What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-02-07 compared with 2022-10-27 · 229 added, 152 removed, 511 unchanged (43% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

2022 June 30,

1 unchanged sentence

Cash and cash equivalents $ 43,912 $ 91,018

Accounts receivable, net of allowance for doubtful accounts of $ 0 and $ 0 as of September 30, 2022 and June 30, 2022, respectively

Restricted cash 1,246 —

Accounts receivable, net of allowance for doubtful accounts of $ 0 and $ 0 as of December 31, 2022 and June 30, 2022, respectively

74,976 47,240

3 unchanged sentences

Total current assets 207,937 205,269

Property and equipment, net of accumulated depreciation and amortization of $ 47,710 and $ 46,794 as of September 30, 2022 and June 30, 2022, respectively

Property and equipment, net of accumulated depreciation and amortization of $ 48,519 and $ 46,794 as of December 31, 2022 and June 30, 2022, respectively

32,125 32,892

3 unchanged sentences

Goodwill 226,955 226,955

Deferred income tax assets, net 11,607 —

Other assets 43,098 37,288

4 unchanged sentences

(in thousands, except per share data)

September 30,

2022 June 30,

23 unchanged sentences

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

19,803 and 19,697 shares outstanding as of September 30, 2022 and June 30, 2022, respectively

19,415 and 19,697 shares outstanding as of December 31, 2022 and June 30, 2022, respectively

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

4,530 shares outstanding as of September 30, 2022 and June 30, 2022

4,530 shares outstanding as of December 31, 2022 and June 30, 2022

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

none outstanding as of September 30, 2022 and June 30, 2022

none outstanding as of December 31, 2022 and June 30, 2022

Additional paid-in capital — 17,573

Treasury stock, at cost, 645 and 751 shares as of September 30, 2022 and June 30, 2022, respectively

Treasury stock, at cost, 1,033 and 751 shares as of December 31, 2022 and June 30, 2022, respectively

( 169,772 ) ( 128,026 )

10 unchanged sentences

(in thousands, except per share data)

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2022 2021 2022 2021

$ 353,694 $ 289,581 $ 377,783 $ 308,375

Operating expenses:

Direct operating expenses (b)

225,702 192,847 229,383 201,425

Selling, general and administrative expenses (c)

1 unchanged sentence

Depreciation and amortization 838 1,215 1,863 2,641

Operating loss ( 35,898 ) ( 34,938 )

Operating income 51,518 35,919 15,620 981

Other income (expense):

1 unchanged sentence

Interest expense ( 6,079 ) ( 3,585 ) ( 9,391 ) ( 6,688 )

Miscellaneous expense, net ( 166 ) ( 63 )

Miscellaneous income (expense), net 385 ( 64 ) 219 ( 127 )

( 5,127 ) ( 3,606 ) ( 8,249 ) ( 6,722 )

Loss from operations before income taxes ( 39,020 ) ( 38,054 )

Income tax benefit 20,493 21,169

Net loss ( 18,527 ) ( 16,885 )

Income (loss) from operations before income taxes 46,391 32,313 7,371 ( 5,741 )

Income tax (expense) benefit ( 24,555 ) ( 17,115 ) ( 4,062 ) 4,054

Net income (loss) 21,836 15,198 3,309 ( 1,687 )

Net loss attributable to nonredeemable noncontrolling interests ( 655 ) ( 647 ) ( 1,362 ) ( 1,127 )

Net loss attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 17,820 ) $ ( 16,405 )

Basic loss per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 0.73 ) $ ( 0.68 )

Diluted loss per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 0.73 ) $ ( 0.68 )

Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ 22,491 $ 15,845 $ 4,671 $ ( 560 )

Basic earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 0.85 $ 0.65 $ 0.11 $ ( 0.02 )

Diluted earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 0.84 $ 0.65 $ 0.11 $ ( 0.02 )

Weighted-average number of common shares outstanding:

2 unchanged sentences

_________________

(a) Includes revenues from related parties of $ 8,174 and $ 7,247 for the three months ended September 30, 2022 and 2021, respectively.

(b) Includes net charges from related parties of $ 2,184 and $ 2,158 for the three months ended September 30, 2022 and 2021, respectively.

(c) Includes net charges from related parties of $ 13,308 and $ 12,247 for the three months ended September 30, 2022 and 2021, respectively.

(a) Includes revenues from related parties of $ 74,950 and $ 70,131 for the three months ended December 31, 2022 and 2021, respectively, and $ 83,124 and $ 77,378 for the six months ended December 31, 2022 and 2021, respectively.

(b) Includes net charges from related parties of $ 45,485 and $ 37,874 for the three months ended December 31, 2022 and 2021, respectively, and $ 47,669 and $ 40,032 for the six months ended December 31, 2022 and 2021, respectively.

