What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-08-12 compared with 2024-08-13 · 129 added, 113 removed, 392 unchanged (38% of the section changed)

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In this MD&A, there are statements concerning the future operating and future financial performance of Madison Square Garden Sports Corp.

and its direct and indirect subsidiaries (collectively, “we,” “us,” “our,” “MSG Sports,” or the “Company”).

and its direct and indirect subsidiaries (collectively, “we,” “us,” “our,” “MSG Sports,” or the “Company”) including stated annual local media rights fees for the year ending June 30, 2026.

Words such as “expects,” “anticipates,” “believes,” “estimates,” “may,” “will,” “should,” “could,” “potential,” “continue,” “intends,” “plans,” and similar words and terms used in the discussion of future operating and future financial performance identify forward-looking statements.

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

• costs associated with player injuries, waivers or contract terminations of players and other team personnel;

• costs associated with player injuries, waivers or contract terminations of players, coaches and other team personnel;

• changes in professional sports teams’ compensation, including the impact of signing free agents and executing trades, subject to league salary caps and the impact of luxury tax;

• general economic conditions, especially in the New York City metropolitan area;

• general economic conditions, especially in the New York City metropolitan area, including any economic downturn, recession, financial instability or inflation;

• the demand for sponsorship arrangements and for advertising;

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• changes in laws, National Basketball Association (“NBA”) or National Hockey League (“NHL”) rules, regulations, guidelines, bulletins, directives, policies and agreements, including the leagues’ respective collective bargaining agreements (each, a “CBA”) with their players’ associations, salary caps, escrow requirements, revenue sharing, NBA luxury tax thresholds and media rights, or other regulations under which we operate;

• the performance by our affiliates of their obligations under various agreements with the Company;

• a pandemic or another pandemic or public health emergency, including a resurgence of the COVID-19 pandemic, and our ability to effectively manage the impacts, including labor market disruptions;

• developments affecting the regional sports network industry, including the effects of such developments on MSG Networks Inc.’s (“MSG Networks”) ability to generate revenue and perform its obligations under its local media rights agreements with us;

• developments affecting the regional sports network industry, including the effects of such developments on MSG Networks Inc.’s (“MSG Networks”) solvency and its ability to perform its obligations under its local media rights agreements with us;

• a default by our subsidiaries under their respective credit facilities;

• any NBA, NHL or other work stoppage;

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

• the performance by our affiliates of their obligations under various agreements with the Company;

• seasonal fluctuations and other variation in our operating results and cash flow from period to period;

• the level of our expenses, including our corporate expenses;

• operational, business, reputational, litigation and other risk if there is a security incident resulting in loss, disclosure or misappropriation of stored personal information or other breaches of our information security or if third party facilities, systems and/or software upon which we rely are interrupted or unavailable;

• activities or other developments that discourage or may discourage congregation at prominent places of public assembly, including Madison Square Garden Arena (“The Garden”) where the home games of the New York Knickerbockers (the “Knicks”) and the New York Rangers (the “Rangers”) are played;

• a default by our subsidiaries under their respective credit facilities;

• the acquisition or disposition of assets or businesses and/or the impact of, and our ability to successfully pursue acquisitions or other strategic transactions;

• our ability to successfully integrate acquisitions or new businesses into our operations and the operating and financial performance of strategic acquisitions and investments, including those we may not control;

• the impact of governmental regulations or laws, including changes in how those regulations and laws are interpreted and the continued benefit of certain tax exemptions (including for The Garden) and the ability for us and Madison Square Garden Entertainment Corp.

• a pandemic or another public health emergency, including a resurgence of the COVID-19 pandemic, and our ability to effectively manage the impacts, including labor market disruptions;

• the impact of governmental regulations or laws, changes in how those regulations and laws are interpreted and the continued benefit of certain tax exemptions (including for The Garden) and the ability for us and Madison Square Garden Entertainment Corp.

(“MSG Entertainment”) to maintain necessary permits or licenses;

• the impact of any government plans to redesign New York City’s Pennsylvania Station;

• changes in international trade policies and practices, including tariffs, and the economic impacts, volatility and uncertainty resulting therefrom;

• business, economic, reputational and other risks associated with, and the outcome of, litigation and other proceedings;

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• certain restrictions on transfer and ownership of our common stock related to our ownership of professional sports franchises in the NBA and NHL;

• the tax-free treatment of the Sphere Distribution (as defined below);

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

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

On April 20, 2023 (the “MSGE Distribution Date”), Sphere Entertainment distributed 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”).

