What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-08-18 compared with 2021-08-19 · 117 added, 125 removed, 292 unchanged (45% of the section changed)

Sports Business Risks

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

As described under “Part I - Item 1.

Business,” our business depends on the activities of the Knicks and the Rangers.

Due to the global COVID-19 pandemic, the NBA and NHL suspended their 2019-20 seasons on March 11 and 12, 2020, respectively, and as a result, virtually all of our business operations were suspended.

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

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

Subsequently, New York venues were permitted to operate at reduced capacity, and the Knicks and the Rangers began playing games at The Garden with a limited number of fans in attendance.

Effective May 19, 2021, New York State adopted the Centers for Disease Control and Prevention’s (“CDC”) guidance, providing that 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.

The shortened 2020-21 NBA and NHL seasons resulted in 10 and 26 fewer regular season games in the 2020-21 seasons being played by the Knicks and the Rangers, respectively.

The shortened 2020-21 seasons and limitations on fan attendance had a material impact on our revenues for the fiscal year ended June 30, 2021.

While capacity limitations have been eased significantly at The Garden and neither the NBA nor NHL playoffs were shortened, a resurgence in the COVID-19 pandemic, such as the Delta variant, or another major epidemic or pandemic could impact future NBA and NHL seasons.

Accordingly, no assurances can be made as to whether and when the 2021-22 seasons will occur, the number of games played for the 2021-22 seasons, that the games will be played at The Garden or will be played with any in-arena audiences or without limited-capacity in-arena audiences.

A significant portion of the Company’s revenue is earned from media rights fees from the local broadcast of Knicks and Rangers games and our share of fees paid for league-wide media rights, which are not recognized if those games are not played.

As a result of the shortened 2020-21 NBA and NHL seasons, the Company’s revenues earned from local media rights fees were reduced by approximately $16 million and revenues for league-wide media rights were reduced by approximately $1 million.

If, due to a resurgence in COVID-19 or otherwise, the NBA and the NHL do not play a minimum number of games required under the league-wide media rights agreements or the Knicks or the Rangers do not make available to MSG Networks the number of games during the season required under the local media rights agreements, the amounts of revenues we earn would be substantially reduced depending upon the number of games not played or not made available to MSG Networks and an event

of default may occur under the Knicks and the Rangers credit agreements.

Our Operations and Operating Results Have Been, and May in the Future be, Materially Impacted by the COVID-19 Pandemic and Government and League Actions Taken in Response.

In March 2020, the NBA and NHL suspended their 2019-20 seasons due to COVID-19, and as a result, virtually all of our business operations were suspended.

In addition, the start of the 2020-21 NBA and NHL regular seasons were delayed, and the Knicks and the Rangers each played fewer games than their traditional 82-game regular season schedules, with the NBA playing a 72-game regular season schedule and the NHL playing a 56-game regular season schedule.

Even once Knicks and Rangers games resumed at The Garden, there were varying levels of restrictions on fan attendance and professional athletes due to New York City and New York State regulations.

For example, fans were initially prohibited from attending games due to government-mandated assembly restrictions through February 2021, and home games at The Garden were then limited to 10% capacity through May 2021.

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.

New York City did not lift vaccination requirements applicable to fan attendance and professional athletes competing at The Garden until March 2022.

As a result of the foregoing, COVID-19 disruptions materially impacted our operations and operating results for fiscal years 2020 and 2021, with us recognizing materially less revenues, or over certain periods of time no revenues, across a number of areas, including, ticket sales;

our share of suite licenses;

sponsorships;

signage and in-venue advertising at The Garden;

local media rights fees;

and food, beverage and merchandise sales.

For example, a significant portion of our revenue is earned from media rights fees from the local broadcast of Knicks and Rangers games and our share of fees paid for league-wide media rights, which are not recognized if those games are not played.

As a result of the shortened 2020-21 NBA and NHL seasons, the Company’s revenues earned from local media rights fees were reduced by approximately $16 million and revenues earned by the Company for league-wide media rights were reduced by approximately $1 million.

Our operations and operating results continued to be impacted by COVID-19 during fiscal year 2022, but to a lesser extent.

Even though full attendance at Knicks and Rangers games was permitted during fiscal year 2022, results were impacted by temporary declines in attendance due to ongoing reduced tourism levels as well as an increase in COVID-19 cases during certain months of the fiscal year.

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, demand for our sponsorship, tickets and other premium inventory.

Accordingly, no assurances can be made as to whether and when the 2022-23 seasons will occur, the number of games played for the 2022-23 seasons, that the games will be played at The Garden or will be played with any in-arena audiences or without capacity limitations.

If, due to a resurgence in COVID-19 or otherwise, the NBA and the NHL do not play a minimum number of games required under the league-wide media rights agreements or the Knicks or the Rangers do not make available to MSG Networks the number of games during the season required under the local media rights agreements, the amounts of revenues we earn could be substantially reduced depending upon the number of games not played or not made available to MSG Networks and an event of default may occur under the Knicks and the Rangers credit agreements.

See “— Economic and Business Relationship Risks — Certain of Our Subsidiaries Have Incurred Substantial Indebtedness, and the Occurrence of an Event of Default Under Our Subsidiaries’ Credit Facilities or Our Inability to Repay Such Indebtedness When Due Could Substantially Impair the Assets of Those Subsidiaries and Have a Negative Effect on Our Business ” and “— Economic and Business Relationship Risks — We Do Not Own The Garden and Our Failure to Renew the Arena License Agreements or MSG Entertainment’s Failure to Operate The Garden in Compliance with the Arena License Agreements or Extensive Governmental Regulations May Have a Material Negative Effect on Our Business and Results of Operations .”