(c) Includes net charges from related parties of $ 17,433 and $ 18,880 for the three months ended December 31, 2022 and 2021, respectively, and $ 30,741 and $ 31,127 for the six months ended December 31, 2022 and 2021, respectively.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

September 30,

Net loss $ ( 18,527 ) $ ( 16,885 )

Three Months Ended Six Months Ended

December 31, December 31,

2022 2021 2022 2021

Net income (loss) $ 21,836 $ 15,198 $ 3,309 $ ( 1,687 )

Other comprehensive income, before income taxes:

5 unchanged sentences

Other comprehensive income, net of income taxes 3 22 6 44

Comprehensive loss ( 18,524 ) ( 16,863 )

Comprehensive income (loss) 21,839 15,220 3,315 ( 1,643 )

Comprehensive loss attributable to nonredeemable noncontrolling interests ( 655 ) ( 647 ) ( 1,362 ) ( 1,127 )

Comprehensive loss attributable to Madison Square Garden Sports Corp.’s stockholders $ ( 17,817 ) $ ( 16,383 )

Comprehensive income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ 22,494 $ 15,867 $ 4,677 $ ( 516 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

September 30,

Six Months Ended

Cash flows from operating activities:

Net loss $ ( 18,527 ) $ ( 16,885 )

Net income (loss) $ 3,309 $ ( 1,687 )

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

Depreciation and amortization 1,863 2,641

Benefits from deferred income taxes ( 20,525 ) ( 21,169 )

Provision for (benefit from) deferred income taxes 4,009 ( 4,054 )

Share-based compensation expense 18,839 12,205

9 unchanged sentences

Operating lease right-of-use assets and lease liabilities 11,804 8,722

Net cash provided by (used in) operating activities 1,285 ( 19,310 )

Net cash provided by operating activities 31,577 24,030

Cash flows from investing activities:

3 unchanged sentences

Cash flows from financing activities:

Accelerated share repurchase ( 75,000 ) —

Dividends paid ( 170,683 ) —

Taxes paid in lieu of shares issued for equity-based compensation ( 15,440 ) ( 12,142 )

Proceeds from revolving credit facilities 215,000 —

Repayment of revolving credit facilities ( 30,000 ) ( 25,000 )

Payments for financing costs — ( 2,737 )

Net cash used in financing activities ( 76,123 ) ( 39,879 )

8 unchanged sentences

(in thousands)

Three Months Ended September 30, 2022

Three Months Ended December 31, 2022

Issued Additional

6 unchanged sentences

Interests Total Equity

Balance as of June 30, 2022 $ 249 $ 17,573 $ ( 128,026 ) $ ( 35,699 ) $ ( 1,186 ) $ ( 147,089 ) $ 1,712 $ ( 145,377 )

Net loss — — — ( 17,820 ) — ( 17,820 ) ( 707 ) ( 18,527 )

Balance as of September 30, 2022 $ 249 $ — $ ( 109,981 ) $ ( 62,447 ) $ ( 1,183 ) $ ( 173,362 ) $ 1,452 $ ( 171,910 )

Net income (loss) — — — 22,491 — 22,491 ( 655 ) 21,836

Other comprehensive income — — — — 3 3 — 3

Comprehensive loss — — — — — ( 17,817 ) ( 707 ) ( 18,524 )

Comprehensive income (loss) — — — — — 22,494 ( 655 ) 21,839

Share-based compensation

4 unchanged sentences

— ( 209 ) 209 — — — — —

Dividends declared ($ 7.00 per share)

— — — ( 172,749 ) — ( 172,749 ) — ( 172,749 )

Accelerated share repurchase — ( 10,658 ) ( 60,000 ) ( 4,342 ) — ( 75,000 ) — ( 75,000 )

Adjustments to noncontrolling interests — ( 541 ) — — — ( 541 ) 541 —

Balance as of September 30, 2022 $ 249 $ — $ ( 109,981 ) $ ( 62,447 ) $ ( 1,183 ) $ ( 173,362 ) $ 1,452 $ ( 171,910 )

Balance as of December 31, 2022 $ 249 $ — $ ( 169,772 ) $ ( 217,047 ) $ ( 1,180 ) $ ( 387,750 ) $ 1,338 $ ( 386,412 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended September 30, 2021

Three Months Ended December 31, 2021

Common Stock Issued Additional

5 unchanged sentences

Interests Total Equity

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

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

Other comprehensive income — — — — 22 22 — 22

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

Share-based compensation

— 7,354 — — — 7,354 — 7,354

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

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

See accompanying notes to consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(in thousands)

Six Months Ended December 31, 2022

Common Stock Issued Additional

Capital Treasury

Stock Accumulated Deficit Accumulated

Comprehensive Loss Total Madison Square Garden Sports Corp.