On April 20, 2023 (the “MSGE Distribution Date”), Sphere Entertainment distributed approximately 67% of the issued and outstanding shares of common stock of 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).

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

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

Our professional sports franchises are collectively referred to herein as “our sports teams” or the “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 also operates a professional sports team performance center — the Madison Square Garden Training Center in Greenburgh, NY.

Revenue Sources

We earn revenue from several primary sources:

ticket sales and a portion of suite rental fees at The Garden, our share of distributions from NHL and NBA league-wide national and international television contracts and other league-wide revenue sources, venue signage and other sponsorships, food and beverage sales at The Garden and merchandising .

ticket sales and a portion of suite rental fees at The Garden, our share of distributions from NHL and NBA league-wide national and international television contracts and other league-wide revenue sources, sponsorships and signage, food and beverage sales at The Garden and merchandising .

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

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The Company and MSG Networks are parties to media rights agreements covering the local telecast rights for the Knicks and the Rangers .

On June 27, 2025, our sports teams and MSG Networks entered into amendments with respect to the media rights agreements.

See “— Factors Affecting Operating Results — Amendments to Media Rights Agreements” for more information.

National and international telecast arrangements differ by league .

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

Recognition of operating lease costs is recorded on a straight-line basis over the term of the applicable agreement based upon the value of total future payments under the arrangement.

Operating lease costs associated with the Knicks and the Rangers playing home games at The Garden includes operating lease costs of (i) $44,052 and $42,769 of expense paid in cash for the years ended June 30, 2025 and 2024, respectively, and (ii) a non-cash expense of $23,566 and $24,850 for the years ended June 30, 2025 and 2024, respectively.

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

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Fifty percent of the aggregate luxury tax payments is a funding source for the revenue sharing plan (described below) and the remaining 50% of such payments is distributed in equal shares to non-taxpaying teams.

For the 2023-24 and 2022-23 seasons, the Knicks were not a luxury tax payer and we recorded approximately $11,968 and $15,074, respectively, of luxury tax proceeds from tax-paying teams.

For the 2024-25 season, the Knicks were a luxury tax payer and we recorded luxury tax expense of $38,035 for the year ended June 30, 2025.

For the 2023-24 season, the Knicks were not a luxury tax payer and we recorded $11,968 of luxury tax proceeds from tax-paying teams for the year ended June 30, 2024.

Tax obligations for years beyond the 2024-25 season will be subject to contractual player payroll obligations and corresponding NBA luxury tax thresholds.

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

During the 2020-21 season a “Ten-and-Spread” escrow system was put in place.

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

If, for a particular season, compensation reductions in excess of 10% were needed, the excess would be divided by three and recouped via reductions to players’ compensation over the same season, and the subsequent two seasons.

The reduction of players’ salary for any one season was capped at 20% and carried over to the subsequent season as additional compensation reductions.

Each team was entitled to receive an equal one-thirtieth share of the compensation reductions up to 10% and the excess above 10% was allocated in proportion to each team’s player payroll.

This system was in place until the new CBA took effect on July 1, 2023.

Effective July 1, 2023, a “Ten-and-Roll” escrow system was put in place.

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Each team is entitled to receive an equal one-thirtieth share of the compensation reductions up to 10% and the excess above 10% is allocated in proportion to each team’s player payroll.

The NBA also has a revenue sharing plan that generally requires the distribution of a pool of funds to teams with below-average net revenues (as defined in the plan), subject to reduction or elimination based on individual team market size and profitability.

The plan is funded by a combination of disproportionate contributions from teams with above-average net revenues, subject to certain profit-based limits (each as defined in the plan);

The NBA also has a revenue sharing plan that generally requires the distribution of a pool of funds to teams with below-average net revenues (as defined in the plan), subject to potential reduction based on individual team market size.

The plan is funded by a combination of disproportionate contributions from teams with above-average net revenues (as defined in the plan);

50% of aggregate league-wide luxury tax proceeds (see above);

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The actual amounts for the 2024-25 season may vary significantly from the recorded provision based on actual operating results for the league and all NBA teams for the season and other factors.

The current NHL CBA expires after the 2025-26 season (with the possibility of a one-year extension in certain circumstances).

The current NHL CBA expires on September 15, 2026 (with the possibility of a one-year extension in certain circumstances).

On July 8, 2025, the NHL and the National Hockey League Players’ Association (“NHLPA”) announced that a new four-year CBA had been ratified by the NHL Board of Governors and the NHL players.

The new NHL CBA expires after

the 2029-30 season.