Additionally, even if the Knicks and the Rangers are able to continue playing games at The Garden with audiences, it is unclear whether and to what extent COVID-19 and related concerns will impact the demand for attending those games and for our sponsorship, tickets and other premium inventory.

As a result of a resurgence in COVID-19, such as the Delta variant, our business could be subject to additional governmental regulations and/or league determinations, including updated COVID-19 protocols for the 2021-22 seasons, which could have a material impact on our business.

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

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

See “— Operational Risks — We Are Subject to Governmental Regulation, Which Can Change, and Any Failure to Comply With These Regulations May Have a Material Negative Effect on Our Business and Results of Operations .” In addition, we may adopt COVID-19 protocols that are more restrictive than those imposed by New York State, New York City or the leagues.

Even with additional protective measures to provide for the health and safety of all of those in attendance, including compliance with New York State and New York City requirements, league restrictions, CDC guidance and other measures we may adopt, there can be no assurances that players, fans attending games or vendors and employees will not contract COVID-19.

Any such occurrence could result in litigation, legal and other costs and reputational risk that could materially impact our business and results of operations.

In addition, such additional measures will increase operating expenses.

Our business is also particularly sensitive to discretionary business and consumer spending.

A pandemic such as COVID-19 could also 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 our business.

In addition, remote and/or hybrid in-office work arrangements in the New York City metropolitan area could result in reduced attendance at Knicks and Rangers games.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those relating to our liquidity, indebtedness, and our ability to comply with the covenants contained in the agreements that govern our indebtedness.

Our Business Faces Intense and Wide-Ranging Competition, Which May Have a Material Negative Effect on Our Business and Results of Operations.

17 unchanged sentences

In addition, the popularity of our sports teams can impact television ratings, which could affect the long-term value of the media rights for the Knicks and/or the Rangers.

Furthermore, success in the regular season may qualify one or both of our sports teams for participation in post-season playoffs, which provides us with additional revenue by increasing the number of games played by our sports teams and, more importantly, by generating increased excitement and interest in our sports teams, which can help drive a number of our revenue streams, including by improving attendance and television ratings, in subsequent seasons.

The Knicks last qualified for the post-season during the 2020-21 NBA season and the Rangers last qualified for the post-season during the 2021-22 NHL season.

20 unchanged sentences

The Actions of the NBA, NHL and Esports Leagues May Have a Material Negative Effect on Our Business and Results of Operations.

consistent with maximizing our results of operations and which could affect our sports teams in ways that are different than the impact on other sports teams.

Certain of these decisions by the NBA or the NHL could have a material negative effect on our business and results of operations.

The governing bodies of the NBA (including the NBAGL) and the NHL (including the AHL) have certain rights under certain circumstances to take actions that they deem to be in the best interests of their respective leagues, which may not necessarily be consistent with maximizing our results of operations and which could affect our sports teams in ways that are different than the impact on other sports teams.

Decisions by the NBA or the NHL could have a material negative effect on our business and results of operations.

For example, failure to follow rules and regulations of the NBA or NHL could result in fines, loss of draft picks or other actions by the leagues.

From time to time, we may disagree with or challenge actions the leagues take or the power and authority they assert.

5 unchanged sentences

We receive significant revenues from MSG Networks for the right to telecast games of the Knicks and the Rangers.

Changes to league rules, regulations and/or agreements, including national and international media rights, could impact the availability of games covered by our local media rights and could negatively affect the rights fees we receive from MSG Networks and our business and results of operations.

The sports leagues have asserted control over other important decisions, under certain circumstances, such as the length and format of, and the number of games in, the playing season, preseason and playoff schedules, the operating territories of the member teams, admission of new members, franchise relocations, labor relations with the players associations, collective bargaining, free agency, luxury taxes and revenue sharing.

Changes to league rules, regulations and/or agreements, including changes to league schedules and national and international media rights, could impact the availability of games covered by our local media rights and could negatively affect the rights fees we receive from MSG Networks and our business and results of operations.

• The NBA and NHL impose certain rules that define, under certain circumstances, the territories in which our sports teams operate, including the markets in which our games may be telecast.

The sports leagues have also asserted control over other important decisions, such as the length and format of, and the number of games in, the playing season, preseason and playoff schedules, admission of new members, franchise relocations, labor relations with the players associations, collective bargaining, free agency, luxury taxes and revenue sharing.

Changes to these rules could have a material negative effect on our business and results of operations.

For example, we were subject to the leagues’ decisions with respect to the 2019-20, 2020-21 and 2021-22 seasons as a result of the COVID-19 pandemic and player, team and/or league protests and actions.

See “— 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 ” and “— Economic and Business Relationship Risks — Organized Labor Matters May Have a Material Negative Effect on Our Business and Results of Operations .” In addition, the NBA imposes a luxury tax and escrow system with respect to player salaries and a revenue sharing plan, and the NHL imposes an escrow system with respect to player salaries and a revenue sharing plan.

For fiscal year 2021, the Knicks and the Rangers recorded a credit of approximately $31.8 million in estimated revenue sharing, net of escrow receipts.

The actual amounts for the 2020-21 season may vary significantly from the estimate based on actual operating results for the respective leagues and all teams for the season and other factors, particularly due to the impact of the COVID-19 pandemic on the season.

See “— Economic and Business Relationship Risks — Labor Matters May Have a Material Negative Effect on Our Business and Results of Operations .”

• The NBA imposes a luxury tax and escrow system with respect to player salaries and a revenue sharing plan, and the NHL imposes an escrow system with respect to player salaries and a revenue sharing plan.

For fiscal year 2022, the Knicks and the Rangers recorded approximately $82.4 million in estimated revenue sharing expenses, net of escrow receipts.

The actual amounts for the 2021-22 season may vary significantly from the estimate based on actual operating results for the respective leagues and all teams for the season and other factors.

For a discussion of the NBA luxury tax impacts, see “— Our Basketball and Hockey Decisions, Especially Those Concerning Player Selection and Salaries, May Have a Material Negative Effect on Our Business and Results of Operations.

The esports leagues may also assert control over certain matters, under certain circumstances, that may affect our revenues.

For example, they have adopted a number of rules and regulations governing the length and format of the playing season, how teams may generate revenue and player rosters.

Decisions on these matters may materially negatively affect our business and results of operations.

• The NBA and the NHL impose certain restrictions on the ability of owners to undertake certain types of transactions in respect of teams, including a change in ownership and team relocation.

2 unchanged sentences

In certain instances, these restrictions could impair our ability to proceed with a transaction that is in the best interest of the Company and its stockholders if we were unable to obtain any required league approvals in a timely manner or at all.

The NBA and NHL impose certain rules that define, under certain circumstances, the territories in which our sports teams operate, including the markets in which our games may be telecast.

Changes to these rules could have a material negative effect on our business and results of operations.

• The possibility of further NBA and/or NHL expansion could create increased competition for the Knicks and the Rangers, respectively.

9 unchanged sentences

The leagues’ governing documents and our agreements with the leagues purport to limit the manner in which we may challenge decisions and actions by a league commissioner or the league itself.

See “— Economic and Business Relationship Risks — Organized Labor Matters May Have a Material Negative Effect on Our Business and Results of Operations .”

See “— Economic and Business Relationship Risks — Labor Matters May Have a Material Negative Effect on Our Business and Results of Operations .”

The esports leagues may also assert control over certain matters, that may affect our revenues.

For example, they have adopted a number of rules and regulations governing the length and format of the playing season, how teams may generate revenue and player rosters.

Injuries to, and Illness of, Players on Our Sports Teams Could Hinder Our Success.

To the degree that our financial results are dependent on our sports teams’ popularity and/or on-court and on-ice success, the likelihood of achieving such popularity or competitive success may be substantially impacted by serious and/or untimely injuries to or illness of key players.

In addition, even with team and league-wide health and safety precautions in place and compliance with New York State and New York City requirements, CDC guidance and other COVID-19 protocols we may adopt, our players may nevertheless contract COVID-19 and, as a result, our ability to participate in games may be substantially impacted.

In addition, even with team and league-wide health and safety precautions in place and compliance with governmental and other COVID-19 protocols we may adopt, our players may nevertheless contract COVID-19 and, as a result, our ability to participate in games may be substantially impacted.

Nearly all of our Knicks and Rangers players, including those with multi-year contracts, have partially or fully guaranteed contracts, meaning that in some cases (subject to the terms of the applicable player contract and CBA), a player or his estate may be entitled to receive his salary even if the player dies or is unable to play as a result of injury.

These salaries represent significant financial commitments for our sports teams.

These salaries represent significant financial commitments for our sports

We maintain insurance to mitigate some of the risk of paying certain player salaries in the event of a player’s death or disability.

9 unchanged sentences

Our subsidiaries have incurred substantial indebtedness.

New York Knicks, LLC and New York Rangers, LLC, which own the assets of the Knicks and the Rangers franchises, respectively, and Knicks Holdings, LLC, the direct parent of New York Knicks, LLC, have entered into revolving credit facilities.

As of June 30, 2021, the outstanding balance under the Knicks Revolving Credit Facility and the Rangers Revolving Credit was $220 million and $135 million, respectively, and there were no borrowings under the Knicks Holdings Revolving Credit Facility.

All three credit facilities expire in November 2023.

New York Knicks, LLC and New York Rangers, LLC, which own the assets of the Knicks and the Rangers franchises, respectively, have entered into revolving credit facilities.

As of June 30, 2022, the outstanding balance under the Knicks Revolving Credit Facility was $220 million, while there was no outstanding balance under the Rangers Revolving Credit Facility.

Both credit facilities expire in December 2026.

New York Rangers, LLC also received a $30 million advance from the NHL, which is payable upon demand by the NHL.

4 unchanged sentences

Furthermore, a resurgence in the COVID-19 pandemic may cause our interest expense to be substantial relative to our revenues and cash outflows.

Our interest expense could also increase if interest rates increase as our indebtedness bears interest at floating rates (or to the extent we have to refinance existing debt with higher cost debt).

Our interest expense could also increase if interest rates increase (including in connection with rising inflation) as our indebtedness bears interest at floating rates (or to the extent we have to refinance existing debt with higher cost debt).

The Knicks Revolving Credit Facility includes covenants and events of default that may be implicated by a shortfall in the amount of national media rights revenue received by the Knicks.

The Rangers Revolving Credit Facility includes covenants and

events of default that may be implicated by a shortfall in the amount of national and local media rights revenue received by the Rangers.

The Rangers Revolving Credit Facility includes covenants and events of default that may be implicated by a shortfall in the amount of national and local media rights revenue received by the Rangers.

If, due to the impact of the COVID-19 pandemic, protests or otherwise, the NBA and/or NHL 2022-23 seasons are delayed, shortened, suspended or cancelled, the Knicks or the Rangers may be required, absent a cure or waiver, to repay certain amounts borrowed under the revolving credit facilities.

If we are unable to repay such amounts due to liquidity constraints, we may need to pursue other sources of financing, including through issuances of equity and/or asset sales.

In addition, in July 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates the London Interbank Offered Rate (“LIBOR”), announced that it will no longer persuade or compel banks to submit LIBOR rates after 2021.

Although such date has been extended to June 2023, the U.S.

Federal Reserve issued a statement advising banks to stop new LIBOR issuances by the end of 2021.

It is unclear whether or not, at that time, a satisfactory replacement rate will be developed or if new methods of calculating LIBOR will be established such that it continues to exist in the future.

The proposed alternative, a new index that measures the cost of borrowing cash overnight, backed by U.S.

Treasury securities (“SOFR”), is observed and backward-looking, which stands in contrast with LIBOR under the current methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members.

On July 29, 2021, the Alternative Reference Rate Committee of the Federal Reserve formally recommended SOFR term rates;

however, whether or not SOFR or any other potential alternative reference rate attains market traction as a LIBOR replacement rate remains in question.

Our credit agreements provide mechanisms to adjust our base interest rates in the event that LIBOR ceases to exist, LIBOR is replaced by a SOFR rate, or in certain other related circumstances;

however, there can be no assurances that the transition to another benchmark rate will occur as intended.

The consequences of these developments with respect to LIBOR cannot be entirely predicted but may result in the level of interest payments on the portion of our indebtedness that bears interest at variable rates to be affected, which may adversely impact the amount of our interest payments under such debt.

Our Business Has Been Adversely Impacted and May, in the Future, Be Materially Adversely Impacted by an Economic Downturn and Financial Instability.

The United Kingdom’s Financial Conduct Authority (“FCA”), which regulates the London Interbank Offered Rate (“LIBOR”), has announced that it will not compel panel banks to contribute to LIBOR after 2021.

In November 2020, the ICE Benchmark Administration Limited announced a plan to extend the date as of which most U.S.

LIBOR values would cease being computed from December 31, 2021 to June 30, 2023.

On July 29, 2021, the Alternative Reference Rates Committee announced that it was recommending the forward-looking Secured Overnight Financing Rate (“SOFR”) term rate.

In connection with the refinancing of our revolving credit facilities in December 2021, we amended our revolving credit facilities to adjust to SOFR-based rates.

However, the consequences of using the SOFR term rate cannot be entirely predicted but may result in the level of interest payments on the portion of our indebtedness that bears interest at variable rates to be affected, which may adversely impact the amount of our interest payments under such debt.

Our Business Has Been Adversely Impacted and May, in the Future, Be Materially Adversely Impacted by an Economic Downturn, Recession, Financial Instability or Inflation.

Our business depends upon the ability and willingness of consumers and businesses to purchase tickets (including season tickets) to our games, license suites at The Garden, spend on food and beverages and merchandise and drive continued advertising and sponsorship revenues, and these revenues are sensitive to general economic conditions and consumer buying patterns.

Consumer and corporate spending may decline at any time for reasons beyond our control, and the risks associated with our businesses may become more acute in periods of a slowing economy or recession, which may lead to reductions in, among other things, corporate sponsorship and advertising and decreases in attendance at live sports events, demand for suite licenses and food and beverage and merchandise sales, some of which we have experienced in the past.

In addition, inflation, which has significantly risen, has and may continue to increase operational costs, and continued increases in interest rates in response to concerns about inflation may have the effect of further increasing economic uncertainty and heightening these risks.

As a result, instability and weakness of the U.S.

and global economies, including as a result of the effects caused by the COVID-19 pandemic, disruptions to financial markets, inflation, recession, high unemployment, reduced tourism and other geopolitical events and the resulting negative effects on consumers’ and businesses’ discretionary spending may materially negatively affect our business and results of operations.

We Have Incurred Substantial Operating Losses, Negative Adjusted Operating Income and Negative Cash Flow and There is No Assurance We Will Have Operating Income, Positive Adjusted Operating Income or Positive Cash Flow in the Future.

We incurred operating losses of approximately $78 million, $94 million and $58 million in fiscal years 2021, 2020 and 2019, respectively.

In addition, we have, in prior periods, incurred operating losses and negative cash flow and there is no assurance that we will have operating income or positive cash flow in the future.

and global economies, including any prolonged effects caused by the COVID-19 pandemic, disruptions to financial markets, inflation, recession, high unemployment, reduced tourism and other geopolitical events and the resulting negative effects on consumers’ and businesses’ discretionary spending may materially negatively affect our business and results of operations.

We Have Incurred Substantial Operating Losses, Adjusted Operating Losses and Negative Cash Flow and There is No Assurance We Will Have Operating Income, Adjusted Operating Income or Positive Cash Flow in the Future.

We incurred operating losses of approximately $78 million and $94 million in fiscal years 2021 and 2020, respectively.

In addition, we have, in prior periods, incurred adjusted operating losses and negative cash flow and there is no assurance that we will have operating income, adjusted operating income or positive cash flow in the future.

If we are unable to play games at The Garden at or near full capacity due to a resurgence in COVID-19 cases or otherwise, our fiscal year 2023 operating results will also be materially impacted.

2 unchanged sentences

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors Affecting Operating Results.”

Our Business is Subject to Seasonal Fluctuations and our Operating Results and Cash Flow Can Vary Substantially from Period to Period.

Our revenues and expenses have been seasonal and we expect they will continue to be seasonal.

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

Additionally, as a result of the delayed start of the 2020-21 NBA and NHL regular seasons due to COVID-19, certain of our revenues and expenses were recognized during the third and fourth quarters of fiscal year 2021 that otherwise typically would have been recognized during the second and third quarters of fiscal year 2021, respectively.

As a result, our operating results and cash flow reflect significant variation from period to period and will continue to do so in the future.

Therefore, period-to-period comparisons of our operating results may not necessarily be meaningful and the operating results of one period are not indicative of our financial performance during a full fiscal year.

This variability may adversely affect our business, results of operations and financial condition.

We May Pursue Acquisitions and Other Strategic Transactions to Complement or Expand Our Business that May Not Be Successful.

We may explore opportunities to purchase or invest in other businesses or assets that we believe will complement, enhance or expand our current business or that might otherwise offer us growth opportunities.

Any transactions that we are able to identify and complete may involve risks, including the commitment of significant capital, the incurrence of indebtedness, the payment of advances, the diversion of management’s attention and resources, litigation or other claims in connection with acquisitions or against companies we invest in or acquire, our lack of control over certain joint venture companies and other minority investments, the inability to successfully integrate such business into our operations or even if successfully integrated, the risk of not achieving the intended results and the exposure to losses if the underlying transactions or ventures are not successful.

We Do Not Own The Garden and Our Failure to Renew the Arena License Agreements or MSG Entertainment’s Failure to Operate The Garden in Compliance with the Arena License Agreements or Extensive Governmental Regulations May Have a Material Negative Effect on Our Business and Results of Operations.

2 unchanged sentences

If we are unable to renew the Arena License Agreements on economically attractive terms, our business could be materially negatively affected.

See “— We Rely on MSG Entertainment’s Performance Under Various Agreements .”

The Arena License Agreements require that MSG Entertainment must operate The Garden in a first-class manner.

15 unchanged sentences

For fiscal year 2022, the tax exemption was $41.9 million.

From time to time there have been calls to repeal or amend the tax exemption.

From time to time there

have been calls to repeal or amend the tax exemption.

Repeal or amendment would require legislative action by New York State.

We have entered into Arena License Agreements with subsidiaries of MSG Entertainment, pursuant to which the Knicks and the Rangers play their home games at The Garden.

Under the Arena License Agreements, which each have a term of 35 years (unless extended), the Knicks and the Rangers pay an annual license fee in connection with their use of The Garden.

Under the Arena License Agreements, the teams are responsible for 100% of any real property or similar taxes applicable to The Garden.

If the tax exemption is repealed or a team is otherwise subject to the property tax due to no fault of that team, certain revenue allocations that we receive under the applicable Arena License Agreement would be increased as set forth in the applicable

Arena License Agreement.

Under the Arena License Agreements, the teams are responsible for 100% of any real estate or similar taxes applicable to The Garden.

Although the value of any such revenue increase could be material, it is not expected to offset the property tax that would be payable by the applicable team.

3 unchanged sentences

Such markets can exert extreme downward pressure on stock prices and upward pressure on the cost of new debt capital and can severely restrict credit availability for most issuers.

For example, the global economy, including credit and financial markets, has recently experienced extreme volatility and disruptions, including diminished liquidity and credit availability, rising interest and inflation rates, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.

We may require financing to fund our ongoing operations, including as a result of any impact of the COVID-19 pandemic on our business.

See “— Sports Business Risks — Our Operations and Operating Results Have Been, and May Continue to be, Materially Impacted by the COVID-19 Pandemic and Government and League Actions Taken in Response .” In the future we may also engage in transactions that depend on our ability to obtain financing.

In the future we may also engage in transactions that depend on our ability to obtain financing.

Depending upon conditions in the financial markets and/or the Company’s financial performance, we may not be able to raise additional capital on favorable terms, or at all.

In addition, as described above, the leagues in which our sports teams compete may have, under certain circumstances, approval rights over certain financing transactions, and in connection with those rights, could affect our ability to obtain such financing.

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

Our business is dependent upon the efforts of unionized workers.

Labor Matters May Have a Material Negative Effect on Our Business and Results of Operations.

NBA players are covered by a CBA between the NBPA and the NBA.

5 unchanged sentences

The NBA has also experienced labor difficulties, including (i) a lockout during the 1998-99 season, which resulted in a regular season that was shortened from 82 to 50 games, and (ii) a lockout during the 2011-12 season, which resulted in a regular season that was shortened from 82 games to 66 games.

The current NBA CBA expires after the 2023-24 season, but each of the NBA and NBPA has the right to terminate the CBA effective following the 2022-23 season.

The current NBA CBA expires after the 2023-24 season, but each of the NBA and NBPA has the right (which must be exercised by December 15, 2022) to terminate the CBA effective following the 2022-23 season.

Any labor disputes, such as players’ strikes, protests or lockouts, with the unions with which we have CBAs could have a material negative effect on our business and results of operations.

In addition, as a result of ongoing labor market disruptions due to the COVID-19 pandemic and otherwise, we and MSG Entertainment (which provides services to us through various commercial agreements as discussed under “—We Rely on MSG Entertainment’s Performance Under Various Agreements”) have faced difficulty in maintaining staffing on Knicks and Rangers game days and have been operating in an increasingly competitive labor market.

If we and/or MSG Entertainment are unable to attract and retain qualified people or to do so on reasonable terms, we could suffer operational difficulties and the fan experience at Knicks and Rangers games may be adversely impacted.

Competition for qualified employees could require higher wages, which could result in higher labor costs and could have an adverse effect on our business and results of operations.

We Rely on MSG Entertainment’s Performance Under Various Agreements.

We have various agreements with MSG Entertainment, including a distribution agreement, a tax disaffiliation agreement, a transition services agreement, an employee matters agreement, arena license agreements, media rights agreements, sponsorship sales and service representation agreements, a team sponsorship allocation agreement, a group ticket sales agreement, a single night rental commission agreement and service representation agreement, as well as certain other arrangements with MSG Entertainment and its subsidiary MSG Networks.

These agreements include the allocation of employee benefits, taxes and certain other liabilities and obligations attributable to periods prior to the MSGE Distribution.

We have various agreements with MSG Entertainment, including a distribution agreement, a tax disaffiliation agreement, a services agreement, an employee matters agreement, arena license agreements, media rights agreements, sponsorship sales and service representation agreements, a team sponsorship allocation agreement, a group ticket sales agreement, a single night rental commission agreement and service representation agreement, as well as certain other arrangements with MSG Entertainment and its subsidiary MSG Networks.

These agreements include the allocation of employee benefits, taxes and certain other

liabilities and obligations attributable to periods prior to the MSGE Distribution.

In connection with the MSGE Distribution, we agreed to provide MSG Entertainment with indemnities with respect to liabilities arising out of our businesses and MSG Entertainment agreed to provide us with indemnities with respect to liabilities arising out of the businesses we transferred to MSG Entertainment.

2 unchanged sentences

These services include the collection and storage of certain personal information regarding employees and/or customers as well as information regarding the Company, advertisers and others.

See “— Operational Risks — We Face Continually Evolving Cybersecurity and Similar Risks, Which Could Result in Loss, Disclosure, Theft, Destruction or Misappropriation of, or Access to, Our Confidential Information and Cause Disruption to Our Business, Damage to Our Brands and Reputation, Legal Exposure and Financial Losses .” The transition services agreement and certain of the commercial arrangements are subject to potential termination by MSG Entertainment in the event MSG Entertainment and the Company are no longer affiliates.

The services agreement and certain of the commercial arrangements are subject to potential termination by MSG Entertainment in the event MSG Entertainment and the Company are no longer affiliates.

The Company relies on MSG Entertainment to perform its obligations under these agreements.

If MSG Entertainment were to breach, become unable to satisfy its material obligations under these agreements, including a failure to satisfy its indemnification or other financial obligations, or these agreements otherwise terminate or expire and we do not enter into replacement agreements, we could suffer operational difficulties and/or significant losses.

If MSG Entertainment were to breach, become unable to satisfy its material obligations under these agreements as a result of ongoing labor market disruptions or otherwise, fail to satisfy its indemnification or other financial obligations, or these agreements otherwise terminate or expire and we do not enter into replacement agreements, we could suffer operational difficulties and/or significant losses.

Our Business is Subject to Seasonal Fluctuations and our Operating Results and Cash Flow Can Vary Substantially from Period to Period.

Our revenues and expenses have been seasonal and we expect they will continue to be seasonal.

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

Disruptions due to COVID-19 have also impacted the seasonality of our business.

For example , as a result of the delayed start of the 2020-21 NBA and NHL regular seasons due to COVID-19, certain of our revenues and expenses were recognized during the third and fourth quarters of fiscal year 2021 that otherwise typically would have been recognized during the second and third quarters.

As a result, our operating results and cash flow reflect significant variation from period to period and will continue to do so in the future.

We May Pursue Acquisitions and Other Strategic Transactions to Complement or Expand Our Business that May Not Be Successful .

We may continue to explore opportunities to purchase or invest in other businesses or assets that we believe will complement, enhance or expand our current business or that might otherwise offer us growth opportunities.

Operational Risks

Weather or Other Conditions May Impact Our Games, Which May Have a Material Negative Effect on Our Business and Results of Operations.

Weather or other conditions, including natural disasters and similar events, in the New York metropolitan area may affect patron attendance as well as sales of food and beverages and merchandise, among other things.

Weather conditions may also require us to cancel or postpone games.

Any of these events may have a material negative effect on our business and results of operations.

Our Business Could Be Adversely Affected by Terrorist Activity or the Threat of Terrorist Activity and Other Developments That Discourage Congregation at Prominent Places of Public Assembly.

3 unchanged sentences

Similarly, a major epidemic or pandemic, or the threat of such an event, could adversely affect attendance at our games or, depending on its severity, halt our operations entirely.

See “— Sports Business Risks — Our Operations and Operating Results Have Been, and May Continue to be, Materially Impacted by the COVID-19 Pandemic and Government and League Actions Taken in Response .” Moreover, the costs of protecting against such incidents, including any costs of protecting against the spread of COVID-19, reduce the profitability of our operations.

See “— Sports Business Risks — Our Operations and Operating Results Have Been, and May in the Future be, Materially Impacted by the COVID-19 Pandemic and Government and League Actions Taken in Response .” Moreover, the costs of protecting against such incidents, including any costs of protecting against the spread of COVID-19, reduce the profitability of our operations.

In addition, such events or the threat of such events may harm our ability to obtain or renew insurance coverage on favorable terms or at all.

6 unchanged sentences

For example, California has passed a comprehensive data privacy law, the CCPA, and other states including Virginia and Colorado have also passed similar laws.

Additionally, the CPRA was recently passed, which will impose additional data protection obligations on covered businesses, including additional consumer rights procedures and obligations, limitations on data uses, new audit requirements for higher risk data, and constraints on certain uses of sensitive data.

Additionally, the CPRA will impose additional data protection obligations on covered businesses, including additional consumer rights procedures and obligations, limitations on data uses, new audit requirements for higher risk data, and constraints on certain uses of sensitive data.

The majority of the CPRA provisions will go into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required.

8 unchanged sentences

Our business has also been materially impacted by government actions taken in response to the COVID-19 pandemic.

Weather or Other Conditions May Impact Our Games, Which May Have a Material Negative Effect on Our Business and Results of Operations.

Weather or other conditions, including natural disasters and similar events, in the New York metropolitan area may affect patron attendance at Knicks or Rangers games as well as sales of food and beverages and merchandise, among other things.

Weather conditions may also require us to cancel or postpone games.

Any of these events may have a material negative effect on our business and results of operations.

We Face Continually Evolving Cybersecurity and Similar Risks, Which Could Result in Loss, Disclosure, Theft, Destruction or Misappropriation of, or Access to, Our Confidential Information and Cause Disruption to Our Business, Damage to Our Brands and Reputation, Legal Exposure and Financial Losses.

2 unchanged sentences

Data maintained in electronic form is subject to the risk of security incidents, including breach, compromise, intrusion, tampering, theft, misappropriation or other malicious activity.

Cyber-attacks, denial-of-service attacks, ransomware attacks, business emails compromises, viruses and social engineering (including phishing) are continuing to occur in our industry, as well as the industries of our partners, vendors and suppliers.

In addition, we may experience attacks, unavailable systems, unauthorized access or disclosure due to employee theft or misuse, sophisticated nation-state and nation-state supported actors and advanced persistent threat intrusions.

Further, hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of such systems.

Our ability to safeguard such personal and other sensitive information, including information regarding the Company and our customers, sponsors, partners and employees, independent contractors and vendors, is important to our business.

1 unchanged sentence

These protections are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.

In addition, in the event of a security incident, changes in legislation may increase the risk of potential litigation.

For example, the CCPA, which provides a private right of action (in addition to statutory damages) for California residents whose sensitive personal information is breached as a result of a business’ violation of its duty to reasonably secure such information, took effect on January 1, 2020 and will be expanded by the CPRA once it takes effect in January 2023.

Despite our efforts, the risks of a security incident cannot be entirely eliminated and our information technology and other systems that maintain and transmit customer, sponsor, partner, Company, employee and other confidential and proprietary information may be compromised due to employee error or other action, computer malware or ransomware, viruses, hacking and phishing attacks, or otherwise.

Such compromise could affect the security of information on our network, or that of a third-party service provider, including MSG Entertainment to which we outsource information technology services, including technology relating to season ticket holders and purchases of individual game tickets, and certain payment processing.

Such compromise could affect the security of information on our network, or that of a third-party service provider, including MSG Entertainment to which we

outsource information technology services, including technology relating to season ticket holders and purchases of individual game tickets, and certain payment processing.

For example, in November 2016, a payment card issue that affected cards used at merchandise and food and beverage locations at several of the Company’s pre-MSGE Distribution venues, including its New York venues and The Chicago Theatre, was identified and addressed with the assistance of security firms.

5 unchanged sentences

The Company may be required to incur significant expenses in order to address any actual or potential security incidents that arise, and we may not have insurance coverage for all such expenses.

If we experience a security incident, our ability to conduct business may be interrupted or impaired, we may incur damage to our systems, we may lose profitable opportunities or the value of those opportunities may be diminished and we may lose revenue as a result of unlicensed use of our intellectual property.

If we experience an actual or perceived security incident, our ability to conduct business may be interrupted or impaired, we may incur damage to our systems, we may lose profitable opportunities or the value of those opportunities may be diminished and we may lose revenue as a result of unlicensed use of our intellectual property.

Unauthorized access to or security breaches of our systems could result in the loss of data, loss of business, severe reputational damage adversely affecting customer or investor confidence, diversion of management’s attention, regulatory investigations and orders, litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations and significant costs for remediation that may include liability for stolen or lost assets or information and repair of system damage that may have been caused, incentives offered to customers or other business partners in an effort to maintain business relationships after a breach and other liabilities.

Further, an actual or perceived security incident, such as penetration of our or our third-party vendors’ networks, affecting personal or other sensitive information could subject us to business and litigation risk and damage our reputation, including with customers, sponsors and partners, which could have a material negative effect on our business and results of operations.

In addition, in the event of a security incident, changes in legislation may increase the risk of potential litigation.

Our insurance coverage may not be adequate to cover the costs of a data breach, indemnification obligations, or other liabilities.

2 unchanged sentences

The Unavailability of Systems Upon Which We Rely May Have a Material Negative Effect on Our Business and Results of Operations.

We rely upon various internal and third-party software or systems in the operation of our business, including, with respect to ticket sales, credit card processing, email marketing, point of sale transactions, database, inventory, human resource management and financial systems.

From time to time, certain of the arrangements for these systems may not be covered by long-term agreements.

12 unchanged sentences

Incidents in connection with one of our games or an event hosted by MSG Entertainment at The Garden could also reduce attendance at our other games, and may have a negative impact on our revenue and results of operations.

Under the Arena License Agreements, MSG Entertainment and the Company have reciprocal indemnity obligations to each other in connection with their respective acts or omissions in or about The Garden during the home games of the Knicks and the Rangers.

Under the Arena License Agreements, MSG Entertainment and the Company have reciprocal indemnity obligations to each other in

connection with their respective acts or omissions in or about The Garden during the home games of the Knicks and the Rangers.

We, the NBA and the NHL maintain insurance policies that provide coverage for incidents in the ordinary course of business, but there can be no assurance that such indemnities or insurance will be adequate at all times and in all circumstances.

2 unchanged sentences

As a result, we may incur liability from litigation (including in connection with settling such litigation) which could be material and for which we may not have available or adequate insurance coverage or be subject to other forms of non-monetary relief which may adversely affect the Company.

The liabilities we incur in connection with any such litigation could have an adverse effect on our business and results of operations.

The liabilities and any defense costs we incur in connection with any such litigation could have an adverse effect on our business and results of operations.

Corporate Governance Risks

8 unchanged sentences

We May Have a Significant Indemnity Obligation to MSG Entertainment if the MSGE Distribution Is Treated as a Taxable Transaction.

the MSGE Distribution and related matters such as the filing of tax returns and the conduct of IRS and other audits.

We have entered into a Tax Disaffiliation Agreement with MSG Entertainment, which sets out each party’s rights and obligations with respect to deficiencies and refunds, if any, of federal, state, local or foreign taxes for periods before and after the MSGE Distribution and related matters such as the filing of tax returns and the conduct of IRS and other audits.

Pursuant to the Tax Disaffiliation Agreement, we are required to indemnify MSG Entertainment for losses and taxes of MSG Entertainment resulting from our breach of certain covenants and for certain taxable gain recognized by MSG Entertainment, including as a result of certain acquisitions of our stock or assets.

26 unchanged sentences

The “Dolan Family Committee” consists of Charles F.

Dolan and his six children,

Dolan and his six children, James L.

Dolan, Thomas C.

20 unchanged sentences

As a result, the Dolan Family Group also has the power to prevent such issuance or amendment.

The Dolan Family Group also controls MSG Entertainment (which now includes MSG Networks as a subsidiary) and AMC Networks Inc.

(“AMC Networks”), and controlled MSG Networks prior to the MSGE-MSGN Merger in July 2021.

The Dolan Family Group also controls MSG Entertainment (including its subsidiary MSG Networks) and AMC Networks Inc.

(“AMC Networks”).

We Have Elected to Be a “Controlled Company” for NYSE Purposes Which Allows Us Not to Comply with Certain of the Corporate Governance Rules of NYSE.

14 unchanged sentences

These restrictions are described under “Description of Capital Stock — Class A Common Stock and Class B Common Stock — Transfer Restrictions” in Exhibit 4.5 to this annual report on Form 10-K.

stock to a person or the ownership of shares of our common stock by a person requires approval or other action by a league and such approval or other action was not obtained or taken as required, the Company shall have the right by written notice to the holder to require the holder to dispose of the shares of common stock which triggered the need for such approval.

In order to protect the Company and its NBA and NHL franchises from sanctions that might be imposed by the NBA or NHL as a result of violations of these restrictions, our amended and restated certificate of incorporation provides that, if a transfer of shares of our common stock to a person or the ownership of shares of our common stock by a person requires approval or other action by a league and such approval or other action was not obtained or taken as required, the Company shall have the right by written notice to the holder to require the holder to dispose of the shares of common stock which triggered the need for such approval.

If a holder fails to comply with such a notice, in addition to any other remedies that may be available, the Company may redeem the shares at 85% of the fair market value of those shares.

We Share Certain Key Officers and Directors with MSG Entertainment and/or AMC Networks, Which Means Those Officers and Directors Do Not Devote Their Full Time and Attention to Our Affairs and the Overlap May Give Rise to Conflicts.

We Share Certain Directors, Officers and Employees with MSG Entertainment and/or AMC Networks, Which Means Those Officers and Directors Do Not Devote Their Full Time and Attention to Our Affairs and the Overlap May Give Rise to Conflicts.

Our Executive Chairman, James L.

Dolan, also serves as the Executive Chairman and Chief Executive Officer of MSG Entertainment, our President and Chief Executive Officer, Andrew Lustgarten, also serves as the President of MSG Entertainment and our Executive Vice President, Corporate Development and General Counsel, Lawrence J.

Burian, also serves as the Executive Vice President, Corporate Development of MSG Entertainment.

As a result, not all of our executive officers devote their full time and attention to the Company’s affairs.

Our Vice Chairman, Gregg G.

Seibert, also serves as the Vice Chairman of MSG Entertainment and AMC Networks.

Dolan, also serves as the Executive Chairman and Chief Executive Officer of MSG Entertainment and Non-Executive Chairman of AMC Networks.

In addition, one of our directors, Charles F.

3 unchanged sentences

Dolan) are also directors of MSG Entertainment and seven members of our Board of Directors are also directors of AMC Networks (including James L.

Dolan, who is the Non-Executive Chairman of AMC Networks, and Charles F.

The overlapping employees, officers and directors may have actual or apparent conflicts of interest with respect to matters involving or affecting each company.

Dolan and Charles F.

Our Vice Chairman, Gregg G.

Seibert, also serves as the Vice Chairman of MSG Entertainment and AMC Networks and our Senior Vice President, Associate General Counsel and Secretary, Mark C.

Cresitello, also serves as Secretary of MSG Entertainment.

As a result, these individuals do not devote their full time and attention to the Company’s affairs.

The overlapping directors, officers and employees may have actual or apparent conflicts of interest with respect to matters involving or affecting each company.

For example, the potential for a conflict of interest exists when we on the one hand, and MSG Entertainment and/or AMC Networks on the other hand, look at certain acquisitions and other corporate opportunities that may be suitable for more than one of the companies.

Also, conflicts may arise if there are issues or disputes under the commercial arrangements that exist between MSG Entertainment (which now includes MSG Networks as a subsidiary after the MSGE-MSGN Merger) or AMC Networks and us.

In addition, certain of our directors and officers hold MSG Entertainment and/or AMC Networks stock, stock options and/or restricted stock units.

Also, conflicts may arise if there are issues or disputes under the commercial arrangements that exist between MSG Entertainment or AMC Networks and us.

In addition, certain of our directors, officers and employees hold MSG Entertainment and/or AMC Networks stock, stock options and/or restricted stock units.

These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for our Company and MSG Entertainment or AMC Networks.

5 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors