2020

Three Months Ended September 30, 2020

Common Stock Issued Additional

Capital Treasury

Stock Retained Earnings (Accumulated Deficit) Accumulated

Stock Accumulated Deficit Accumulated

Comprehensive Loss Total Madison Square Garden Sports Corp.

1 unchanged sentence

Noncontrolling

Interests Total Equity Redeemable

Noncontrolling

Interests Total Equity

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

Net loss — — — ( 28,417 ) — ( 28,417 ) ( 598 ) ( 29,015 )

Other comprehensive loss — — — — ( 5,684 ) ( 5,684 ) — ( 5,684 ) —

Other comprehensive income — — — — 10 10 — 10

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

5 unchanged sentences

— ( 1,355 ) 19,826 ( 18,471 ) — — — —

Adjustments to noncontrolling interests — ( 1,424 ) — — — ( 1,424 ) 1,424 — —

Contribution from noncontrolling interest holders

— — — — — — 3,709 3,709 —

Distributions to noncontrolling interest holders

— — — — — — ( 535 ) ( 535 ) —

Noncontrolling interest non-cash acquisition

— 20,262 17,453 — — 37,715 — 37,715 ( 37,715 )

Redeemable noncontrolling interest adjustment to redemption fair value

— ( 16,939 ) — — — ( 16,939 ) — ( 16,939 ) 16,939

Balance as of March 31, 2020 $ 249 $ 2,850,372 $ ( 168,066 ) $ ( 74,866 ) $ ( 52,607 ) $ 2,555,082 $ 21,195 $ 2,576,277 $ 23,000

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

See accompanying notes to consolidated financial statements.

4 unchanged sentences

Description of Business

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

Madison Square Garden Sports Corp.

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

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

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

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

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

2 unchanged sentences

The Company operates and reports financial information in one segment.

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

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

the manner in which its operations are managed;

19 unchanged sentences

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

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

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Reclassifications

The historical results of MSG Entertainment have been reflected in the accompanying consolidated statements of operations for the three and nine months ended March 31, 2020 as discontinued operations.

See Note 3 for more information.

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

Impact of COVID-19

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

Those areas include:

ticket sales;

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 during the fiscal year ended June 30, 2021.

In March 2020, the NBA and NHL suspended their 2019-20 seasons due to COVID-19.

As a result of the suspension of the 2019-20 NBA and NHL seasons and subsequent resumption of play in July and August 2020, respectively, during the first quarter of fiscal year 2021, the Company recognized certain revenues that otherwise would have been recognized during the third and fourth quarters of fiscal year 2020.

In addition, the start of the 2020-21 NBA and NHL regular seasons were delayed and the Knicks and the Rangers played fewer games, 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 connection with the MSGE Distribution, we entered into the Arena License Agreements with MSG Entertainment.

The Garden was not available for use between April 17, 2020 (the date of the MSGE Distribution) 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 was available at reduced capacity through May 2021.

As a result, the Company was not required to pay license fees to MSG Entertainment under the Arena License Agreements until games resumed at The Garden, and the Company continued to pay substantially reduced fees while attendance was limited.

Effective July 1, 2021, the Company began paying license fees to MSG Entertainment under the Arena License Agreements in their full contractual amounts.

These disruptions materially impacted the Company’s revenues across a number of areas, including, ticket sales;

the Company’s share of suite licenses;

2 unchanged sentences

and food, beverage and merchandise sales.

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

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

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

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

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

However, fans were initially prohibited from attending events 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 Rangers began playing games at The Garden with a limited number of fans in attendance on February 23 and 26, respectively.

Effective May 19, 2021, The Garden will be permitted to operate at up to 30% capacity, which would be after the end of the 2020-21 regular seasons.

No assurances can be made that attendance will remain permissible or at stated capacity limits during the remainder of the 2020-21 regular seasons and postseasons.

During the nine months ended March 31, 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 are reduced including (i) rent payments to MSG Entertainment under the Arena License Agreements, (ii) NBA league assessments and day-of-game expenses for the Knicks and Rangers games, and (iii) league revenue sharing and team personnel expense.

These expense reductions will not fully offset revenue losses.

Additionally, as the Knicks and Rangers returned to play in December 2020 and January 2021, respectively, and with fans having returned to The Garden in February 2021, certain costs increased and will continue to increase, to the extent that attendance capacity increases, including day-of-game expenses and certain selling, general and administrative costs.

The Company believes that it has sufficient liquidity, including $ 69,128 in Cash and cash equivalents as of March 31, 2021, along with available borrowing capacity under existing credit facilities, to fund its operations and satisfy any obligations with respect to the return or application of deferred revenue over the next 12 months.

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

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, in addition to the reduced payments to MSG Entertainment under the Arena License Agreements described above, (i) NBA league assessments and day-of-game expenses for Knicks and Rangers games, and (ii) league revenue sharing, net of escrow and team personnel expense.

These expense reductions did not fully offset revenue losses.

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

Guests are also required to wear masks unless they show proof of full COVID-19 vaccination (i.e., at least 14 days have passed after their final vaccine dose).

Children under age 12 can attend events with a vaccinated adult, but ages 2 to 11 need to wear a mask while inside our venues.

At this time, the Company’s management is unable to predict if there will be any longer-term effects due to these COVID-19 related disruptions.

Fan attendance for the 2021-22 NBA and NHL seasons could be impacted by a resurgence in the COVID-19 pandemic such as the Delta variant, governmental and league restrictions on attendance of games at The Garden, reduced tourism, as well as general hesitancy among the public to return to pre-COVID-19 activity levels.

The Company’s business is also particularly sensitive to discretionary business and consumer spending.

23 unchanged sentences

Recently Adopted Accounting Pronouncements

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

2016-13, Financial Instruments — Credit Losses .

2016-13 replaces the incurred loss impairment methodology in current U.S.

GAAP with a methodology that will require the reflection of expected credit losses and will also require consideration of a broader range of reasonable and supportable information to determine credit loss estimates.

In May 2019, the FASB issued ASU No.

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

In November 2019, FASB issued ASU No.

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

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

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

In February 2020, the FASB issued ASU No.

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

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

The impact in future periods is not expected to be material.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement as part of the FASB’s broader disclosure framework project.

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

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In August 2018, the FASB issued ASU No.

2018-15, Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.

2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

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

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

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

In November 2018, the FASB issued ASU No.

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

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

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

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

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

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

In April 2019, the FASB issued ASU No.

2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825 - Financial Instruments.

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

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

In November 2019, the FASB issued ASU No.

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

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

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

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

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

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

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

In January 2020, the FASB issued ASU No.

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

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

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

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

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

Recently Issued Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU No.

2018-14, Compensation-Retirement Benefits-Defined Benefit Plans - General (Subtopic 715-20):

Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.

2018-14 removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and adds additional disclosures.

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

The amendments in ASU No.

2018-14 are required to be applied retrospectively.

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In December 2019, the FASB issued ASU No.

