What changed in this filing

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Item 1. Financial Statements

2022-02-03 compared with 2021-11-09 · 244 added, 187 removed, 531 unchanged (45% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

2021 June 30,

2 unchanged sentences

Restricted cash 745 7,134

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

Accounts receivable, net of allowance for doubtful accounts of $ 0 and $ 0 as of December 31, 2021 and June 30, 2021, respectively

79,737 74,197

3 unchanged sentences

Total current assets 218,555 185,246

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

Property and equipment, net of accumulated depreciation and amortization of $ 44,784 and $ 42,673 as of December 31, 2021 and June 30, 2021, respectively

34,233 35,716

10 unchanged sentences

(in thousands, except per share data)

September 30,

2021 June 30,

21 unchanged sentences

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

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

19,689 and 19,587 shares outstanding as of December 31, 2021 and June 30, 2021, respectively

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

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

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

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

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

none outstanding as of December 31, 2021 and June 30, 2021

Additional paid-in capital 6,460 23,102

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

Treasury stock, at cost, 759 and 861 shares as of December 31, 2021 and June 30, 2021, respectively

( 129,426 ) ( 146,734 )

10 unchanged sentences

(in thousands, except per share data)

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2021 2020 2021 2020

$ 289,581 $ 28,771 $ 308,375 $ 85,809

Operating expenses:

Direct operating expenses (b)

192,847 16,661 201,425 56,447

Selling, general and administrative expenses (c)

1 unchanged sentence

Depreciation and amortization 1,215 1,607 2,641 3,267

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

Operating income (loss) 35,919 ( 38,406 ) 981 ( 65,810 )

Other income (expense):

3 unchanged sentences

( 3,606 ) ( 2,557 ) ( 6,722 ) ( 4,666 )

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

Income tax benefit 21,169 498

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

Income (loss) from operations before income taxes 32,313 ( 40,963 ) ( 5,741 ) ( 70,476 )

Income tax (expense) benefit ( 17,115 ) ( 170 ) 4,054 328

Net income (loss) 15,198 ( 41,133 ) ( 1,687 ) ( 70,148 )

Net loss attributable to nonredeemable noncontrolling interests ( 647 ) ( 508 ) ( 1,127 ) ( 1,106 )

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 )

Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ 15,845 $ ( 40,625 ) $ ( 560 ) $ ( 69,042 )

Basic earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 0.65 $ ( 1.68 ) $ ( 0.02 ) $ ( 2.86 )

Diluted earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 0.65 $ ( 1.68 ) $ ( 0.02 ) $ ( 2.86 )

Weighted-average number of common shares outstanding:

2 unchanged sentences

_________________

(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.

(a) Includes revenues from related parties of $ 70,131 and $ 14,369 for the three months ended December 31, 2021 and 2020, respectively, and $ 77,378 and $ 23,430 for the six months ended December 31, 2021 and 2020, respectively.

(b) Includes net charges from related parties of $ 37,874 and $ 2,650 for the three months ended December 31, 2021 and 2020, respectively, and $ 40,032 and $ 3,264 for the six months ended December 31, 2021 and 2020, respectively.

(c) Includes net charges from related parties of $ 18,880 and $ 10,455 for the three months ended December 31, 2021 and 2020, respectively, and $ 31,127 and $ 24,202 for the six months ended December 31, 2021 and 2020, respectively.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

September 30,

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

Three Months Ended Six Months Ended

December 31, December 31,

2021 2020 2021 2020

Net income (loss) $ 15,198 $ ( 41,133 ) $ ( 1,687 ) $ ( 70,148 )

Other comprehensive income, before income taxes:

5 unchanged sentences

Other comprehensive income, net of income taxes 22 10 44 20

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

Comprehensive income (loss) 15,220 ( 41,123 ) ( 1,643 ) ( 70,128 )

Comprehensive loss attributable to nonredeemable noncontrolling interests ( 647 ) ( 508 ) ( 1,127 ) ( 1,106 )

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

Comprehensive income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ 15,867 $ ( 40,615 ) $ ( 516 ) $ ( 69,022 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

September 30,

Six Months Ended

Cash flows from operating activities:

Net loss $ ( 1,687 ) $ ( 70,148 )

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

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

Depreciation and amortization 2,641 3,267

12 unchanged sentences

Operating lease right-of-use assets and lease liabilities 8,722 2,327

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

Net cash provided by (used in) operating activities 24,030 ( 21,633 )

Cash flows from investing activities:

4 unchanged sentences

Taxes paid in lieu of shares issued for equity-based compensation ( 12,142 ) ( 13,891 )

Proceeds from revolving credit facilities — 30,000

Repayment of revolving credit facility ( 25,000 ) —

Payment of contingent consideration — ( 200 )

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

Payments for financing costs ( 2,737 ) ( 4,546 )

Net cash (used in) provided by financing activities ( 39,879 ) 11,363

Net decrease in cash, cash equivalents and restricted cash ( 16,476 ) ( 10,411 )

7 unchanged sentences

(in thousands)

Three Months Ended September 30, 2021

Three Months Ended December 31, 2021

Issued Additional

6 unchanged sentences

Interests Total Equity

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

Net income (loss) — — — 15,845 — 15,845 ( 647 ) 15,198

Other comprehensive income — — — — 22 22 — 22

Comprehensive income (loss) — — — — — 15,867 ( 647 ) 15,220

Share-based compensation

— 7,354 — — — 7,354 — 7,354

Adjustments to noncontrolling interests — ( 894 ) — — — ( 894 ) 894 —

Balance as of December 31, 2021 $ 249 $ 6,460 $ ( 129,426 ) $ ( 87,390 ) $ ( 1,983 ) $ ( 212,090 ) $ 2,480 $ ( 209,610 )

See accompanying notes to consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(in thousands)

Three Months Ended December 31, 2020

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

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

Other comprehensive income — — — — 10 10 — 10

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

Share-based compensation

— 15,981 — — — 15,981 — 15,981

Tax withholding associated with shares issued for equity-based compensation

— ( 93 ) — — — ( 93 ) — ( 93 )

Common stock issued under stock incentive plans

— ( 20 ) 20 — — — — —

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

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

See accompanying notes to consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(in thousands)

Six Months Ended December 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 June 30, 2021 $ 249 $ 23,102 $ ( 146,734 ) $ ( 78,898 ) $ ( 2,027 ) $ ( 204,308 ) $ 2,442 $ ( 201,866 )

2 unchanged sentences

Comprehensive loss

— — — — — ( 516 ) ( 1,127 ) ( 1,643 )

Share-based compensation

5 unchanged sentences

Adjustments to noncontrolling interests — ( 1,165 ) — — — ( 1,165 ) 1,165 —

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

Balance as of December 31, 2021 $ 249 $ 6,460 $ ( 129,426 ) $ ( 87,390 ) $ ( 1,983 ) $ ( 212,090 ) $ 2,480 $ ( 209,610 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended September 30, 2020

Six Months Ended December 31, 2020

Common Stock Issued Additional

15 unchanged sentences

— ( 1,375 ) 19,846 ( 18,471 ) — — — —

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

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

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

See accompanying notes to consolidated financial statements.

37 unchanged sentences

Impact of COVID-19

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.

2 unchanged sentences

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.

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

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

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

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

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

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

2 unchanged sentences

signage and in-venue advertising at The Garden;

local media rights fees;

and food, beverage and merchandise sales.

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

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

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.

1 unchanged sentence

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.

As a result of New York City regulations effective August 17, 2021, indoor entertainment venues such as The Garden were permitted to host guests at full capacity, subject to certain restrictions, including that all guests 12 years of age and older were required to show proof they had received at least one dose of a COVID-19 vaccine.

Following updated New York City regulations, effective January 29, 2022, all guests five years of age and older and employees must provide proof that they have received either two doses of a two-shot COVID-19 vaccination, or one dose of a single-shot vaccine.

Children under age five can attend events with a vaccinated adult, but ages two to four need to wear a mask while inside venues such as The Garden.

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.

Fan attendance for the 2021-22 NBA and NHL seasons has been and may continue to be impacted by a resurgence in the COVID-19 pandemic, such as the Delta and Omicron variants, , reduced tourism, as well as general hesitancy among the public to return to pre-COVID-19 activity levels, and may also be impacted by new governmental and league restrictions on attendance of games at The Garden and vaccination requirements for fans.

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

13 unchanged sentences

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

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

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

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

17 unchanged sentences

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

For the three months ended September 30, 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 and six months ended December 31, 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 months ended September 30, 2021 and 2020:

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2021 2020 2021 2020

Event-related (a)

$ 109,074 $ — $ 112,944 $ —

Media rights (b)

112,308 22,306 118,894 72,495

Sponsorship, signage and suite licenses 58,534 3,995 61,704 6,945

2 unchanged sentences

_________________

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

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

(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.

2 unchanged sentences

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

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

September 30, June 30,

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

December 31, 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 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.

As of December 31, 2021 and June 30, 2021, the Company’s receivables reported above included $ 4,509 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 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 December 31, 2021, the Company had receivable balances related to escrow and player compensation recoveries of $ 30,190 and $ 8,462 , 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.

4 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 was $ 32,458 and $ 260 as of September 30, 2021 and June 30, 2021, respectively.

The Company’s deferred revenue related to local media rights was $ 8,702 and $ 260 as of December 31, 2021 and June 30, 2021, respectively.

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

(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 .

(d) Revenue recognized for the six months ended December 31, 2021 relating to the deferred revenue balance as of June 30, 2021 was $ 62,758 .

MADISON SQUARE GARDEN SPORTS CORP.

1 unchanged sentence

Transaction Price Allocated to the Remaining Performance Obligations

The following table depicts the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 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 December 31, 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.

8 unchanged sentences

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

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2021 2020 2021 2020

Weighted-average shares (denominator):

6 unchanged sentences

Team Personnel Transactions

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.

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

Team personnel transactions were a net credit of $ 302 and a net provision of $ 2,839 for the three months ended December 31, 2021 and 2020, respectively, and net provisions of $ 425 and $ 13,712 for the six months ended December 31, 2021 and 2020, respectively.

MADISON SQUARE GARDEN SPORTS CORP.

2 unchanged sentences

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

September 30,

2021 June 30,

2021 September 30,

2021 December 31,

2020 June 30,

6 unchanged sentences

_________________

(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).

(a) Restricted cash as of December 31, 2021 and 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).

2 unchanged sentences

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.

In November 2021, MSG Entertainment entered into a new lease for principal executive offices at Two Pennsylvania Plaza in New York (the “New MSGE Lease Agreement”).

In accordance with the terms of the Sublease Agreement and the New MSGE Lease Agreement, the lease term of the Sublease Agreement was extended until October 31, 2024 .

The Company has accounted for this extension as a lease remeasurement and remeasured the right-of-use asset and operating lease liability utilizing the Company’s incremental borrowing rate as of the date of remeasurement.

As a result of the remeasurement, non-cash additions to the right-of-use asset and operating lease liability of $ 1,244 were recorded during the three and six months ended December 31, 2021.

In accordance with the terms of the Sublease Agreement, the Company has committed to enter into a new sublease agreement with MSG Entertainment for a lease term equivalent to the New MSGE Lease Agreement term, which ends January 31, 2046.

In addition, in connection with the New MSGE Lease Agreement, the Company has entered into a commitment whereby if the New MSGE Lease Agreement were terminated under certain circumstances, the Company would be required to enter into a new lease for executive offices in Two Pennsylvania Plaza directly with the landlord, with a consistent lease term through January 31, 2046.

As the Company has not yet entered into a new sublease for or taken possession of the new executive office space at Two Pennsylvania Plaza, no additional right-of-use assets or operating lease liabilities have been recorded as of December 31, 2021 related to the commitments discussed above.

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.

2 unchanged sentences

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.

During the three and six months ended December 31, 2021, the Company recognized operating lease costs associated with the Arena License Agreements with respect to games played at The Garden.

During the three and six months ended December 31,

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2020, the Company recognized operating lease costs associated with the Knicks Arena License Agreement, but no operating lease costs associated with the Rangers Arena License Agreement as there were no Rangers events.

As of December 31, 2021, the Company’s existing operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 8 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.

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,

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

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

2021 June 30,

9 unchanged sentences

_________________

(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.

(a) As of December 31, 2021, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 42,372 and $ 692,139 , 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 months ended September 30, 2021 and 2020:

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

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

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

2021 2020 2021 2020

Operating lease cost Direct operating expenses $ 27,860 $ 2,308 $ 29,267 $ 2,398

Operating lease cost Selling, general and administrative expenses

613 611 1,224 1,222

Short-term lease cost Direct operating expenses 41 27 77 51

1 unchanged sentence

Supplemental Information

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:

For the six months ended December 31, 2021 and 2020, cash paid for amounts included in the measurement of lease liabilities was $ 21,689 and $ 1,299 , respectively.

The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of December 31, 2021 was 33.1 years.

The weighted average discount rate was 7.13 % as of December 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 December 31, 2021 are as follows:

Fiscal Year 2022 (remainder) $ 22,104

7 unchanged sentences

Total lease liabilities $ 735,613

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 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:

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

The Company’s indefinite-lived intangible assets as of December 31, 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:

September 30, 2021 Gross Accumulated

December 31, 2021 Gross Accumulated

Amortization Net

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

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

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

For the six months ended December 31, 2021 and 2020, amortization expense of intangible assets was $ 530 and $ 530 , respectively.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 September 30,

Fair Value Hierarchy December 31,

2021 June 30,

Money market account I $ 12,419 $ 33,820

Time deposit I 1 5,000

Time deposits I 35,005 5,000

Total assets measured at fair value $ 47,424 $ 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 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 amount of the Company’s money market account and time deposits approximate fair value due to their short-term maturities.

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

September 30, 2021 June 30, 2021

December 31, 2021 June 30, 2021

Value Carrying

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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 2021 other than activities in the ordinary course of business.

The Company did not have any material changes in its contractual obligations, including off-balance sheet commitments, since the end of fiscal year 2021 other than the lease commitments discussed in Note 7 and activities in the ordinary course of business.

Legal Matters

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

On December 14, 2021, Knicks LLC entered into Amendment No.

2 to the 2020 Knicks Credit Agreement, which amended and restated the 2020 Knicks Credit Agreement (the “2021 Knicks Credit Agreement”).

The 2021 Knicks Credit Agreement provides for a senior secured revolving credit facility of up to $ 275,000 (the “2021 Knicks Revolving Credit Facility”) to fund working capital needs and for general corporate purposes.

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

The maturity date of the 2021 Knicks Credit Agreement is December 14, 2026 .

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

All borrowings under the 2021 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) the London Inter-Bank Offered Rate (“LIBOR”) plus a margin ranging from 1.500 % to 1.750 % per annum.

Borrowings under the 2021 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 0.250 % to 0.500 % per annum or (ii) term Secured Overnight Financing Rate (“SOFR”) plus a credit spread adjustment of 0.100 % per annum plus a margin ranging from 1.250 % to 1.500 % per annum depending on the credit rating applicable to the NBA’s league-wide credit facility.

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 2021 Knicks Revolving Credit Facility.

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)

The outstanding balance under the 2021 Knicks Revolving Credit Facility was $ 220,000 as of December 31, 2021 which was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2021 Knicks Revolving Credit Facility as of December 31, 2021 was 1.40 %.

During the six months ended December 31, 2021 the Company made interest payments of $ 1,645 in respect of the 2021 Knicks Revolving Credit Facility (including in respect of obligations under the 2020 Knicks Credit Agreement prior to the amendment and restatement thereof).

All obligations under the 2021 Knicks Revolving Credit Facility are secured by a first lien security interest in certain of Knicks LLC’s assets, including, but not limited to, (i) the Knicks LLC’s membership rights in the NBA, (ii) revenues to be paid to the Knicks LLC by the NBA pursuant to certain U.S.

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

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

Subject to customary notice and minimum amount conditions, Knicks LLC may voluntarily prepay outstanding loans under the 2021 Knicks Revolving Credit Facility at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to SOFR-based loans).

Knicks LLC is required to make mandatory prepayments in certain circumstances, including without limitation if the maximum available amount under the 2021 Knicks Revolving Credit Facility is greater than 350 % of qualified revenues.

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

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

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

Knicks Unsecured Credit Facility

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

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

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

The 2021 Knicks Revolving Credit Facility requires Knicks LLC to comply with a debt service ratio of at least 1.5 :1.0 over a trailing four quarter period.

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

Knicks Holdings Credit Facility

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

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

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 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 .

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

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

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

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

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

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

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

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

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;

(ii) creating liens on certain assets;

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

(iv) engaging in sale and leaseback transactions;

(v) merging or consolidating;

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

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

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

On December 14, 2021 , the Company terminated the 2020 Knicks Holdings Revolving Credit Facility in its entirety.

Rangers Revolving Credit Facility

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

On December 14, 2021, Rangers LLC entered into Amendment No.

3 to the 2020 Rangers Credit Agreement, which amended and restated the 2020 Rangers Credit Agreement (the “2021 Rangers Credit Agreement”).

The 2021 Rangers Credit Agreement provides for a senior secured revolving credit facility of up to $ 250,000 (the “2021 Rangers Revolving Credit Facility”) to fund working capital needs and for general corporate purposes.

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

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

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

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

The maturity date of the 2021 Rangers Credit Agreement is December 14, 2026 .

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

All borrowings under the 2021 Rangers Revolving Credit Facility are subject to the satisfaction of certain customary conditions.

Borrowings under the 2021 Rangers Revolving Credit Facility bear interest at a floating rate, which at the option of Rangers LLC may be either (i) a base rate plus a margin ranging from 0.500 % to 1.000 % per annum or (ii) term SOFR plus a credit spread adjustment of 0.100 % per annum plus a margin ranging from 1.500 % to 2.000 % per annum depending on the credit rating applicable to the NHL’s league-wide credit facility.

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 2021 Rangers Revolving Credit Facility.

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 .

During the six months ended December 31, 2021, the Company made principal repayments of $ 25,000 and the outstanding balance under the 2021 Rangers Revolving Credit Facility was $ 110,000 as of December 31, 2021 which was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2021 Rangers Revolving Credit Facility as of December 31, 2021 was 1.90 %.

During the six months ended December 31, 2021 the Company made interest payments of $ 1,326 in respect of the 2021 Rangers Revolving Credit Facility (including in respect of obligations under the 2020 Rangers Credit Agreement prior to the amendment and restatement thereof).

In addition, on February 2, 2022, the Company made an additional principal repayment of $ 25,000 under the 2021 Rangers Revolving Credit Facility.

All obligations under the 2021 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.

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

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

Subject to customary notice and minimum amount conditions, Rangers LLC may voluntarily prepay outstanding loans under the 2021 Rangers Revolving Credit Facility at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to SOFR-based loans).

Rangers LLC is required to make mandatory prepayments in certain circumstances, including without limitation if qualified revenues are less than 17 % of the maximum available amount under the 2021 Rangers Revolving Credit Facility.

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and (vi) taking certain actions that would invalidate the secured lenders’ liens on any of Rangers LLC’s assets securing the obligations under the 2021 Rangers Revolving Credit Facility.

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

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

The 2021 Rangers Revolving Credit Facility requires Rangers LLC to comply with a debt service ratio of at least 1.5 :1.0 over a trailing four quarter period.

As of December 31, 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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

date any such advances are fully repaid.

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 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 .

The outstanding balance under the 2021 Rangers NHL Advance Agreement was $ 30,000 as of December 31, 2021 and was recorded as Debt in the accompanying consolidated balance sheet.

During the six months ended December 31, 2021 the Company made interest payments of $ 450 .

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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:

September 30,

2021 June 30,

Other current assets $ 1,145 $ 1,759

Other assets 4,527 2,345

(a) In connection with the 2021 Knicks Revolving Credit Facility and 2021 Rangers Revolving Credit Facility, the Company incurred $ 2,836 in deferred financing costs during the six months ended December 31, 2021.

Benefit Plans

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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,

Three Months Ended Six Months Ended

December 31, December 31,

2021 2020 2021 2020

Interest cost $ 31 $ 60 $ 62 $ 120

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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.

Expenses related to the Savings Plans that are included in the accompanying consolidated statements of operations were $ 899 and $ 1,838 for the three and six months ended December 31, 2021, respectively, and $ 506 and $ 1,104 for the three and six months ended December 31, 2020, respectively.

MADISON SQUARE GARDEN SPORTS CORP.

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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.

Share-based compensation expense was $ 7,354 and $ 12,205 for the three and six months ended December 31, 2021, respectively, and $ 15,981 and $ 22,326 for the three and six months ended December 31, 2020, respectively.

There were no costs related to share-based compensation that were capitalized for the three and six months ended December 31, 2021 and 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 4 -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 three and six months ended December 31, 2020.

Restricted Stock Units Award Activity

The following table summarizes activity related to the Company’s restricted stock units and performance restricted stock units, collectively referred to as “RSUs,” held by the Company and MSG Entertainment employees, for the three months ended September 30, 2021:

Number of Weighted-Average

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Vested ( 130 ) ( 85 ) $ 256.24

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

Unvested award balance, December 31, 2021 196 178 $ 201.04

_____________________

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

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

The fair value of RSUs that vested during the six months ended December 31, 2021 was $ 38,828 .

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, 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 .

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

The weighted-average fair value per share at grant date of RSUs granted during the six months ended December 31, 2020 was $ 162.22 .

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Stock Options Award Activity

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

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

Balance as of December 31, 2021 94 $ 145.78 5.96 $ 2,622

Exercisable as of December 31, 2021 94 $ 145.78 5.96 $ 2,622

Stock Repurchase Program

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

During the three months ended September 30, 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.

During the six months ended December 31, 2021 and 2020, the Company did no t engage in any share repurchase activities under its share repurchase program.

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

Related Party Transactions

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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.

As of December 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 3.1 % 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.

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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 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;

• Arena License Agreements entered into in April 2020 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.

• Sponsorship sales and service representation agreements entered into in April 2020 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.

In addition, under this agreement, the Company is charged by MSG Entertainment for sales and service staff and overhead associated with the sales of sponsorship assets;

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

• Team sponsorship allocation agreement with MSG Entertainment, pursuant to which teams continue receiving an allocation of sponsorship and signage revenues associated with the sponsorship agreements that existed at the MSGE Distribution Date;

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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;

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

Dolan, a director of the Company and spouse of James L.

Dolan, a former director of the Company and spouse of James L.

Dolan, the Company’s Executive Chairman and a director, is the founder and Chief Executive Officer of 605, LLC.

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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 months ended September 30, 2021 and 2020:

Three Months Ended September 30,

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

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

2021 2020 2021 2020

Revenues $ 70,131 $ 14,369 $ 77,378 $ 23,430

4 unchanged sentences

Other operating expenses, net 208 52 321 52

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

Corporate general and administrative expenses, net reflects net charges of $ 10,990 and $ 19,874 from MSG Entertainment pursuant to the TSA for certain business functions that were previously performed by internal resources for the three and six months ended December 31, 2021, respectively, and $ 7,913 and $ 18,949 for the three and six months ended December 31, 2020, respectively.

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

In addition, Corporate general and administrative 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)

ended September 30, 2021 and 2020, respectively.

In addition, Corporate general and administrative expenses, net reflects rent expense associated with the lease of office space from MSG Entertainment of $ 765 and $ 1,480 for the three and six months ended December 31, 2021, respectively, and $ 674 and $ 1,369 for the three and six months ended December 31, 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.

Corporate general and administrative expenses, net for the three and six months ended December 31, 2020 also reflects charges from the Company to MSG Networks for the period prior to the MSGE-MSGN Merger pursuant to a services agreement between the Company and MSG Networks.

Costs associated with the Sponsorship sales and service representation agreements

1 unchanged sentence

Costs associated with the Arena License Agreements

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

For the three and six months ended December 31, 2021, costs associated with the Arena License Agreements include $ 27,686 and $ 28,997 , respectively, recorded as operating lease cost.

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

For the three and six months ended December 31, 2020, no operating lease costs were recorded for the Rangers Arena License Agreement as there were no Rangers events.

See Note 7 for more information regarding Arena License Agreements.

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, 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 %.

Income tax expense for the three months ended December 31, 2021 of $ 17,115 reflects an effective tax rate of 53 %.

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 exceeds the statutory federal tax rate of 21 % primarily due to state taxes, 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 .

Income tax benefit for the six months ended December 31, 2021 of $ 4,054 reflects an effective tax rate of 71 %.

The effective tax rate for the six months ended December 31, 2021 is higher than the estimated annual effective tax rate primarily due to $ 752 of excess tax benefit on share-based payment awards that was recognized in the first quarter of the fiscal year.

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

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

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.

1 unchanged sentence

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What changed 10-Q

Item 1. Financial Statements