What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-05 compared with 2022-02-03 · 105 added, 92 removed, 221 unchanged (47% of the section changed)

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

• the duration and severity of the COVID-19 pandemic and our ability to effectively manage the impacts, including the availability of The Garden with no or limited fans, league decisions regarding play and other matters, the cancellation of games, the impact of restrictions imposed by New York State, New York City, or otherwise, reduced tourism, and general hesitancy among the public to return to pre-COVID-19 activity levels;

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

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Impact of COVID-19 on Our Business

COVID-19 disruptions have materially impacted the Company’s revenues and the Company recognized materially less revenues, or in some cases no revenues, across a number of areas during the fiscal year 2021.

COVID-19 disruptions have materially impacted the Company’s operations and operating results, with the Company recognizing materially less revenues, or in some cases no revenues, across a number of areas during fiscal years 2020 and 2021.

The Company’s operations and operating results were also impacted by temporary declines in attendance in fiscal year 2022, due to ongoing reduced tourism levels as well as an increase in cases during certain months of the fiscal year due to a COVID-19 variant.

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

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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.

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 paid 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.

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.

During 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 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 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.

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 show proof of 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 all employees were required to 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 could attend events with a vaccinated adult, but children ages two to four were required to wear a mask while inside venues such as The Garden.

Effective March 7, 2022, New York City lifted all COVID-19 vaccination requirements pertaining to guests in attendance at indoor entertainment venues, followed by a lifting of vaccination requirements applicable to professional athletes competing in such venues effective March 24, 2022.

Also, in April 2022, New York State terminated the last of its mandatory COVID-19 rules for indoor venues.

As a result, there are no capacity restrictions or vaccination requirements applicable to fan attendance at games at The Garden as of the date of this filing.

The Knicks and the Rangers each completed their full 82-game regular season schedules for the 2021-22 season in April 2022 and the Rangers are currently competing in the playoffs.

Fan attendance during the regular season was impacted by the COVID-19 pandemic including the emergence of certain variants and ongoing reduced tourism levels.

It is unclear to what extent COVID-19 concerns, including with respect to new variants, could result in renewed governmental and league restrictions on attendance or otherwise impact attendance of games at The Garden.

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

COVID-19 could impede economic activity in impacted regions or globally over the long-term, causing a global recession and leading to a further decline in discretionary spending on sporting events and other leisure activities, including declines in domestic and international tourism, which could result in long-term effects on the Company’s business.

A pandemic such as COVID-19 could impede economic activity in impacted regions or globally over the long-term, causing a global recession and leading to a further decline in discretionary spending on sporting events and other leisure activities, including declines in domestic and international tourism, which could result in long-term effects on the Company’s business.

This MD&A is organized as follows:

Results of Operations.

This section provides an analysis of our unaudited results of operations for the three and six months ended December 31, 2021 compared to the three and six months ended December 31, 2020.

This section provides an analysis of our unaudited results of operations for the three and nine months ended March 31, 2022 compared to the three and nine months ended March 31, 2021.

Liquidity and Capital Resources.

This section focuses primarily on (i) the liquidity and capital resources of the Company, (ii) an analysis of the Company’s cash flows for the six months ended December 31, 2021 compared to the six months ended December 31, 2020, and (iii) certain contractual obligations.

This section focuses primarily on (i) the liquidity and capital resources of the Company, (ii) an analysis of the Company’s cash flows for the nine months ended March 31, 2022 compared to the nine months ended March 31, 2021, and (iii) certain contractual obligations.

Seasonality of Our Business.

