What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-08-18 compared with 2021-08-19 · 163 added, 301 removed, 386 unchanged (55% 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 coronavirus pandemic and our ability to effectively manage the impacts, including the availability of the Madison Square Garden Arena (“The Garden”) with no or limited fans, league decisions regarding play, the cancellation of games and the impact of restrictions imposed by New York State, New York City, or otherwise;

• the duration and severity of the COVID-19 pandemic and our ability to effectively manage the impacts, including the availability of the Madison Square Garden Arena (“The Garden”) with no or limited fans, league decisions regarding play and other matters, the cancellation of games, the impact of governmental restrictions, reduced tourism, and general hesitancy among the public to engage in public activities due to COVID-19;

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

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

• labor market disruptions due to the COVID-19 pandemic or otherwise;

• any economic, political or other actions, such as boycotts, protests, work stoppages or campaigns by labor organizations;

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

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

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

• the factors described under “Part I — Item 1A.

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MSG Entertainment owns, directly or indirectly, the entertainment business previously owned and operated by the Company through its MSG Entertainment business segment and the sports booking business previously owned and operated by the Company through its MSG Sports business segment.

In the MSGE Distribution, (a) each holder of the Company’s Class A common stock, received one share of MSG Entertainment Class A common stock, par value $0.01 per share, for every share of the Company’s Class A common stock held of record as of the close of business, New York City time, on April 13, 2020 (the “Record Date”), and (b) each holder of the Company’s Class B common stock, received one share of MSG Entertainment Class B common stock, par value $0.01 per share, for every share of the Registrant’s Class B common stock held of record as of the close of business, New York City time, on the Record Date.

In the MSGE Distribution, (a) each holder of the Company’s Class A common stock, received one share of MSG Entertainment Class A common stock, par value $0.01 per share, for every share of the Company’s Class A common stock held of record as of the close of business, New York City time, on April 13, 2020 (the “Record Date”), and (b) each holder of the Company’s Class B common stock, received one share of MSG Entertainment Class B common stock, par value $0.01 per share, for every share of the Company’s Class B common stock held of record as of the close of business, New York City time, on the Record Date.

Subsequent to the MSGE Distribution, the Company no longer consolidates the financial results of MSG Entertainment for purposes of its own financial reporting and the historical financial results of MSG Entertainment have been reflected in the Company’s consolidated financial statements as discontinued operations for all periods presented through the MSGE Distribution Date.

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This section provides an analysis of our results of operations for the years ended June 30, 2022 and 2021.

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

For the comparison of our results of operations for the years ended June 30, 2021 and 2020, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2021 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on August 19, 2021.

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Both the Knicks and the Rangers play their home games at The Garden.

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

The Company’s other professional sports franchises include two development league teams - the Hartford Wolf Pack of the American Hockey League and the Westchester Knicks of the NBA G League.

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

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We also earn substantial fees from MSG Networks for the local media rights to telecast the games of our sports teams .

The amount of revenue we earn is influenced by many factors, including the impacts of COVID-19, the popularity and on-court or on-ice performance of our sports teams and general economic conditions.

The amount of revenue we earn is influenced by many factors, including the popularity and on-court or on-ice performance of our sports teams and general economic and health and safety conditions.

In particular, when our sports teams have strong on-court and on-ice performance, we benefit from increased demand for tickets, potentially greater food and merchandise sales from increased attendance and increased sponsorship opportunities.

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Pursuant to the Arena Licenses Agreements, the Knicks and the Rangers are entitled to 35% and 32.5%, respectively, of the revenues received by MSG Entertainment in connection with suite and club licenses.

Venue Signage and Sponsorships

Sponsorships and Signage

We earn revenues through the sale of sponsorships and signage specific to the teams .

Sales of team specific signage generally involve the sale of advertising space within The Garden during our sports teams’ home games and include the sale of signage on the ice and on the boards of the hockey rink during Rangers games, courtside during Knicks games, and/or on the various scoreboards and display panels at The Garden .

We offer both television camera-visible and non-camera-visible signage space.

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

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

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

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

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

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

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

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

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

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

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

The Garden was not available for use between April 17, 2020 and the start of the NBA and NHL 2020-21 seasons in December 2020 and January 2021, respectively, due to the government-mandated suspension of events in response to COVID-19, and as a result, the Company was not required to pay license fees to MSG Entertainment under the Arena License Agreements.

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

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

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

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

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

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

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

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

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

At the time of the MSGE Distribution, the Garden was not available for use due to the government-mandated suspension of events in response to COVID-19, and was only available at reduced capacity beginning in December 2020 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 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.

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

The amount we pay an individual player is typically determined by negotiation between the player (typically represented by an agent) and us, and is generally influenced by the player’s past performance, the amounts paid to players with comparable past performance by other sports teams and restrictions in the CBAs, including the salary floors and caps and NBA luxury tax.

The amount we pay an individual player is typically determined by negotiation between the player (typically represented by an agent) and us, and is generally influenced by the player’s past performance, the amounts paid to players with comparable past performance by other sports teams, the NBA luxury tax and restrictions in the CBAs, including the salary floors and caps.

The leagues’ CBAs typically contain restrictions on when players may move between league clubs following expiration of their contracts and what rights their current and former clubs have.

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

The NBA CBA expires after the 2023-24 season (although each of the NBA and the National Basketball Players Association (“NBPA”) has the right (which must be exercised by December 15, 2022) to terminate the CBA effective following the 2022-23 season).

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

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

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

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

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

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

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

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

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and collective league sources, if necessary.

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

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

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

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

We record our revenue sharing expense net of escrow.

Our net provisions for these items for the year ended June 30, 2022 was approximately $34,186.

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

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

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

Our net provisions for these items for the year ended June 30, 2022 was approximately $48,209.

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

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

The NBA imposed on each team a 6% assessment on regular season ticket revenue.

The NBA imposes on each team a 6% assessment on regular season ticket revenue.

We also incur costs associated with VIP amenities provided to certain ticket holders.

Other Expenses

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

Other expenses primarily include Selling, general and administrative (“SG&A”) expenses that consist of administrative costs, including compensation, professional fees, and costs related to the Company’s services agreement with MSGE Entertainment, as well as sales and marketing costs, including fees related to the Company’s sponsorship sales and service representation agreements with MSG Entertainment and non-event related advertising expenses.

Factors Affecting Operating Results

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These expenses add to the volatility of our operating results .

We expect to continue to pursue opportunities to improve the overall quality of our sports teams and our efforts may result in continued significant expenses and charges .

We expect to continue to pursue opportunities to improve the overall quality of our

sports teams and our efforts may result in continued significant expenses and charges .

Such expenses and charges may result in future operating losses although it is not possible to predict their timing or amount.

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See “Part I — Item 1A.

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

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

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

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

MSGE Distribution

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

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

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

Suite License Fee Revenue

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

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

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

Venue Sponsorship and Signage

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

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

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

Subsequent to the MSGE Distribution, the Company

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

Food, Beverage and Merchandise Sales

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

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

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

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

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

Corporate Costs

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

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

In addition, remote and/or hybrid in-office work arrangements in the New York City metropolitan area resulting from COVID-19 could result in reduced attendance at Knicks and Rangers games.

Impact of COVID-19 on Our Business

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

Those areas include:

ticket sales;

During fiscal years 2020 and 2021, COVID-19 disruptions materially impacted the Company’s revenues and the Company recognized materially less revenues, or in some cases, no revenues, across a number of areas.

In fiscal year 2022, the Company’s operations and operating results were also 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.

Fiscal Years 2020 and 2021

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

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

In addition, the start of the 2020-21 NBA and NHL regular seasons were delayed.

The Knicks and the Rangers did not start their seasons until December 16, 2020 and January 14, 2021, respectively, initially with no fans and then with fan attendance limited to 10% capacity starting on February 23 and February 26, respectively, due to government-mandated assembly restrictions.

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

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

During the 2020-2021 season, 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.

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

the Company’s share of suite licenses;

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signage and in-venue advertising at The Garden;

local media rights fees;

and food, beverage and merchandise sales.

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

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

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

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

At the time the seasons were suspended, the Knicks had 16 games remaining, including eight home games, and the Rangers had 12 games remaining, including five home games.

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

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

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

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

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

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

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

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

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

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

During the fiscal year 2021, as a result of COVID-19, the Company implemented cost-reduction measures that included workforce reductions and limits on discretionary spending.

In addition, as a result of the disruptions caused by COVID-19, certain operating expenses were reduced including (i) payments to MSG Entertainment under the Arena License Agreements, (ii) NBA league assessments and day-of-game expenses for Knicks and Rangers games, and (iii) league revenue sharing, net of escrow and team personnel expense.

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

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

These expense reductions did not fully offset revenue losses.

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

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

Fiscal Year 2022

Starting August 17, 2021, indoor entertainment venues such as The Garden were permitted to host guests at full capacity, subject to certain restrictions, including vaccination and/or mask requirements for guests.

In March 2022, New York City lifted all COVID-19 vaccination requirements pertaining to guests and professional athletes at indoor entertainment venues such as The Garden.

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 competed in the playoffs in May and June 2022, playing ten home playoff games in total.

Fan attendance during fiscal year 2022 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.

Results of Operations

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Depreciation and amortization 5,042 5,574 (532) (10) %

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

Other income (expense):

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

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

Loss from continuing operations before income taxes

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

Operating income (loss) 86,080 (78,443) 164,523 NM

Other expense:

Interest expense, net (11,422) (10,529) (893) (8) %

Miscellaneous expense, net (726) (346) (380) NM

Income (loss) from operations before income taxes 73,932 (89,318) 163,250 NM

Income tax benefit (expense) (25,052) 73,421 (98,473) NM

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

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

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

Net income (loss) 48,880 (15,897) 64,777 NM

Net loss attributable to nonredeemable noncontrolling interests from continuing operations

(2,251) (1,943) (308) (16) %

Net loss attributable to redeemable noncontrolling interests from discontinued operations

— (24,013) 24,013 NM

Net loss attributable to nonredeemable noncontrolling interests from discontinued operations

— (120) 120 NM

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

Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ 51,131 $ (13,954) $ 65,085 NM

NM — Percentage is not meaningful

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

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

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

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

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

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

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

The net decrease is attributable to the following:

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

Decrease in suite license fee revenues (67,433)

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

Decrease in sponsorship and signage revenues (11,676)

Increase in revenues from league distributions 98,329

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

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

Other net decreases (1,187)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Revenues for the year ended June 30, 2022 increased $405,633, or 98%, to $821,354 as compared to the prior year.

The net increase is attributable to the following:

Increase in pre/regular season ticket-related revenues $ 237,265

Increase in suite license fee revenues 86,754

Increase in playoff related revenues 49,570

Increase in sponsorship and signage revenues 28,337

Increase in pre/regular season food, beverage and merchandise sales 22,029

Increase in local media rights fees 17,942

Decrease in revenues from league distributions (39,133)

Other net increases 2,869

The increase in pre/regular season ticket-related revenues was a result of increased attendance due to the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year.

In the prior year, 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 increase in suite license fee revenues was a result of the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year, as discussed above.

In the prior year, for Knicks and Rangers games played with a limited number of fans in attendance, access to suites was sold by way of individual tickets and, as a result, minimal suite license fee revenues were recognized.

The increase in playoff related revenues was primarily due to the Rangers playing ten home playoff games as the team advanced to the Eastern Conference Finals in the current year as compared to the Knicks playing three home playoff games in the prior year.

The increase in sponsorship and signage revenues was a result of the shortened NBA and NHL 2020-21 regular season schedules in the prior year, as well as the elimination of government mandated assembly restrictions at The Garden that were in place during the prior year, as discussed above.

The increase in pre/regular season food, beverage and merchandise sales was a result of increased attendance due to the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year, as discussed above.

The increase in local media rights fees was primarily due to the impact of the shortened NBA and NHL 2020-21 regular season schedules in the prior year, as well as contractual rate increases.

The increase was slightly offset by the recognition of local media rights fees in the prior year associated with the Rangers’ participation in the Stanley Cup Qualifiers.

The decrease in revenues from league distributions was primarily due to the recognition of (i) 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 and (ii) a $21,043 expansion fee from the NHL in the prior year.

The decrease was partially offset by increased NBA and NHL national media rights fees and other league distributions in the current year.

Direct operating expenses

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

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

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

The net decrease is attributable to the following:

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

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

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

Decrease in team personnel compensation (17,801)

• the cost of merchandise sales.

Direct operating expenses for the year ended June 30, 2022 increased $218,674, or 78%, to $500,564 as compared to the prior year.

The net increase is attributable to the following:

Increase in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax $ 95,574

Increase in team personnel compensation 43,167

Increase in other team operating expenses not discussed elsewhere in this table 38,739

Increase in operating lease costs associated with the Knicks and the Rangers playing home games at The Garden 32,200

Increase in playoff related expenses 20,230

Increase in pre/regular season expense associated with merchandise sales 9,980

Decrease in net provisions for certain team personnel transactions (21,216)

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

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

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

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

Years Ended June 30, Decrease

Years Ended June 30, Increase

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

$ 57,843 $ (37,731) $ 95,574

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

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

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

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

The increase in net provisions for league revenue sharing expense (net of escrow) and NBA luxury tax was primarily due to higher provisions for league revenue sharing expense (net of escrow) of $102,589 as a result of higher escrow recoveries and lower revenue sharing expense in the prior year, which reflected the impact of the COVID-19 pandemic, partially offset by higher recoveries of NBA luxury tax in the current year.

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 June 30, 2022 did not result in the team being a luxury tax payer for the 2021-22 season and the Company will receive an equal share of the portion of luxury tax receipts that are distributed to non-tax paying teams.

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

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

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

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

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

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.

The increase in team personnel compensation was primarily due to the impact of the shortened 2020-21 NBA and NHL regular seasons in the prior year and higher player compensation in the current year, partially offset by the recognition of player compensation expense during the prior year 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.

The increase in other team operating expenses not discussed elsewhere in the table was a result of the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year, as discussed above.

Other team operating expenses 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 increase in operating lease costs associated with the Knicks and the Rangers playing home games at The Garden was primarily a result of the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year, as discussed above.

The increase in playoff related expenses was primarily due to the Rangers playing ten home playoff games as the team advanced to the Eastern Conference Finals in the current year as compared to the Knicks playing three home playoff games in the prior year.

The increase in pre/regular season expense associated with merchandise sales was a result of increased attendance due to the elimination of government-mandated assembly restrictions at The Garden that were in place during the prior year, as discussed above.

Net provisions for certain team personnel transactions were as follows:

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

Season-ending player injuries 2,662 — 2,662

Net provisions for certain team personnel transactions $ 2,327 $ 23,542 $ (21,215)

Selling, general and administrative expenses

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

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

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

Selling, general and administrative expenses primarily consist of (i) administrative costs, including compensation, professional fees, costs under the Company’s services agreement with MSG Entertainment, (ii) fees related to the Company’s sponsorship sales and service representation agreements, and (iii) sales and marketing costs.

Selling, general and administrative expenses for the year ended June 30, 2022 increased $22,968, or 11%, to $229,668 as compared to the prior year primarily due to higher (i) marketing costs, (ii) playoff related expenses, (iii) fees related to the Company’s sponsorship sales and service representation agreements with MSG Entertainment, (iv) costs related to the Company’s services agreement with MSG Entertainment and (v) other general and administrative expenses, partially offset by lower employee compensation and related benefits, including the absence of severance related to team executives incurred in the prior year.

Depreciation and amortization

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

Operating loss

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

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

Depreciation and amortization for the year ended June 30, 2022 decreased $532, or 10%, to $5,042 as compared to the prior year.

Operating income (loss)

For the year ended June 30, 2022, operating income of $86,080 improved $164,523 as compared to the prior year.

The improvement to operating income was primarily due to higher revenues, partially offset by higher direct operating costs and, to a lesser extent, higher selling, general and administrative expenses.

Interest expense, net

Net interest expense increased $893 to $11,422 as compared to the prior year.

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

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

The increase was primarily driven by (i) increased interest expense under the Knicks revolving credit facility as a result of higher interest rates, (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, partially offset by decreased interest expense under the Rangers revolving credit facility as a result of principal repayments made during the current year.

Income tax expense for the year ended June 30, 2022 of $25,052 differs from the income tax expense derived from applying the statutory federal rate of 21% to pretax income primarily due to state and local tax expense of $8,763 and nondeductible officers’ compensation of $5,156, partially offset by a change in the estimated tax rate used to determine deferred taxes of $3,191 and return to provision adjustments of $2,476.

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

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

Adjusted operating loss

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

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, (vi) the impact of purchase accounting adjustments related to business acquisitions, and (vii) gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan (which was established in November 2021), which is referred to as adjusted operating income (loss), a non-GAAP measure.

Management believes that given the length of the Arena License Agreements and resulting magnitude of the difference in deferred rent expense and the cash rent payments, the exclusion of deferred rent expense provides investors with a clearer picture of the Company's operating performance.

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

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

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

In addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan, which are included for the first time this period, provides investors with a clearer picture of the Company’s operating performance given that, in accordance with GAAP, gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan are recognized in Operating (income) loss whereas gains and losses related to the remeasurement of the assets under the Company’s Executive Deferred Compensation Plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Miscellaneous income (expense), net, which is not reflected in Operating income (loss).

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

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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 is a reconciliation of operating loss to adjusted operating loss:

Years Ended June 30, Change

2021 2020 Amount Percentage

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

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

Years Ended June 30,

2022 2021 Change

Operating income (loss) $ 86,080 $ (78,443) $ 164,523

Deferred rent 27,305 28,305

Depreciation and amortization (a) (b)

Share-based compensation (a)

30,437 48,693

Depreciation and amortization 5,042 5,574

Share-based compensation 24,245 30,437

Restructuring charges — 1,597

Other purchase accounting adjustments — 167

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

________________

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

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

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

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

Remeasurement of deferred compensation plan liabilities

Adjusted operating income (loss) $ 142,211 $ (12,530) $ 154,741

For the year ended June 30, 2022, adjusted operating income of $142,211 improved $154,741 as compared to the prior year.

The improvement to adjusted operating income was primarily due to higher revenues, partially offset by higher direct operating costs and, to a lesser extent, higher selling, general and administrative expenses.

Liquidity and Capital Resources

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

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

Risk Factors – 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 ”.

Our operations and operating results were materially impacted by the COVID-19 pandemic and government and league actions taken in response during fiscal years 2020 and 2021.

Our 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 COVID-19 variants.

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

Risk Factors — 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 ”.

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

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

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

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

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

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, pursuant to the 2021 Rangers NHL Advance Agreement (the “2021 Rangers NHL Advance Agreement”), the NHL advanced the Company $30,000, which the league made available to each team.

See Note 13 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for a discussion of the 2021 Knicks Credit Agreement, 2021 Rangers Credit Agreement, and 2021 Rangers NHL Advance Agreement.

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

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In addition, as of June 30, 2022, the Company’s deferred revenue obligations were approximately $141,176, net of billed, but not yet collected deferred revenue.

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

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

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

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

In addition, the Company’s deferred revenue obligations included $30,000 from the NBA, which the league provided to each team.

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

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

We believe we have sufficient liquidity, including approximately $91,000 in Cash and cash equivalents as of June 30, 2022, along with $305,000 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.

Financing Agreements and Stock Repurchases

2020 Knicks Revolving Credit Facility

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

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

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

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

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

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

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

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

Knicks LLC is required to pay a commitment fee ranging from 0.25% to 0.30% per annum in respect of the average daily unused commitments under the 2020 Knicks Revolving Credit Facility.

The outstanding balance under the 2020 Knicks Revolving Credit Facility was $220,000 as of June 30, 2021.

All obligations under the 2020 Knicks Revolving Credit Facility are secured by a first lien security interest in certain of Knicks LLC’s assets, including, but not limited to, (i) the Knicks LLC’s membership rights in the NBA, (ii) revenues to be paid to the

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

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

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

Knicks LLC is required to make mandatory prepayments in certain circumstances, including without limitation if the maximum available amount under the 2020 Knicks Revolving Credit Facility is greater than 350% of qualified revenues.

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

The 2020 Knicks Revolving Credit Facility contains certain restrictions on the ability of Knicks LLC to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the 2020 Knicks Revolving Credit Facility, including the following:

(i) incurring additional indebtedness and contingent liabilities;

(ii) creating liens on certain assets;

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

(iv) engaging in sale and leaseback transactions;

(v) merging or consolidating;

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

2020 Knicks Holdings Revolving Credit Facility

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

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

The 2020 Knicks Holdings Revolving Credit Facility requires Knicks Holdings to comply with a debt service ratio of 1.1:1.0 over a trailing four quarter period.

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

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

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

Borrowings under the 2020 Knicks Holdings Revolving Credit Facility bear interest at a floating rate, which at the option of Knicks Holdings may be either (i) a base rate plus a margin ranging from 1.00% to 1.25% per annum or (ii) LIBOR plus a margin ranging from 2.00% to 2.25% per annum.

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

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

All obligations under the 2020 Knicks Holdings Revolving Credit Facility are secured by debt service and distribution accounts maintained by Knicks Holdings, and includes a guarantee from MSG NYK Holdings, LLC, an indirect wholly-owned subsidiary of the Company and the direct parent of Knicks Holdings.

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

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

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

The 2020 Knicks Holdings Revolving Credit Facility contains certain restrictions on the ability of Knicks Holdings to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the 2020 Knicks Holdings Revolving Credit Facility, including the following:

(i) incurring additional indebtedness and contingent liabilities;

(ii) creating liens on certain assets;

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

(iv) engaging in sale and leaseback transactions;

(v) merging or consolidating;

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

2020 Rangers Revolving Credit Facility

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

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

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

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

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

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

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

Borrowings bear interest at a floating rate, which at the option of Rangers LLC may be either (i) a base rate plus a margin ranging from 0.75% to 1.25% per annum or (ii) LIBOR plus a margin ranging from 1.75% to 2.25% per annum.

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

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

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

All obligations under the 2020 Rangers Revolving Credit Facility are, subject to the 2021 Rangers NHL Advance Agreement, secured by a first lien security interest in certain of Rangers LLC’s assets, including, but not limited to, (i) Rangers LLC’s membership rights in the NHL, (ii) revenues to be paid to Rangers LLC by the NHL pursuant to certain U.S.

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

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

Rangers LLC is required to make mandatory prepayments in certain circumstances, including without limitation if qualified revenues are less than 17% of the maximum available amount under the 2020 Rangers Revolving Credit Facility.

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

The 2020 Rangers Revolving Credit Facility contains certain restrictions on the ability of Rangers LLC to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the 2020 Rangers Revolving Credit Facility, including the following:

(i) incurring additional indebtedness and contingent liabilities;

(ii) creating liens on certain assets;

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

(iv) engaging in sale and leaseback transactions;

(v) merging or consolidating;

and (vi) taking certain actions that would invalidate the secured lenders’ liens on any of Rangers LLC’s assets securing the obligations under the 2020 Rangers Revolving Credit Facility.

2021 Rangers NHL Advance Agreement

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

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

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

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

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

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

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

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

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Years Ended June 30,

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

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

Net income (loss) $ 48,880 $ (15,897)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities 55,600 (36,744)

Subtotal $ 104,480 $ (52,641)

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Net cash used in investing activities (2,932) (466)

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

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

Net decrease in cash, cash equivalents and restricted cash $ (18,637) $ (1,027,228)

Net cash (used in) provided by financing activities (156,142) 17,155

Net increase (decrease) in cash, cash equivalents and restricted cash $ 18,982 $ (18,637)

Operating Activities

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

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

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

Net cash provided by operating activities for the year ended June 30, 2022 was $178,056 as compared to net cash used in operating activities in the prior year of $35,326.

This was primarily due to the increase in net income 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.

Investing Activities

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

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

Net cash used in investing activities for the year ended June 30, 2022 increased by $2,466 to $2,932 as compared to the prior year primarily due to higher other investing activities and capital expenditures in the current year.

Financing Activities

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

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

Net cash used in financing activities for the year ended June 30, 2022 was $156,142 as compared to net cash provided by financing activities in the prior year of $17,155.

This was due to (i) 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 as compared to none in the current year, and (iii) additional borrowings in the prior year 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.

Contractual Obligations and Off Balance Sheet Arrangements

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

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

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

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See Note 8 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for information on the contractual obligations related to future lease payments, which are reflected on the consolidated balance sheet as lease liabilities as of June 30, 2022.

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

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

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

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

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

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

See Note 14 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for more information on the Company’s pension obligations.

Seasonality of Our Business

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The Company believes that if the fair value of a reporting unit exceeds its carrying value by greater than 10%, a sufficient safety margin has been realized.

As a result of operating disruptions due to COVID-19, the Company’s projected cash flows were directly impacted.

This disruption along with the macroeconomic industry and market conditions, resulted in the evaluation of whether there was a “triggering event”, which required the Company to assess the carrying value of its goodwill and intangible assets for impairment.

Based on the assessment, management determined that it was not more likely than not that an impairment exists and there was no goodwill or intangible asset balance that was impaired as of June 30, 2021.

However, the duration and impact of the COVID-19 pandemic may result in future impairment charges that management will evaluate as facts and circumstances evolve through time.

Identifiable Indefinite-Lived Intangible Assets

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

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

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

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

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

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

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

These assessments considered the events

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

Examples of such events and circumstances include:

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On April 17, 2020, in connection with the MSGE Distribution, we entered into a sublease agreement with MSG Entertainment (the “Sublease Agreement”) for our principal executive offices at Two Pennsylvania Plaza in New York.

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

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

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

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

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

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

As the Company has not yet entered into a new sublease for or taken possession of the new executive office space at Two

Pennsylvania Plaza, no additional right-of-use assets or operating lease liabilities have been recorded as of June 30, 2022 related to the commitments discussed above.

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

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

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

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

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

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

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

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

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

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

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

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

As such, the Company concluded that the related straight-line operating lease costs should be recorded by each team equally over each team’s individual event days.

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

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Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

This rate is also used for the Sublease Agreement.

Our incremental borrowing rate is calculated as the weighted average risk-free rate plus a spread to reflect our current unsecured credit rating.

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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-K

Item 7. Management’s Discussion and Analysis