Stockholders’ Equity Non -

Noncontrolling

Interests Total Equity

Balance as of June 30, 2022 $ 249 $ 17,573 $ ( 128,026 ) $ ( 35,699 ) $ ( 1,186 ) $ ( 147,089 ) $ 1,712 $ ( 145,377 )

Net income (loss) — — — 4,671 — 4,671 ( 1,362 ) 3,309

Other comprehensive income — — — — 6 6 — 6

Comprehensive income (loss) — — — — — 4,677 ( 1,362 ) 3,315

Share-based compensation

— 18,839 — — — 18,839 — 18,839

Tax withholding associated with shares issued for equity-based compensation

— ( 15,440 ) — — — ( 15,440 ) — ( 15,440 )

Common stock issued under stock incentive plans

— ( 9,326 ) 18,254 ( 8,928 ) — — — —

Dividends declared ($ 7.00 per share)

— — — ( 172,749 ) — ( 172,749 ) — ( 172,749 )

Accelerated share repurchase — ( 10,658 ) ( 60,000 ) ( 4,342 ) — ( 75,000 ) — ( 75,000 )

Adjustments to noncontrolling interests — ( 988 ) — — — ( 988 ) 988 —

Balance as of December 31, 2022 $ 249 $ — $ ( 169,772 ) $ ( 217,047 ) $ ( 1,180 ) $ ( 387,750 ) $ 1,338 $ ( 386,412 )

See accompanying notes to consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF EQUITY (Continued)

(in thousands)

Six Months Ended December 31, 2021

Common Stock Issued Additional

Capital Treasury

Stock Accumulated Deficit Accumulated

Comprehensive Loss Total Madison Square Garden Sports Corp.

Stockholders’ Equity Non -

Noncontrolling

Interests Total Equity

Balance as of June 30, 2021 $ 249 $ 23,102 $ ( 146,734 ) $ ( 78,898 ) $ ( 2,027 ) $ ( 204,308 ) $ 2,442 $ ( 201,866 )

Net loss — — — ( 560 ) — ( 560 ) ( 1,127 ) ( 1,687 )

8 unchanged sentences

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

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

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

See accompanying notes to consolidated financial statements.

28 unchanged sentences

The results of operations for the periods presented are not necessarily indicative of the results that might be expected for future interim periods or for the full year.

The dependence of MSG Sports on revenues from its NBA and NHL sports teams generally means it earns a disproportionate share of its revenues in the second and third quarters of the Company’s fiscal year.

MADISON SQUARE GARDEN SPORTS CORP.

4 unchanged sentences

See Note 1, Description of Business and Basis of Presentation, to the Company’s audited consolidated financial statements and notes thereto for the year ended June 30, 2022 included in the Company’s Annual Report on Form 10-K for more information regarding the impact of the COVID-19 pandemic on our business during fiscal years 2020, 2021 and 2022.

It is unclear to what extent COVID-19, including new variants, could result in renewed governmental and league restrictions on attendance or otherwise impact the Company’s operations and operating results.

It is unclear to what extent COVID-19, including new variants thereof, could result in renewed governmental and/or league restrictions on attendance or otherwise impact the Company’s operations and operating results.

Accounting Policies

22 unchanged sentences

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

For the three months ended September 30, 2022 and 2021, the Company did not have any material impairment losses on receivables or contract assets arising from contracts with customers.

For the three and six months ended December 31, 2022 and 2021, the Company did not have any material impairment losses on receivables or contract assets arising from contracts with customers.

Disaggregation of Revenue

The following table disaggregates the Company’s revenues by type of goods or services in accordance with the required entity-wide disclosure requirements set forth in ASC Subtopic 280-10-50-38 to 40 and the disaggregation of revenue required disclosures in accordance with ASC Subtopic 606-10-50-5 for the three months ended September 30, 2022 and 2021:

Three Months Ended

September 30,

Three Months Ended Six Months Ended

December 31, December 31,

2022 2021 2022 2021

Event-related (a)

1 unchanged sentence

Media rights (b)

118,158 112,308 125,144 118,894

Sponsorship, signage and suite licenses 81,021 58,534 85,835 61,704

7 unchanged sentences

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

The following table provides information about contract balances from the Company’s contracts with customers as of September 30, 2022 and June 30, 2022.

September 30, June 30,

The following table provides information about contract balances from the Company’s contracts with customers as of December 31, 2022 and June 30, 2022.

December 31, June 30,

Receivables from contracts with customers, net (a)

1 unchanged sentence

Contract assets, current (b)

13,485 13,839

Deferred revenue, including non-current portion (c), (d)

2 unchanged sentences

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

As of September 30, 2022 and June 30, 2022, the Company’s receivables reported above incl uded $ 922 and $ 1,258 , respectively, related to various related parties associated with contracts with customers.

As of December 31, 2022 and June 30, 2022, the Company’s receivables reported above incl uded $ 5,971 and $ 1,258 , respectively, related to various related parties associated with contracts with customers.

See Note 15 for further details on related party arrangements.

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

As of September 30, 2022, the Company had receivable balances related to escrow and player compensation recoveries of $ 11,694 and $ 6,782 , recorded in Account s receivable, net and Other assets, respectively.

As of December 31, 2022, the Company had receivable balances related to escrow and player compensation recoveries of $ 15,593 recorded in Account s receivable, net.

As of June 30, 2022, the Company had receivable balances related to escrow and player compensation recover ies of $ 12,464 and $ 6,782 , reco rded in Accounts receivable, net and Other assets, respectively.

4 unchanged sentences

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

The Company’s deferred revenue related to local media rights was $ 36,169 and $ 0 as of September 30, 2022 and June 30, 2022, respectively.

The Company’s deferred revenue related to local media rights was $ 10,700 and $ 0 as of December 31, 2022 and June 30, 2022, respectively.

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

(d) Revenue recognized for the three months ended September 30, 2022 relating to the deferred revenue balance as of June 30, 2022 was $ 5,356 .

(d) Revenue recognized for the six months ended December 31, 2022 relating to the deferred revenue balance as of June 30, 2022 was $ 73,474 .

MADISON SQUARE GARDEN SPORTS CORP.

1 unchanged sentence

Transaction Price Allocated to the Remaining Performance Obligations

The following table depicts the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2022 and is based on current projections.

The following table depicts the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2022 and is based on current projections.

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

7 unchanged sentences

Computation of Earnings (Loss) per Common Share

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

Three Months Ended

September 30,

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

Three Months Ended Six Months Ended

December 31, December 31,

2022 2021 2022 2021

Net earnings (loss) allocable to common shares, basic and diluted (numerator):

Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders $ 22,491 $ 15,845 $ 4,671 $ ( 560 )

Dividends to other-than-common stockholders (a)

2,056 — 2,056 —

Net earnings allocable to common shares, basic and diluted (numerator):

$ 20,435 $ 15,845 $ 2,615 $ ( 560 )

Weighted-average shares (denominator):

Weighted-average shares for basic EPS 24,130 24,261 24,213 24,217

24,295 24,172

Dilutive effect of shares issuable under share-based compensation plans 59 112 93 —

Weighted-average shares for diluted EPS 24,189 24,373 24,306 24,217

Weighted-average shares excluded from diluted EPS — — — 154

Basic earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 0.85 $ 0.65 $ 0.11 $ ( 0.02 )

Diluted earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 0.84 $ 0.65 $ 0.11 $ ( 0.02 )

_________________

Weighted-average shares excluded from diluted earnings (loss) per share 128 196

(a) Dividends to other-than-common stockholders consists of forfeitable rights to dividends declared and payable to holders of the Company’s unvested restricted stock units and performance restricted stock units.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Team Personnel Transactions

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

Team personnel transactions were a net credit of $ 329 and a net provision of $ 727 for the three months ended September 30, 2022 and 2021, respectively.

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

Team personnel transactions were a net provision of $ 29 and a net credit of $ 302 for the three months ended December 31, 2022 and 2021, respectively, and a net credit of $ 300 an d a net provision of $ 425 for the six months ended December 31, 2022 and 2021, respectively.

Cash, Cash Equivalents and Restricted Cash

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

September 30,

2022 June 30,

2022 September 30,

2022 December 31,

2021 June 30,

6 unchanged sentences

_________________

(a) Restricted cash as of September 30, 2021 and June 30, 2021 relates to the Company’s revolving credit facilities (see Note 11 for more information).

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(a) Restricted cash as of December 31, 2022 and December 31, 2021 primarily included cash deposited in an escrow account (see Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022 for more information).

For the period ended June 30, 2021, restricted cash relates to the Company’s revolving credit facilities (see Note 11 for more information).

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

1 unchanged sentence

See Note 8 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022 for more information regarding the Company’s accounting policies associated with its leases.

As of September 30, 2022, the Company’s existing operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 8 months to 33 years.

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

As of December 31, 2022, the Company’s exis ting operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 5 months to 33 years.

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

The exercise of lease renewals, if available under the lease options, is generally at the Company’s discretion and is considered in the Company’s assessment of the respective lease term.

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

The following table summarizes the ROU assets and lease liabilities recorded on the Company’s accompanying consolidated balance sheets as of September 30, 2022 and June 30, 2022:

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the right-of-use assets and lease liabilities recorded on the Company’s accompanying consolidated balance sheets as of December 31, 2022 and June 30, 2022:

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

2022 June 30,

9 unchanged sentences

_________________

(a) As of September 30, 2022, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 43,225 and $ 689,302 , respectively, that are payable to MSG Entertainment.

(a) As of December 31, 2022, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 43,380 and $ 702,667 , respectively, that are payable to MSG Entertainment.

As of June 30, 2022, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 43,028 and $ 699,587 , respectively, that are payable to MSG Entertainment.

The following table summarizes the activity recorded within the Company’s accompanying consolidated statements of operations for the three months ended September 30, 2022 and 2021:

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

The following table summarizes the activity recorded within the Company’s accompanying consolidated statements of operations for the three and six months ended December 31, 2022 and 2021:

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

2022 2021 2022 2021

Operating lease cost Direct operating expenses $ 31,811 $ 27,860 $ 33,214 $ 29,267

Operating lease cost Selling, general and administrative expenses

613 613 1,226 1,224

Short-term lease cost Direct operating expenses 70 41 115 77

1 unchanged sentence

Supplemental Information

For the three months ended September 30, 2022 and 2021, cash paid for amounts included in the measurement of lease liabilities was $ 11,263 and $ 10,768 , respectively.

The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of September 30, 2022 was 32.5 years.

The weighted average discount rate was 7.13 % as of September 30, 2022 and represented the Company’s estimated incremental borrowing rate, assuming a secured borrowing, based on the remaining lease term at the time of either (i) adoption of the standard or (ii) the period in which the lease term expectation commenced or was modified.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Maturities of operating lease liabilities as of September 30, 2022 are as follows:

For the six months ended December 31, 2022 and 2021, cash paid for amounts included in the measurement of lease liabilities was $ 22,526 and $ 21,689 , respectively.

The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of December 31, 2022 was 32.3 years.

The weighted average discount rate was 7.13 % as of December 31, 2022 and represented the Company’s estimated incremental borrowing rate, assuming a secured borrowing, based on the remaining lease term at the time of either (i) adoption of the standard or (ii) the period in which the lease term expectation commenced or was modified.

Maturities of operating lease liabilities as of December 31, 2022 are as follows:

Fiscal Year 2023 (remainder) $ 22,809

7 unchanged sentences

Total lease liabilities $ 746,418

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Goodwill and Intangible Assets

During the first quarter of fiscal year 2023, the Company performed its annual impairment test of goodwill and determined that there were no impairments identified as of the impairment test date.

The carrying amount of goodwill as of September 30, 2022 and June 30, 2022 is $ 226,955 .

The Company’s indefinite-lived intangible assets as of September 30, 2022 and June 30, 2022 are as follows:

The carrying amount of goodwill as of December 31, 2022 and June 30, 2022 is $ 226,955 .

The Company’s indefinite-lived intangible assets as of December 31, 2022 and June 30, 2022 are as follows:

Sports franchises $ 111,064

2 unchanged sentences

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

September 30, 2022 Gross Accumulated

December 31, 2022 Gross Accumulated

Amortization Net

9 unchanged sentences

$ 5,900 $ ( 5,264 ) $ 636

For the three months ended September 30, 2022 and 2021, amortization expense o f intangible assets was $ 108 and $ 265 , respectively.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended December 31, 2022 and 2021, amortization expense o f in tangible assets was $ 30 and $ 265 , respectively.

For the six months ended December 31, 2022 and 2021, amortization expense of intangible assets was $ 138 and $ 530 , respectively.

Fair Value Measurements

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

Fair Value Hierarchy September 30,

Fair Value Hierarchy December 31,

2022 June 30,

5 unchanged sentences

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

September 30, 2022 June 30, 2022

December 31, 2022 June 30, 2022

Value Carrying

5 unchanged sentences

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

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

The fair value of the Company’s debt, current is the same as its carrying amount based on valuation of similar securities.

See Note 11 for further details.

9 unchanged sentences

Although the outcome of these lawsuits cannot be predicted with certainty (including the extent of available insurance), management does not believe that resolution of these lawsuits will have a material adverse effect on the Company.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Knicks Revolving Credit Facility

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Knicks LLC is required to pay a commitment fee ranging from 0.250 % to 0.300 % per annum in respect of the average daily unused commitments under the 2021 Knicks Revolving Credit Facility.

The outstanding balance under the 2021 Knicks Revolving Credit Facility was $ 220,000 as of September 30, 2022, which was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2021 Knicks Revolving Credit Facility as of September 30, 2022 was 4.37 %.

During the three months ended September 30, 2022 t he Company made interest payments of $ 1,892 in respect of the 2021 Knicks Revolving Credit Facility.

During the six months ended December 31, 2022, the Company borrowed an additional

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

$ 55,000 and made principal repayments of $ 15,000 under the 2021 Knicks Revolving Credit Facility.

The outstanding balance under the 2021 Knicks Revolving Credit Facility was $ 260,000 as of December 31, 2022, which was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2021 Knicks Revolving Credit Facility as of December 31, 2022 was 5.86 %.

During the six months ended December 31, 2022 the Company made interest payments of $ 5,053 in respect of the 2021 Knicks Revolving Credit Facility.

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

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

As of September 30, 2022, Knicks LLC was in compliance with this financial covenant.

As of December 31, 2022, Knicks LLC was in compliance with this financial covenant.

Knicks Holdings Credit Facility

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Rangers Revolving Credit Facility

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Rangers LLC is required to pay a commitment fee ranging from 0.375 % to 0.625 % per annum in respect of the average daily unused commitments under the 2021 Rangers Revolving Credit Facility.

There was no borrowing under the 2021 Rangers Revolving Credit Facility as of September 30, 2022 and accordingly the Company did not make any interest payments during the three months ended September 30, 2022 in respect of the 2021 Rangers Revolving Credit Facility.

During the six months ended December 31, 2022, the Company borrowed $ 160,000 and made principal repayments of

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

$ 15,000 under the 2021 Rangers Revolving Credit Facility.

The outstanding balance under the 2021 Rangers Revolving Credit Facility was $ 145,000 as of December 31, 2022, which was recorded as Long-term debt in the accompanying consolidated balance sheet.

The interest rate on the 2021 Rangers Revolving Credit Facility as of December 31, 2022 was 6.40 %.

During the six months ended December 31, 2022 the Company made interest payments of $ 1,569 in respect of the 2021 Rangers Revolving Credit Facility.

In addition, on February 3, 2023, the Company made an additional principal repayment of $ 15,000 under the 2021 Rangers Revolving Credit Facility.

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

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

As of September 30, 2022, Rangers LLC was in compliance with this financial covenant.

As of December 31, 2022, Rangers LLC was in compliance with this financial covenant.

2021 Rangers NHL Advance Agreement

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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,

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

distributed or transferred by the NHL to Rangers LLC.

The outstanding balance under the 2021 Rangers NHL Advance Agreement was $ 30,000 as of September 30, 2022 and was recorded as Debt in the accompanying consolidated balance sheet.

During the three months ended September 30, 2022 the Company made interest payments of $ 225 .

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 December 31, 2022 and was recorded as Debt in the accompanying consolidated balance sheet.

During the six months ended December 31, 2022 the Company made interest payments of $ 450 .

Deferred Financing Costs

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

September 30,

2022 June 30,

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Other assets 3,382 3,954

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Benefit Plans

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See Note 14 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022 for more information with regard to the liabilities retained by the Company from certain plans, which were transferred to the MSG Sports, LLC Excess Cash Balance Plan and MSG Sports, LLC Excess Retirement Plan, which the Company established in connection with the MSGE Distribution and are collectively referred to the “MSGS Pension Plans.”

The following table presents components of net periodic benefit cost for the MSGS Pension Plans included in the accompanying consolidated statements of operations for the three months ended September 30, 2022 and 2021.

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

Three Months Ended

September 30,

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

Three Months Ended Six Months Ended

December 31, December 31,

2022 2021 2022 2021

Interest cost $ 60 $ 31 $ 120 $ 62

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Expenses related to the Savings Plans that are included in the accompanying consolidated statements of operations for the three months ended September 30, 2022 and 2021 were $ 1,065 and $ 939 , respectively.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Ex penses related to the Savings Plans that are included in the accompanying consolidated statements of operations were $ 1,072 and $ 2,137 for the three and six months ended December 31, 2022, respectively, and $ 899 and $ 1,838 for the three and six months ended December 31, 2021 respectively.

Executive Deferred Compensation Plan

See Note 14 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022 for more information regarding the Company’s Executive Deferred Compensation Plan (the “Deferred Compensation Plan”).

For the three months ended September 30, 2022, the Company recorded compensation cost credits of $ 103 within Selling, general and administrative expenses to reflect the remeasurement of the Deferred Compensation Plan liability.

In addition, for the three months ended September 30, 2022, the Company recorded losses of $ 103 within Miscellaneous income (expense), net to reflect the remeasurement of the fair value of assets under the Deferred Compensation Plan.

The Company recorded compensation expense of $ 449 and $ 346 for the three and six months ended December 31, 2022, respectively, within Selling, general and administrative expenses to reflect the remeasurement of the Deferred Compensation Plan liability.

In addition, the Company recorded gains of $ 449 and $ 346 for the three and six months ended December 31, 2022, respectively, within Miscellaneous income (expense), net to reflect the remeasurement of the fair value of assets under the Deferred Compensation Plan.

The following table summarizes amounts recognized related to the Deferred Compensation Plan in the consolidated balance sheets:

September 30,

2022 June 30,

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Non-current liabilities (included in other employee related costs) ( 10,986 ) ( 2,613 )

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Share-based Compensation

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

Share-based compensation expense was $ 7,220 and $ 4,851 for the three months ended September 30, 2022 and 2021, respectively.

There were no costs related to share-based compensation that were capitalized for the three months ended September 30, 2022 and 2021, respectively.

Share-based compensation expense was $ 11,619 and $ 18,839 for the three and six months ended December 31, 2022, respectively and $ 7,354 and $ 12,205 for the three and six months ended December 31, 2021, respectively.

There were no costs related to share-based compensation that were capitalized for the three and six months ended December 31, 2022 and 2021 respectively.

Restricted Stock Units Award Activity

The following table summarizes activity related to the Company’s restricted stock units and performance restricted stock units, collectively referred to as “RSUs,” held by the Company and MSG Entertainment employees, for the three months ended September 30, 2022:

Number of Weighted-Average

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Forfeited / Cancelled ( 1 ) ( 1 ) $ 158.48

Unvested award balance, September 30, 2022 136 158 $ 167.12

Unvested award balance, December 31, 2022 136 158 $ 167.13

_____________________

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

The fair value of RSUs that vested during the three months ended September 30, 2022 was $ 31,766 .

The fair value of RSUs that vested during the six months ended December 31, 2022 was $ 34,233 .

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

To fulfill the Company’s and MSG Entertainment’s employees’ required statutory tax withholding obligations for the applicable income and other employment taxes, 99 of these RSUs, with an aggregate value of $ 15,229 , inclusive of $ 4,233 related to MSG Entertainment employees (who vested in the Company’s RSUs), were retained by the Company and the taxes paid are reflected as a financing activity in the accompanying consolidated statement of cash flows for the three months ended September 30, 2022.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

The weighted-average fair value per share at grant date of RSUs granted during the three months ended September 30, 2021 w as $ 262.08 .

To fulfill the Company’s and MSG Entertainment’s employees’ required statutory tax withholding obligations for the applicable income and other employment taxes, 100 of these RSUs, with an aggregate value of $ 15,441 , inclusive of $ 4,233 related to MSG Entertainment employees (who vested in the Company’s RSUs), were retained by the Company and the taxes paid are reflected as a financing activity in the accompanying consolidated statement of cash flows for the six months ended December 31, 2022.

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

The weighted-average fair value per share at grant date of RSUs granted during the six months ended December 31, 2021 w as $ 161.16 .

Stock Options Award Activity

The following table summarizes activity related to the Company’s stock options for the three months ended September 30, 2022:

The following table summarizes activity related to the Company’s stock options for the six months ended December 31, 2022:

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

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Cancelled — $ —

Balance as of September 30, 2022 94 $ 145.78 5.21 $ —

Exercisable as of September 30, 2022 94 $ 145.78 5.21 $ —

Balance as of December 31, 2022 94 $ 138.78 4.96 $ 4,180

Exercisable as of December 31, 2022 94 $ 138.78 4.96 $ 4,180

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Stock Repurchase Program

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

During the three months ended September 30, 2022 and 2021, the Company did no t engage in any share repurchase activities under its share repurchase program.

As of September 30, 2022, the Company had $ 259,639 of availability remaining under its stock repurchase authorization .

On October 6, 2022, the Company’s Board of Directors authorized a $ 75,000 accelerated share repurchase (“ASR”) program under the Company’s existing share repurchase authorization.

On October 28, 2022, the Company entered into a $ 75,000 ASR agreement with JPMorgan Chase Bank, National Association (“JP Morgan”).

Pursuant to the ASR agreement, the Company made a payment of $ 75,000 to JP Morgan and JP Morgan delivered 388,777 initial shares of Class A Common Stock to the Company on November 1, 2022, representing 80 % of the total shares expected to be repurchased under the ASR (determined based on the closing price of the Company’s Class A Common Stock of $ 154.33 on October 28, 2022).

The ASR was completed on January 31, 2023 with JP Morgan delivering 67,681 additional shares of Class A Common Stock to the Company upon final settlement.

The average purchase price per share for shares of Class A Common Stock purchased by the Company pursuant to the ASR was $ 164.31 .

The ASR is accounted for as a repurchase of shares and as an equity forward contract indexed to the Company’s Class A Common Stock.

The equity forward contract is classified as an equity instrument under ASC Subtopic 815-40.

The Company has treated the initial shares of Class A Common Stock delivered as treasury shares as of the date the shares were physically delivered in computing the weighted average shares of outstanding Class A Common Stock for both basic and diluted earnings per share.

As of December 31, 2022, the Company had $ 184,639 of availability remaining under its stock repurchase authorization .

Related Party Transactions

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

As of September 30, 2022, members of the Dolan family including trusts for members of the Dolan family (collectively, the “Dolan Family Group”), for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, collectively beneficially own 100 % of the Company’s outstanding Class B Common Stock and own approximately 3.1 % of the Company’s outstanding Class A Common Stock.

As of December 31, 2022, members of the Dolan family including trusts for members of the Dolan family (collectively, the “Dolan Family Group”), for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, collectively beneficially own 100 % of the Company’s outstanding Class B Common Stock and own approximately 3.2 % of the Company’s outstanding Class A Common Stock.

Such shares of the Company’s Class A Common Stock and Class B Common Stock, collectively, represent approximately 71.0 % of the aggregate voting power of the Company’s outstanding common stock.

1 unchanged sentence

(“AMC Networks”).

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

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

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

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

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

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

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

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

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

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

• Services Agreement (the “Services Agreement”) pursuant to which the Company (i) receives certain services from MSG Entertainment, such as information technology, accounts payable, payroll, human resources, and other corporate functions, as well as the executive support services, in exchange for service fees and (ii) provides certain services to MSG Entertainment, such as certain communications, legal (including certain services the Company provided to MSG Networks prior to the MSGE-MSGN Merger) and ticketing services, in exchange for service fees;

• Services Agreement (the “Services Agreement”) pursuant to which the Company (i) receives certain services from MSG Entertainment, such as information technology, accounts payable, payroll, human resources, and other corporate functions and executive support services, in exchange for service fees and (ii) provides certain services to MSG Entertainment, such as certain communications, legal and ticketing services, in exchange for service fees;

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

7 unchanged sentences

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

The Company also previously shared costs for the Company’s Chief Executive Officer with MSG Entertainment through March 31, 2022.

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

The Company also previously shared costs for the Company’s former Chief Executive Officer with MSG Entertainment through March 31, 2022.

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

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

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

These amounts are reflected in revenues and operating expenses in the accompanying consolidated statements of operations for the three months ended September 30, 2022 and 2021:

Three Months Ended September 30,

These amounts are reflected in revenues and operating expenses in the accompanying consolidated statements of operations for the three and six months ended December 31, 2022 and 2021:

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

2022 2021 2022 2021

$ 74,950 $ 70,131 $ 83,124 $ 77,378

Operating expenses:

7 unchanged sentences

(a) Primarily consist of local media rights recognized from the licensing of team-related programming under the media rights agreements covering the Knicks and the Rangers.

Income tax benefit for the three months ended September 30, 2022 of $ 20,493 reflects an effective tax rate of 52.5 % and income tax benefit for the three months ended September 30, 2021 of $ 21,169 reflects an effective tax rate of 55.6 % .

Income tax expense for the three and six months ended December 31, 2022 is $ 24,555 and $ 4,062 , respectively, with an effective tax rate of 53 % and 55 %, respectively.

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

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

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

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

Income tax expense for the three months ended December 31, 2021 of $ 17,115 reflects an effective tax rate of 53 % and income tax benefit for the six months ended December 31, 2021 of $ 4,054 reflects an effective tax rate of 71 %.

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

The estimated annual effective tax rate exceeds the statutory federal tax rate of 21 % in the three and six months ended December 31, 2021 primarily due to state taxes, nondeductible officers’ compensation, disability insurance premiums expense and excess tax benefit on share-based payment awards that was recognized in the first quarter of fiscal year 2022.

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

The Company was notified in April 2020 and in February 2022 that the City of New York was commencing an audit of the local income tax returns for the fiscal years ended June 30, 2016 and 2017 and for fiscal years ended June 30, 2018 and 2019, respectively.

The Company does not expect the examinations, when finalized, to result in material changes.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Subsequent Events

Special Dividend and Accelerated Share Repurchase

On October 6, 2022, the Company announced that its Board of Directors has declared a special, one-time cash dividend of $7.00 per share (expected to be approximately $ 172,749 ).

The special dividend is payable on October 31, 2022 to shareholders of record on October 17, 2022.

In addition, the Company’s Board of Directors has authorized a $ 75,000 accelerated share repurchase (“ASR”) program, under the Company’s existing share repurchase authorization.

As discussed in Note 14, the Company had $ 259,639 of availability remaining under its stock repurchase authorization as of September 30, 2022 and prior to the execution of the ASR program.

Borrowings under Revolving Credit Facilities

In connection with the special dividend and ASR, on October 27, 2022, the Company borrowed an additional $ 55,000 under the 2021 Knicks Revolving Credit Facility and $ 160,000 under the 2021 Rangers Revolving Credit Facility.

See Note 11 for more information with regards to these revolving credit facilities.

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

What changed 10-Q

Item 1. Financial Statements