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Results of Operations

Comparison of the three and six months ended December 31, 2021 versus the three and six months ended December 31, 2020

Comparison of the three and nine months ended March 31, 2022 versus the three and nine months ended March 31, 2021

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

Three Months Ended Six Months Ended

December 31, Change (a)

Three Months Ended Nine Months Ended

March 31, Change (a)

2022 2021 $ % 2022 2021 $ %

Revenues $ 289,581 $ 28,771 $ 260,810 NM $ 308,375 $ 85,809 $ 222,566 NM

Direct operating expenses 192,847 16,661 176,186 NM 201,425 56,447 144,978 NM

Revenues $ 337,774 $ 183,010 $ 154,764 85 % $ 646,149 $ 268,819 $ 377,330 NM

Direct operating expenses 206,273 126,510 79,763 63 % 407,698 182,957 224,741 NM

Selling, general and administrative expenses 68,902 46,803 22,099 47 % 172,230 138,708 33,522 24 %

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Miscellaneous expense, net (63) (46) (17) (37) % (190) (236) 46 19 %

Income (loss) from operations before income taxes 32,313 (40,963) 73,276 NM (5,741) (70,476) 64,735 92 %

Income (loss) from operations before income taxes 58,912 5,148 53,764 NM 53,171 (65,328) 118,499 NM

Income tax (expense) benefit (34,993) (53) (34,940) NM (30,939) 275 (31,214) NM

Net income (loss) 15,198 (41,133) 56,331 NM (1,687) (70,148) 68,461 98 %

Net income (loss) 23,919 5,095 18,824 NM 22,232 (65,053) 87,285 NM

Net loss attributable to nonredeemable noncontrolling interests (584) (373) (211) (57) % (1,711) (1,479) (232) (16) %

Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ 15,845 $ (40,625) $ 56,470 NM $ (560) $ (69,042) $ 68,482 99 %

Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ 24,503 $ 5,468 $ 19,035 NM $ 23,943 $ (63,574) $ 87,517 NM

_________________

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

Revenues increased $260,810 to $289,581 for the three months ended December 31, 2021 as compared to the prior year period.

Revenues increased $222,566 to $308,375 for the six months ended December 31, 2021 as compared to the prior year period.

Revenues increased $154,764, or 85%, to $337,774 for the three months ended March 31, 2022 as compared to the prior year period.

Revenues increased $377,330 to $646,149 for the nine months ended March 31, 2022 as compared to the prior year period.

The net increases were attributable to the following:

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Increase in pre/regular season ticket-related revenues $ 105,780 $ 210,264

Increase in local media rights fees 50,871 49,107

Increase in revenues from league distributions 44,790 3,575

Increase in suite license fee revenues 38,554 73,167

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Increase in pre/regular season food, beverage and merchandise sales 9,700 18,527

(Decrease) increase in local media rights fees (9,510) 39,597

(Decrease) increase in revenues from league distributions (3,024) 551

Other net increases 494 2,308

$ 154,764 $ 377,330

The increases in pre/regular season ticket-related revenues for the three and six months ended December 31, 2021 were a result of fans being prohibited from attending events at The Garden due to government-mandated assembly restrictions in the prior year periods.

The increases in local media rights fees for the three and six months ended December 31, 2021 were due to the delayed start of the 2020-21 NBA and NHL regular seasons and the impact of the shortened 2020-21 NHL regular season schedule in the prior year

period, as well as contractual rate increases.

In addition, the increase for the six months ended December 31, 2021 was slightly offset by the recognition of local media rights fees in the prior year period associated with the Rangers’ participation in the Stanley Cup Qualifiers.

The increases in revenues from league distributions for the three and six months ended December 31, 2021 were primarily due to (i) higher national media rights fees and other league distributions as a result of the delayed start of the 2020-21 NBA and NHL regular seasons in the prior year period and to a lesser extent (ii) increased NHL national media rights fees in the current year period.

In addition, the increase for the six months ended December 31, 2021 was partially offset by the recognition of the remainder of national media rights fees related to the 2019-20 NBA and NHL seasons during the three months ended September 30, 2020 that otherwise would have been recognized during the third and fourth quarters of fiscal year 2020.

The increases in pre/regular season ticket-related revenues for the three and nine months ended March 31, 2022 were a result of the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year periods.

In the prior year periods, the Knicks and the Rangers played games at The Garden with no fans in attendance until February 23 and 26, 2021, respectively, and after that, played games with attendance restricted to 10% capacity.

The increases in suite license fee revenues for the three and nine months ended March 31, 2022 were a result of the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year periods, as discussed above.

In the prior year periods, for Knicks and Rangers games played with a limited number of fans in attendance, access to suites was sold by way of individual tickets, thus minimal suite license fee revenue was recognized for the three and nine months ended March 31, 2021.

The increases in sponsorship and signage revenues for the three and nine months ended March 31, 2022 were a result of the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year periods, as discussed above.

In addition, the increase for the nine months ended March 31, 2022 was also due to the delayed start of the 2020-21 NBA and NHL regular seasons in the prior year period.

The increases in pre/regular season food, beverage and merchandise sales for the three and nine months ended March 31, 2022 were a result of the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year periods, as discussed above.

The decrease in local media rights fees for the three months ended March 31, 2022 was primarily due to the compressed timing of the NBA and NHL 2020-21 seas ons resulting in revenue being recognized over a shorter time frame in the prior fiscal year, partially offset by the impact of the shortened NBA and NHL 2020-21 regular season schedules in the prior year period, as well as contractual rate increases.

The increase in local media rights fees for the nine months ended March 31, 2022 was primarily due to the delayed start of the 2020-21 NBA and NHL regular seasons and the impact of the shortened NBA and NHL 2020-21 regular season schedules in the prior year period, as well as contractual rate increases.

In addition, the increase for the nine months ended March 31, 2022 was slightly offset by the recognition of local media rights fees in the prior year period associated with the Rangers’ participation in the Stanley Cup Qualifiers.

The decrease in revenues from league distributions for the three months ended March 31, 2022 was primarily due to the compressed timing of the NBA and NHL 2020-2021 seasons resulting in revenue being recognized over a shorter time frame in the prior fiscal year , partially offset by increased NBA and NHL national media rights fees and higher other league distributions in the current year period.

The increase in revenues from league distributions for the nine months ended March 31, 2022 was primarily due to ( i) higher NBA and NHL national media rights fees and other league distributions as a result of the delayed start of the 2020-21 NBA and N HL regular seasons in the prior year period and (ii) increased NBA and NHL national media rights fees and other league distributions in the current year period.

In addition, the increase for the nine months ended March 31, 2022 was partially offset by the recognition of the remainder of national media rights fees related to the 2019-20 NBA and NHL seasons during the first quarter of fiscal year 2021 that otherwise would have been recognized during the third and fourth quarters of fiscal year 2020.

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

The increases in suite license fee revenues for the three and six months ended December 31, 2021 were a result of fans being prohibited from attending events at The Garden due to government-mandated assembly restrictions in the prior year periods.

The increases in sponsorship and signage revenues for the three and six months ended December 31, 2021 were due to the delayed start of the 2020-21 NBA and NHL regular seasons and fans being prohibited from attending events at The Garden due to government-mandated assembly restrictions in the prior year periods.

The increases in pre/regular season food, beverage and merchandise sales for the three and six months ended December 31, 2021 were a result of fans being prohibited from attending events at The Garden due to government-mandated assembly restrictions in the prior year periods.

Direct operating expenses

Direct operating expenses increased $176,186 to $192,847 for the three months ended December 31, 2021 as compared to the prior year period.

Direct operating expenses increased $144,978 to $201,425 for the six months ended December 31, 2021 as compared to the prior year period.

Direct operating expenses increased $79,763, or 63%, to $206,273 for the three months ended March 31, 2022 as compared to the prior year period.

Direct operating expenses increased $224,741 to $407,698 for the nine months ended March 31, 2022 as compared to the prior year period.

The net increases were attributable to the following:

Months Months

Increase in team personnel compensation $ 91,147 $ 77,685

Increase in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax $ 58,244 $ 70,211

Increase in other team operating expenses not discussed elsewhere in this table 11,121 46,874

Increase in operating lease costs associated with the Knicks and the Rangers playing home games at The Garden 9,084 35,854

Increase in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax 20,848 11,967

Increases in pre/regular season expense associated with food, beverage and merchandise sales 3,790 8,276

Increase in team personnel compensation 525 78,210

Decrease in net provisions for certain team personnel transactions (3,001) (14,684)

Other net increases 3,860 4,501

$ 79,763 $ 224,741

The increases in team personnel compensation for the three and six months ended December 31, 2021 were primarily due to the delayed start of the 2020-21 NBA and NHL regular seasons in the prior year periods.

The increases in other team operating expenses not discussed elsewhere in this table for the three and six months ended December 31, 2021 were driven by fans being prohibited from attending events at The Garden due to government-mandated assembly restrictions and the delayed start of the 2020-21 NBA and NHL regular seasons in the prior year periods.

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

Three Months Ended Six Months Ended

December 31, December 31,

Three Months Ended Nine Months Ended

March 31, March 31,

2022 2021 Increase 2022 2021 Increase

Net provisions for league revenue sharing expense (net of escrow) and NBA luxury tax $ 26,471 $ (31,773) $ 58,244 $ 47,748 $ (22,463) $ 70,211

The increases in net provisions for league revenue sharing expense (net of escrow) and NBA luxury tax for the three and six months ended December 31, 2021 were primarily due to higher provisions for league revenue sharing expense (net of escrow) of $25,111 and $16,232, respectively, as a result of impact of the COVID-19 pandemic in the prior year period partially offset by higher recoveries of NBA luxury tax.

In addition, the increase in league revenue sharing expense (net of escrow) for the six months ended December 31, 2021 was partially offset by adjustments to revenue sharing expense for the 2019-20 NBA and NHL seasons in the

prior year period.

The increases in net provisions for league revenue sharing expense (net of escrow) and NBA luxury tax for the three and nine months ended March 31, 2022 were primarily due to higher provisions for league revenue sharing expense (net of escrow) of $61,787 and $78,019, respectively, as a result of higher escrow recoveries and lower revenue sharing expense in the prior year periods, which reflected the impact of the COVID-19 pandemic, partially offset by higher estimated recoveries of NBA luxury tax in the current year periods.

In addition, the increase in league revenue sharing expense (net of escrow) for the nine months ended March 31, 2022 was partially offset by adjustments to revenue sharing expense for the 2019-20 NBA and NHL seasons in the prior year period.

Based on the completion of the 2019-20 NBA and NHL seasons during the three months ended September 30, 2020, the Company recognized a portion of revenue sharing expense (net of escrow) related to those seasons during that period that otherwise would have been recognized during the third and fourth quarters of fiscal year 2020.

The Knicks were not a luxury tax payer for the 2020-21 season and, therefore, received an equal share of the portion of luxury tax receipts that were distributed to non-tax paying teams.

The Knicks’ roster as of December 31, 2021 would not result in the team being a luxury tax payer for the 2021-22 season.

The Knicks’ roster as of March 31, 2022 would not result in the team being a luxury tax payer for the 2021-22 season.

The actual amounts for the 2021-22 seasons may vary significantly from the recorded provisions based on actual operating results for each league and all teams within each league for the season and other factors.

Net provisions for certain team personnel transactions were as follows:

Three Months Ended Six Months Ended

December 31, December 31,

The increases in other team operating expenses not discussed elsewhere in this table for the three and nine months ended March 31, 2022 were a result of the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year periods, as discussed above, and the delayed start of the 2020-21 NBA and NHL regular seasons in the prior year periods.

Other team operating expenses not discussed elsewhere in this table primarily consists of league assessments and expenses associated with day-to-day operations, including variable day-of-event costs incurred at The Garden, team travel and player insurance.

The increases in operating lease costs associated with the Knicks and the Rangers playing home games at The Garden for the three and nine months ended March 31, 2022 were primarily a result of the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year periods, as discussed above.

In addition, the increase in operating lease costs associated with the Knicks and the Rangers playing home games at The Garden for the nine months ended March 31, 2022 was also due to the delayed start of the 2020-21 NBA and NHL regular seasons in the prior year period.