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

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

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

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

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

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

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

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

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

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

Discontinued Operations

As a result of the MSGE Distribution, the results of the entertainment business previously owned and operated by the Company through its MSG Entertainment business segment and the sports booking business previously owned and operated by the Company through its MSG Sports business segment through the MSGE Distribution Date, as well as transaction costs related to the MSGE Distribution, have been classified in the accompanying consolidated statement of operations for the three and nine months ended March 31, 2020 as discontinued operations.

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

The table below sets forth operating results of discontinued operations for the three and nine months ended March 31, 2020.

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

Three Months Ended Nine Months Ended

March 31, 2020 March 31, 2020

Revenues $ 157,010 $ 658,385

Direct operating expenses 111,545 399,517

Selling, general and administrative expenses 64,989 179,874

Depreciation and amortization 24,094 71,531

Impairment of intangibles, long-lived assets and goodwill 102,211 102,211

Operating loss ( 145,829 ) ( 94,748 )

Other income (expense):

Loss in equity method investments ( 1,096 ) ( 3,739 )

Interest income 3,494 16,553

Interest expense ( 1,014 ) ( 3,197 )

Miscellaneous expense, net ( 17,306 ) ( 2,755 )

Loss from discontinued operations before income taxes ( 161,751 ) ( 87,886 )

Income tax benefit (expense) 16,502 ( 1,832 )

Net loss from discontinued operations ( 145,249 ) ( 89,718 )

Net loss attributable to redeemable noncontrolling interests ( 22,447 ) ( 23,851 )

Net income attributable to nonredeemable noncontrolling interests 195 37

Net loss from discontinued operations attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 122,997 ) $ ( 65,904 )

This ASU eliminates certain exceptions to the general approach in Accounting Standards Codification (“ASC”) Topic 740 and includes methods of simplification to the existing guidance.

The Company adopted this standard as of the beginning of fiscal year 2022, and the adoption did not have a material impact on its consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As permitted under ASU 2014-08, the Company has elected not to adjust the consolidated statement of cash flows for the nine months ended March 31, 2020 to exclude cash flows attributable to discontinued operations.

The table below sets forth, for the period presented, significant selected financial information related to the MSG Entertainment business segment and the sports booking business previously owned and operated by the Company through its MSG Sports business segment through the MSGE Distribution Date, which is included in the accompanied consolidated statements of cash flows:

Nine Months Ended

March 31, 2020

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

Depreciation and amortization $ 71,531

Impairment of intangibles, long-lived assets and goodwill 102,211

Share-based compensation expense 7,881

Cash flows from investing activities:

Capital expenditures $ 326,596

Non-cash investing activities:

Non-cash acquisition of additional redeemable noncontrolling interests $ 37,715

Capital expenditures incurred but not yet paid 75,656

Revenue Recognition

1 unchanged sentence

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

For the three and nine months ended March 31, 2021 and 2020, the Company did not have any material impairment losses on receivables or contract assets arising from contracts with customers.

For the three months ended September 30, 2021 and 2020, the Company did not have any material impairment losses on receivables or contract assets arising from contracts with customers.

Disaggregation of Revenue

The following table disaggregates the Company’s revenues by type of goods or services in accordance with the required entity-wide disclosure requirements set forth in ASC Subtopic 280-10-50-38 to 40 and the disaggregation of revenue required disclosures in accordance with ASC Subtopic 606-10-50-5 for the three and nine months ended March 31, 2021 and 2020:

Three Months Ended Nine Months Ended

March 31, March 31,

2021 2020 2021 2020

Three Months Ended

September 30,

Event-related (a)

$ 4,552 $ 105,443 $ 4,552 $ 236,909

Media rights (b)

139,963 96,789 212,458 204,185

Sponsorship, signage and suite licenses 3,170 2,950

3 unchanged sentences

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

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

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

MADISON SQUARE GARDEN SPORTS CORP.

1 unchanged sentence

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

The following table provides information about contract balances from the Company’s contracts with customers as of March 31, 2021 and June 30, 2020.

March 31, June 30,

The following table provides information about contract balances from the Company’s contracts with customers as of September 30, 2021 and June 30, 2021.

September 30, June 30,

Receivables from contracts with customers, net (a)

5 unchanged sentences

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

As of March 31, 2021 and June 30, 2020, the Company’s receivables reported above included $ 911 and $ 632 , respectively, related to various related parties associated with contracts with customers.

As of September 30, 2021 and June 30, 2021, the Company’s receivables reported above included $ 97 and $ 213 , respectively, related to various related parties associated with contracts with customers.

See Note 15 for further details on related party arrangements.

Receivables from contracts with customers, net, excludes amounts recorded in Accounts receivable, net, associated with amounts due from the NBA and NHL related to escrow and luxury tax payments.

Receivables from contracts with customers, net, excludes amounts recorded in Accounts receivable, net, associated with amounts due from the NBA and NHL related to escrow and player compensation recoveries and luxury tax payments.

As of September 30, 2021, the Company had receivable balances related to escrow and player compensation recoveries of $ 32,013 and $ 10,700 , recorded in Accounts receivable, net and Other assets, respectively.

As of June 30, 2021, the Company had receivable balances related to escrow and player compensation recoveries of $ 36,525 and $ 10,700 , recorded in Accounts receivable, net and Other assets, respectively.

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

3 unchanged sentences

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

The Company’s deferred revenue related to local media rights with MSG Networks was $ 4,620 and $ 0 as of March 31, 2021 and June 30, 2020, respectively.

The Company’s deferred revenue related to local media rights was $ 32,458 and $ 260 as of September 30, 2021 and June 30, 2021, respectively.

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

(d) Revenue recognized for the nine months ended March 31, 2021 relating to the deferred revenue balance as of June 30, 2020 was $ 53,397 .

(d) Revenue recognized for the three months ended September 30, 2021 relating to the deferred revenue balance as of June 30, 2021 was $ 3,097 .

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Transaction Price Allocated to the Remaining Performance Obligations

The following table depicts the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2021 and is based on current projections.

The following table depicts the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2021 and is based on current projections.

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

Additionally, the Company has elected to exclude variable consideration from its disclosure related to the remaining performance obligations under its local media rights arrangements, league-wide national and international television contracts, and certain other arrangements with variable consideration.

Fiscal Year 2022 (remainder) $ 101,504

4 unchanged sentences

Thereafter 38,456

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Computation of Earnings (Loss) per Common Share

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

Three Months Ended Nine Months Ended

March 31, March 31,

2021 2020 2021 2020

Three Months Ended

September 30,

Weighted-average shares (denominator):

6 unchanged sentences

Team Personnel Transactions

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

Team personnel transactions expense was $ 3,305 and $ 5,711 for the three months ended March 31, 2021 and 2020, respectively, and $ 17,003 and $ 33,598 for the nine months ended March 31, 2021 and 2020, respectively.

As a result of certain team personnel contract terminations in May 2021, the Company will record a pre-tax charge of approximately $ 21,000 in the fourth quarter of fiscal year 2021.

This charge will be reflected in selling, general and administrative expenses in the Company’s consolidated statements of operations for the year ending June 30, 2021.

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

Team personnel transactions expense was $ 727 and $ 10,873 for the three months ended September 30, 2021 and 2020, respectively.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cash, Cash Equivalents and Restricted Cash

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

September 30,

2021 June 30,

2020 March 31,

2021 September 30,

2020 June 30,

6 unchanged sentences

_________________

(a) Restricted cash as of March 31, 2021 relates to the Company’s revolving credit facilities (see Note 12 for more information) and cash deposited in an escrow account.

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

(a) Restricted cash as of June 30, 2020 primarily included cash deposited in an escrow account (see Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 for more information).

For all other periods, restricted cash relates to the Company’s revolving credit facilities (see Note 11 for more information).

The Company’s leases primarily consist of the lease of the Company’s principal executive offices under the Sublease Agreement with MSG Entertainment (the “Sublease Agreement”) and the lease of CLG Performance Center.

1 unchanged sentence

See Note 8 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 for more information regarding the Company’s accounting policies associated with its leases.

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

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

present value of minimum base rent and other fixed payments over the reasonably certain lease term, which ends April 30, 2024.

In addition, in connection with the MSGE Distribution, the Company entered into the Arena License Agreements with MSG Entertainment that end on June 30, 2055 and allow the Knicks and the Rangers to continue to play their home games at The Garden.

In connection with the MSGE Distribution, the Company entered into the Arena License Agreements with MSG Entertainment that end on June 30, 2055 and allow the Knicks and the Rangers to continue to play their home games at The Garden.

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

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

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

During the three and nine months ended March 31, 2021, the Company recognized operating lease costs associated with the Knicks and Rangers Arena License Agreements with respect to games played at The Garden beginning in December 2020 and January 2021, respectively.

As of March 31, 2021, the Company’s existing operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 17 months to 34 years.

Absent the reduced payments due to the government-mandated suspension of events at The Garden in response to COVID-19 described below, the stated license fee for the first full contract year ended 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.

During the three months ended September 30, 2021, the Company recognized operating lease costs associated with the Rangers Arena License Agreement with respect to games played at The Garden in September 2021.

During the three months ended September 30, 2020, there were no events and thus no operating lease costs were recorded.

As of September 30, 2021, the Company’s existing operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 11 months to 34 years.

In certain instances, leases include options to renew, with varying option terms.

1 unchanged sentence

The Company’s lease agreements do not contain material residual value guarantees or material restrictive covenants.

The following table summarizes the ROU assets and lease liabilities recorded on the Company’s accompanying consolidated balance sheets as of March 31, 2021 and June 30, 2020:

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the ROU assets and lease liabilities recorded on the Company’s accompanying consolidated balance sheets as of September 30, 2021 and June 30, 2021:

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

2021 June 30,

9 unchanged sentences

_________________

(a) As of March 31, 2021, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 33,922 and $ 691,783 , respectively, that are payable to MSG Entertainment.

(a) As of September 30, 2021, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 42,017 and $ 680,745 , respectively, that are payable to MSG Entertainment.

As of June 30, 2021, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 41,541 and $ 690,792 , respectively, that are payable to MSG Entertainment.

The following table summarizes the activity recorded within the Company’s accompanying consolidated statements of operations for the three and nine months ended March 31, 2021 and 2020:

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

2021 2020 2021 2020

The following table summarizes the activity recorded within the Company’s accompanying consolidated statements of operations for the three months ended September 30, 2021 and 2020:

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

Operating lease cost Direct operating expenses $ 1,407 $ 90

Operating lease cost Selling, general and administrative expenses

611 — 1,833 —

Short-term lease cost Direct operating expenses 36 24

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

Total lease cost $ 2,054 $ 725

Supplemental Information

For the nine months ended March 31, 2021 and 2020, cash paid for amounts included in the measurement of lease liabilities was $ 2,717 and $ 300 , respectively.

The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of March 31, 2021 was 33.9 years.

The weighted average discount rate was 7.13 % as of March 31, 2021 and represented the Company’s estimated incremental borrowing rate, assuming a secured borrowing, based on the remaining lease term at the time of either (i) adoption of the standard or (ii) the period in which the lease term expectation commenced or was modified.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Maturities of operating lease liabilities as of March 31, 2021 are as follows:

For the three months ended September 30, 2021 and 2020, cash paid for amounts included in the measurement of lease liabilities was $ 10,768 and $ 295 , respectively.

The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of September 30, 2021 was 33.4 years.

The weighted average discount rate was 7.13 % as of September 30, 2021 and represented the Company’s estimated incremental borrowing rate, assuming a secured borrowing, based on the remaining lease term at the time of either (i) adoption of the standard or (ii) the period in which the lease term expectation commenced or was modified.

Maturities of operating lease liabilities as of September 30, 2021 are as follows:

Fiscal Year 2022 (remainder) $ 32,790

7 unchanged sentences

Total lease liabilities $ 723,432

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Goodwill and Intangible Assets

During the first quarter of fiscal year 2022, the Company performed its annual impairment test of goodwill and determined that there were no impairments identified as of the impairment test date.

The carrying amount of goodwill as of March 31, 2021 and June 30, 2020 is $ 226,955 .

The Company’s indefinite-lived intangible assets as of March 31, 2021 and June 30, 2020 are as follows:

The carrying amount of goodwill as of September 30, 2021 and June 30, 2021 is $ 226,955 .

The Company’s indefinite-lived intangible assets as of September 30, 2021 and June 30, 2021 are as follows:

Sports franchises $ 111,064

2 unchanged sentences

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

March 31, 2021 Gross Accumulated

September 30, 2021 Gross Accumulated

Amortization Net

9 unchanged sentences

$ 5,900 $ ( 4,205 ) $ 1,695

For the three months ended March 31, 2021 and 2020, amortization expense of intangible assets was $ 265 and $ 1,090 , respectively.

For the nine months ended March 31, 2021 and 2020, amortization expense of intangible assets was $ 795 and $ 3,295 , respectively.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended September 30, 2021 and 2020, amortization expense of intangible assets was $ 265 and $ 265 , respectively.

Fair Value Measurements

The following table presents the Company’s assets that are measured at fair value on a recurring basis, which include cash equivalents:

Fair Value Hierarchy March 31,

Fair Value Hierarchy September 30,

2021 June 30,

Money market accounts I $ 60,008 $ —

Money market account I $ 11,916 $ 33,820

Time deposit I 1 5,000

Total assets measured at fair value $ 11,917 $ 38,820

Assets listed above are classified within Level I of the fair value hierarchy as they are valued using observable inputs that reflect quoted prices for identical assets in active markets.

The carrying amount of the Company’s money market accounts approximates fair value due to their short-term maturities.

The carrying amount of the Company’s money market account and time deposit approximates fair value due to their short-term maturities.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

March 31, 2021 June 30, 2020

September 30, 2021 June 30, 2021

Value Carrying

4 unchanged sentences

_________________

(a) On March 25, 2021, the NHL advanced $ 30,000 to Rangers LLC.

The Company’s debt, current is classified within Level II of the fair value hierarchy as it is valued using quoted indices of similar securities for which the inputs are readily observable.

The fair value of the Company’s debt, current is the same as its carrying amount as the advance bears interest at current market conditions.

(a) The Company’s debt, current is classified within Level II of the fair value hierarchy as it is valued using quoted indices of similar securities for which the inputs are readily observable.

The fair value of the Company’s debt, current is the same as its carrying amount as the debt bears interest at current market conditions.

See Note 11 for further details.

(b) The Company’s long-term debt is classified within Level II of the fair value hierarchy as it is valued using quoted indices of similar securities for which the inputs are readily observable.

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

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

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

See Note 11 for further details .

Contingent Consideration Liabilities

In connection with the CLG acquisition (see Note 11 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2020 for further details), the Company recorded certain deferred and contingent consideration liabilities at fair value as part of the purchase price allocation.

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

Nine Months Ended March 31, 2021

Balance as of June 30, 2020 $ 336

Contingent consideration payment ( 200 )

Change in fair value of contingent consideration (a)

Balance as of March 31, 2021 $ —

_________________

(a) The change in fair value of contingent consideration, including accretion, was recorded within Selling, general and administrative expenses in the accompanying consolidated statement of operations for the nine months ended March 31, 2021.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Commitments and Contingencies

1 unchanged sentence

In addition, see Note 7 for more information on the contractual obligations related to future lease payments.

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

The Company did not have any material changes in its contractual obligations, including off-balance sheet commitments, since the end of fiscal year 2021 other than activities in the ordinary course of business.

Legal Matters

9 unchanged sentences

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

Borrowings under the 2020 Knicks Credit Agreement bear interest at a floating rate, which at the option of Knicks LLC may be either (i) a base rate plus a margin ranging from 0.500 % to 0.750 % per annum or (ii) LIBOR plus a margin ranging from 1.500 % to 1.750 % per annum.

Borrowings under the 2020 Knicks Credit Agreement bear interest at a floating rate, which at the option of Knicks LLC may be either (i) a base rate plus a margin ranging from 0.500 % to 0.750 % per annum or (ii) the London Inter-Bank Offered Rate (“LIBOR”) plus a margin ranging from 1.500 % to 1.750 % per annum.

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

The outstanding balance under the 2020 Knicks Revolving Credit Facility was $ 220,000 as of March 31, 2021.

The interest rate on the 2020 Knicks Revolving Credit Facility as of March 31, 2021 was 1.61 %.

During the nine months ended March 31, 2021 the Company made interest payments of $ 2,313 .

The outstanding balance under the 2020 Knicks Revolving Credit Facility was $ 220,000 as of September 30, 2021 and was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2020 Knicks Revolving Credit Facility as of September 30, 2021 was 1.59 %.

During the three months ended September 30, 2021 the Company made interest payments of $ 915 .

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

10 unchanged sentences

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

As of March 31, 2021, Knicks LLC was in compliance with this financial covenant.

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

Knicks Unsecured Credit Facility

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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 March 31, 2021, Knicks Holdings was in compliance with this financial covenant.

As of September 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 .

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

There was no borrowing under the 2020 Knicks Holdings Revolving Credit Facility as of March 31, 2021.

There was no borrowing under the 2020 Knicks Holdings Revolving Credit Facility as of September 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.

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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:

The 2020 Knicks Holdings Revolving Credit Facility contains certain restrictions on the ability of Knicks Holdings to take certain actions

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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;

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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

The outstanding balance under the 2020 Rangers Revolving Credit Facility was $ 160,000 as of March 31, 2021.

The interest rate on the 2020 Rangers Revolving Credit Facility as of March 31, 2021 was 2.11 %.

During the nine months ended March 31, 2021 the Company made interest payments of $ 2,233 .

The outstanding balance under the 2020 Rangers Revolving Credit Facility was $ 135,000 as of September 30, 2021 and was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2020 Rangers Revolving Credit Facility as of September 30, 2021 was 2.09 %.

During the three months ended September 30, 2021 the Company made interest payments of $ 738 .

All obligations under the 2020 Rangers Revolving Credit Facility are, subject to the 2021 Rangers NHL Advance Agreement (as defined below), 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.

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

As of March 31, 2021, Rangers LLC was in compliance with this financial covenant.

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

2021 Rangers NHL Advance Agreement

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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 March 31, 2021.

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 Facilities”).

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

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

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 September 30, 2021 and was recorded as Debt in the accompanying consolidated balance sheet.

During the three months ended September 30, 2021 the Company made interest payments of $ 225 .

Deferred Financing Costs

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

March 31, 2021 (a)

September 30,

2021 June 30,

Other current assets $ 1,759 $ 1,759

Other assets 1,905 2,345

(a) In connection with the 2020 Knicks Revolving Credit Facility , 2020 Knicks Holdings Revolving Credit Facility and 2020 Rangers Revolving Credit Facility, the Company incurred $ 4,562 in deferred financing costs during the nine months ended March 31, 2021.

Benefit Plans

Defined Benefit Pension Plans and Postretirement Benefit Plan

Prior to the MSGE Distribution, the Company sponsored a non-contributory, qualified cash balance retirement plan covering its non-union employees (the “Cash Balance Pension Plan”) and an unfunded non-contributory, non-qualified excess cash balance plan (the “Excess Cash Balance Plan”) covering certain employees who participate in the underlying qualified plan (collectively, the “Cash Balance Plans”).

Also, the Company historically sponsored an unfunded non-contributory, non-qualified defined benefit pension plan for the benefit of certain employees who participate in the underlying qualified plan (the “Excess Plan”).

Prior to the MSGE Distribution, the Company sponsored a non-contributory, qualified defined benefit pension plan covering certain of its union employees (the “Union Plan”).

Benefits payable to retirees under the Union Plan are based upon years of Benefit Service (as defined in the Union Plan document).

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

In addition, the Company also sponsored a contributory welfare plan which provided certain postretirement healthcare benefits to certain employees hired prior to January 1, 2001 who are eligible to commence receipt of early or normal benefits under the Cash Balance Pension Plan and their dependents, as well as certain union employees (“Postretirement Plan”).

Defined Benefit Pension Plans

Prior to the MSGE Distribution, the Company sponsored various defined benefit pension plans and a contributory welfare plan.

As of the MSGE Distribution Date, the Company and MSG Entertainment entered into an employee matters agreement (the “Employee Matters Agreement”) which determined each company’s obligations after the MSGE Distribution with regard to historical liabilities under the Company’s former pension and postretirement plans.

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

The following table presents components of net periodic benefit cost for the MSGE Pension Plans, MSGS Pension Plans and Postretirement Plan included in the accompanying consolidated statements of operations for the three and nine months ended March 31, 2021 and 2020.

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

All other components of net periodic benefit cost are reported in Miscellaneous expense, net.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MSGE Pension Plans & MSGS Pension Plans Postretirement Plan

Three Months Ended Three Months Ended

March 31, March 31,

2021 2020 2021 2020

Service cost $ — $ 24 $ — $ 18

Interest cost (credit) ( 11 ) 1,326 — 28

Expected return on plan assets — ( 1,330 ) — —

Recognized actuarial loss 57 339 — 3

Settlement loss recognized — 67 — —

Net periodic benefit cost $ 46 $ 426 $ — $ 49

MSGE Pension Plans & MSGS Pension Plans Postretirement Plan

Nine Months Ended Nine Months Ended

March 31, March 31,

2021 2020 2021 2020

Service cost $ — $ 72 $ — $ 53

See Note 14 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 for more information with regard to the liabilities retained by the Company from certain plans, which were transferred to the MSG Sports, LLC Excess Cash Balance Plan and MSG Sports, LLC Excess Retirement Plan, which the Company established in connection with the MSGE Distribution and are collectively referred to the “MSGS Pension Plans.”

The following table presents components of net periodic benefit cost for the MSGS Pension Plans included in the accompanying consolidated statements of operations for the three months ended September 30, 2021 and 2020.

Net periodic benefit cost is reported in Miscellaneous expense, net.

Three Months Ended

September 30,

Interest cost $ 31 $ 60

Expected return on plan assets — ( 3,989 ) — —

Recognized actuarial loss 33 10

Settlement loss recognized — 67 — —

Net periodic benefit cost $ 64 $ 70

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

MSGE Pension Plans & MSGS Pension Plans Postretirement Plan

Three Months Ended Three Months Ended

March 31, March 31,

2021 2020 2021 2020

Continuing Operations $ 46 $ 142 $ — $ —

Discontinued Operations — 284 — 49

Total net periodic benefit cost

$ 46 $ 426 $ — $ 49

MSGE Pension Plans & MSGS Pension Plans Postretirement Plan

Nine Months Ended Nine Months Ended

March 31, March 31,

2021 2020 2021 2020

Continuing Operations $ 186 $ 314 $ — $ —

Discontinued Operations — 837 — 144

Total net periodic benefit cost

$ 186 $ 1,151 $ — $ 144

Defined Contribution Plans

Prior to the MSGE Distribution, the Company sponsored The Madison Square Garden 401(k) Savings Plan (the “401(k) Plan”), which is a multiple employer plan and the MSG S&E, LLC Excess Savings Plan (collectively referred to as the “Savings Plans”) and The Madison Square Garden 401(k) Union Plan (the “Union Savings Plan”), which is also a multiple employer plan.

As a result of the MSGE Distribution, the Savings Plans and Union Savings Plan were transferred to MSG Entertainment.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As a result of the MSGE Distribution, the Savings Plans were transferred to MSG Entertainment.

However, MSG Sports employees continue to participate in the 401(k) Plan.

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Expenses related MSG Sports LLC Excess Savings Plan and Savings Plans that are included in the accompanying consolidated statements of operations for the three and nine months ended March 31, 2021 and 2020 are as follows:

Three Months Ended Nine Months Ended

March 31, March 31,

2021 2020 2021 2020

Continuing Operations $ 426 $ ( 585 ) $ 1,530 $ 3,421

Discontinued Operations — ( 219 ) — 1,285

Total Savings Plan Expenses

$ 426 $ ( 804 ) $ 1,530 $ 4,706

For the three and nine months ended March 31, 2020, expenses related to the Union Savings Plan of $ 469 and $ 522 , respectively, have been classified in the accompanying consolidated statement of operations as discontinued operations.

Share-based Compensation

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

Share-based compensation expense was recognized in the consolidated statements of operations as a component of direct operating expenses or selling, general and administrative expenses.

Share-based compensation expense was $ 3,867 and $ 26,193 for the three and nine months ended March 31, 2021, respectively.

Share-based compensation expense was $ 11,508 and $ 39,559 for the three and nine months ended March 31, 2020, respectively.

There were no costs related to share-based compensation in continuing operations that were capitalized for the three and nine months ended March 31, 2021 and 2020, respectively.

Share-based compensation expense for discontinued operations was $ 2,347 and $ 7,881 for the three and nine months ended March 31, 2020, respectively.

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

Dolan voluntarily relinquished a one-time equity award granted by the Company in October 2018 pursuant to his 2018 employment agreement, and the related award agreements were canceled.

The one-time equity award included:

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

The Settlement became effective October 8, 2020 and therefore, upon cancellation, the Company recorded previously unrecognized share-based compensation expense of approximately $ 7,400 related to this award during the nine months ended March 31, 2021.

Expenses related to the Savings Plans that are included in the accompanying consolidated statements of operations for the three months ended September 30, 2021 and 2020 were $ 939 and $ 598 , respectively.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Share-based Compensation

See Note 15 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 for more information regarding the Company’s 2015 Employee Stock Plan (the “Employee Stock Plan”) and its 2015 Stock Plan for Non-Employee Directors.

Share-based compensation expense was recognized in the consolidated statements of operations as a component of selling, general and administrative expenses.

Share-based compensation expense was $ 4,851 and $ 6,345 for the three months ended September 30, 2021 and 2020, respectively.

There were no costs related to share-based compensation that were capitalized for the three months ended September 30, 2021 and 2020, respectively.

Restricted Stock Units Award Activity

The following table summarizes activity related to the Company’s restricted stock units and performance restricted stock units, collectively referred to as “RSUs,” held by the Company and MSG Entertainment employees, for the nine months ended March 31, 2021:

Number of Weighted-Average

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Vested ( 116 ) ( 85 ) $ 262.08

Forfeited / Cancelled ( 16 ) ( 54 ) $ 275.81

Unvested award balance, March 31, 2021 263 221 $ 235.32

Unvested award balance, September 30, 2021 196 179 $ 201.10

_____________________

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

The fair value of RSUs that vested during the nine months ended March 31, 2021 was $ 36,099 .

The fair value of RSUs that vested during the three months ended September 30, 2021 was $ 36,380 .

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

To fulfill the Company’s and MSG Entertainment’s employees’ required statutory tax withholding obligations for the applicable income and other employment taxes, 88 of these RSUs, with an aggregate value of $ 13,891 , inclusive of $ 7,106 related to MSG Entertainment employees (who vested in the Company’s RSUs), were retained by the Company and the taxes paid are reflected as a financing activity in the accompanying consolidated statement of cash flows for the nine months ended March 31, 2021.

The fair value of RSUs that vested during the nine months ended March 31, 2020 was $ 59,215 .

The weighted-average fair value per share at grant date of RSUs granted during the nine months ended March 31, 2020 was $ 247.18 .

To fulfill the Company’s and MSG Entertainment’s employees’ required statutory tax withholding obligations for the applicable income and other employment taxes, 101 of these RSUs, with an aggregate value of $ 18,306 , inclusive of $ 6,164 related to MSG Entertainment employees (who vested in the Company’s RSUs), were retained by the Company and the taxes paid are reflected as a financing activity in the accompanying consolidated statement of cash flows for the three months ended September 30, 2021.

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

The weighted-average fair value per share at grant date of RSUs granted during the three months ended September 30, 2020 was $ 242.62 .

Stock Options Award Activity

The following table summarizes activity related to the Company’s stock options for the nine months ended March 31, 2021:

The following table summarizes activity related to the Company’s stock options for the three months ended September 30, 2021:

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

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Cancelled — $ —

Balance as of March 31, 2021 94 $ 145.78 6.71 $ 3,160

Exercisable as of March 31, 2021 94 $ 145.78 6.71 $ 3,160

Balance as of September 30, 2021 94 $ 145.78 6.21 $ 3,769

Exercisable as of September 30, 2021 94 $ 145.78 6.21 $ 3,769

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Stock Repurchase Program

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

During the three and nine months ended March 31, 2021, the Company did no t engage in any share repurchase activities under its share repurchase program.

As of March 31, 2021, the Company had $ 259,639 of availability remaining under its stock repurchase authorization.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During the three months ended September 30, 2021 and 2020, the Company did no t engage in any share repurchase activities under its share repurchase program.

As of September 30, 2021, the Company had $ 259,639 of availability remaining under its stock repurchase authorization.

Related Party Transactions

As of March 31, 2021, members of the Dolan family including trusts for members of the Dolan family (collectively, the “Dolan Family Group”), for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, collectively beneficially own 100 % of the Company’s outstanding Class B Common Stock and own approximately 3.0 % of the Company’s outstanding Class A Common Stock.

On July 9, 2021, MSG Networks merged with a subsidiary of MSG Entertainment and became a wholly-owned subsidiary of MSG Entertainment (the “MSGE-MSGN Merger”).

Accordingly, agreements between the Company and MSG Networks are now effectively agreements with MSG Entertainment on a consolidated basis.

As of September 30, 2021, members of the Dolan family including trusts for members of the Dolan family (collectively, the “Dolan Family Group”), for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, collectively beneficially own 100 % of the Company’s outstanding Class B Common Stock and own approximately 3.1 % of the Company’s outstanding Class A Common Stock.

Such shares of the Company’s Class A Common Stock and Class B Common Stock, collectively, represent approximately 70.6 % of the aggregate voting power of the Company’s outstanding common stock.

Members of the Dolan family are also the controlling stockholders of MSG Entertainment, MSG Networks and AMC Networks Inc.

Members of the Dolan family are also the controlling stockholders of MSG Entertainment and AMC Networks Inc.

(“AMC Networks”).

Current Related Party Arrangements

Members of the Dolan family were the direct controlling stockholders of MSG Networks prior to the MSGE-MSGN Merger and indirectly control MSG Networks through MSG Entertainment’s ownership of MSG Networks.

The Company is party to the following agreements and/or arrangements with MSG Entertainment and MSG Networks, as applicable:

• Arena License Agreements pursuant to which MSG Entertainment (i) provides the right to use The Garden for games of the Knicks and Rangers for a 35 -year term in exchange for arena license fees, (ii) shares revenues collected for suite licenses, (iii) operates and manages the sale of the sports teams merchandise at The Garden for a commission, (iv) operates and manages the sales of food and beverage concessions in exchange for 50% of net profits from the sales and catering services during the Knicks and Rangers home games, (v) provides day of game services that were historically provided prior to the MSGE Distribution, and (vi) provides other general services within The Garden;

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

• Arena License Agreements pursuant to which MSG Entertainment (i) provides the right to use The Garden for games of the Knicks and the Rangers for a 35 -year term in exchange for arena license fees, (ii) shares revenues collected for suite licenses, (iii) operates and manages the sale of the sports teams merchandise at The Garden for a commission, (iv) operates and manages the sales of food and beverage concessions in exchange for 50% of net profits from the sales and catering services during Knicks and Rangers home games, (v) provides day of game services that were historically provided prior to the MSGE Distribution, and (vi) provides other general services within The Garden;

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

• Sponsorship sales and service representation agreements pursuant to which MSG Entertainment has the exclusive right and obligation to sell the Company’s sponsorships for an initial stated term of 10 years for a commission.

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• Transition Services Agreement (the “TSA”) pursuant to which the Company receives certain services from MSG Entertainment, such as information technology, accounts payable, payroll, human resources, and other corporate functions, as well as the executive support services, in exchange for service fees.

• A services agreement with MSG Networks, pursuant to which the Company provides certain legal services to MSG Networks (the “Current MSGN Services Agreement”);

As a result of the MSGE-MSGN Merger, the TSA is expected to be amended to provide for the provision of certain legal services by the Company to MSG Entertainment, including its wholly-owned subsidiary, MSG Networks;

• A services agreement with MSG Networks, pursuant to which the Company provides certain legal services to MSG Networks (the “MSGN Services Agreement”).

As a result of the MSGE-MSGN Merger, the MSGN Services Agreement is expected to be terminated, and any services provided to MSG Networks are expected to be provided pursuant to the TSA;

• Sublease agreement, pursuant to which the Company leases office space from MSG Entertainment;

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

• Group ticket sales representation agreement, pursuant to which MSG Entertainment appointed the Company as its sales and service representative to sell group ticket packages related to MSG Entertainment events in exchange for a commission;

• Single night rental commission agreement, pursuant to which the Company may, from time to time, sell (or make referrals for sales of) licenses for the use of suites at The Garden for individual MSG Entertainment events in exchange for a commission and reimbursement for sales and service staff and overhead associated with the ticket sales on behalf of MSG Entertainment;

• Aircraft sharing agreements pursuant to which MSG Entertainment has agreed from time to time to make its aircraft and an aircraft it leases from another related party available to the Company for lease on a “time sharing” basis;

• Aircraft sharing agreements pursuant to which MSG Entertainment has agreed from time to time to make its aircraft and aircraft it leases from other related parties available to the Company for lease on a “time sharing” basis;

• Other agreements with MSG Entertainment entered into in connection with the MSGE Distribution, including a distribution agreement, a tax disaffiliation agreement, an employee matters agreement, a trademark license agreement and certain other arrangements;

• Other agreements with MSG Networks entered into in connection with the MSGS Distribution, including a distribution agreement, a tax disaffiliation agreement, an employee matters agreement and certain other arrangements.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In addition, the Company shares certain executive support costs, including office space, executive assistants, security and transportation costs for:

(i) the Company’s Executive Chairman with MSG Entertainment and MSG Networks;

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

(i) the Company’s Executive Chairman with MSG Entertainment;

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

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

Additionally, the Company, MSG Entertainment, MSG Networks and AMC Networks agreed on an allocation of the costs of certain personal aircraft and helicopter use by their shared executives.

Additionally, the Company, MSG Entertainment, and AMC Networks allocate the costs of certain personal aircraft and helicopter use by their shared executives.

From time to time the Company has entered into, and is expected to continue to enter into, arrangements with 605, LLC.

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605, LLC provides audience measurement and data analytics services to the Company and its subsidiaries in the ordinary course of business.

Related Party Arrangements Prior to the MSGE Distribution

Following the MSGE Distribution, except as otherwise noted, the Company is no longer party to the arrangements described below.

However, the amounts associated with such arrangements are reflected in the Company’s results of operations for the periods prior to the MSGE Distribution.

The Company had various agreements with MSG Networks, including an advertising sales representation agreement and a services agreement (the “Prior MSGN Services Agreement”).

Pursuant to the Prior MSGN Services Agreement, which was effective July 1, 2019, the Company provided certain services to MSG Networks, such as information technology, accounts payable, payroll, human resources, and other corporate functions, as well as the executive support services described below, in exchange for service fees.

MSG Networks also provided certain services to the Company, in exchange for service fees.

Effective as of the MSGE Distribution, this agreement is now between MSG Entertainment and MSG Networks.

The Company separately entered into the Current MSGN Services Agreement.

See “— Current Related Party Arrangements.”

The Company shared certain executive support costs, including office space, executive assistants, security and transportation costs, for (i) the Company’s Executive Chairman with MSG Networks and (ii) the Company’s Vice Chairman with MSG Networks and AMC Networks.

Additionally, the Company, MSG Networks and AMC Networks agreed on an allocation of the costs of certain personal aircraft and helicopter use by their shared executives.

Following the MSGE Distribution, the Company also shares these expenses with MSG Entertainment.

See “— Current Related Party Arrangements.”

Prior to September 2018, the Company had an arrangement with the Dolan Family Office, LLC (“DFO”), an entity owned and controlled by Charles F.

Dolan, AMC Networks and MSG Networks providing for the sharing of certain expenses associated with executive office space which was available to James L.

Dolan (the Executive Chairman and a director of the Company, the Executive Chairman, Chief Executive Officer and a director of MSG Entertainment, the Executive Chairman and a director of MSG Networks, and a director of AMC Networks), Charles F.

Dolan (the father of James L.

Dolan and the Executive Chairman and a director of AMC Networks and a director of the Company, MSG Entertainment and MSG Networks), and the DFO.

The Company was a party to various Aircraft Support Services Agreements (the “Support Agreements”), pursuant to which the Company provided certain aircraft support services to entities controlled by (i) James L.

Dolan, (ii) Charles F.

Dolan, and (iii) Patrick F.

Dolan, the son of Charles F.

Dolan and brother of James L.

On December 17, 2018, the Company terminated the agreement providing services to the entity controlled by Charles F.

Dolan, and entered into a new agreement with Charles F.

Dolan and certain of his children, who are siblings of James L.

Dolan, specifically:

Dolan (a director of the Company), Deborah Dolan-Sweeney, Patrick F.

Dolan, Marianne Dolan Weber (a director of the Company), and Kathleen M.

Dolan, which provided substantially the same services as the prior agreement for a new aircraft.

In addition, the Company was party to reciprocal time sharing/dry lease agreements with each of (i) Quart 2C, LLC (“Q2C”), a company controlled by James L.

Dolan and Kristin A.

Dolan, his spouse and a director of the Company, and (ii) Charles F.

Dolan and Sterling Aviation, LLC, a company controlled by Charles F.

Dolan (collectively, “CFD”), pursuant to which the Company has agreed from time to time to make its aircraft available to each of Q2C and CFD, and Q2C and CFD have agreed from time to time to make their aircraft available to the Company.

Pursuant to the terms of the agreements, Q2C and/or CFD may lease on a non-exclusive, “time sharing” basis, the Company’s Gulfstream Aerospace G550 aircraft (the “G550 Aircraft”).

On December 17, 2018, in connection with the purchase of a new aircraft (as noted above), the Company replaced the dry lease agreement with CFD with a new dry lease agreement with Sterling2k LLC, an entity owned and controlled by Deborah Dolan-Sweeney, the daughter of CFD and the sister of James L.

Dolan, which provides for the Company’s usage of the new aircraft on the same terms as the prior agreement.

On May 6, 2019, the Company entered into a dry lease agreement with Brighid Air, LLC (“Brighid Air”), a company owned and controlled by Patrick F.

Dolan, pursuant to which the Company was permitted to lease on a non-exclusive basis Brighid

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Air’s Bombardier BD100-1A10 Challenger 350 aircraft (the “Challenger”).

In connection with the dry lease agreement, on May 6, 2019, the Company also entered into a Flight Crew Services Agreement (the “Flight Crew Agreement”) with DFO, an entity owned and controlled by Charles F.

Dolan, pursuant to which the Company was permitted to utilize pilots employed by DFO for purposes of flying the Challenger when the Company was leasing that aircraft under the Company’s dry lease agreement with Brighid Air.

The Company and each of MSG Networks and AMC Networks were party to certain aircraft time sharing agreements, pursuant to which the Company agreed from time to time to make its aircraft available to MSG Networks and/or AMC Networks for lease on a “time sharing” basis.

In addition to the aircraft arrangements described above, certain executives of the Company were party to aircraft time sharing agreements, pursuant to which the Company agreed from time to time to make certain aircraft available for lease on a “time sharing” basis for personal use in exchange for payment of actual expenses of the flight (as listed in the agreement).

Revenues and Operating Expenses (Credits)

Revenues and Operating Expenses

The following table summarizes the composition and amounts of the transactions with the Company’s affiliates.

These amounts are reflected in revenues and operating expenses in the accompanying consolidated statements of operations for the three and nine months ended March 31, 2021 and 2020:

Three Months Ended March 31, Nine Months Ended March 31,

2021 2020 2021 2020

These amounts are reflected in revenues and operating expenses in the accompanying consolidated statements of operations for the three months ended September 30, 2021 and 2020:

Three Months Ended September 30,

Revenues $ 7,247 $ 9,061

Operating expenses (credits):

Corporate general and administrative credits, net — MSG Networks $ ( 219 ) $ ( 2,672 ) $ ( 656 ) $ ( 7,876 )

Corporate general and administrative expenses, net — MSG Entertainment 9,500 — 29,818 —

Operating expenses:

Corporate general and administrative expenses, net $ 9,599 $ 11,643

Costs associated with the Sponsorship sales and service representation agreements 2,733 2,358

Costs associated with the Arena License Agreements 1,960 —

Other operating expenses (credits), net 239 ( 182 ) 290 ( 514 )

Revenues from related parties primarily consist of local media rights recognized from the licensing of team-related programming to MSG Networks under the media rights agreements covering the Knicks and Rangers, which provide MSG Networks with exclusive media rights to team games in their local markets.

Corporate general and administrative credits, net — MSG Networks

The Company’s corporate overhead expenses that were charged to MSG Networks prior to MSGE Distribution are primarily related to centralized functions, including executive compensation, finance, treasury, tax, internal audit, legal, information technology, human resources and risk management functions.

These charges are reflected in the Company’s results of operations for the periods prior to the MSGE Distribution as they do not meet the criteria for inclusion in discontinued operations.

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

Corporate general and administrative credits, net — MSG Networks reflects charges from the Company to MSG Networks under the Current MSGN Services Agreement of $ 219 and $ 656 for the three and nine months ended March 31, 2021, respectively.

In addition, it reflects charges from the Company to MSG Networks under the Prior MSGN Services Agreement of $ 2,700 and $ 7,982 , for the three and nine months ended March 31, 2020, net of general and administrative costs charged to the Company by MSG Networks, respectively.

Corporate general and administrative expenses, net — MSG Entertainment

Corporate general and administrative expenses, net — MSG Entertainment reflects net charges of $ 8,822 and $ 27,771 from MSG Entertainment pursuant to the TSA for certain business functions that were previously performed by internal resources for the three and nine months ended March 31, 2021, respectively.

These services include information technology, accounting,

Other operating expenses, net 113 360

Revenues from related parties primarily consist of local media rights recognized from the licensing of team-related programming under the media rights agreements covering the Knicks and the Rangers, which provide MSG Networks with exclusive media rights to team games in their local markets.

Corporate general and administrative expenses, net

Corporate general and administrative expenses, net reflects net charges of $ 8,884 and $ 11,036 from MSG Entertainment pursuant to the TSA for certain business functions that were previously performed by internal resources for the three months ended September 30, 2021 and 2020, respectively.

These services include information technology, accounting, accounts payable, payroll, tax, legal, human resources, insurance and risk management, investor relations, corporate communications, benefit plan administration and reporting, and internal audit.

In addition, Corporate general and administrative expenses, net reflects rent expense of $ 715 and $ 695 associated with the lease of office space from MSG Entertainment for the three months

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

accounts payable, payroll, tax, legal, human resources, insurance and risk management, investor relations, corporate communications, benefit plan administration and reporting, and internal audit.

In addition, Corporate general and administrative expenses, net — MSG Entertainment reflects rent expense of $ 678 and $ 2,047 associated with the lease of office space from MSG Entertainment for the three and nine months ended March 31, 2021, respectively.

ended September 30, 2021 and 2020, respectively.

See Note 7 for more information regarding the lease of office space from MSG Entertainment.

Corporate general and administrative expenses, net for the three months ended September 30, 2020 also reflects charges from the Company to MSG Networks for the period prior to the MSGE-MSGN Merger under the MSGN Services Agreement.

Costs associated with the Sponsorship sales and service representation agreements

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Costs associated with the Arena License Agreements

For the three and nine months ended March 31, 2021, costs associated with the Arena License Agreements include $ 20,357 and $ 22,567 respectively, recorded as operating lease cost.

For the three months ended September 30, 2021, costs associated with the Arena License Agreements include $ 1,311 recorded as operating lease cost.

See Note 7 for more information regarding Arena License Agreements.

Other operating expenses (credits), net

Other operating expenses, net

The Company and its related parties enter into transactions with each other in the ordinary course of business.

Other operating expenses (credits), net includes net charges relating to (i) reciprocal aircraft arrangements between the Company and each of Q2C and CFD and (ii) time sharing agreements with MSG Networks and AMC Networks.

Following the MSGE Distribution, the Company no longer provides these services to MSG Networks.

However, these charges are reflected in the Company’s results of operations for the periods prior to the MSGE Distribution as they do not meet the criteria for inclusion in discontinued operations.

In addition, Other operating expenses (credits), net includes fees paid by the Company to MSG Networks for insertion of virtual signage during the Knicks home and away games during the 2020-21 season.

Discontinued operations

Related party transactions included in Loss from discontinued operations, net of taxes in the accompanying consolidated statements of operations for the three months ended March 31, 2020 include (i) revenues from related parties of $ 5,937 , (ii) operating expenses charged by related parties of $ 547 , and (iii) loss in equity-method investments of $ 1,096 .

Related party transactions included in Loss from discontinued operations, net of taxes in the accompanying consolidated statements of operations for the nine months ended March 31, 2020 include (i) revenues from related parties of $ 13,056 , (ii) operating expenses charged by related parties of $ 1,009 , and (iii) loss in equity-method investments of $ 3,739 .

Income tax expense for the three months ended March 31, 2021 of $ 53 differs from income tax expense derived from applying the statutory federal rate of 21 % to pretax income primarily due to tax benefit of $ 4,295 related to a decrease in the valuation allowance, partially offset by state income tax expense of $ 1,507 and tax expense of $ 561 resulting from nondeductible officers’ compensation.

Income tax benefit for the nine months ended March 31, 2021 of $ 275 differs from income tax benefit derived from applying the statutory federal rate of 21 % to the pretax loss primarily due to tax expense of $ 13,168 related to an increase in the valuation allowance, tax expense of $ 1,954 resulting from nondeductible officers’ compensation and tax expense of $ 1,558 resulting from the acceleration of share-based compensation expense in connection with the cancellation of certain awards, partially offset by state income tax benefit of $ 4,754 .

Income tax expense for the three months ended March 31, 2020 of $ 5,598 differs from income tax benefit derived from applying the statutory federal rate of 21 % to the pretax loss primarily due to state income tax expense of $ 2,207 and tax expense of $ 1,523 resulting from nondeductible officers’ compensation.

Income tax benefit for the nine months ended March 31, 2020 of $ 11,132 differs from income tax benefit derived from applying the statutory federal rate of 21 % to the pretax loss primarily due to excess tax benefit of $ 3,180 related to share-based compensation awards and state income tax benefit of $ 2,173 , partially offset by tax expense of $ 4,531 resulting from nondeductible officers’ compensation.

On April 19, 2021, the state of New York enacted a corporate tax rate increase that will become effective starting with the fiscal year ended June 30, 2022.

The impact of enacted tax changes is recognized in the period of enactment.

Accordingly, the Company will remeasure deferred tax assets and liabilities at the higher applicable tax rate in the fourth quarter of the fiscal year ended June 30, 2021.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Other operating expenses, net primarily includes net charges relating to time sharing agreements with MSG Entertainment.

Income tax benefit for the three months ended September 30, 2021 of $ 21,169 reflects an effective tax rate of 56 %.

In general, the Company is required to use an estimated annual effective tax rate to measure the tax benefit or tax expense recognized in an interim period.

The estimated annual effective tax rate exceeds the statutory federal tax rate of 21 % primarily due to state taxes and nondeductible officers’ compensation and disability insurance premiums expense.

The estimated annual effective tax rate is revised on a quarterly basis.

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

The Company was notified in April 2020 that the City of New York was commencing an audit of the state income tax returns for the fiscal years ended June 30, 2016 and 2017.

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

What changed 10-Q

Item 1. Financial Statements