The NHL CBA provides for a salary floor (i.e., a floor on each team’s aggregate player salaries) and a “hard” salary cap (i.e., teams may not exceed a stated maximum, which is adjusted each season based upon league-wide revenues).

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The actual amounts for the 2024-25 season may vary significantly from the recorded provision based on actual operating results for the league and all NHL teams for the season and other factors.

The new NHL CBA includes certain changes to league rules and regulations, including replacing one preseason home game with a regular season home game, and changes to the revenue sharing plan which, beginning with the 2026-27 season, will be funded as follows:

a) 50% from contributions by the top eleven revenue earning teams (based on preseason and regular season revenues, net of arena costs) in accordance with a formula;

(b) then from payments by teams participating in the playoffs, with each team contributing 35% of its gate receipts for each home playoff game in the first round of the playoffs and 50% of its gate receipts for each home playoff game in subsequent playoff rounds;

and (c) the remainder from centrally-generated NHL sources.

Other Team Operating Expenses

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Other Expenses

Other expenses primarily include Selling, general and administrative (“SG&A”) expenses that consist of (i) administrative costs, including compensation, costs under the Company’s services agreement with MSG Entertainment, operating lease costs and professional fees, (ii) fees related to the Company’s sponsorship sales and service representation agreements, and (iii) sales and marketing costs.

Other expenses primarily include Selling, general and administrative expenses that consist of (i) administrative costs, including compensation, costs under the Company’s services agreement with MSG Entertainment, operating lease costs and professional fees, (ii) fees related to the Company’s Sponsorship Sales and Service Representation Agreements (as defined below), and (iii) sales and marketing costs.

Factors Affecting Operating Results

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

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

Amendments to Media Rights Agreements

On June 27, 2025, the media rights agreements between subsidiaries of MSG Networks, on the one hand, and Knicks LLC and Rangers LLC (each as defined herein), on the other hand, were amended, as follows:

• New York Knicks:

◦ A modification to the annual rights fee to effect a 28% reduction as of January 1, 2025;

◦ an elimination of the annual rights fee escalator;

◦ a change to the contract expiration date to the end of the 2028-29 season, subject to a right of first refusal in favor of MSG Networks;

• New York Rangers:

◦ A modification to the annual rights fee to effect an 18% reduction as of January 1, 2025;

◦ an elimination of the annual rights fee escalator;

◦ a change to the contract expiration date to the end of the 2028-29 season, subject to a right of first refusal in favor of MSG Networks;

Concurrent with the amendments to the media rights agreements, MSG Networks issued penny warrants to the Company exercisable for 19.9% of the equity interests in MSG Networks.

As a result of the amendments to the media rights agreements, media rights fees revenues for the year ended June 30, 2025 have been recorded at the applicable reduced rate described above.

The Company will also record media rights fees revenues reflecting the reduced rates described above in future periods.

Results of Operations

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Other income (expense):

Interest expense, net (24,802) (20,492) (4,310) 21 %

Miscellaneous (expense) income, net (15,568) 25,239 (40,807) NM

Income before income taxes 105,668 89,921 15,747 18 %

Interest income 4,034 2,787 1,247 45 %

Interest expense (21,652) (27,589) 5,937 (22) %

Miscellaneous expense, net (14,462) (15,568) 1,106 (7) %

(Loss) income before income taxes (17,272) 105,668 (122,940) NM

Income tax expense (5,166) (46,897) 41,731 (89) %

Net income 58,771 45,628 13,143 29 %

Net loss attributable to nonredeemable noncontrolling interests — (2,165) 2,165 100 %

Net income attributable to Madison Square Garden Sports Corp.’s stockholders $ 58,771 $ 47,793 $ 10,978 23 %

Net (loss) income $ (22,438) $ 58,771 $ (81,209) NM

NM — Percentage is not meaningful

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The net increase was attributable to the following:

Increase in playoff related revenues $ 71,848

Increase in pre/regular season ticket-related revenues $ 14,911

Increase in revenues from league distributions 22,423

Increase in sponsorship and signage revenues 11,362

Increase in suite revenues 10,857

Increase in pre/regular season food, beverage and merchandise sales 5,289

Increase in revenues from local media rights fees 2,985

Decrease in sponsorship and signage revenues (1,855)

Increase in revenues from league distributions 8,013

Decrease in revenues from local media rights fees (17,935)

Decrease in playoff related revenues (13,233)

Decrease in pre/regular season food, beverage and merchandise sales (1,944)

Other net increases 40

The increase in playoff related revenues was primarily due to the Rangers and the Knicks playing additional home playoff games at The Garden in the current year as compared to the prior year and higher average per-game revenue.

The Rangers played eight home playoff games in the current year as the team advanced to the Eastern Conference Finals, as compared to three home playoff games in the prior year.

The Knicks played seven home playoff games at The Garden in the current year as compared to five home playoff games in the prior year.

The increase in pre/regular season ticket-related revenues was primarily due to higher average per-game revenue.

The increase in revenues from league distributions was primarily due to an increase in certain league distributions unrelated to national media rights fees, including a non-recurring territorial fee from the NHL of approximately $7 million dollars, and increased national media rights fees in the current year, partially offset by the absence of league distributions related to CLG in the current year and lower other league distributions in the current year.

The increase in suite revenues was primarily due to higher net sales of suite products, including revenue related to new premium hospitality offerings which were made available at the start of the 2023-24 seasons.

The increase in pre/regular season food, beverage and merchandise sales was primarily due to higher average per-game revenue and higher online sales of merchandise.

The increase in revenues from local media rights fees was primarily due to contractual rate increases, partially offset by a reduction in rights fees due to a decrease in the number of games exclusively available to MSG Networks during the current year as compared to the prior year.

The decrease in sponsorship and signage revenues was primarily due to the absence of sponsorship and signage revenues related to CLG in the current year.

The increase in sponsorship and signage revenues was primarily due to higher net sales of existing sponsorship and signage inventory.

The increase in suite revenues was primarily due to higher net sales of suite products.

The increase in revenues from league distributions was primarily due to an increase in certain league distributions unrelated to national media rights fees and increased national media rights fees in the current year, partially offset by the absence of a non-recurring territorial fee from the NHL of approximately $7 million recognized in the prior year.

The decrease in revenues from local media rights fees was primarily due to a reduction in local media rights fees for the 2024-25 season as a result of amendments to the Knicks’ and Rangers’ local media rights agreements with MSG Networks entered into in the fourth quarter of fiscal year 2025.

Stated annual local media rights fees, subject to adjustments in certain circumstances, including if the Company does not make available a minimum number of games in the year, after consideration of the media rights amendments are $139,237 for the year ending June 30, 2026 as compared to $162,939 in stated annual local media rights fees for the year ended June 30, 2025.

The decrease in playoff related revenues was primarily due to the Rangers playing eight home playoff games in the prior year as compared to not qualifying for the playoffs in the current year.

This decrease was partially offset by higher per-game Knicks playoff revenue and the Knicks playing an additional two home playoff games at The Garden in the current year as compared to the prior year.

The Knicks played nine home playoff games at The Garden in the current year as the team advanced to the Eastern Conference Finals as compared to seven home playoff games in the prior year.

The decrease in pre/regular season food, beverage and merchandise sales was primarily due to lower online sales of merchandise.

Merchandise sales for the year ended June 30, 2024 included the positive impact of new Rangers’ jersey launches.

Direct operating expenses

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• arena license fees recognized as operating lease costs associated with the Knicks and the Rangers playing home games at The Garden;

• cost of team personnel transactions for waivers/contract termination costs, trades, and season-ending player injuries (net of anticipated insurance recoveries) of players and other team personnel;

• NBA and NHL revenue sharing (net of escrow and excluding playoffs) and NBA luxury tax;

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The net increase was attributable to the following:

Increase in playoff related expenses $ 27,844

Increase in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax $ 62,628

Increase in net provisions for certain team personnel transactions 48,367

Increase in team personnel compensation 32,820

Increase in other team operating expenses 1,367

Increase in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax 7,831

Increase in pre/regular season expense associated with merchandise sales 3,439

Decrease in net provisions for certain team personnel transactions (3,631)

The increase in playoff related expenses was primarily due to the Rangers and the Knicks playing additional home playoff games at The Garden in the current year as compared to the prior year and, to a lesser extent, higher average per-game expenses.

The increase in team personnel compensation was primarily due to the impact of roster changes for the Knicks and the Rangers, partially offset by the absence of expenses related to CLG in the current year.

The increase in other team operating expenses was primarily a result of higher average per-game expenses including league assessments and expenses associated with day-to-day operations, including variable day-of-event costs incurred at The Garden, team travel and player insurance.

Decrease in playoff related expenses (5,786)

Decrease in pre/regular season expense associated with merchandise sales (792)

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

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$ 106,962 $ 44,334 $ 62,628

The increase in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax was primarily due to higher provisions for league revenue sharing expense (net of escrow and excluding playoffs) of $4,045 and lower recoveries of NBA luxury tax in the current year.

The Knicks were not a luxury tax payer for the 2022-23 or 2023-24 seasons and, therefore, received an equal share of the portion of luxury tax receipts that were distributed to non-tax paying teams.

The increase in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax was primarily due to higher NBA luxury tax expense and, to a lesser extent, higher provisions for league revenue sharing expense (net of escrow and excluding playoffs).

The increase in NBA luxury tax expense was the result of the Knicks being a significant luxury tax payer for the 2024-25 season, whereas the Knicks were not a luxury tax payer for the 2023-24 season.

The Knicks received an equal share of the portion of luxury tax receipts that were distributed to non-paying teams for the 2023-24 season.

Based on the current roster the Knicks would be a luxury tax payer for the 2025-26 season, however the final determination will be based upon the Knicks roster at the end of the 2025-26 regular season.

The actual amounts for the 2023-24 seasons may vary significantly from the recorded provisions based on actual operating results for each league and all teams within each league for the season and other factors.

The increase in pre/regular season expense associated with merchandise sales was primarily related to higher merchandise sales as a result of higher average per-game revenue and higher online sales of merchandise.

The actual net provisions for league revenue sharing expense (net of escrow and excluding playoffs) for the 2024-25 seasons may vary significantly from the recorded provisions based on actual operating results for each league and all teams within each league for the season and other factors.

Net provisions for certain team personnel transactions were as follows:

Years Ended June 30, Increase (Decrease)

Season-ending player injuries $ 2,613 $ — $ 2,613

Player trades (1,500) 1,143 (2,643)

Years Ended June 30, Increase

Waivers/contract terminations $ 39,215 $ (332) $ 39,547

Player trades 9,800 (1,500) 11,300

Season-ending player injuries 133 2,613 (2,480)

Net provisions for certain team personnel transactions $ 49,148 $ 781 $ 48,367

The increase in team personnel compensation was primarily due to changes in the Knicks roster.

The increase in other team operating expenses was primarily due to higher team travel and player insurance, partially offset by lower event presentation expenses.

The decrease in playoff related expenses was primarily due to the Rangers playing eight home playoff games in the prior year as compared to not qualifying for the playoffs in the current year.

This decrease was partially offset by higher per-game Knicks playoff expenses and the Knicks playing an additional two home playoff games at The Garden in the current year as compared to the prior year.

The decrease in pre/regular season expense associated with merchandise sales was primarily due to lower online sales of merchandise as compared to the prior year.

Selling, general and administrative expenses

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

Selling, general and administrative expenses primarily consist of (i) administrative costs, including compensation, costs under the Services Agreement, professional fees, and operating lease costs, (ii) fees related to the Sponsorship Sales and Service Representation Agreements, and (iii) sales and marketing costs.

Selling, general and administrative expenses generally do not fluctuate in line with changes in the Company’s revenues and direct operating expenses.

Selling, general and administrative expenses for the year ended June 30, 2024 increased $11,548, or 5%, to $261,433 as compared to the prior year primarily due to higher (i) operating lease costs of $7,435, (ii) employee compensation and related benefits of $4,086, including the net impact of executive management transition costs, and (iii) playoff related expenses of $2,829, partially offset by lower other general and administrative expenses.

Depreciation and amortization

Depreciation and amortization for the year ended June 30, 2024 decreased $413, or 12%, to $3,164 as compared to the prior year.

Selling, general and administrative expenses for the year ended June 30, 2025 increased $4,643, or 2%, to $266,076 as compared to the prior year primarily due to (i) higher professional fees of $15,196, (ii) higher operating lease costs of $5,904, (iii) higher fees related to the Sponsorship Sales and Service Representation Agreements of $1,768, and (iv) higher playoff related expenses of $1,473, partially offset by lower employee compensation and related benefits of $16,861, primarily related to executive management transition costs recognized in the prior year, and lower sales and marketing costs of $3,546.

Operating income

For the year ended June 30, 2024, operating income increased $60,864, or 71%, to $146,038 as compared to the prior year.

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

Interest expense, net

Interest expense, net increased $4,310, or 21%, to $24,802 as compared to the prior year.

The increase was primarily due to increased interest expense caused by higher average interest rates in the current year and higher average borrowings under the Knicks Revolving Credit Facility in the current year.

The increase was partially offset by lower average borrowings under the Rangers Revolving Credit Facility in the current year and, to a lesser extent, higher interest income primarily due to increased interest rates in the current year.