The increases in pre/regular season expense associated with food, beverage and merchandise sales for the three and nine months ended March 31, 2022 were a result of the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year periods, as discussed above.

The increase in team personnel compensation for the nine months ended March 31, 2022 was primarily due to the net impact of the delayed start and shortened 2020-21 NBA and NHL regular seasons in the prior year period and higher player compensation in the current year period.

This increase in team personnel compensation for the nine months ended March 31, 2022 was partially offset by the recognition of player compensation expense during the prior year period that otherwise would have been recognized during the third and fourth quarters of fiscal year 2020 as a result of the NBA completing the 2019-20 season in October 2020.

Net provisions (credits) for certain team personnel transactions were as follows:

Three Months Ended Nine Months Ended

March 31, March 31,

2022 2021 Increase (Decrease) 2022 2021 Increase (Decrease)

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Player trades (1,066) — (1,066) (1,066) 2,583 (3,649)

Season-ending player injuries 1,357 — 1,357 1,357 — 1,357

Season-ending player injuries (a)

1,305 — 1,305 2,662 — 2,662

Net provisions for certain team personnel transactions $ 304 $ 3,305 $ (3,001) $ 2,319 $ 17,003 $ (14,684)

(a) Net of insurance recovery of $656 for the three and nine months ended March 31, 2022.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended December 31, 2021 increased $10,691, or 22%, to $59,600 as compared to the prior year period.

Selling, general and administrative expenses for the six months ended December 31, 2021 increased $11,423, or 12%, to $103,328 as compared to the prior year period.

For the three and six months ended December 31, 2021 the increases were primarily due to higher (i) marketing costs, (ii) fees related to the Company’s sponsorship sales and service representation agreements with MSG Entertainment, and (iii) costs related to the Company’s TSA with MSG Entertainment.

Selling, general and administrative expenses for the three months ended March 31, 2022 increased $22,099, or 47%, to $68,902 as compared to the prior year period.

Selling, general and administrative expenses for the nine months ended March 31, 2022 increased $33,522, or 24%, to $172,230 as compared to the prior year period.

For the three and nine months ended March 31, 2022 the increases were primarily due to higher (i) employee compensation and related benefits (including separation-related costs), (ii) marketing costs, (iii) commissions related to the Company’s sponsorship sales and service representation agreements with MSG Entertainment, and (iv) costs related to the Company’s TSA with MSG Entertainment.

Depreciation and amortization

Depreciation and amortization for the three months ended December 31, 2021 decreased $392, or 24%, to $1,215 as compared to the prior year period.

Depreciation and amortization for the six months ended December 31, 2021 decreased $626, or 19%, to $2,641 as compared to the prior year period.

Depreciation and amortization for the three months ended March 31, 2022 decreased $367, or 23%, to $1,206 as compared to the prior year period.

Depreciation and amortization for the nine months ended March 31, 2022 decreased $993, or 21%, to $3,847 as compared to the prior year period.

Operating income (loss)

Operating income of $35,919 improved $74,325 for the three months ended December 31, 2021 as compared to the prior year period.

For the six months ended December 31, 2021, operating income of $981 improved $66,791 as compared to the period year period.

For the three and six months ended December 31, 2021 the improvements to operating income were primarily due to increases in revenues, partially offset by higher direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses.

Operating income for the three months ended March 31, 2022 increased $53,269 to $61,393 as compared to the prior year period.

For the nine months ended March 31, 2022, operating income of $62,374 improved $120,060 as compared to the period year period.

For the three and nine months ended March 31, 2022 the improvements to operating income were primarily due to increases in revenues, partially offset by higher direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses.

Interest expense, net

Net interest expense for the three months ended December 31, 2021 increased $1,055, or 42%, to $3,542 as compared to the prior year period.

Net interest expense for the six months ended December 31, 2021 increased $2,119, or 47%, to $6,595 as compared to the prior year period.

The increases in net interest expense for the three and six months ended December 31, 2021 were primarily due to interest expense associated with the Knicks and the Rangers revolving credit facilities.

During the second quarter of fiscal year 2021, the Company amended and restated the Knicks and the Rangers credit agreements and as a result incurred additional financing costs that are being amortized over the term of the revolving credit facilities.

In addition, during December 2021, the Company terminated the 2020 Knicks Holdings Revolving Credit Facility in its entirety resulting in acceleration of certain previously incurred financing costs.

Net interest expense for the three months ended March 31, 2022 decreased $512, or 17%, to $2,418 as compared to the prior year period.

Net interest expense for the nine months ended March 31, 2022 increased $1,607, or 22%, to $9,013 as compared to the prior year period.

The decrease in net expense for the three months ended March 31, 2022 was primarily a result of principal repayments made under the Rangers revolving credit facility during the current year period.

The increase in net interest expense for the nine months ended March 31, 2022 was primarily driven by (i) commitment fees on unused commitments as a result of principal repayments made under the Rangers revolving credit facility during the current year period, (ii) interest expense related to the advances received in March 2021 under the 2021 Rangers NHL Advance Agreement, and (iii) acceleration of certain previously incurred financing costs when the Company terminated the 2020 Knicks Holdings Revolving Credit Facility in its entirety during December 2021.

See Note 16 to the consolidated financial statements included in “Part I — Item 1.

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Adjusted operating income (loss)

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

GAAP measure.

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

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

The following are the reconciliations of operating income (loss) to adjusted operating income (loss) for the three and six months ended December 31, 2021 as compared to the prior year period:

Three Months Ended Six Months Ended

December 31, Change December 31, Change

The following are the reconciliations of operating income (loss) to adjusted operating income (loss) for the three and nine months ended March 31, 2022 as compared to the prior year period:

Three Months Ended Nine Months Ended

March 31, Change March 31, Change

2022 2021 $ % 2022 2021 $ %

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Adjusted operating income (loss) $ 81,454 $ 30,042 $ 51,412 NM $ 108,989 $ (6,729) $ 115,718 NM

For the three months ended December 31, 2021, adjusted operating income of $55,667 improved $74,683 as compared to the prior year period.

For the six months ended December 31, 2021, adjusted operating income of $27,535 improved $64,306 as compared to the prior year period.

For the three and six months ended December 31, 2021 the improvements were primarily due to increases in revenues partially offset by higher direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses.

For the three months ended March 31, 2022, adjusted operating income increased $51,412 to $81,454 as compared to the prior year period.

For the nine months ended March 31, 2022, adjusted operating income of $108,989 improved $115,718 as compared to the prior year period.

For the three and nine months ended March 31, 2022 the improvements were primarily due to increases in revenues partially offset by higher direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses.

Liquidity and Capital Resources

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

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

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

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On December 14, 2021, the Company amended and extended the 2020 Knicks Credit Agreement and the 2020 Rangers Credit Agreement.

In addition, in March 2021, the NHL advanced the Company $30,000, which the league made

available to each team following the completion of the NHL’s approximately $1,000,000 private placement in January 2021, pursuant to the 2021 Rangers NHL Advance Agreement.

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

See Note 11 to the consolidated financial statements included in “Part I - Item 1.

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

As of December 31, 2021, we had approximately $54,800 in Cash and cash equivalents.

In addition, as of December 31, 2021, the Company’s deferred revenue obligations were approximately $167,438, net of billed, but not yet collected deferred revenue.

The current portion of this balance is primarily comprised of obligations in connection with tickets, suites and local media rights.

As of March 31, 2022, we had approximately $49,200 in Cash and cash equivalents.

In addition, as of March 31, 2022, the Company’s deferred revenue obligations were approximately $79,753, net of billed, but not yet collected deferred revenue.

The current portion of this balance is primarily comprised of obligations in connection with tickets.

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

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

We believe we have sufficient liquidity, including approximately $54,800 in Cash and cash equivalents as of December 31, 2021, along with $195,000 of additional available borrowing capacity under existing credit facilities, to fund our operations and satisfy any obligations, including with respect to the return or application of deferred revenue for the foreseeable future.

In addition, on February 2, 2022, the Company made a principal repayment of $25,000 under the 2021 Rangers Revolving Credit Facility using cash on hand.

We believe we have sufficient liquidity, including approximately $49,200 in Cash and cash equivalents as of March 31, 2022, along with $240,000 of additional available borrowing capacity under existing credit facilities, to fund our operations and satisfy any obligations, including with respect to the return or application of deferred revenue for the foreseeable future.

In addition, on April 27, 2022, the Company made an additional principal repayment of $15,000 under the 2021 Rangers Revolving Credit Facility using cash on hand.

Financing Agreements and Stock Repurchases

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Cash Flow Discussion

The following table summarizes the Company’s cash flow activities for the six months ended December 31, 2021 and 2020:

Six Months Ended December 31,

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

Adjustments to reconcile net loss to net cash provided by (used in) operating activities 12,053 25,461

The following table summarizes the Company’s cash flow activities for the nine months ended March 31, 2022 and 2021:

Nine Months Ended March 31,

Net income (loss) $ 22,232 $ (65,053)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities 55,511 31,389

77,743 (33,664)

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Operating Activities

Net cash provided by operating activities for the six months ended December 31, 2021 was $24,030 as compared to net cash used in operating activities in the prior year period of $21,633.

This was primarily due to the decrease in net loss adjusted for non-cash items slightly offset by changes in working capital assets and liabilities driven by the COVID-19 pandemic in the prior year period.

Net cash provided by operating activities for the nine months ended March 31, 2022 was $64,233 as compared to net cash used in operating activities in the prior year period of $54,367.

This was primarily due to the increase in net income in the current year period, adjusted for non-cash items and, to a lesser extent, changes in working capital assets and liabilities driven by the COVID-19 pandemic in the prior year period.

Investing Activities

Net cash used in investing activities for the six months ended December 31, 2021 increased by $486 to $627 as compared to the prior year period primarily due to higher other investing activities and capital expenditures in the current year period as compared to prior year period.

Net cash used in investing activities for the nine months ended March 31, 2022 increased by $699 to $1,136 as compared to the prior year period primarily due to higher capital expenditures and other investing activities in the current year period as compared to prior year period.

Financing Activities

Net cash used in financing activities for the six months ended December 31, 2021 was $39,879 as compared to net cash provided by financing activities in the prior year period of $11,363.

This was due to additional borrowings in the prior year period under the amended and extended 2021 Knicks Credit Agreement and 2021 Rangers Credit Agreement (prior to the amendment and restatement thereof) as compared to no borrowings in the current year period and a partial repayment on the 2021 Rangers Credit Agreement in the current year period.

Net cash used in financing activities for the nine months ended March 31, 2022 was $84,978 as compared to net cash provided by financing activities in the prior year period of $42,155.

This was due to (i) partial principal repayments on the 2021 Rangers Credit Agreement in the current year period, (ii) proceeds from the 2021 Rangers NHL Advance Agreement in the prior year period as compared to none in the current year period, and (iii) additional borrowings in the prior year period under the amended and extended 2021 Knicks Credit Agreement and 2021 Rangers Credit Agreement (prior to the amendment and restatement thereof) as compared to no borrowings in the current year period.

Seasonality of Our Business

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There have been no material changes to the Company’s critical accounting policies from those set forth in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

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

The carrying amount of goodwill as of March 31, 2022 is $226,955.

Goodwill is tested annually for impairment as of August 31 st and at any time upon the occurrence of certain events or changes in circumstances.

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

The following table sets forth the amount of identifiable indefinite-lived intangible assets reported in the Company’s consolidated balance sheet as of December 31, 2021:

The following table sets forth the amount of identifiable indefinite-lived intangible assets reported in the Company’s consolidated balance sheet as of March 31, 2022:

Sports franchises $ 111,064

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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 2. Management’s Discussion and Analysis