What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2023-02-07 · 223 added, 174 removed, 566 unchanged (41% of the section changed)

7 unchanged sentences

Restricted cash 653 —

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

Accounts receivable, net of allowance for doubtful accounts of $ 0 and $ 0 as of March 31, 2023 and June 30, 2022, respectively

80,835 47,240

3 unchanged sentences

Total current assets 261,931 205,269

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

Property and equipment, net of accumulated depreciation and amortization of $ 49,331 and $ 46,794 as of March 31, 2023 and June 30, 2022, respectively

31,415 32,892

34 unchanged sentences

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

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

19,364 and 19,697 shares outstanding as of March 31, 2023 and June 30, 2022, respectively

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

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

4,530 shares outstanding as of March 31, 2023 and June 30, 2022

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

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

none outstanding as of March 31, 2023 and June 30, 2022

Additional paid-in capital 11,226 17,573

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

Treasury stock, at cost, 1,084 and 751 shares as of March 31, 2023 and June 30, 2022, respectively

( 179,410 ) ( 128,026 )

10 unchanged sentences

(in thousands, except per share data)

Three Months Ended Six Months Ended

December 31, December 31,

Three Months Ended Nine Months Ended

March 31, March 31,

2023 2022 2023 2022

12 unchanged sentences

13,024 ( 2,481 ) 4,775 ( 9,203 )

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 )

Income before income taxes 94,775 58,912 102,146 53,171

Income tax expense ( 42,962 ) ( 34,993 ) ( 47,024 ) ( 30,939 )

Net income 51,813 23,919 55,122 22,232

Net loss attributable to nonredeemable noncontrolling interests ( 566 ) ( 584 ) ( 1,928 ) ( 1,711 )

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 )

Net income attributable to Madison Square Garden Sports Corp.’s stockholders $ 52,379 $ 24,503 $ 57,050 $ 23,943

Basic earnings per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 2.19 $ 1.01 $ 2.28 $ 0.99

Diluted earnings per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 2.18 $ 1.00 $ 2.27 $ 0.98

Weighted-average number of common shares outstanding:

2 unchanged sentences

_________________

(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.

(a) Includes revenues from related parties of $ 84,024 and $ 75,851 for the three months ended March 31, 2023 and 2022, respectively, and $ 167,148 and $ 153,229 for the nine months ended March 31, 2023 and 2022, respectively.

(b) Includes net charges from related parties of $ 43,595 and $ 40,796 for the three months ended March 31, 2023 and 2022, respectively, and $ 91,264 and $ 80,828 for the nine months ended March 31, 2023 and 2022, respectively.

(c) Includes net charges from related parties of $ 18,875 and $ 20,493 for the three months ended March 31, 2023 and 2022, respectively, and $ 49,616 and $ 51,620 for the nine months ended March 31, 2023 and 2022, respectively.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended Six Months Ended

December 31, December 31,

Three Months Ended Nine Months Ended

March 31, March 31,

2023 2022 2023 2022

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

Net income $ 51,813 $ 23,919 $ 55,122 $ 22,232

Other comprehensive income, before income taxes:

5 unchanged sentences

Other comprehensive income, net of income taxes 3 23 9 67

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

Comprehensive income 51,816 23,942 55,131 22,299

Comprehensive loss attributable to nonredeemable noncontrolling interests ( 566 ) ( 584 ) ( 1,928 ) ( 1,711 )

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

Comprehensive income attributable to Madison Square Garden Sports Corp.’s stockholders $ 52,382 $ 24,526 $ 57,059 $ 24,010

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

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

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

Net income $ 55,122 $ 22,232

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

Depreciation and amortization 2,703 3,847

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

Provision for deferred income taxes 27,590 30,939

Share-based compensation expense 22,059 19,178

Unrealized gain on equity investments with readily determinable fair value, warrants, and forward contract ( 19,020 ) —

Other non-cash adjustments 859 1,547

11 unchanged sentences

Capital expenditures ( 1,033 ) ( 886 )

Other investing activities ( 652 ) ( 250 )

Purchases of equity securities ( 9,333 ) ( 250 )

Net cash used in investing activities ( 10,366 ) ( 1,136 )

5 unchanged sentences

Repayment of revolving credit facilities ( 85,000 ) ( 70,000 )

Payments for financing costs — ( 2,737 )

Other financing activities 1,705 ( 2,836 )

Net cash used in financing activities ( 129,618 ) ( 84,978 )

8 unchanged sentences

(in thousands)

Three Months Ended December 31, 2022

Three Months Ended March 31, 2023

Issued Additional

6 unchanged sentences

Interests Total Equity

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 )

Net income (loss) — — — 52,379 — 52,379 ( 566 ) 51,813

7 unchanged sentences

— ( 1,844 ) 2,729 — — 885 — 885

Dividends declared ($ 7.00 per share)

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

Accelerated share repurchase — 12,307 ( 12,367 ) — — ( 60 ) — ( 60 )

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

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

Balance as of March 31, 2023 $ 249 $ 11,226 $ ( 179,410 ) $ ( 164,668 ) $ ( 1,177 ) $ ( 333,780 ) $ 772 $ ( 333,008 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended December 31, 2021

Three Months Ended March 31, 2022

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 )

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

Net income (loss) — — — 24,503 — 24,503 ( 584 ) 23,919

3 unchanged sentences

— 6,973 — — — 6,973 — 6,973

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 )

Common stock issued under stock incentive plans

— ( 571 ) 1,400 — 829 — 829

Balance as of March 31, 2022 $ 249 $ 12,862 $ ( 128,026 ) $ ( 62,887 ) $ ( 1,960 ) $ ( 179,762 ) $ 1,896 $ ( 177,866 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended December 31, 2022

Nine Months Ended March 31, 2023

Common Stock Issued Additional

19 unchanged sentences

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 )

Balance as of March 31, 2023 $ 249 $ 11,226 $ ( 179,410 ) $ ( 164,668 ) $ ( 1,177 ) $ ( 333,780 ) $ 772 $ ( 333,008 )

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended December 31, 2021

Nine Months Ended March 31, 2022

Common Stock Issued Additional

6 unchanged sentences

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 )

Net income (loss) — — — 23,943 — 23,943 ( 1,711 ) 22,232

Other comprehensive income — — — — 67 67 — 67

Comprehensive loss — — — — — ( 516 ) ( 1,127 ) ( 1,643 )

Comprehensive income (loss) — — — — — 24,010 ( 1,711 ) 22,299

Share-based compensation

5 unchanged sentences

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

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

Balance as of March 31, 2022 $ 249 $ 12,862 $ ( 128,026 ) $ ( 62,887 ) $ ( 1,960 ) $ ( 179,762 ) $ 1,896 $ ( 177,866 )

See accompanying notes to consolidated financial statements.

8 unchanged sentences

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.

These professional sports franchises are collectively referred to herein as the “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.

The Company also operates two professional sports team performance centers — the Madison Square Garden Training Center in Greenburgh, NY and the CLG Performance Center in Los Angeles, CA.

CLG and Knicks Gaming are collectively referred to herein as the “esports teams,” and together with the sports teams, the “teams.”

These professional sports franchises are collectively referred to herein as the “sports teams.” In addition, the Company previously owned a controlling interest in Counter Logic Gaming (“CLG”), a North American esports organization.

In April 2023, the Company sold its controlling interest in CLG to Hard Carry Gaming Inc.

(“NRG”), a professional gaming and entertainment company in exchange for a noncontrolling equity interest in the combined NRG/CLG company.

CLG and the sports teams are collectively referred to herein as the “teams.” The Company also operates a professional sports team performance center — the Madison Square Garden Training Center in Greenburgh, NY.

The Company operates and reports financial information in one segment.

5 unchanged sentences

(“MSG Networks”).

All the outstanding common stock of the Company was distributed to MSG Networks shareholders (the “MSGS Distribution”) on September 30, 2015.

On April 17, 2020 (the “MSGE Distribution Date”), the Company distributed all of the outstanding common stock of Madison Square Garden Entertainment Corp.

(formerly MSG Entertainment Spinco, Inc.

and referred to herein as “MSG Entertainment”) to its stockholders (the “MSGE Distribution”).

All of the outstanding common stock of the Company was distributed to MSG Networks shareholders (the “MSGS Distribution”) on September 30, 2015.

On April 17, 2020 (the “Sphere Distribution Date”), the Company distributed all of the outstanding common stock of Sphere Entertainment Co.

(formerly Madison Square Garden Entertainment Corp.

and referred to herein as “Sphere Entertainment”) to its stockholders (the “Sphere Distribution”).

On April 20, 2023 (the “MSGE Distribution Date”), Sphere Entertainment distributed to its stockholders approximately 67% of the issued and outstanding shares of common stock of Madison Square Garden Entertainment Corp.

(formerly, MSGE Spinco, Inc.

and referred to herein as “MSG Entertainment”) (the “MSGE Distribution”).

In connection with the MSGE Distribution, Sphere Entertainment assigned several of its agreements with the Company to MSG Entertainment, as described herein.

Basis of Presentation

17 unchanged sentences

All significant intercompany transactions and balances have been eliminated in consolidation.

In addition, the consolidated financial statements of the Company include the accounts from CLG, in which the Company has a controlling voting interest.

In addition, the consolidated financial statements of the Company include the accounts from CLG, in which the Company had a controlling voting interest.

The Company’s consolidation criteria are based on authoritative accounting guidance for voting interest, controlling interest or variable interest entities.

3 unchanged sentences

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

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

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

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

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

Management believes its use of estimates in the Financial Statements to be reasonable.

4 unchanged sentences

Changes in estimates resulting from weakness in the economic environment or other factors beyond the Company’s control could be material and would be reflected in the Company’s financial statements in future periods.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No.

2023-01, Leases (Topic 842):

Common Control Arrangements.

This ASU amends certain provisions of Accounting Standards Codification (“ASC”) 842, Leases that apply to arrangements between related parties under common control.

The new guidance is effective for the Company in the first quarter of fiscal year 2025.

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

MADISON SQUARE GARDEN SPORTS CORP.

3 unchanged sentences

All revenue recognized in the consolidated statements of operations is considered to be revenue 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.

For the three and nine months ended March 31, 2023 and 2022, 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 and six months ended December 31, 2022 and 2021:

Three Months Ended Six Months Ended

December 31, December 31,

Three Months Ended Nine Months Ended

March 31, March 31,

2023 2022 2023 2022

12 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 December 31, 2022 and June 30, 2022.

December 31, June 30,

The following table provides information about contract balances from the Company’s contracts with customers as of March 31, 2023 and June 30, 2022.

March 31, June 30,

Receivables from contracts with customers, net (a)

6 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 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.

As of March 31, 2023 and June 30, 2022, the Company’s receivables reported above incl uded $ 3,057 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 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 March 31, 2023, the Company had receivable balances related to escrow and player compensation recoveries of $ 10,861 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.

1 unchanged sentence

Contract assets are transferred to accounts receivable once the Company’s right to consideration becomes unconditional.

The Company had contract asset balances related to local media rights of $ 24,065 and $ 0 as of March 31, 2023 and June 30, 2022, respectively.

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

(c) Deferred revenue, including non-current portion primarily relates to the Company’s receipt of consideration from customers or billing customers in advance of the Company’s transfer of goods or services to those customers.

1 unchanged sentence

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 $ 10,700 and $ 0 as of December 31, 2022 and June 30, 2022, respectively.

The Company’s deferred revenue related to local media rights was $ 0 and $ 0 as of March 31, 2023 and June 30, 2022, respectively.

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

(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 .

(d) Revenue recognized for the nine months ended March 31, 2023 relating to the deferred revenue balance as of June 30, 2022 was $ 120,042 .

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 December 31, 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 March 31, 2023 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.

6 unchanged sentences

Thereafter 24,972

Computation of Earnings (Loss) per Common Share

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,

Computation of Earnings per Common Share

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 per common share attributable to the Company’s stockholders (“EPS”) and the number of shares excluded from diluted earnings per common share, as they were anti-dilutive.

Three Months Ended Nine Months Ended

March 31, March 31,

2023 2022 2023 2022

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 )

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

Net income attributable to Madison Square Garden Sports Corp.’s stockholders $ 52,379 $ 24,503 $ 57,050 $ 23,943

Dividends to other-than-common stockholders (a)

2,056 — 2,056 —

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

5 unchanged sentences

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

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 )

Basic earnings per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 2.19 $ 1.01 $ 2.28 $ 0.99

Diluted earnings per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 2.18 $ 1.00 $ 2.27 $ 0.98

_________________

4 unchanged sentences

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.

Team personnel transactions were a net provision of $ 81 and $ 304 (net of insurance recovery of $ 656 ) for the three months ended March 31, 2023 and 2022, respectively, and a net credit of $ 219 and a net provision of $ 729 (net of insurance recovery of $ 656 ) for the nine months ended March 31, 2023 and 2022, respectively.

Cash, Cash Equivalents and Restricted Cash

1 unchanged sentence

2023 June 30,

2022 December 31,

2022 March 31,

2022 June 30,

6 unchanged sentences

_________________

(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.

(a) Restricted cash as of March 31, 2023 and March 31, 2022 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).

As of June 30, 2021, restricted cash was related to the Company’s revolving credit facilities (see Note 11 for more information).

As of March 31, 2023, the Company’s leases primarily consist of the lease of the Company’s principal executive offices under the Sublease Agreement with Sphere Entertainment (the “Sublease Agreement”) and, until April 2023, the lease of the CLG performance center in Los Angeles, CA.

As of the MSGE Distribution Date, the Sublease Agreement is now between the Company and MSG Entertainment.

In addition, the Company accounts for the rights of use of The Garden pursuant to the Arena License Agreements as leases under the ASC Topic 842, Leases.

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 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.

As of March 31, 2023, the Company’s exis ting operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 2 months to 32 years.

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

3 unchanged sentences

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,

The following table summarizes the right-of-use assets and lease liabilities recorded on the Company’s accompanying consolidated balance sheets as of March 31, 2023 and June 30, 2022:

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

2023 June 30,

9 unchanged sentences

_________________

(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 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,

(a) As of March 31, 2023, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 43,538 and $ 715,511 , respectively, that are payable to Sphere Entertainment.

The following table summarizes the activity recorded within the Company’s accompanying consolidated statements of operations for the three and nine months ended March 31, 2023 and 2022:

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

2023 2022 2023 2022

5 unchanged sentences

Supplemental Information

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:

For the nine months ended March 31, 2023 and 2022, cash paid for amounts included in the measurement of lease liabilities was $ 33,791 and $ 32,580 , respectively.

The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of March 31, 2023 w as 32.1 years.

The weighted average discount rate was 7.13 % as of March 31, 2023 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 March 31, 2023 are as follows:

Fiscal Year 2023 (remainder) $ 11,233

11 unchanged sentences

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 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:

The carrying amount of goodwill as of March 31, 2023 and June 30, 2022 is $ 226,955 .

The Company’s indefinite-lived intangible assets as of March 31, 2023 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:

December 31, 2022 Gross Accumulated

March 31, 2023 Gross Accumulated

Amortization Net

9 unchanged sentences

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

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.

For the three months ended March 31, 2023 and 2022, amortization expense o f intangible assets was $ 29 and $ 265 , respectively.

For the nine months ended March 31, 2023 and 2022, amortization expense of intangible assets was $ 167 and $ 795 , 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 December 31,

Fair Value Hierarchy March 31,

2023 June 30,

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Equity investments I 24,993 2,736

Warrants III 6,502 —

Forward contract III 7,140 —

Total assets measured at fair value $ 96,600 $ 84,836

Assets listed above are classified within Level I of the fair value hierarchy as they are valued using observable inputs that reflect quoted prices for identical assets in active markets.

Level I Inputs

Assets classified within Level I of the fair value hierarchy are valued using observable inputs that reflect quoted prices for identical assets in active markets.

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

Equity investments include equity instruments with readily determinable fair value, which are included within Other assets in the accompanying consolidated balance sheets.

The equity investments balance as of March 31, 2023 includes an investment of $ 11,685 in common stock of Xtract One Technologies Inc.

(“Xtract One”), a technology-driven threat detection and security solution company that is listed on the

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Toronto Stock Exchange (“TSX”) under the symbol “XTRA.” In addition, the remaining balance as of March 31, 2023 and balance as of June 30, 2022 consists of other equity investments held in trust under the Company’s Executive Deferred Compensation Plan (refer to note 12 for further details regarding the plan).

During the three and nine months ended March 31, 2023, the Company recorded unrealized gains of $ 7,337 related to the investment in Xtract One which is reported in Miscellaneous income (expense).

During the three and nine months ended March 31, 2023, the Company recorded gains of $ 368 and $ 714 , respectively, within Miscellaneous income (expense), net to reflect t he remeasurement of the fair value of assets under the Company’s Executive Deferred Compensation Plan.

Level III Inputs

The Company’s level III assets consist of warrants entitling the Company to acquire additional common shares of Xtract One and a forward contract to acquire additional common stock and warrants of Xtract One.

The Company’s warrants and forward contract are included within Other assets and Other current assets, respectively, in the accompanying consolidated balance sheets.

The fair value of the Company’s warrants in Xtract One were determined using the Black-Scholes option pricing model.

The fair value of the Company’s forward contract was determined using the number of additional common shares and warrants in the forward contract, the contractual price of the forward contract, the quoted prices of Xtract One, and the fair value of the Xtract One warrants as of March 31, 2023.

The following are key assumptions used to calculated the fair value of the warrants as of March 31, 2023:

Expected term 2.47 years

Expected volatility 77.32 %

Risk-free interest rate 3.94 %

The following table presents additional information about our assets for which we utilize Level III inputs to determine fair value:

Three Months Ended Nine Months Ended

March 31, March 31,

Balance at beginning of period $ — $ —

Purchases of warrants 1,959 1,959

Unrealized gains on warrants 4,543 4,543

Unrealized gains on forward contract 7,140 7,140

Balance at end of period $ 13,642 $ 13,642

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

December 31, 2022 June 30, 2022

March 31, 2023 June 30, 2022

Value Carrying

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See Note 11 for further details .

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Commitments and Contingencies

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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.

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.

During the nine months ended March 31, 2023, the Company borrowed an additional $ 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 March 31, 2023, 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 March 31, 2023 was 6.11 % .

During the nine months ended March 31, 2023 the Company made interest payments of $ 8,865 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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In addition to the financial covenant described above, the 2021 Knicks Credit Agreement and related security agreements contain certain customary representations and warranties, affirmative covenants and events of default.

The 2021 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 2021 Knicks Revolving Credit Facility, including the following:

The 2021 Knicks

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 2021 Knicks Revolving Credit Facility, including the following:

(i) incurring additional indebtedness and contingent liabilities;

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

As of March 31, 2023, Knicks LLC was in compliance with this financial covenant.

Knicks Holdings 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.

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.

During the nine months ended March 31, 2023, the Company borrowed $ 160,000 and made principal repayments of $ 70,000 under the 2021 Rangers Revolving Credit Facility.

The outstanding balance under the 2021 Rangers Revolving Credit Facility wa s $ 90,000 as of March 31, 2023, 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 March 31, 2023 wa s 6.66 % .

During the nine months ended March 31, 2023 the Company made interest payments of $ 3,669 in respect of the 2021 Rangers Revolving Credit Facility.

In addition, on April 28, 2023, the Company made an additional principal repayment of $ 30,000 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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Rangers LLC is required to make mandatory prepayments in certain circumstances, including without limitation if qualified revenues are less than 17 % of the maximum available amount under the 2021 Rangers Revolving Credit Facility.

MADISON SQUARE GARDEN SPORTS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In addition to the financial covenant described above, the 2021 Rangers Credit Agreement and related security agreements contain certain customary representations and warranties, affirmative covenants and events of default.

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

As of March 31, 2023, Rangers LLC was in compliance with this financial covenant.

2021 Rangers NHL Advance Agreement

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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 .

The outstanding balance under the 2021 Rangers NHL Advance Agreement was $ 30,000 as of March 31, 2023 and was recorded as Debt in the accompanying consolidated balance sheet.

During the nine months ended March 31, 2023 the Company made interest p ayments of $ 675 .

Deferred Financing Costs

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Defined Benefit Pension Plans

Prior to the MSGE Distribution, the Company sponsored various defined benefit pension plans and a contributory welfare plan.

As of the MSGE Distribution Date, the Company and MSG Entertainment entered into an employee matters agreement (the “Employee Matters Agreement”) which determined each company’s obligations after the MSGE Distribution with regard to historical liabilities under the Company’s former pension and postretirement plans.

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 and six months ended December 31, 2022 and 2021.

Prior to the Sphere Distribution, the Company sponsored various defined benefit pension plans and a contributory welfare plan.

As of the Sphere Distribution Date, the Company and Sphere Entertainment entered into an employee matters agreement (the “Employee Matters Agreement”) which determined each company’s obligations after the Sphere Distribution with regard to historical liabilities under the Company’s former pension and postretirement plans.

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 Sphere Distribution and are collectively referred to the “MSGS Pension Plans.”

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

Three Months Ended Six Months Ended

December 31, December 31,

Three Months Ended Nine Months Ended

March 31, March 31,

2023 2022 2023 2022

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Defined Contribution Plans

Prior to the MSGE Distribution, the Company sponsored The Madison Square Garden 401(k) Savings Plan (the “401(k) Plan”), which is a multiple employer plan and the MSG S&E, LLC Excess Savings Plan (collectively referred to as the “Savings Plans”).

As a result of the MSGE Distribution, the Savings Plans were transferred to MSG Entertainment.

Prior to the Sphere Distribution, the Company sponsored The Madison Square Garden 401(k) Savings Plan (the “401(k) Plan”), which is a multiple employer plan and the MSG S&E, LLC Excess Savings Plan (collectively referred to as the “Savings Plans”).

As a result of the Sphere Distribution, the Savings Plans were transferred to Sphere Entertainment.

However, MSG Sports employees continue to participate in the 401(k) Plan.

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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.

Expenses related to the Savings Plans that are included in the accompanying consolidated statements of operations were $ 1,465 and $ 3,602 for the three and nine months ended March 31, 2023, respectively, and $ 1,238 and $ 3,076 for the three and nine months ended March 31, 2022 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”).

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.

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 E xecutive Deferred Compensation Plan (the “Deferred Compensation Plan”).

The Company recorded compensation expense of $ 368 and $ 714 for the three and nine months ended March 31, 2023, respectively, within Selling, general and administrative expenses to reflect the remeasurement of the Deferred Compensation Plan liability.

In addition, the Company recorded gains of $ 368 and $ 714 for the three and nine months ended March 31, 2023, respectively, within Miscellaneous income (expense), net to reflect t he 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:

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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 $ 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.

Share-based compensation expense was $ 3,220 and $ 22,059 for the three and nine months ended March 31, 2023, respectively and $ 6,973 and $ 19,178 for the three and nine months ended March 31, 2022, respectively.

There were no costs related to share-based compensation that were capitalized for the three and nine months ended March 31, 2023 and 2022 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 and non-employee directors, for the six months ended December 31, 2022:

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 Sphere Entertainment employees and non-employee directors, for the nine months ended March 31, 2023:

Number of Weighted-Average

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Forfeited / Cancelled ( 2 ) ( 2 ) $ 159.80

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

Unvested award balance, March 31, 2023 102 157 $ 165.49

_____________________

(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 six months ended December 31, 2022 was $ 34,233 .

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

The fair value of RSUs that vested during the nine months ended March 31, 2023 was $ 40,795 .

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, 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 .

To fulfill the Company’s and Sphere Entertainment’s employees’ required statutory tax withholding obligations for the applicable income and other employment taxes, 117 of these RSUs, with an aggregate value of $ 18,621 , inclusive of $ 4,956 related to Sphere 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 nine months ended March 31, 2023.

The fair value of RSUs that vested during the nine months ended March 31, 2022 was $ 40,490 .

The weighted-average fair value per share at grant date of RSUs granted during the nine months ended March 31, 2022 was $ 160.22 .

Stock Options Award Activity

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

The following table summarizes activity related to the Company’s stock options for the nine months ended March 31, 2023:

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 December 31, 2022 94 $ 138.78 4.96 $ 4,180

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

Balance as of March 31, 2023 94 $ 138.78 4.71 $ 5,261

Exercisable as of March 31, 2023 94 $ 138.78 4.71 $ 5,261

MADISON SQUARE GARDEN SPORTS CORP.

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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 .

The ASR was 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 was classified as an equity instrument under ASC Subtopic 815-40.

The Company has treated the initial and final 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 March 31, 2023, the Company had $ 184,639 of availability remaining under its stock repurchase authorization .

Related Party Transactions

On July 9, 2021, MSG Networks merged with a subsidiary of MSG Entertainment and became a wholly-owned subsidiary of MSG Entertainment (the “MSGE-MSGN Merger”).

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

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.

Members of the Dolan family are also the controlling stockholders of MSG Entertainment and AMC Networks Inc.

On July 9, 2021, MSG Networks merged with a subsidiary of Sphere Entertainment and became a wholly-owned subsidiary of Sphere Entertainment.

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

As of March 31, 2023, 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 th e aggregate voting power of the Company’s outstanding common stock.

Members of the Dolan family are also the controlling stockholders of Sphere Entertainment, MSG Entertainment and AMC Networks Inc.

(“AMC 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 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;

The Company was party to the following agreements and/or arrangements with Sphere Entertainment as of March 31, 2023, which are now between the Company and MSG Entertainment as of the MSGE Distribution Date:

• 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 Sphere Distribution, and (vi) provides other general services within The Garden;

• 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)

• 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;

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;

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• Single night rental commission agreement, pursuant to which the Company may, from time to time, sell (or make referrals for sales of) licenses for the use of suites at The Garden for individual MSG Entertainment events in exchange for a commission and reimbursement for sales and service staff and overhead associated with the ticket sales on behalf of MSG Entertainment;

• Aircraft sharing agreements pursuant to which MSG Entertainment has agreed from time to time to make its aircraft and aircraft it leases from other related parties available to the Company for lease on a “time sharing” basis;

• Other agreements with MSG Entertainment entered into in connection with the MSGE Distribution, including a distribution agreement, a tax disaffiliation agreement, an employee matters agreement, a trademark license agreement and certain other arrangements;

• Interest-bearing advances to MSG Entertainment in connection with the construction of new premium hospitality suites at The Garden;

• Other agreements with MSG Entertainment entered into in connection with the Sphere Distribution, including a trademark license agreement and certain other arrangements.

The Company is also party to the following agreements and/or arrangements with Sphere Entertainment (including through its subsidiary MSG Networks) which were not assigned to MSG Entertainment in connection with the MSGE Distribution:

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

• Other agreements with Sphere Entertainment in connection with the Sphere Distribution, including a distribution agreement, a tax disaffiliation agreement and an employee matters agreement and certain other arrangements;

• Other agreements with MSG Networks entered into in connection with the MSGS Distribution, including a distribution agreement, a tax disaffiliation agreement, an employee matters agreement and certain other arrangements.

In addition, the Company shares certain executive support costs, including office space, executive assistants, security and transportation costs for:

(i) the Company’s Executive Chairman with MSG Entertainment;

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

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.

In addition, the Company shared certain executive support costs, including office space, executive assistants, security and transportation costs for:

(i) the Company’s Executive Chairman with Sphere Entertainment;

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

Following the MSGE Distribution, such costs are also shared with MSG Entertainment.

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

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

Following the MSGE Distribution, such costs are also shared with MSG Entertainment.

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 and six months ended December 31, 2022 and 2021:

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

These amounts are reflected in revenues and operating expenses in the accompanying consolidated statements of operations for the three and nine months ended March 31, 2023 and 2022:

Three Months Ended March 31, Nine Months Ended March 31,

2023 2022 2023 2022

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Operating expenses:

Corporate expenses pursuant to Services Agreement with MSG Entertainment $ 9,817 $ 10,990 $ 19,330 $ 19,874

Rent expense (sublease) due to MSG Entertainment 723 765 1,421 1,480

Corporate expenses pursuant to Services Agreement with Sphere Entertainment $ 8,702 $ 9,473 $ 28,032 $ 29,347

Rent expense (sublease) due to Sphere Entertainment 741 752 2,162 2,232

Costs associated with the Sponsorship sales and service representation agreements 7,866 8,389 16,525 16,857

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

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.

Income tax expense for the three and nine months ended March 31, 2023 of $ 42,962 and $ 47,024 , respe ctively, reflect an effective tax rate of 45 % and 46 %.

Income tax expense for the three and nine months ended March 31, 2022 of $ 34,993 and $ 30,939 , respectively, reflect an effective tax rate of 59 % and 58 %.

The Company was notified in April 2020 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.

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

During the nine months ended March 31, 2023, the Company made income tax payments of $ 1,084 .

Subsequent Events

CLG & NRG Combination

On April 6, 2023, the Company completed the sale of its controlling interest in CLG to NRG, a professional gaming and entertainment company, in exchange for a noncontrolling equity interest in the combined NRG/CLG company, which will be accounted for as an equity method investment.

The Company will deconsolidate the CLG business in the fourth quarter of fiscal year 2023 and the transaction is not expected to have a material impact on the Company’s ongoing operations, financial position, or cash flows.

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