Miscellaneous (expense) income, net

Miscellaneous (expense) income, net decreased $40,807 to a net expense of $15,568 as compared to the prior year primarily due to the recognition of unrealized losses in the current year related to the Company’s investments in Xtract One common stock and warrants, as compared to unrecognized gains in the prior year related to the Company’s investments in Xtract One common stock and warrants, and, to a lesser extent, losses, including other than temporary impairments, associated with the company’s equity method investments in the current year.

Income tax expense for the year ended June 30, 2024 of $46,897 differs from the income tax expense derived from applying the statutory federal rate of 21% to pretax income primarily due to state and local tax expense of $18,348 and nondeductible officers’ compensation of $5,899.

Income tax expense for the year ended June 30, 2023 of $44,293 differs from the income tax expense derived from applying the statutory federal rate of 21% to pretax income primarily due to state and local tax expense of $15,066, nondeductible officers’ compensation of $5,238, a change in the estimated tax rate used to determine deferred taxes of $1,788, and nondeductible disability insurance premiums expense of $1,227.

For the year ended June 30, 2025, operating income decreased $131,230, or 90%, to $14,808 as compared to the prior year.

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

Interest income

Interest income increased $1,247, or 45%, to $4,034 as compared to the prior year.

The increase was primarily due to higher average cash balances in the current year, partially offset by lower average interest rates.

Interest expense

Interest expense decreased $5,937, or 22%, to $21,652 as compared to the prior year.

The decrease was primarily due to lower average borrowings under the Rangers Revolving Credit Facility and lower average interest rates under the Knicks Revolving Credit Facility in the current year.

Miscellaneous expense, net

The decrease in Miscellaneous expense, net of $1,106, or 7%, relates to the Company’s investments.

Income tax expense for the year ended June 30, 2025 of $5,166, reflecting an effective tax rate of (30)%, differs from the income tax benefit derived from applying the statutory federal rate of 21% to pretax loss primarily due to nondeductible officers’ compensation of $5,291 and state and local tax expense of $2,686.

Income tax expense for the year ended June 30, 2024 of $46,897, reflecting an effective tax rate of 44%, differs from the income tax expense derived from applying the statutory federal rate of 21% to pretax income primarily due to state and local tax expense of $18,348 and nondeductible officers’ compensation of $5,899.

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

Adjusted operating income

During the fourth quarter of fiscal year 2023, the Company amended the definition of adjusted operating income (loss) so that the impact of the non-cash portion of operating lease costs related to the Company’s Arena License Agreements with MSG Entertainment is no longer excluded in the calculation of adjusted operating income (loss) in all periods presented.

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

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Remeasurement of deferred compensation plan liabilities

Adjusted operating income (a)

$ 172,242 $ 115,045 $ 57,197 50 %

_________________

(a) During the fourth quarter of fiscal year 2023, the Company amended the definition of adjusted operating income so that the impact of the non-cash portion of operating lease costs related to the Company’s Arena License Agreements with MSG Entertainment is no longer excluded.

Pursuant to GAAP, recognition of operating lease costs is recorded on a straight-line basis over the term of the agreement based upon the value of total future payments under the arrangement.

As a result, operating lease costs is comprised of a contractual cash component plus or minus a non-cash component for each period presented.

Adjusted operating income includes operating lease costs of (i) $42,769 and $41,524 of expense paid in cash for the years ended June 30, 2024 and 2023, respectively, and (ii) a non-cash expense of $24,850 and $26,096, for the years ended June 30, 2024 and 2023, respectively.

For the year ended June 30, 2024, adjusted operating income increased $57,197, or 50%, to $172,242 as compared to the prior year.

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

Adjusted operating income $ 38,156 $ 172,242 $ (134,086) (78) %

For the year ended June 30, 2025, adjusted operating income decreased $134,086, or 78%, to $38,156 as compared to the prior year.

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

Liquidity and Capital Resources

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

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

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

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

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

In addition, the Company’s deferred revenue obligations included $11,033 from the NBA which the league provided to each team.

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

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and global economic and market conditions could adversely impact its ability to do so at that time.

We believe we have sufficient liquidity, including approximately $89,136 in Cash and cash equivalents as of June 30, 2024, along with $250,000 of additional available borrowing capacity under existing credit facilities, to fund our operations and satisfy any obligations, for the foreseeable future.

If MSG Networks were to experience a bankruptcy event, we would be prevented, absent a cure or waiver, from borrowing additional amounts under our revolving credit facilities.

We believe we have sufficient liquidity, including approximately $144,617 in Cash and cash equivalents as of June 30, 2025, along with $258,000 of additional available borrowing capacity under existing credit facilities (as of June 30, 2025), to fund our operations and satisfy any obligations, for the foreseeable future.

If MSG Networks were to experience a bankruptcy or insolvency event (as set forth in each of the credit facilities), we would be prevented, absent a cure or waiver, from making borrowings under our revolving credit facilities.

The Rangers Credit Agreement also includes an event of default upon a bankruptcy or insolvency event with respect to a material media rights counterparty, including MSG Networks.

There were no borrowings outstanding under the Rangers Revolving Credit Facility as of June 30, 2025.

See “Item 1A.

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Years Ended June 30,

Net income $ 58,771 $ 45,628

Adjustments to reconcile net income to net cash provided by operating activities 35,175 20,571

Net (loss) income $ (22,438) $ 58,771

Adjustments to reconcile net (loss) income to net cash provided by operating activities (13,542) 35,175

Changes in working capital assets and liabilities 127,587 (1,815)

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Net cash used in financing activities (26,406) (28,785)

Net increase (decrease) in cash, cash equivalents and restricted cash $ 54,448 $ (50,559)

Net increase in cash, cash equivalents and restricted cash $ 58,281 $ 54,448

Operating Activities

Net cash provided by operating activities for the year ended June 30, 2025 decreased by $524 to $91,607 as compared to the prior year.

The decrease was primarily due to the impact of changes in working capital assets and liabilities, partially offset by the increase in net income adjusted for non-cash items.

The changes in working capital assets and liabilities were primarily driven by (i) a decrease in accrued and other liabilities of $69,417 primarily due to higher payments related to employee compensation and league revenue sharing in the current year, (ii) an increase in net related party receivables of $27,820 primarily due to the timing of collections related to the Company’s arena license agreements and sponsorship sales and service representation agreements, and (iii) a decrease in deferred revenue of $27,482 primarily due to the timing of collections related to pre/regular season ticket sales.

These changes were partially offset by (i) a an increase in net related party payables of $14,975 primarily due to the timing of payments related to the Services Agreement and other agreements with MSG Entertainment, (ii) a decrease in prepaid expenses and other assets of $10,147 primarily related to decreased contract assets due to the timing of collections related to the Company’s

arena license agreements, and (iii) a lower increase in investments of $7,892 primarily related to the Company’s Executive Deferred Compensation Plan.

The decrease was due to the decrease in net (loss) income adjusted for non-cash items, offset by the impact of changes in working capital assets and liabilities.

The changes in working capital assets and liabilities were primarily driven by (i) increase in accrued and other liabilities of $66,787 primarily due to increased accruals for NBA luxury tax, revenue sharing, and league assessments in the current year period, (ii) a decrease in net related party receivables of $44,959 primarily due to the timing of collections related to the Company’s Arena License Agreements and Sponsorship Sales and Service Representation Agreements, and (iii) an increase in deferred revenue of $34,907 primarily due to higher collections of ticket, suites, and sponsorship sales in

advance of recognition.

These changes were partially offset by an increase in prepaid expenses and other assets of $17,459 primarily driven by the timing of payments related to employee compensation.

Investing Activities

Net cash used in investing activities for the year ended June 30, 2024 decreased by $8,861 to $8,898 as compared to the prior year primarily due to lower purchases of investments in the current year and, to a lesser extent, the impact of cash balances disposed of as part of the sale of CLG in the prior year.

Net cash used in investing activities for the year ended June 30, 2025 decreased by $1,978 to $6,920 as compared to the prior year primarily due to lower purchases of investments in the current year, partially offset by higher capital expenditures.

Financing Activities

Net cash used in financing activities for the year ended June 30, 2024 decreased by $156,488 to $28,785 as compared to the prior year primarily due to the impact of dividends paid and the accelerated share repurchase in the prior year, lower principal repayments under the Knicks Revolving Credit Facility and the Rangers Revolving Credit Facility in the current year and, to a lesser extent, lower taxes paid in lieu of shares issued for equity-based compensation in the current year.

These impacts were partially offset by additional borrowings under the Company’s credit facilities in the prior year.

Net cash used in financing activities for the year ended June 30, 2025 decreased by $2,379 to $26,406 as compared to the prior year primarily due to lower repayments under the Company’s credit facilities in the current year, partially offset by additional borrowings under the Company’s credit facilities in the prior year and, to a lesser extent, the impact of principal repayments under the Rangers NHL Advance Agreement in the current year and higher taxes paid in lieu of shares issued for equity-based compensation in the current year.

Contractual Obligations and Off-Balance Sheet Arrangements

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These estimates are subjective in nature and involve significant uncertainties and judgments and therefore cannot be determined with precision.

assumptions could significantly affect the estimates.

Changes in assumptions could significantly affect the estimates.

If these estimates or material related assumptions change in the future, the Company may be required to record impairment charges related to its long-lived and/or indefinite-lived assets.

Goodwill is tested annually for impairment as of August 31 st and at any time upon the occurrence of certain events or changes in circumstances.

Goodwill is tested annually for impairment as of August 31 st and at any time upon the occurrence of certain events or changes in

circumstances.

The Company performs its goodwill impairment test at the reporting unit level, which is the same as or one level below the operating segment level.

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Lease Accounting

The Company’s leases primarily consist of the lease of the Company’s corporate offices under the Sublease Agreement with MSG Entertainment (the “Sublease Agreement”) for our principal executive offices at Two Pennsylvania Plaza in New York, an aircraft lease, and the lease of the CLG Performance Center until April 2023.

The Company’s leases primarily consist of the lease of the Company’s corporate offices under the Sublease Agreement (as defined below) with MSG Entertainment for our principal executive offices at Two Pennsylvania Plaza in New York, an aircraft lease, and the lease of the CLG Performance Center until April 2023.

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

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The Company’s incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment surrounding the associated lease.

The Sublease Agreement ROU assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term.

The Company is party to the Sublease Agreement for the Company’s principal executive offices at Two Pennsylvania Plaza in New York.

The sublease ROU assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term.

In November 2021, Sphere Entertainment entered into a new lease for principal executive offices at Two Pennsylvania Plaza in New York, which was assigned to MSG Entertainment in connection with the MSGE Distribution (the “New MSGE Lease Agreement”).

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

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

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

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

As the Company has not yet entered into a new sublease for or taken possession of the new executive office space at Two Pennsylvania Plaza, no additional ROU assets or operating lease liabilities have been recorded as of June 30, 2024 related to the commitments discussed above.

In addition, we are party to long term leases with MSG Entertainment that end June 30, 2055 that allow the Knicks and the Rangers to play their home games at The Garden.

In accordance with the terms of the Prior Sublease Agreement (as defined below) and the New MSGE Lease Agreement, the lease term of the Prior Sublease Agreement was extended until October 31, 2024.

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

During the second quarter of fiscal 2025, the Company amended and restated its prior sublease agreement with MSG Entertainment (the “Prior Sublease Agreement”) to enter into a short term lease for new principal executive offices through December 31, 2024.

The Company recorded the short term operating lease costs for this amendment within Selling, general and administrative expenses in the accompanying consolidated statements of operations for the year ended June 30, 2025.

In January 2025, the Company entered into a new sublease agreement with MSG Entertainment for new principal executive offices at Two Pennsylvania Plaza in New York with a lease term which ends January 31, 2046 (the “New Sublease Agreement” and together with the Prior Sublease Agreement, the “Sublease Agreement”) and fixed lease payment obligations of $167,444 over the lease term.

The Company recorded a lease right-of-use asset and liability in the accompanying consolidated balance sheet as of June 30, 2025 based on the present value of minimum fixed lease payments over the lease term utilizing the Company’s incremental borrowing rate as of the lease commencement date.

In addition, the Company entered into a commitment whereby if the MSG Entertainment’s lease for principal executive offices at Two Pennsylvania Plaza in New York were terminated under certain circumstances, the Company would be required to enter into a new lease for executive offices at Two Pennsylvania Plaza directly with the landlord, with a consistent lease term through January 31, 2046.

In addition, the Company is party to long term leases with MSG Entertainment that end June 30, 2055 that allow the Knicks and the Rangers to play their home games at The Garden.

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

The contracted license fee for

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

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

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In June 2023, the Company entered into a lease agreement for an aircraft with a term through December 30, 2031.

The lease ROU asset and operating lease liability were recorded in the Company’s accompanying consolidated balance sheet as of June 30, 2023 based on the present value of minimum lease fixed payments over the lease term utilizing the Company’s incremental borrowing rate as of the lease commencement date.

The lease ROU asset and operating lease liability were recorded in the Company’s consolidated balance sheet based on the present value of minimum lease fixed payments over the lease term utilizing the Company’s incremental borrowing rate as of the lease commencement date.

Estimation of the incremental borrowing rate requires judgment by management and reflects an assessment of credit standing to derive an implied secured credit rating and corresponding yield curve.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis