Madison Square Garden Sports Corp. 10-Q

Item 1. Financial Statements MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) March 31, 2024 June 30, 2023 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 40,033 $ 40,398 Restricted cash 4,751 61 Accounts receivable, net of allowance for doubtful accounts of $ 0 as of March 31, 2024 and June 30, 2023 76,843 40,139 Net related party receivables 23,190 15,969 Prepaid expenses 31,800 24,768 Other current assets 74,028 27,898 Total current assets 250,645 149,233 Property and equipment, net of accumulated depreciation and amortization of $ 51,490 and $ 49,117 as of March 31, 2024 and June 30, 2023, respectively 29,062 30,501 Right-of-use lease assets 697,464 715,283 Indefinite-lived intangible assets 103,644 103,644 Goodwill 226,523 226,523 Investments 61,443 67,374 Other assets 19,690 22,459 Total assets $ 1,388,471 $ 1,315,017 See accompanying notes to consolidated financial statements. 1 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED BALANCE SHEETS (Continued) (in thousands, except per share data) March 31, 2024 June 30, 2023 (Unaudited) LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 5,906 $ 9,093 Net related party payables 5,107 5,842 Debt 30,000 30,000 Accrued liabilities: Employee related costs 151,731 144,310 League-related accruals 117,472 106,926 Other accrued liabilities 49,075 17,561 Operating lease liabilities, current 50,376 49,745 Deferred revenue 116,888 157,051 Total current liabilities 526,555 520,528 Long-term debt 330,000 295,000 Operating lease liabilities, noncurrent 756,871 746,437 Defined benefit obligations 4,333 4,526 Other employee related costs 48,569 49,070 Deferred tax liabilities, net 14,894 24,024 Deferred revenue, noncurrent 1,204 12,666 Total liabilities 1,682,426 1,652,251 Commitments and contingencies (see Note 11) Madison Square Garden Sports Corp. Stockholders’ Equity: Class A Common Stock, par value $ 0.01 , 120,000 shares authorized; 19,416 and 19,364 shares outstanding as of March 31, 2024 and June 30, 2023, respectively 204 204 Class B Common Stock, par value $ 0.01 , 30,000 shares authorized; 4,530 shares outstanding as of March 31, 2024 and June 30, 2023 45 45 Preferred stock, par value $ 0.01 , 15,000 shares authorized; none outstanding as of March 31, 2024 and June 30, 2023 — — Additional paid-in capital 18,004 16,846 Treasury stock, at cost, 1,031 and 1,084 shares as of March 31, 2024 and June 30, 2023, respectively ( 170,583 ) ( 179,410 ) Accumulated deficit ( 140,635 ) ( 173,910 ) Accumulated other comprehensive loss ( 990 ) ( 1,009 ) Total equity ( 293,955 ) ( 337,234 ) Total liabilities and equity $ 1,388,471 $ 1,315,017 See accompanying notes to consolidated financial statements. 2 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data) Three Months Ended Nine Months Ended March 31, March 31, 2024 2023 2024 2023 Revenues (a) $ 429,954 $ 382,744 $ 799,898 $ 760,527 Operating expenses: Direct operating expenses (b) 273,026 239,051 508,771 468,434 Selling, general and administrative expenses (c) 76,398 61,102 195,020 192,019 Depreciation and amortization 788 840 2,372 2,703 Operating income 79,742 81,751 93,735 97,371 Other income (expense): Interest income 477 704 1,549 1,627 Interest expense ( 6,921 ) ( 7,004 ) ( 21,269 ) ( 16,395 ) Miscellaneous (expense) income, net ( 1,403 ) 19,324 ( 11,077 ) 19,543 ( 7,847 ) 13,024 ( 30,797 ) 4,775 Income before income taxes 71,895 94,775 62,938 102,146 Income tax expense ( 34,018 ) ( 42,962 ) ( 29,658 ) ( 47,024 ) Net income 37,877 51,813 33,280 55,122 Less: Net loss attributable to nonredeemable noncontrolling interests — ( 566 ) — ( 1,928 ) Net income attributable to Madison Square Garden Sports Corp.’s stockholders $ 37,877 $ 52,379 $ 33,280 $ 57,050 Basic earnings per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 1.58 $ 2.19 $ 1.39 $ 2.28 Diluted earnings per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 1.57 $ 2.18 $ 1.38 $ 2.27 Weighted-average number of common shares outstanding: Basic 24,028 23,971 24,005 24,133 Diluted 24,100 24,062 24,076 24,225 _________________ (a) Includes revenues from related parties of $ 86,944 and $ 84,024 for the three months ended March 31, 2024 and 2023, respectively, and $ 173,419 and $ 167,148 for the nine months ended March 31, 2024 and 2023, respectively. (b) Includes net charges from related parties of $ 49,907 and $ 43,595 for the three months ended March 31, 2024 and 2023, respectively, and $ 88,206 and $ 91,264 for the nine months ended March 31, 2024 and 2023, respectively. (c) Includes net charges from related parties of $ 18,707 and $ 18,875 for the three months ended March 31, 2024 and 2023, respectively, and $ 47,462 and $ 49,616 for the nine months ended March 31, 2024 and 2023, respectively. See accompanying notes to consolidated financial statements. 3 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands) Three Months Ended Nine Months Ended March 31, March 31, 2024 2023 2024 2023 Net income $ 37,877 $ 51,813 $ 33,280 $ 55,122 Other comprehensive income, before income taxes: Pension plans: Amounts reclassified from accumulated other comprehensive loss: Amortization of actuarial loss included in net periodic benefit cost 10 4 28 13 Other comprehensive income, before income taxes 10 4 28 13 Income tax expense related to items of other comprehensive income ( 3 ) ( 1 ) ( 9 ) ( 4 ) Other comprehensive income, net of income taxes 7 3 19 9 Comprehensive income 37,884 51,816 33,299 55,131 Less: Comprehensive loss attributable to nonredeemable noncontrolling interests — ( 566 ) — ( 1,928 ) Comprehensive income attributable to Madison Square Garden Sports Corp.’s stockholders $ 37,884 $ 52,382 $ 33,299 $ 57,059 See accompanying notes to consolidated financial statements. 4 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended March 31, 2024 2023 Cash flows from operating activities: Net income $ 33,280 $ 55,122 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 2,372 2,703 (Benefit from) provision for deferred income taxes ( 9,139 ) 27,590 Share-based compensation expense 18,069 22,059 Unrealized loss (gain) on equity investments with readily determinable fair value, warrants, and forward contract 9,969 ( 19,738 ) Other non-cash adjustments 3,136 863 Change in assets and liabilities: Accounts receivable, net ( 36,704 ) ( 33,595 ) Net related party receivables ( 7,221 ) 1,450 Prepaid expenses and other assets ( 49,252 ) ( 35,138 ) Investments ( 2,067 ) ( 9,736 ) Accounts payable ( 3,190 ) ( 3,029 ) Net related party payables ( 563 ) ( 11,720 ) Accrued and other liabilities 47,831 85,022 Deferred revenue ( 51,625 ) 744 Operating lease right-of-use assets and lease liabilities 28,884 32,204 Net cash (used in) provided by operating activities ( 16,220 ) 114,801 Cash flows from investing activities: Capital expenditures ( 1,084 ) ( 1,033 ) Purchases of investments ( 4,605 ) ( 9,333 ) Net cash used in investing activities ( 5,689 ) ( 10,366 ) Cash flows from financing activities: Accelerated share repurchase — ( 75,060 ) Dividends paid ( 682 ) ( 170,824 ) Taxes paid in lieu of shares issued for equity-based compensation ( 8,084 ) ( 15,439 ) Proceeds from revolving credit facilities 75,000 215,000 Repayment of revolving credit facilities ( 40,000 ) ( 85,000 ) Other financing activities — 1,705 Net cash provided by (used in) financing activities 26,234 ( 129,618 ) Net increase (decrease) in cash, cash equivalents and restricted cash 4,325 ( 25,183 ) Cash, cash equivalents and restricted cash at beginning of period 40,459 91,018 Cash, cash equivalents and restricted cash at end of period $ 44,784 $ 65,835 Non-cash investing and financing activities: Capital expenditures incurred but not yet paid $ 105 $ 148 See accompanying notes to consolidated financial statements. 5 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (in thousands) Three Months Ended March 31, 2024 Common Stock Issued Additional Paid-In Capital Treasury Stock Accumulated Deficit Accumulated Other Comprehensive Loss Total Equity Balance as of December 31, 2023 $ 249 $ 11,471 $ ( 171,400 ) $ ( 178,512 ) $ ( 997 ) $ ( 339,189 ) Net income — — — 37,877 — 37,877 Other comprehensive income — — — — 7 7 Comprehensive income — — — — — 37,884 Share-based compensation — 7,350 — — — 7,350 Common stock issued under stock incentive plans — ( 817 ) 817 — — — Balance as of March 31, 2024 $ 249 $ 18,004 $ ( 170,583 ) $ ( 140,635 ) $ ( 990 ) $ ( 293,955 ) See accompanying notes to consolidated financial statements. 6 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED STATEMENTS OF EQUITY (Continued) (Unaudited) (in thousands) Three Months Ended March 31, 2023 Common Stock Issued Additional Paid-In Capital Treasury Stock Accumulated Deficit Accumulated Other Comprehensive Loss Total Madison Square Garden Sports Corp. Stockholders ’ Equity Non - redeemable Noncontrolling Interests Total Equity 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 Other comprehensive income — — — — 3 3 — 3 Comprehensive income (loss) — — — — — 52,382 ( 566 ) 51,816 Share-based compensation — 3,220 — — — 3,220 — 3,220 Tax withholding associated with shares issued for equity-based compensation — ( 2,457 ) — — — ( 2,457 ) — ( 2,457 ) Common stock issued under stock incentive plans — ( 1,844 ) 2,729 — — 885 — 885 Accelerated share repurchase — 12,307 ( 12,367 ) — — ( 60 ) — ( 60 ) 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. 7 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED STATEMENTS OF EQUITY (Continued) (Unaudited) (in thousands) Nine Months Ended March 31, 2024 Common Stock Issued Additional Paid-In Capital Treasury Stock Accumulated Deficit Accumulated Other Comprehensive Loss Total Equity Balance as of June 30, 2023 $ 249 $ 16,846 $ ( 179,410 ) $ ( 173,910 ) $ ( 1,009 ) $ ( 337,234 ) Net income — — — 33,280 — 33,280 Other comprehensive income — — — — 19 19 Comprehensive income — — — — — 33,299 Share-based compensation — 18,069 — — — 18,069 Tax withholding associated with shares issued for equity-based compensation — ( 8,084 ) — — — ( 8,084 ) Common stock issued under stock incentive plans — ( 8,827 ) 8,827 — — — Dividends declared ($ 7.00 per share) — — — ( 5 ) — ( 5 ) Balance as of March 31, 2024 $ 249 $ 18,004 $ ( 170,583 ) $ ( 140,635 ) $ ( 990 ) $ ( 293,955 ) See accompanying notes to consolidated financial statements. 8 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED STATEMENTS OF EQUITY (Continued) (Unaudited) (in thousands) Nine Months Ended March 31, 2023 Common Stock Issued Additional Paid-In Capital Treasury Stock Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Loss Total Madison Square Garden Sports Corp. Stockholders ’ Equity Non - redeemable 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) — — — 57,050 — 57,050 ( 1,928 ) 55,122 Other comprehensive income — — — — 9 9 — 9 Comprehensive income (loss) — — — — — 57,059 ( 1,928 ) 55,131 Share-based compensation — 22,059 — — — 22,059 — 22,059 Tax withholding associated with shares issued for equity-based compensation — ( 17,897 ) — — — ( 17,897 ) — ( 17,897 ) Common stock issued under stock incentive plans — ( 11,170 ) 20,983 ( 8,928 ) — 885 — 885 Dividends declared ($ 7.00 per share) — — — ( 172,749 ) — ( 172,749 ) — ( 172,749 ) Accelerated share repurchase — 1,649 ( 72,367 ) ( 4,342 ) — ( 75,060 ) — ( 75,060 ) Adjustments to noncontrolling interests — ( 988 ) — — — ( 988 ) 988 — 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. 9 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) All amounts included in the following Notes to Consolidated Financial Statements are presented in thousands, except per share data or as otherwise noted. Note 1. Description of Business and Basis of Presentation Description of Business Madison Square Garden Sports Corp. (together with its subsidiaries, collectively, “we,” “us,” “our,” “MSG Sports,” or the “Company”) owns and operates a portfolio of assets featuring some of the most recognized teams in all of sports, including the New York Knickerbockers (“Knicks”) of the National Basketball Association (“NBA”) and the New York Rangers (“Rangers”) of the National Hockey League (“NHL”). Both the Knicks and the Rangers play their home games in Madison Square Garden Arena (“The Garden”). 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 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. The Company’s decision to organize as one operating segment and report in one segment is based upon its internal organizational structure; the manner in which its operations are managed; and the criteria used by the Company’s Executive Chairman, its Chief Operating Decision Maker (“CODM”), to evaluate segment performance. The Company’s CODM reviews total company operating results to assess overall performance and allocate resources. The Company was incorporated on March 4, 2015 as an indirect, wholly-owned subsidiary of MSG Networks Inc. (“MSG Networks”). 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 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. (referred to herein as “MSG Entertainment”) to its stockholders (the “MSGE Distribution”). All agreements between the Company and MSG Entertainment described herein were between the Company and Sphere Entertainment prior to the MSGE Distribution (except agreements entered into after the MSGE Distribution Date). Unless the context otherwise requires, all references to MSG Entertainment, Sphere Entertainment and MSG Networks refer to such entity, together with its direct and indirect subsidiaries. Basis of Presentation The accompanying unaudited consolidated interim financial statements (referred to as the “Financial Statements” herein) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and Article 10 of Regulation S-X of the Securities and Exchange Commission (the “SEC”) for interim financial information, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 (“fiscal year 2023”). The Financial Statements presented in this Quarterly Report on Form 10-Q are unaudited; however, in the opinion of management, the Financial Statements reflect all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods presented. 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, which is when the majority of the sports teams’ games are played. Reclassifications Certain reclassifications have been made in order to conform to the current period’s presentation and relate to the separation of Investments and unrealized loss (gain) on equity investments with readily determinable fair value and warrants on the consolidated statements of cash flows for the nine months ended March 31, 2023. 10 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Note 2. Accounting Policies Principles of Consolidation The consolidated financial statements of the Company include the accounts of Madison Square Garden Sports Corp. and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. For consolidated subsidiaries where the Company’s ownership is less than 100%, the relevant amounts attributable to investors other than the Company are reflected under “Nonredeemable noncontrolling interests,” “Net income (loss) attributable to nonredeemable noncontrolling interests” and “Comprehensive income (loss) attributable to nonredeemable noncontrolling interests” in the accompanying consolidated balance sheets, the accompanying consolidated statements of operations and consolidated statements of comprehensive income (loss), respectively. Use of Estimates The preparation of the accompanying Financial Statements in conformity with GAAP requires management to make estimates and assumptions about future events. 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, fair value of investments, deferred tax valuation allowance, tax accruals, 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. Management believes its use of estimates in the Financial Statements to be reasonable. Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and, as such, these estimates may ultimately differ from actual results. 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 (“FASB”) 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. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ending June 30, 2025 and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact this standard will have on its segment disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU enhances annual disclosures related to the effective income tax rate reconciliation and income taxes paid. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ending June 30, 2026 and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact this standard will have on its income tax disclosures. 11 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Note 3. Revenue Recognition Contracts with Customers All revenue recognized in the consolidated statements of operations is considered to be revenue from contracts with customers. For the three and nine months ended March 31, 2024 and 2023, 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 nine months ended March 31, 2024 and 2023: Three Months Ended Nine Months Ended March 31, March 31, 2024 2023 2024 2023 Event-related (a) $ 177,826 $ 144,650 $ 306,096 $ 292,304 Media rights (b) 139,579 135,200 269,345 260,344 Sponsorship, signage and suite licenses 101,402 90,340 176,032 176,175 League distributions and other 11,147 12,554 48,425 31,704 Total revenues from contracts with customers $ 429,954 $ 382,744 $ 799,898 $ 760,527 _________________ (a) Consists of (i) ticket sales and other ticket-related revenues, and (ii) food, beverage and merchandise sales at The Garden. (b) Consists of (i) local media rights fees, (ii) revenue from the distribution through league-wide national television contracts, and (iii) other local radio rights fees. 12 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) 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 March 31, 2024 and June 30, 2023. March 31, June 30, 2024 2023 Receivables from contracts with customers, net (a) $ 58,782 $ 20,134 Contract assets, current (b) 64,724 19,465 Deferred revenue, including non-current portion (c), (d) 118,092 169,717 _________________ (a) Receivables from contracts with customers, net, which are reported in Accounts receivable, net and Net related party receivables in the accompanying consolidated balance sheets, represent the Company’s unconditional rights to consideration under its contracts with customers. As of March 31, 2024 and June 30, 2023, the Company’s receivables reported above incl uded $ 1,970 and $ 0 , respectively, related to contracts with customers who are related parties. See Note 16 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 March 31, 2024 and June 30, 2023, the Company had receivable balances related to escrow and player compensation recoveries of $ 7,058 and $ 1,544 , respectively, reco rded in Accounts receivable, net. (b) Contract assets, current, which are reported as Other current assets in the accompanying consolidated balance sheets, primarily relate to the Company’s rights to consideration for goods or services transferred to the customer, for which the Company does not have an unconditional right to bill as of the reporting date. 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 $ 25,642 and $ 0 as of March 31, 2024 and June 30, 2023, respectively. See Note 16 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. Deferred revenue is reduced and the related revenue is recognized once the underlying goods or services are transferred to a customer. The Company’s deferred revenue related to local media rights was $ 0 as of March 31, 2024 and June 30, 2023. See Note 16 for further details on these related party arrangements. (d) Revenue recognized for the nine months ended March 31, 2024 relating to the deferred revenue balance as of June 30, 2023 was $ 141,372 . 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 March 31, 2024 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. Additionally, the Company has elected to exclude variable consideration from its disclosure related to the remaining performance obligations under its local media rights arrangements, league-wide national and international television contracts, and certain other arrangements with variable consideration. Fiscal Year 2024 (remainder) $ 23,113 Fiscal Year 2025 124,822 Fiscal Year 2026 77,696 Fiscal Year 2027 39,157 Fiscal Year 2028 19,647 Thereafter 17,186 $ 301,621 13 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Note 4. 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, 2024 2023 2024 2023 Net earnings allocable to common shares, basic and diluted (numerator): Net income attributable to Madison Square Garden Sports Corp.’s stockholders $ 37,877 $ 52,379 $ 33,280 $ 57,050 Less: Dividends to other-than-common stockholders (a) — — 5 2,056 Net earnings allocable to common shares, basic and diluted (numerator): $ 37,877 $ 52,379 $ 33,275 $ 54,994 Weighted-average shares (denominator): Weighted-average shares for basic EPS 24,028 23,971 24,005 24,133 Dilutive effect of shares issuable under share-based compensation plans 72 91 71 92 Weighted-average shares for diluted EPS 24,100 24,062 24,076 24,225 Weighted-average shares excluded from diluted EPS — — — — Basic earnings per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 1.58 $ 2.19 $ 1.39 $ 2.28 Diluted earnings per common share attributable to Madison Square Garden Sports Corp.’s stockholders $ 1.57 $ 2.18 $ 1.38 $ 2.27 _________________ (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. Note 5. Team Personnel Transactions 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 $ 2,170 and $ 81 for the three months ended March 31, 2024 and 2023, respectively, and a net provision of $ 2,170 and a net credit of $ 219 for the nine months ended March 31, 2024 and 2023, respectively. 14 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Note 6. Cash, Cash Equivalents and Restricted Cash The following table provides a summary of the amounts recorded as cash, cash equivalents and restricted cash. As of March 31, 2024 June 30, 2023 March 31, 2023 June 30, 2022 Captions on the consolidated balance sheets: Cash and cash equivalents $ 40,033 $ 40,398 $ 65,182 $ 91,018 Restricted cash (a) 4,751 61 653 — Cash, cash equivalents and restricted cash on the consolidated statements of cash flows $ 44,784 $ 40,459 $ 65,835 $ 91,018 _________________ (a) Restricted cash as of March 31, 2024, June 30, 2023 and March 31, 2023 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, 2023 for more information). Note 7. Leases As of March 31, 2024, 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 a lease agreement for an aircraft. Prior to the MSGE Distribution Date, the Sublease Agreement was between the Company and Sphere Entertainment. In addition, the Company accounts for the rights of use of The Garden pursuant to the Arena License Agreements (as defined below) as leases under the ASC Topic 842, Leases. See Note 7 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 for more information regarding the Company’s accounting policies associated with its leases. As of March 31, 2024, the Company’s exis ting operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 7 months to 31 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 right-of-use assets and lease liabilities recorded in the accompanying consolidated balance sheets as of March 31, 2024 and June 30, 2023: Line Item in the Company’s Consolidated Balance Sheet March 31, 2024 June 30, 2023 Right-of-use assets: Operating leases Right-of-use lease assets $ 697,464 $ 715,283 Lease liabilities: Operating leases, current (a) Operating lease liabilities, current $ 50,376 $ 49,745 Operating leases, noncurrent (a) Operating lease liabilities, noncurrent 756,871 746,437 Total lease liabilities $ 807,247 $ 796,182 _________________ (a) As of March 31, 2024, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances o f $ 43,798 and $ 721,320 , r espectively, that are payable to MSG Entertainment. As of June 30, 2023, Operating lease liabilities, current and Operating lease liabilities, noncurrent included balances of $ 43,700 and $ 707,124 , respectively, that are payable to MSG Entertainment. 15 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) The following table summarizes the activity recorded within the accompanying consolidated statements of operations for the three and nine months ended March 31, 2024 and 2023: Line Item in the Company’s Consolidated Statement of Operations Three Months Ended March 31, Nine Months Ended March 31, 2024 2023 2024 2023 Operating lease cost Direct operating expenses $ 35,370 $ 31,258 $ 61,043 $ 64,472 Operating lease cost Selling, general and administrative expenses 2,320 613 6,960 1,839 Short-term lease cost Direct operating expenses — 59 — 174 Total lease cost $ 37,690 $ 31,930 $ 68,003 $ 66,485 Supplemental Information For the nine months ended March 31, 2024 and 2023, cash paid for amounts included in the measurement of lease liabilities was $ 39,119 and $ 33,791 , respectively. The weighted average remaining lease term for operating leases recorded in the accompanying consolidated balance sheet as of March 31, 2024 was 30.0 years. The weighted average discount rate was 7.1 % as of March 31, 2024 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, 2024 are as follows: Fiscal Year 2024 (remainder) $ 13,023 Fiscal Year 2025 51,681 Fiscal Year 2026 52,155 Fiscal Year 2027 53,516 Fiscal Year 2028 54,919 Thereafter 2,041,609 Total lease payments 2,266,903 Less imputed interest ( 1,459,656 ) Total lease liabilities $ 807,247 Note 8. Goodwill and Intangible Assets During the first quarter of fiscal year 2024, 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 March 31, 2024 and June 30, 2023 was $ 226,523 . The Company’s indefinite-lived intangible assets as of March 31, 2024 and June 30, 2023 are as follows: Sports franchises $ 102,564 Photographic related rights 1,080 $ 103,644 During the first quarter of fiscal year 2024, the Company performed its annual impairment test of identifiable indefinite-lived intangible assets and determined that there were no impairments identified as of the impairment test date. For the three and nine months ended March 31, 2023, amortization expense o f intangible assets was $ 29 and $ 167 , respectively. There was no amortization expense for the three and nine months ended March 31, 2024 as a result of the disposal of CLG in April 2023. 16 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Note 9. Investments The Company’s Investments reported in the accompanying consolidated balance sheets, consisted of the following: March 31, 2024 June 30, 2023 Equity method investments: NRG $ 11,230 $ 11,948 Other equity method investments 1,992 — Equity investments with readily determinable fair values: Xtract One Technologies Inc. (“Xtract One”) common stock 16,763 22,408 Other equity investments with readily determinable fair values held in trust under the Company’s Executive Deferred Compensation Plan 18,117 14,406 Equity investments without readily determinable fair values (a) 6,068 5,514 Derivative instruments: Xtract One warrants 7,273 13,098 Total investments $ 61,443 $ 67,374 _________________ (a) For the three and nine months ended March 31, 2024 and 2023, the Company did not record any impairment charges or changes in carrying value of its equity securities without readily determinable fair values in the accompanying consolidated statements of operations. Equity Method Investments NRG In April 2023, the Company sold 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. The Company received preferred shares representing approximately 25 % of the capital stock of NRG. The Company deconsolidated the CLG business and recorded the investment in NRG at fair value as an equity method investment in the fourth quarter of fiscal year 2023. During the three and nine months ended March 31, 2024, the Company recognized its net share of income of $ 140 and losses of $ 718 , respectively, in Miscellaneous (expense) income, net within the Company’s consolidated statement of operations. As of March 31, 2024 and June 30, 2023, the Company’s ownership in NRG was approximately 25 %. Equity Investments with Readily Determinable Fair Values The Company holds investments in equity instruments with readily determinable fair value: • Xtract One, a technology-driven threat detection and security solution company that is listed on the Toronto Stock Exchange under the symbol “XTRA”. The Company holds common stock of Xtract One and holds warrants entitling the Company to acquire additional shares of common stock of Xtract One which are considered derivative instruments. Refer to Note 10 for further details regarding the Company’s warrants, including the inputs used in determining the fair value of the warrants. • Other equity investments held in trust under the Company’s Executive Deferred Compensation Plan. Refer to Note 13 for further details regarding the plan. The fair value of the Company’s investments in common stock of Xtract One and other investments held in trust are determined based on quoted market prices in active markets, which are classified within Level I of the fair value hierarchy. 17 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) The cost basis and carrying value of equity investments with readily determinable fair values are as follows: March 31, 2024 June 30, 2023 Cost Basis Carrying Value/Fair Value Cost Basis Carrying Value/Fair Value Xtract One common stock $ 6,783 $ 16,763 $ 6,783 $ 22,408 Other equity investments with readily determinable fair values 15,984 18,117 13,772 14,406 $ 22,767 $ 34,880 $ 20,555 $ 36,814 The following table summarizes the realized and unrealized gains (losses) on equity investments with readily determinable fair values, recorded within Miscellaneous (expense) income, net within the Company’s consolidated statement of operations, for the three and nine months ended March 31, 2024 and 2023. Three Months Ended March 31, Nine Months Ended March 31, 2024 2023 2024 2023 Unrealized (loss) gain - Xtract One common stock $ ( 853 ) $ 7,337 $ ( 5,645 ) $ 7,337 Unrealized gain - other equity investments with readily determinable fair values 809 372 1,501 718 Realized gain (loss) - other equity investments with readily determinable fair values 12 ( 4 ) 55 ( 4 ) $ ( 32 ) $ 7,705 $ ( 4,089 ) $ 8,051 Note 10. 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 March 31, 2024 June 30, 2023 Assets: Money market accounts I $ 27,149 $ 17,330 Time deposit I 11,487 1,457 Equity investments I 34,880 36,814 Warrants III 7,273 13,098 Total assets measured at fair value $ 80,789 $ 68,699 Level I Inputs Assets that are 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. Refer to Note 9 for further details regarding equity investments. Level III Inputs The Company’s level III assets consist of warrants entitling the Company to acquire additional common stock of Xtract One. The Company’s warrants are included within Investments in the accompanying consolidated balance sheets. Changes in the fair value of derivative instruments are measured at each reporting date and are recorded within Miscellaneous (expense) income, net in the accompanying consolidated statements of operations. The fair value of the Company’s warrants in Xtract One were 18 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) determined using the Black-Scholes option pricing model. The following are key assumptions used to calculate the fair value of the warrants as of March 31, 2024 and June 30, 2023: March 31, 2024 June 30, 2023 Expected term 1.96 years 2.34 years Expected volatility 64.34 % 74.43 % Risk-free interest rate 4.59 % 4.68 % The following table presents additional information about our assets for which we utilize Level III inputs to determine fair value: Three Months Ended March 31, Nine Months Ended March 31, 2024 2023 2024 2023 Balance at beginning of period $ 8,802 $ — $ 13,098 $ — Purchase of warrants — 1,959 — 1,959 Unrealized (loss) gain on warrants ( 1,529 ) 4,543 ( 5,825 ) 4,543 Unrealized gain on forward contract (a) — 7,140 — 7,140 Balance at end of period $ 7,273 $ 13,642 $ 7,273 $ 13,642 _________________ (a) During the three months ended March 31, 2023, the Company recorded an unrealized gain on a forward contract to acquire additional common stock and warrants of Xtract One. The Company’s forward contract was included within Other current assets in the accompanying consolidated balance sheets. 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 carrying value and fair value of the Company’s debt reported in the accompanying consolidated balance sheets are as follows: March 31, 2024 June 30, 2023 Carrying Value Fair Value Carrying Value Fair Value Liabilities Debt, current (a) $ 30,000 $ 30,000 $ 30,000 $ 30,000 Long-term debt (b) $ 330,000 $ 330,000 $ 295,000 $ 295,000 _________________ (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 based on valuation of similar securities. See Note 12 for further details. (b) The Company’s long-term debt 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 long-term debt is the same as its carrying amount as the debt bears interest at a variable rate indexed to current market conditions. See Note 12 for further details . Note 11. Commitments and Contingencies Commitments As more fully described in Note 12 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023, the Company’s commitments consist primarily of the Company’s obligations under employment agreements that the Company has with its professional sports teams’ personnel that are generally guaranteed regardless of employee injury or termination. In addition, see Note 7 for more information on the contractual obligations related to future lease payments. The Company did not have any material changes in its contractual obligations, including off-balance sheet commitments, since the end of fiscal year 2023 other than activities in the ordinary course of business. 19 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Legal Matters The Company is a defendant in various lawsuits. 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. Note 12. Debt Knicks Revolving Credit Facility On September 30, 2016, New York Knicks, LLC (“Knicks LLC”), a wholly owned subsidiary of the Company, entered into a credit agreement (the “2016 Knicks Credit Agreement”) with a syndicate of lenders providing for a senior secured revolving credit facility of up to $ 200,000 with a term of five years to fund working capital needs and for general corporate purposes. On November 6, 2020, the Company amended and restated the 2016 Knicks Credit Agreement in its entirety (the “2020 Knicks Credit Agreement”). On December 14, 2021, Knicks LLC entered into Amendment No. 2 to the 2020 Knicks Credit Agreement, which amended and restated the 2020 Knicks Credit Agreement (as amended and restated, the “Knicks Credit Agreement”). The Knicks Credit Agreement provides for a senior secured revolving credit facility of up to $ 275,000 (the “Knicks Revolving Credit Facility”) to fund working capital needs and for general corporate purposes. The maturity date of the Knicks Credit Agreement is December 14, 2026. Amounts borrowed may be distributed to the Company except during an event of default. All borrowings under the Knicks Revolving Credit Facility are subject to the satisfaction of certain customary conditions. Borrowings under the Knicks Credit Agreement bear interest at a floating rate, which at the option of Knicks LLC may be either (i) a base rate plus a margin ranging from 0.250 % to 0.500 % per annum or (ii) term Secured Overnight Financing Rate (“SOFR”) plus a credit spread adjustment of 0.100 % per annum plus a margin ranging from 1.250 % to 1.500 % per annum depending on the credit rating applicable to the NBA’s league-wide credit facility. 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 Knicks Revolving Credit Facility. During the nine months ended March 31, 2024, the Company borrowed an additional $ 40,000 under the Knicks Revolving Credit Facility. The outstanding balance under the Knicks Revolving Credit Facility was $ 275,000 as of March 31, 2024, which was recorded as Long-term debt in the accompanying consolidated balance sheet. The interest rate on the Knicks Revolving Credit Facility as of March 31, 2024 was 6.68 % . During the nine months ended March 31, 2024 the Company made interest payments of $ 13,778 in respect of the Knicks Revolving Credit Facility. All obligations under the 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. national broadcast agreements, and (iii) revenues to be paid to Knicks LLC pursuant to local media contracts. Subject to customary notice and minimum amount conditions, Knicks LLC may voluntarily prepay outstanding loans under the Knicks Revolving Credit Facility at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to SOFR-based loans). Knicks LLC is required to make mandatory prepayments in certain circumstances, including without limitation if the maximum available amount under the Knicks Revolving Credit Facility is greater than 350 % of qualified revenues. In addition to the financial covenant described above, the Knicks Credit Agreement and related security agreement contain certain customary representations and warranties, affirmative covenants and events of default. The 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 Knicks Revolving Credit Facility, including the following: (i) incurring additional indebtedness and contingent liabilities; (ii) creating liens on certain assets; (iii) making restricted payments during the continuance of an event of default under the Knicks Revolving Credit Facility; (iv) engaging in sale and leaseback transactions; (v) merging or consolidating; and (vi) taking certain actions that would invalidate the secured lenders’ liens on any Knicks LLC’s collateral. The 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 March 31, 2024, Knicks LLC was in compliance with this financial covenant. 20 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Rangers Revolving Credit Facility On January 25, 2017, New York Rangers, LLC (“Rangers LLC”), a wholly owned subsidiary of the Company, entered into a credit agreement (the “2017 Rangers Credit Agreement”) with a syndicate of lenders providing for a senior secured revolving credit facility of up to $ 150,000 with a term of five years to fund working capital needs and for general corporate purposes. On November 6, 2020, the Company amended and restated the 2017 Rangers Credit Agreement in its entirety (the “2020 Rangers Credit Agreement”). On December 14, 2021, Rangers LLC entered into Amendment No. 3 to the 2020 Rangers Credit Agreement, which amended and restated the 2020 Rangers Credit Agreement (as amended and restated, the “Rangers Credit Agreement”). The Rangers Credit Agreement provides for a senior secured revolving credit facility of up to $ 250,000 (the “Rangers Revolving Credit Facility”) to fund working capital needs and for general corporate purposes. The maturity date of the Rangers Credit Agreement is December 14, 2026. Amounts borrowed may be distributed to the Company except during an event of default. All borrowings under the Rangers Revolving Credit Facility are subject to the satisfaction of certain customary conditions. Borrowings under the Rangers Revolving Credit Facility bear interest at a floating rate, which at the option of Rangers LLC may be either (i) a base rate plus a margin ranging from 0.500 % to 1.000 % per annum or (ii) term SOFR plus a credit spread adjustment of 0.100 % per annum plus a margin ranging from 1.500 % to 2.000 % per annum depending on the credit rating applicable to the NHL’s league-wide credit facility. 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 Rangers Revolving Credit Facility. During the nine months ended March 31, 2024, the Company borrowed an additional $ 35,000 and made principal repayments of $ 40,000 under the Rangers Revolving Credit Facility. The outstanding balance under the Rangers Revolving Credit Facility wa s $ 55,000 as of March 31, 2024, which was recorded as Long-term debt in the accompanying consolidated balance sheet. The interest rate on the Rangers Revolving Credit Facility as of March 31, 2024 wa s 7.18 % . During the nine months ended March 31, 2024 the Company made interest payments of $ 3,804 in respect of the Rangers Revolving Credit Facility. In addition, on April 22, 2024, the Company made an additional principal repayment of $ 40,000 under the Rangers Revolving Credit Facility. All obligations under the Rangers Revolving Credit Facility are, subject to the 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. and Canadian national broadcast agreements, and (iii) revenues to be paid to Rangers LLC pursuant to local media contracts. Subject to customary notice and minimum amount conditions, Rangers LLC may voluntarily prepay outstanding loans under the Rangers Revolving Credit Facility at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to SOFR-based loans). Rangers LLC is required to make mandatory prepayments in certain circumstances, including without limitation if qualified revenues are less than 17 % of the maximum available amount under the Rangers Revolving Credit Facility. In addition to the financial covenant described above, the Rangers Credit Agreement and related security agreement contain certain customary representations and warranties, affirmative covenants and events of default. The Rangers Revolving Credit Facility contains certain restrictions on the ability of Rangers LLC to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the Rangers Revolving Credit Facility, including the following: (i) incurring additional indebtedness and contingent liabilities; (ii) creating liens on certain assets; (iii) making restricted payments during the continuance of an event of default under the Rangers Revolving Credit Facility; (iv) engaging in sale and leaseback transactions; (v) merging or consolidating; and (vi) taking certain actions that would invalidate the secured lenders’ liens on any of Rangers LLC’s assets securing the obligations under the Rangers Revolving Credit Facility. The 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 March 31, 2024, Rangers LLC was in compliance with this financial covenant . Rangers NHL Advance Agreement On March 19, 2021, Rangers LLC, Rangers Holdings, LLC and MSG NYR Holdings LLC entered into an advance agreement with the NHL (the “Rangers NHL Advance Agreement”) pursuant to which the NHL advanced $ 30,000 to Rangers LLC. The advance is required to be utilized solely and exclusively to pay for Rangers LLC operating expenses. All obligations under the Rangers NHL Advance Agreement are senior to and shall have priority over all secured and other indebtedness of Rangers LLC, Rangers Holdings, LLC and MSG NYR Holdings LLC. All borrowings under the Rangers NHL 21 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) Advance Agreement were made on a non-revolving basis and bear interest at 3.00 % per annum, ending on the date any such advances are fully repaid. Advances received under the Rangers NHL Advance Agreement are payable upon demand by the NHL. It is expected that the advanced amount will be set off against funds that would otherwise be paid, distributed or transferred by the NHL to Rangers LLC. The outstanding balance under the Rangers NHL Advance Agreement was $ 30,000 as of March 31, 2024 and was recorded as Debt in the accompanying consolidated balance sheet. During the nine months ended March 31, 2024 the Company made interest p ayments of $ 900 . Deferred Financing Costs The following table summarizes deferred financing costs, net of amortization, related to the Company’s credit facilities as reported in the accompanying consolidated balance sheets: March 31, 2024 June 30, 2023 Other current assets $ 1,145 $ 1,145 Other assets 1,951 2,810 Note 13. Benefit Plans Defined Benefit Pension Plans The Company sponsors the MSG Sports, LLC Excess Cash Balance Plan (the “Excess Cash Balance Plan”), an unfunded non-contributory, non-qualified excess cash balance plan and the MSG Sports, LLC Excess Retirement Plan, an unfunded non-contributory, non-qualified defined benefit pension plan for the benefit of certain employees (collectively referred to as the “Pension Plans”). All benefits in the Pension Plans are frozen and participants are not able to earn benefits for future service under these plans, and no employee of the Company who was not already a participant as of the date the respective plan was frozen may become a participant in the Pension Plans. Existing account balances under the Excess Cash Balance Plan are credited with monthly interest in accordance with the terms of the plan. The following table presents components of net periodic benefit cost for the Pension Plans included in the accompanying consolidated statements of operations for the three and nine months ended March 31, 2024 and 2023. Components of net periodic benefit cost are reported in Miscellaneous (expense) income, net. Three Months Ended Nine Months Ended March 31, March 31, 2024 2023 2024 2023 Interest cost $ 68 $ 60 $ 204 $ 180 Recognized actuarial loss 10 4 28 13 Net periodic benefit cost $ 78 $ 64 $ 232 $ 193 Defined Contribution Plans MSG Sports employees participate in The Madison Square Garden 401(k) Savings Plan (the “401(k) Plan”), which is a multiple employer plan sponsored by MSG Entertainment Holdings, LLC, a wholly owned subsidiary of MSG Entertainment. In addition, the Company sponsors the MSG Sports LLC, Excess Savings Plan (the “Excess Savings Plan”), which provides non-qualified retirement benefits to eligible MSG Sports employees. Expense related to the 401(k) Plan and Excess Savings Plan for the three and nine months ended March 31, 2024 was $ 1,261 and $ 3,869 , respectively, and $ 1,465 and $ 3,602 for the three and nine months ended March 31, 2023, respectively . 22 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) 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, 2023 for more information regarding the Company’s E xecutive Deferred Compensation Plan (the “Deferred Compensation Plan”). The Company recorded compensation expense of $ 821 and $ 1,556 for the three and nine months ended March 31, 2024 , respectively, and $ 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 $ 821 and $ 1,556 for the three and nine months ended March 31, 2024 , respectively, and $ 368 and $ 714 for the three and nine months ended March 31, 2023, respectively, within Miscellaneous (expense) income, 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: March 31, 2024 June 30, 2023 Non-current assets (included in investments) $ 18,117 $ 14,406 Current liabilities (included in accrued employee related costs) ( 1,233 ) ( 1,358 ) Non-current liabilities (included in other employee related costs) ( 16,884 ) ( 13,048 ) Note 14. Share-based Compensation See Note 15 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2023 for more information regarding the Company’s 2015 Employee Stock Plan (the “Employee Stock Plan”) and its 2015 Stock Plan for Non-Employee Directors. Share-based compensation expense is recognized in the consolidated statements of operations as a component of Selling, general and administrative expenses. Share-based compensation expense was $ 7,350 and $ 18,069 for the three and nine months ended March 31, 2024, respectively and $ 3,220 and $ 22,059 for the three and nine months ended March 31, 2023, respectively. There were no costs related to share-based compensation that were capitalized for the three and nine months ended March 31, 2024 and 2023, 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 current and former employees of the Company and non-employee directors, for the nine months ended March 31, 2024: Number of Weighted-Average Fair Value Per Share at Date of Grant (a) Nonperformance Based Vesting RSUs Performance Based Vesting RSUs Unvested award balance, June 30, 2023 124 160 $ 167.08 Granted 65 48 $ 177.62 Vested ( 59 ) ( 60 ) $ 168.35 Forfeited / Cancelled ( 3 ) ( 3 ) $ 176.52 Unvested award balance, March 31, 2024 127 145 $ 170.68 _____________________ (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, 2024 was $ 21,192 . 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 current and former employees’ required statutory tax withholding obligations for the applicable income and other employment taxes, 50 of these RSUs, with an aggregate value of $ 8,084 , inclusive of $ 4 related to the Company’s former 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, 2024. 23 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) The fair value of RSUs that vested during the nine months ended March 31, 2023 was $ 40,795 . The weighted-average fair value per share at grant date of RSUs granted during the nine months ended March 31, 2023 was $ 161.70 . Stock Options Award Activity The following table summarizes activity related to the Company’s stock options for the nine months ended March 31, 2024: Number of Time Vesting Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Term (In Years) Aggregate Intrinsic Value Balance as of June 30, 2023 94 $ 138.78 Granted — $ — Cancelled — $ — Balance as of March 31, 2024 94 $ 138.78 3.71 $ 4,292 Exercisable as of March 31, 2024 94 $ 138.78 3.71 $ 4,292 Note 15. Stock Repurchase Program Amounts in this footnote are in thousands, except for the number of shares repurchased and per share data. Effective as of October 1, 2015, the Company’s board of directors authorized the repurchase of up to $ 525,000 of the Company’s Class A Common Stock (“Class A Common Stock”). Under the authorization, shares of Class A Common Stock may be purchased from time to time in open market or private transactions, block trades or such other manner as the Company may determine, in accordance with applicable insider trading and other securities laws and regulations. The timing and amount of purchases will depend on market conditions and other factors. 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 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. During the nine months ended March 31, 2024 , the Company did not make any share repurchases under its share repurchase program. As of March 31, 2024, the Company had $ 184,639 of availability remaining under its stock repurchase authorization . Note 16. Related Party Transactions As of March 31, 2024, certain members of the Dolan family, including certain 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 3.0 % 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 70.9 % of the aggregate voting power of the Company’s outstanding common stock. Members of the Dolan Family Group are also the controlling stockholders of Sphere Entertainment, MSG Entertainment and AMC Networks Inc. (“AMC Networks”). The Company was party to the following agreements and/or arrangements with MSG Entertainment as of March 31, 2024: • Arena license agreements, entered into in April 2020 (the “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 and club licenses, (iii) operates and manages 24 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) 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) shares revenues collected for the sale of venue indoor signage space and sponsorship rights at The Garden that are not specific to our teams, (vi) provides day of game services, and (vii) 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 the teams receive an allocation of sponsorship and signage revenues associated with sponsorship agreements that include the assets of both the Company and MSG Entertainment; • 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; • Arrangements pursuant to which the Company provides certain sponsorship, premium hospitality and other business operations services; • The Sublease Agreement, pursuant to which the Company leases office space from MSG Entertainment; • Group ticket sales representation agreement, pursuant to which MSG Entertainment appointed the Company as its sales and service representative to sell group ticket packages related to MSG Entertainment events in exchange for a commission; • 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; and • 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) as of March 31, 2024 : • Media rights agreements between the Company and MSG Networks, entered into in July 2015, with stated terms of 20 years providing MSG Networks with local telecast rights for Knicks and Rangers games in exchange for media rights fees; • Arrangements with MSG Networks pursuant to which the Knicks and the Rangers have allocated revenues with MSG Networks related to virtual advertising inventory; • Arrangements pursuant to which the Company provides Sphere Entertainment with certain sponsorship and other business operations services; • Arrangements pursuant to which the Company provides sponsorship rights to Sphere Entertainment; • 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; and • Other agreements with MSG Networks entered into in connection with the MSGS Distribution, including an employee matters agreement, agreements related to audio-only distribution rights for Knicks and Rangers games, and certain other arrangements. The Company is also party to arrangements with MSG Entertainment and Sphere Entertainment pursuant to which the three companies have agreed to allocate expenses in connection with the use by each company of aircraft owned or leased by the Company and MSG Entertainment. 25 Table of Contents MADISON SQUARE GARDEN SPORTS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) 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 Sphere Entertainment and, following the MSGE Distribution, with MSG Entertainment as well; (ii) the Company’s Vice Chairman with AMC Networks, Sphere Entertainment and following the MSGE Distribution, with MSG Entertainment as well, and (iii) the Company’s Executive Vice President with Sphere Entertainment and AMC Networks. Additionally, the Company, Sphere Entertainment, AMC Networks, and, following the MSGE Distribution, MSG Entertainment, allocate the costs of certain personal aircraft and helicopter usage by their shared executives. Revenues and Operating Expenses 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 nine months ended March 31, 2024 and 2023: Three Months Ended March 31, Nine Months Ended March 31, 2024 2023 2024 2023 Revenues (a) $ 86,944 $ 84,024 $ 173,419 $ 167,148 Operating expenses: Expense pursuant to the Services Agreement $ 9,131 $ 8,702 $ 28,557 $ 28,032 Rent expense pursuant to Sublease agreement with MSG Entertainment 731 741 2,233 2,162 Costs associated with the Sponsorship sales and service representation agreements 7,260 7,866 15,411 16,525 Operating lease expense associated with the Arena License Agreements 35,370 30,962 61,043 63,890 Other costs associated with the Arena License Agreements 16,788 14,135 30,409 30,202 Other operating (credits) expenses, net ( 666 ) 64 ( 1,985 ) 69 ___________________ (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. Note 17. Income Taxes 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 players’ disability insurance premiums expense. The estimated annual effective tax rate is revised on a quarterly basis. Income tax expense for the three and nine months ended March 31, 2024 of $ 34,018 and $ 29,658 , respectively, reflects an effective tax rate of 47 % for both periods. Income tax expense for the three and nine months ended March 31, 2023 of $ 42,962 and $ 47,024 , respectively, reflects an effective tax rate of 45 % and 46 %, respectively. 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 audit was finalized in January 2024 and resulted in no material changes. During the nine months ended March 31, 2024, the Company made income tax payments, net of refunds, of $ 14,319 . The Company had $ 35,115 and $ 10,633 of accrued federal and state income tax, recorded within other accrued liabilities in the accompanying consolidated balance sheets as of March 31, 2024 and June 30, 2023, respectively. 26 Table of Contents