Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-36900 MADISON SQUARE GARDEN SPORTS CORP. (Exact name of registrant as specified in ...

Madison Square Garden Sports Corp. (NYSE:MSGS) Q4 2022 Earnings Conference Call August 18, 2022 10:00 AM ET Company Participants Ari Danes - Investor Relations Andy Lustgarten - President & Chief Executive Officer Victoria Mink - Executive Vice President, Chief Financial Officer & Treasurer Conference Call Participants Brandon Ross - LightShed Partners Ben Swinburne - Morgan Stanley David Karnovsky - JPMorgan Devin Brisco - Wolfe Research Farshid Javar - Jefferies Operator Good morning. Thank you for standi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) For the fiscal year ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to _____________ Commission File Number: 1-36900 MADISON SQUARE GARDEN SPORTS CORP. (Exact name of registrant as specified in its charter) Delaware 47-3373056 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Ide ...

Financial Data and Key Metrics Changes - For the fiscal third quarter, the company reported revenues of $338 million and adjusted operating income of $81.5 million, reflecting strong consumer and corporate demand [8][34] - Total revenues increased significantly from $183 million in the prior year period, primarily due to the absence of capacity restrictions and a return to normal operations [34][36] - Adjusted operating income rose by $51.4 million compared to the prior year, driven by increased revenues despite higher operating expenses [36][38] Business Line Data and Key Metrics Changes - Ticket, suite, and sponsorship revenues are now above pre-pandemic levels on a per game basis, indicating a strong recovery in these areas [36][34] - Food and beverage (F&B) and merchandise per caps saw double-digit percentage increases compared to pre-pandemic levels, driven by improved guest spending and innovative product offerings [17][19] - Suite revenue per game has also surpassed pre-COVID levels, with strong demand for corporate hospitality continuing to grow [20][21] Market Data and Key Metrics Changes - The company noted a significant improvement in fan attendance and engagement, with ticket holder attendance returning to pre-Omicron levels by March [14][15] - The average combined season renewal rate for tickets is above 85%, indicating strong demand for the upcoming season [15] - The introduction of new marketing partnerships, particularly in mobile sports gaming, has positioned the company to capitalize on emerging revenue streams [23][24] Company Strategy and Development Direction - The company is focused on leveraging its iconic franchises to drive sustained growth and long-term shareholder value, with a strong emphasis on fan engagement and innovative marketing strategies [30][19] - There is a strategic push towards expanding into new sponsorship categories, including blockchain and international markets, to enhance revenue opportunities [25][68] - The company anticipates significant benefits from upcoming media rights deals and playoff runs, which are expected to generate incremental value [29][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to navigate challenges posed by the pandemic, highlighting a strong operational momentum [10][30] - The outlook for ticket revenue growth is positive, supported by new ticket inventory and increased prices for season tickets [16][16] - Management remains cautious about the unpredictable environment but is optimistic about the trajectory of the business and the potential for sustained growth [52][92] Other Important Information - The company has a total debt of $315 million and a liquidity position of $289.2 million, reflecting ongoing efforts to manage debt levels prudently [39][40] - The company has been actively paying down debt, with a total of $60 million repaid since the start of the third quarter, demonstrating confidence in future cash flow [40][56] Q&A Session Summary Question: Drivers of higher per caps for food and merchandise - Management indicated that the increase in per caps is driven by a combination of pricing strategies, new merchandise offerings, and improved service efficiency [45][47] Question: Update on capital allocation and debt paydown - Management reiterated a focus on debt paydown while maintaining financial flexibility, with ongoing evaluations of capital allocation options [50][56] Question: Potential sponsorship opportunities and jersey patches - Management highlighted the significant upside potential for jersey patch renewals and the importance of strategic partnerships in maximizing revenue [58][60] Question: Impact of playoffs on revenue - Playoff games are expected to provide a substantial boost to revenues, with each home playoff game generating approximately $1.5 million in adjusted operating income [78][79] Question: Corporate demand for next year - Management expressed optimism regarding corporate suite sales and sponsorship demand, indicating strong interest from partners [86][89]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements detail the company's financial performance and position for the periods ended March 31, 2022 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The balance sheets show an increase in total assets and liabilities, with an improvement in the company's negative total equity position Total Assets | Metric | March 31, 2022 (in thousands) | June 30, 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $1,363,773 | $1,309,939 | | Current Assets | $264,069 | $185,246 | | Cash and cash equivalents | $49,176 | $64,902 | | Accounts receivable, net | $92,694 | $74,197 | | Net related party receivables | $51,391 | $6,420 | | Right-of-use lease assets | $689,580 | $703,521 | | Deferred income tax assets, net | $0 | $15,943 | Total Liabilities and Equity | Metric | March 31, 2022 (in thousands) | June 30, 2021 (in thousands) | | :--- | :--- | :--- | | Total Liabilities | $1,541,639 | $1,511,805 | | Total Current Liabilities | $454,487 | $368,278 | | Long-term debt | $285,000 | $355,000 | | Operating lease liabilities, noncurrent | $703,718 | $691,152 | | Deferred tax liabilities, net | $15,030 | $0 | | Total Equity | $(177,866) | $(201,866) | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported significant improvements in revenue and net income, driven by the recovery from COVID-19 impacts Financial Performance (Three Months Ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $337,774 | $183,010 | +$154,764 | +84.6% | | Direct operating expenses | $206,273 | $126,510 | +$79,763 | +63.0% | | Selling, general and administrative expenses | $68,902 | $46,803 | +$22,099 | +47.2% | | Operating income (loss) | $61,393 | $8,124 | +$53,269 | +655.7% | | Net income (loss) attributable to Madison Square Garden Sports Corp.'s stockholders | $24,503 | $5,468 | +$19,035 | +348.1% | | Basic earnings (loss) per common share | $1.01 | $0.23 | +$0.78 | +339.1% | Financial Performance (Nine Months Ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $646,149 | $268,819 | +$377,330 | +140.3% | | Direct operating expenses | $407,698 | $182,957 | +$224,741 | +122.8% | | Selling, general and administrative expenses | $172,230 | $138,708 | +$33,522 | +24.2% | | Operating income (loss) | $62,374 | $(57,686) | +$120,060 | NM | | Net income (loss) attributable to Madison Square Garden Sports Corp.'s stockholders | $23,943 | $(63,574) | +$87,517 | NM | | Basic earnings (loss) per common share | $0.99 | $(2.64) | +$3.63 | NM | - Revenues from related parties were **$75,851 thousand** and **$153,229 thousand** for the three and nine months ended March 31, 2022, respectively[15](index=15&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported comprehensive income, a significant improvement from the prior year's comprehensive loss, driven by higher net income Comprehensive Income (Loss) (Three Months Ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net income (loss) | $23,919 | $5,095 | | Other comprehensive income, net of income taxes | $23 | $57 | | Comprehensive income (loss) | $23,942 | $5,152 | | Comprehensive income (loss) attributable to Madison Square Garden Sports Corp.'s stockholders | $24,526 | $5,525 | Comprehensive Income (Loss) (Nine Months Ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net income (loss) | $22,232 | $(65,053) | | Other comprehensive income, net of income taxes | $67 | $77 | | Comprehensive income (loss) | $22,299 | $(64,976) | | Comprehensive income (loss) attributable to Madison Square Garden Sports Corp.'s stockholders | $24,010 | $(63,497) | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company generated significant net cash from operating activities, a reversal from the prior year, while financing activities used cash Cash Flow Activities (Nine Months Ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $64,233 | $(54,367) | | Net cash used in investing activities | $(1,136) | $(437) | | Net cash (used in) provided by financing activities | $(84,978) | $42,155 | | Net decrease in cash, cash equivalents and restricted cash | $(21,881) | $(12,649) | | Cash, cash equivalents and restricted cash at end of period | $50,155 | $78,024 | - Operating activities improved due to **increased net income** and non-cash adjustments, partially offset by changes in working capital[213](index=213&type=chunk) - Financing activities shifted from cash provided to cash used, primarily due to **$70,000 thousand in principal repayments** on the Rangers revolving credit facility and no new borrowings in 2022[215](index=215&type=chunk) [Consolidated Statements of Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Equity) Total equity improved significantly due to net income and share-based compensation, despite tax withholding adjustments Total Equity (Nine Months Ended March 31, 2022) | Metric | June 30, 2021 (in thousands) | March 31, 2022 (in thousands) | | :--- | :--- | :--- | | Total Equity | $(201,866) | $(177,866) | | Net income (loss) | $(78,898) (Accumulated Deficit) | $(62,887) (Accumulated Deficit) | | Share-based compensation | $23,102 (Additional Paid-In Capital) | $12,862 (Additional Paid-In Capital) | - Share-based compensation expense for the nine months ended March 31, 2022, was **$19,178 thousand**[28](index=28&type=chunk) - Tax withholding associated with shares issued for equity-based compensation resulted in a decrease of **$18,306 thousand** in additional paid-in capital[28](index=28&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on business operations, accounting policies, and transactions, offering context to the financial statements [Note 1. Description of Business and Basis of Presentation](index=12&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) The company owns professional sports teams and operates as a single segment, with operations materially impacted by COVID-19 - The company's core business involves owning and operating the **New York Knicks (NBA)** and **New York Rangers (NHL)**, two development league teams, and esports franchises[33](index=33&type=chunk) - The company operates and reports financial information in **one segment**, with its Executive Chairman serving as the Chief Operating Decision Maker[33](index=33&type=chunk) - **COVID-19 materially impacted operations** and operating results in fiscal years 2020, 2021, and 2022, leading to reduced revenues and attendance restrictions[39](index=39&type=chunk)[40](index=40&type=chunk)[42](index=42&type=chunk)[48](index=48&type=chunk) - As of March 7, 2022, New York City **lifted all COVID-19 vaccination requirements** for guests at indoor entertainment venues, allowing full capacity[47](index=47&type=chunk) [Note 2. Accounting Policies](index=14&type=section&id=Note%202.%20Accounting%20Policies) The financial statements are prepared in accordance with GAAP, include subsidiaries, and rely on management estimates - The consolidated financial statements include Madison Square Garden Sports Corp and its subsidiaries, with all significant intercompany transactions and balances eliminated[51](index=51&type=chunk) - Management makes estimates and assumptions for various financial statement items, including valuation of accounts receivable, goodwill, intangible assets, and revenue recognition[52](index=52&type=chunk) - The company adopted ASU No 2019-12, Income Taxes (Topic 740), at the beginning of fiscal year 2022, which did not have a material impact on its consolidated financial statements[54](index=54&type=chunk) [Note 3. Revenue Recognition](index=15&type=section&id=Note%203.%20Revenue%20Recognition) Revenue from contracts with customers increased significantly due to the lifting of COVID-19 restrictions on events Revenue Disaggregation (Three Months Ended March 31) | Revenue Type | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Event-related | $119,728 | $4,552 | +$115,176 | +2530.1% | | Media rights | $124,803 | $139,963 | -$15,160 | -10.8% | | Sponsorship, signage and suite licenses | $76,715 | $25,391 | +$51,324 | +202.1% | | League distributions and other | $16,528 | $13,104 | +$3,424 | +26.1% | | **Total revenues** | **$337,774** | **$183,010** | **+$154,764** | **+84.6%** | Revenue Disaggregation (Nine Months Ended March 31) | Revenue Type | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Event-related | $232,672 | $4,552 | +$228,120 | +5011.4% | | Media rights | $243,697 | $212,458 | +$31,239 | +14.7% | | Sponsorship, signage and suite licenses | $138,419 | $32,336 | +$106,083 | +328.0% | | League distributions and other | $31,361 | $19,473 | +$11,838 | +60.8% | | **Total revenues** | **$646,149** | **$268,819** | **+$377,330** | **+140.3%** | Contract Balances | Metric | March 31, 2022 (in thousands) | June 30, 2021 (in thousands) | | :--- | :--- | :--- | | Receivables from contracts with customers, net | $66,547 | $30,834 | | Contract assets, current | $42,779 | $9,604 | | Deferred revenue, including non-current portion | $133,233 | $162,628 | - Estimated future revenue from unsatisfied performance obligations as of March 31, 2022, totals **$377,795 thousand**[66](index=66&type=chunk) [Note 4. Computation of Earnings (Loss) per Common Share](index=17&type=section&id=Note%204.%20Computation%20of%20Earnings%20(Loss)%20per%20Common%20Share) Basic and diluted EPS increased significantly, reflecting improved profitability with relatively stable weighted-average shares outstanding EPS (Three Months Ended March 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Basic earnings (loss) per common share | $1.01 | $0.23 | | Diluted earnings (loss) per common share | $1.00 | $0.22 | | Weighted-average shares for basic EPS | 24,275 | 24,156 | | Weighted-average shares for diluted EPS | 24,394 | 24,344 | EPS (Nine Months Ended March 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Basic earnings (loss) per common share | $0.99 | $(2.64) | | Diluted earnings (loss) per common share | $0.98 | $(2.64) | | Weighted-average shares for basic EPS | 24,235 | 24,120 | | Weighted-average shares for diluted EPS | 24,377 | 24,120 | [Note 5. Team Personnel Transactions](index=17&type=section&id=Note%205.%20Team%20Personnel%20Transactions) Net provisions for team personnel transactions decreased significantly, indicating fewer waiver and contract termination costs Net Provisions for Team Personnel Transactions | Period | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Three months ended March 31 | $304 | $3,305 | | Nine months ended March 31 | $729 | $17,003 | - The 2022 figures are net of an insurance recovery of **$656 thousand**[69](index=69&type=chunk) [Note 6. Cash, Cash Equivalents and Restricted Cash](index=18&type=section&id=Note%206.%20Cash,%20Cash%20Equivalents%20and%20Restricted%20Cash) Total cash, cash equivalents, and restricted cash decreased from the prior fiscal year-end due to a decline in cash balances Cash, Cash Equivalents and Restricted Cash | Metric | March 31, 2022 (in thousands) | June 30, 2021 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $49,176 | $64,902 | | Restricted cash | $979 | $7,134 | | **Total cash, cash equivalents and restricted cash** | **$50,155** | **$72,036** | - Restricted cash as of March 31, 2022, primarily included cash deposited in an escrow account[73](index=73&type=chunk) [Note 7. Leases](index=18&type=section&id=Note%207.%20Leases) Lease obligations, primarily for The Garden, increased, with operating lease costs rising substantially due to the end of COVID-19 payment reductions ROU Assets and Lease Liabilities | Metric | March 31, 2022 (in thousands) | June 30, 2021 (in thousands) | | :--- | :--- | :--- | | Right-of-use lease assets | $689,580 | $703,521 | | Operating lease liabilities, current | $43,412 | $41,951 | | Operating lease liabilities, noncurrent | $703,718 | $691,152 | | **Total lease liabilities** | **$747,130** | **$733,103** | Operating Lease Costs (Three Months Ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Direct operating expenses | $29,737 | $20,454 | +$9,283 | +45.4% | | Selling, general and administrative expenses | $613 | $611 | +$2 | +0.3% | | Short-term lease cost | $42 | $35 | +$7 | +20.0% | | **Total lease cost** | **$30,392** | **$21,100** | **+$9,292** | **+44.0%** | Operating Lease Costs (Nine Months Ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Direct operating expenses | $59,004 | $22,852 | +$36,152 | +158.2% | | Selling, general and administrative expenses | $1,837 | $1,833 | +$4 | +0.2% | | Short-term lease cost | $119 | $86 | +$33 | +38.4% | | **Total lease cost** | **$60,960** | **$24,771** | **+$36,189** | **+146.1%** | - Cash paid for amounts included in the measurement of lease liabilities for the nine months ended March 31, 2022, was **$32,580 thousand**[83](index=83&type=chunk) - Maturities of operating lease liabilities as of March 31, 2022, total **$2,305,252 thousand** in future lease payments, with a weighted average remaining lease term of **32.9 years**[84](index=84&type=chunk)[87](index=87&type=chunk) [Note 8. Goodwill and Intangible Assets](index=20&type=section&id=Note%208.%20Goodwill%20and%20Intangible%20Assets) Goodwill and indefinite-lived intangible assets remained stable with no impairments identified, while amortizable intangible assets decreased - The carrying amount of goodwill was **$226,955 thousand** as of March 31, 2022, and June 30, 2021, with no impairment identified in the annual test[88](index=88&type=chunk) - Indefinite-lived intangible assets totaled **$112,144 thousand**, primarily consisting of sports franchises, with no impairment identified in the annual test[88](index=88&type=chunk) Amortizable Intangible Assets (Net) | Asset Type | March 31, 2022 (in thousands) | June 30, 2021 (in thousands) | | :--- | :--- | :--- | | Trade names | $153 | $498 | | Non-compete agreements | $160 | $520 | | Other intangibles | $587 | $677 | | **Total Net** | **$900** | **$1,695** | - Amortization expense for intangible assets was **$265 thousand** for the three months and **$795 thousand** for the nine months ended March 31, 2022[89](index=89&type=chunk) [Note 9. Fair Value Measurements](index=21&type=section&id=Note%209.%20Fair%20Value%20Measurements) Assets measured at fair value increased, driven by time deposits, while debt instruments are valued at fair value approximating carrying value Assets Measured at Fair Value (March 31, 2022) | Asset | Fair Value (in thousands) | | :--- | :--- | | Money market account | $14,003 | | Time deposits | $34,017 | | **Total** | **$48,020** | Assets Measured at Fair Value (June 30, 2021) | Asset | Fair Value (in thousands) | | :--- | :--- | | Money market account | $33,820 | | Time deposits | $5,000 | | **Total** | **$38,820** | - The fair value of the company's debt approximates its carrying amount due to variable interest rates[93](index=93&type=chunk) [Note 10. Commitments and Contingencies](index=21&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) Commitments primarily involve employment agreements and lease payments, with no material changes since fiscal year 2021 - The company's commitments primarily consist of obligations under employment agreements with professional sports teams' personnel and future lease payments[94](index=94&type=chunk) - The company is a defendant in various lawsuits, but management does not believe that their resolution will have a **material adverse effect** on the company[95](index=95&type=chunk) [Note 11. Debt](index=21&type=section&id=Note%2011.%20Debt) The company refinanced its Knicks and Rangers credit facilities, increasing total capacity and making significant principal repayments - The 2021 Knicks Revolving Credit Facility provides up to **$275,000 thousand**, matures in December 2026, and had an outstanding balance of **$220,000 thousand** as of March 31, 2022[99](index=99&type=chunk)[100](index=100&type=chunk)[104](index=104&type=chunk) - The 2021 Rangers Revolving Credit Facility provides up to **$250,000 thousand**, and the company made **$70,000 thousand in principal repayments**, leaving an outstanding balance of **$65,000 thousand**[109](index=109&type=chunk)[110](index=110&type=chunk)[114](index=114&type=chunk) - The 2021 Rangers NHL Advance Agreement provided a **$30,000 thousand** advance from the NHL, with the full balance outstanding as of March 31, 2022[115](index=115&type=chunk)[116](index=116&type=chunk) - The company incurred **$2,836 thousand** in deferred financing costs during the nine months ended March 31, 2022, related to the new credit facilities[118](index=118&type=chunk) [Note 12. Benefit Plans](index=24&type=section&id=Note%2012.%20Benefit%20Plans) The company maintains defined benefit and defined contribution plans, with expenses for the latter increasing significantly Net Periodic Benefit Cost (MSGS Pension Plans) | Period | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Three months ended March 31 | $64 | $46 | | Nine months ended March 31 | $192 | $186 | Defined Contribution Plan Expenses (Savings Plans) | Period | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Three months ended March 31 | $1,238 | $426 | | Nine months ended March 31 | $3,076 | $1,530 | [Note 13. Share-based Compensation](index=25&type=section&id=Note%2013.%20Share-based%20Compensation) Share-based compensation expense trends were mixed, with a decrease over nine months due to a prior-year one-time expense recognition Share-based Compensation Expense | Period | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Three months ended March 31 | $6,973 | $3,867 | | Nine months ended March 31 | $19,178 | $26,193 | - The decrease in share-based compensation expense for the nine months was partly due to the recognition of approximately **$7,400 thousand** in previously unrecognized expense in the prior year[126](index=126&type=chunk) - The fair value of Restricted Stock Units (RSUs) that vested during the nine months ended March 31, 2022, was **$40,490 thousand**[127](index=127&type=chunk) - As of March 31, 2022, **94 thousand time-vesting stock options** were outstanding and exercisable, with an aggregate intrinsic value of **$3,151 thousand**[131](index=131&type=chunk) [Note 14. Stock Repurchase Program](index=26&type=section&id=Note%2014.%20Stock%20Repurchase%20Program) The company has a $525,000 thousand stock repurchase program with remaining availability, but no shares were repurchased - The company's board of directors authorized a **$525,000 thousand** Class A Common Stock repurchase program on September 11, 2015[132](index=132&type=chunk) - As of March 31, 2022, **$259,639 thousand** of availability remained under the stock repurchase authorization[133](index=133&type=chunk) - **No share repurchase activities** occurred during the nine months ended March 31, 2022, or 2021[133](index=133&type=chunk) [Note 15. Related Party Transactions](index=26&type=section&id=Note%2015.%20Related%20Party%20Transactions) The company has extensive related party transactions with entities controlled by the Dolan family, with revenues and expenses increasing - The Dolan Family Group, controlling stockholders of MSG Sports, also controls MSG Entertainment and AMC Networks Inc, leading to extensive related party transactions[135](index=135&type=chunk) - Key related party agreements include Arena License Agreements, Media Rights Agreements, Sponsorship Sales and Service Representation Agreements, and a Transition Services Agreement (TSA)[136](index=136&type=chunk) Related Party Revenues and Operating Expenses (Nine Months Ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Revenues from related parties | $153,229 | $103,752 | +$49,477 | +47.7% | | Corporate general and administrative expenses, net | $31,579 | $29,162 | +$2,417 | +8.3% | | Costs associated with Sponsorship sales | $16,857 | $10,184 | +$6,673 | +65.5% | | Costs associated with Arena License Agreements | $83,212 | $27,697 | +$55,515 | +200.4% | [Note 16. Income Taxes](index=28&type=section&id=Note%2016.%20Income%20Taxes) Income tax expense resulted in effective tax rates exceeding the statutory federal rate due to state taxes and nondeductible expenses Income Tax Expense (Three Months Ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Income tax expense | $34,993 | $53 | | Effective tax rate | 59% | N/A | Income Tax Expense (Nine Months Ended March 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Income tax expense | $30,939 | $(275) (benefit) | | Effective tax rate | 58% | N/A | - The estimated annual effective tax rate exceeds the statutory federal tax rate of 21% primarily due to **state taxes** and **nondeductible expenses**[146](index=146&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial condition and operating results, highlighting recovery from COVID-19 impacts and discussing liquidity [Introduction](index=31&type=section&id=Introduction) This MD&A supplements the financial statements, providing insights into the company's single operating segment and the impact of COVID-19 - The MD&A serves as a supplement to the unaudited financial statements, offering an understanding of the company's financial condition, changes, and results of operations[157](index=157&type=chunk) - Following the MSGE Distribution on April 17, 2020, the company operates and reports financial information in **one segment**[159](index=159&type=chunk) - **COVID-19 disruptions** have materially impacted the company's operations and operating results during fiscal years 2020, 2021, and temporarily in 2022[160](index=160&type=chunk) [Factors Affecting Results of Operations](index=31&type=section&id=Factors%20Affecting%20Results%20of%20Operations) COVID-19 significantly impacted operations through season suspensions and attendance restrictions, though these have since been lifted - COVID-19 led to the suspension of NBA and NHL seasons, shortened schedules, and initial fan prohibitions or limited capacity at The Garden[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - These disruptions materially impacted revenues from ticket sales, suite licenses, sponsorships, local media rights, and food/beverage sales[165](index=165&type=chunk) - **Cost-reduction measures**, including workforce reductions and limits on discretionary spending, were implemented[167](index=167&type=chunk) - As of March and April 2022, New York City and State **lifted all COVID-19 vaccination and capacity requirements** for indoor entertainment venues[168](index=168&type=chunk) - Future business remains sensitive to COVID-19 concerns, new variants, and discretionary consumer spending[170](index=170&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) The company experienced substantial financial recovery with significant revenue growth and a return to operating profitability [Revenues](index=33&type=section&id=Revenues) Revenues surged due to the lifting of COVID-19 restrictions, driving significant increases in event-related income Total Revenue Growth | Period | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Three months ended March 31 | $337,774 | $183,010 | +$154,764 | +85% | | Nine months ended March 31 | $646,149 | $268,819 | +$377,330 | +140% | Key Revenue Drivers (Nine Months Ended March 31) | Revenue Source | Increase (in thousands) | | :--- | :--- | | Pre/regular season ticket-related revenues | +$210,264 | | Suite license fee revenues | +$73,167 | | Sponsorship and signage revenues | +$32,916 | | Pre/regular season food, beverage and merchandise sales | +$18,527 | | Local media rights fees | +$39,597 | | Revenues from league distributions | +$551 | - The increases in revenues were primarily a result of the **elimination of government-mandated assembly restrictions** at The Garden[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) [Direct operating expenses](index=34&type=section&id=Direct%20operating%20expenses) Direct operating expenses increased significantly due to higher league-related costs and other expenses from the return to full operations Total Direct Operating Expenses Growth | Period | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Three months ended March 31 | $206,273 | $126,510 | +$79,763 | +63% | | Nine months ended March 31 | $407,698 | $182,957 | +$224,741 | +123% | Key Expense Drivers (Nine Months Ended March 31) | Expense Source | Increase (in thousands) | | :--- | :--- | | Net provisions for league revenue sharing expense (net of escrow) and NBA luxury tax | +$70,211 | | Other team operating expenses | +$46,874 | | Operating lease costs associated with The Garden | +$35,854 | | Pre/regular season food, beverage and merchandise sales expense | +$8,276 | | Team personnel compensation | +$78,210 | | Net provisions for certain team personnel transactions | -$14,684 | - The increases were largely due to the **elimination of government-mandated assembly restrictions** at The Garden and the delayed start of the 2020-21 seasons[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - Net provisions for league revenue sharing expense and NBA luxury tax increased by **$70,211 thousand** for the nine months ended March 31, 2022[185](index=185&type=chunk) [Selling, general and administrative expenses](index=36&type=section&id=Selling,%20general%20and%20administrative%20expenses) SG&A expenses increased, driven by higher employee compensation, marketing costs, and sponsorship sales commissions Total SG&A Expenses Growth | Period | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Three months ended March 31 | $68,902 | $46,803 | +$22,099 | +47% | | Nine months ended March 31 | $172,230 | $138,708 | +$33,522 | +24% | - The increases were primarily due to higher employee compensation, marketing costs, commissions related to sponsorship sales, and costs related to the TSA with MSG Entertainment[194](index=194&type=chunk) [Depreciation and amortization](index=36&type=section&id=Depreciation%20and%20amortization) Depreciation and amortization expenses decreased compared to the prior year periods Depreciation and Amortization | Period | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Three months ended March 31 | $1,206 | $1,573 | -$367 | -23% | | Nine months ended March 31 | $3,847 | $4,840 | -$993 | -21% | [Operating income (loss)](index=36&type=section&id=Operating%20income%20(loss)) Operating income improved significantly, turning from a loss to a profit due to increased revenues offsetting higher expenses Operating Income (Loss) | Period | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Three months ended March 31 | $61,393 | $8,124 | | Nine months ended March 31 | $62,374 | $(57,686) | - The improvements to operating income were primarily due to **increases in revenues**, partially offset by higher direct operating and SG&A expenses[196](index=196&type=chunk) [Interest expense, net](index=36&type=section&id=Interest%20expense,%20net) Net interest expense decreased for the quarter but increased for the nine-month period due to various financing activities Net Interest Expense | Period | 2022 (in thousands) | 2021 (in thousands) | Change (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Three months ended March 31 | $(2,418) | $(2,930) | +$512 | +17% | | Nine months ended March 31 | $(9,013) | $(7,406) | -$1,607 | -22% | - The increase in net interest expense for the nine months was driven by commitment fees, interest on the NHL advance, and accelerated financing costs[197](index=197&type=chunk) [Income taxes](index=36&type=section&id=Income%20taxes) The company recorded income tax expense for the three and nine-month periods, as detailed in Note 16 Income Tax Expense (Three Months Ended March 31) | Period | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Income tax expense | $34,993 | $53 | Income Tax Expense (Nine Months Ended March 31) | Period | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Income tax expense | $30,939 | $(275) (benefit) | - For a detailed discussion of the company's income taxes, refer to **Note 16** to the consolidated financial statements[198](index=198&type=chunk) [Adjusted operating income (loss)](index=36&type=section&id=Adjusted%20operating%20income%20(loss)) Adjusted operating income, a non-GAAP measure, improved significantly, reflecting the overall business recovery Adjusted Operating Income (Loss) | Period | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Three months ended March 31 | $81,454 | $30,042 | | Nine months ended March 31 | $108,989 | $(6,729) | - The improvements were primarily due to **increases in revenues**, partially offset by higher direct operating and SG&A expenses[203](index=203&type=chunk) - Adjusted operating income is a non-GAAP measure that excludes deferred rent expense, depreciation, amortization, and share-based compensation expense[199](index=199&type=chunk)[200](index=200&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity through cash and available borrowing capacity to fund operations for the foreseeable future - As of March 31, 2022, the company had approximately **$49,200 thousand** in cash and cash equivalents[207](index=207&type=chunk)[209](index=209&type=chunk) - The company has **$240,000 thousand** of additional available borrowing capacity under existing credit facilities[209](index=209&type=chunk) - Deferred revenue obligations were approximately **$79,753 thousand** as of March 31, 2022[207](index=207&type=chunk) - On April 27, 2022, the company made an additional principal repayment of **$15,000 thousand** under the 2021 Rangers Revolving Credit Facility[209](index=209&type=chunk) - Management believes the company has **sufficient liquidity** to fund operations and satisfy obligations for the foreseeable future[209](index=209&type=chunk) [Seasonality of Our Business](index=39&type=section&id=Seasonality%20of%20Our%20Business) The company's revenues are typically concentrated in the second and third fiscal quarters due to the NBA and NHL seasons - The company generally earns a disproportionate share of its revenues in the **second and third quarters** of its fiscal year[216](index=216&type=chunk) - COVID-19 disruptions in the 2019-20 seasons caused certain revenues to be recognized in **Q1 FY2021**[216](index=216&type=chunk) [Recently Issued Accounting Pronouncements and Critical Accounting Policies](index=39&type=section&id=Recently%20Issued%20Accounting%20Pronouncements%20and%20Critical%20Accounting%20Policies) Annual impairment testing for goodwill and intangible assets identified no impairments, and there were no material changes to critical accounting policies - The company performed its annual impairment test of goodwill during the first quarter of fiscal year 2022, and **no impairment was identified**[219](index=219&type=chunk)[221](index=221&type=chunk) - The annual impairment test of identifiable indefinite-lived intangible assets was performed during the first quarter of fiscal year 2022, and **no impairments were identified**[223](index=223&type=chunk) - There have been **no material changes** to the company's critical accounting policies from those set forth in its Annual Report on Form 10-K[218](index=218&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure from its floating-rate credit facilities - The company has potential **interest rate risk exposure** related to outstanding borrowings incurred under its credit facilities, which bear interest at a floating rate[226](index=226&type=chunk) - A hypothetical **100 basis point increase** in floating interest rates would increase annual interest expense by approximately **$2.9 million**[227](index=227&type=chunk) - The broad effects of COVID-19, including its negative impact on the global economy and financial markets, are also noted as a market risk[225](index=225&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The company's disclosure controls and procedures were evaluated and concluded to be **effective** as of March 31, 2022[228](index=228&type=chunk) - There were **no material changes** in the company's internal control over financial reporting during the quarter ended March 31, 2022[229](index=229&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various lawsuits, but management believes their resolution will not have a material adverse effect - The company is a defendant in various lawsuits[232](index=232&type=chunk) - Management does not believe that the resolution of these lawsuits will have a **material adverse effect** on the company[232](index=232&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a $525 million share repurchase program with remaining availability, but no activity occurred during the quarter - The company has a **$525 million** Class A Common Stock share repurchase program authorized by its board of directors on September 11, 2015[233](index=233&type=chunk) - As of March 31, 2022, approximately **$260 million** remained available under the share repurchase authorization[233](index=233&type=chunk) - **No share repurchase activity** occurred during the three months ended March 31, 2022[233](index=233&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including employment agreements, certifications, and iXBRL financial statements - Exhibits include an Employment Agreement, Certifications by the CEO and CFO, and financial statements formatted in Inline Extensible Business Reporting Language (iXBRL)[235](index=235&type=chunk)

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Madison Square Garden Sports Corp.'s unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), cash flows, equity, and detailed notes, for periods ended December 31, 2021, and June 30, 2021 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show the company's financial position as of December 31, 2021, compared to June 30, 2021, with increased total assets and liabilities, and a slight decrease in total equity | Metric (in thousands) | Dec 31, 2021 | Jun 30, 2021 | Change | % Change | | :-------------------- | :----------- | :----------- | :----- | :------- | | Total Current Assets | $218,555 | $185,246 | $33,309 | 18.0% | | Total Assets | $1,349,421 | $1,309,939 | $39,482 | 3.0% | | Total Current Liabilities | $451,798 | $368,278 | $83,520 | 22.7% | | Total Liabilities | $1,559,031 | $1,511,805 | $47,226 | 3.1% | | Total Equity | $(209,610) | $(201,866) | $(7,744) | -3.8% | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show a significant turnaround from net loss to net income for the three months and a substantial reduction in net loss for the six months ended December 31, 2021, driven by increased revenues | Metric (in thousands) | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Revenues | $289,581 | $28,771 | $260,810 | 906.5% | | Operating Income (Loss) | $35,919 | $(38,406) | $74,325 | NM | | Net Income (Loss) | $15,198 | $(41,133) | $56,331 | NM | | EPS (Basic) | $0.65 | $(1.68) | $2.33 | NM | | Metric (in thousands) | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Revenues | $308,375 | $85,809 | $222,566 | 259.4% | | Operating Income (Loss) | $981 | $(65,810) | $66,791 | NM | | Net Income (Loss) | $(1,687) | $(70,148) | $68,461 | 97.6% | | EPS (Basic) | $(0.02) | $(2.86) | $2.84 | 99.3% | [Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The consolidated statements of comprehensive income (loss) reflect a shift from comprehensive loss to income for the three months and a significant reduction in loss for the six months ended December 31, 2021, mirroring net income trends | Metric (in thousands) | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Net income (loss) | $15,198 | $(41,133) | $56,331 | NM | | Other comprehensive income, net of income taxes | $22 | $10 | $12 | 120.0% | | Comprehensive income (loss) | $15,220 | $(41,123) | $56,343 | NM | | Metric (in thousands) | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Net income (loss) | $(1,687) | $(70,148) | $68,461 | 97.6% | | Other comprehensive income, net of income taxes | $44 | $20 | $24 | 120.0% | | Comprehensive income (loss) | $(1,643) | $(70,128) | $68,485 | 97.7% | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows show significant improvement in operating cash flow, shifting from outflow to inflow for the six months ended December 31, 2021, while financing activities moved to a net outflow | Metric (in thousands) | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Net cash provided by (used in) operating activities | $24,030 | $(21,633) | $45,663 | NM | | Net cash used in investing activities | $(627) | $(141) | $(486) | -344.7% | | Net cash (used in) provided by financing activities | $(39,879) | $11,363 | $(51,242) | NM | | Net decrease in cash, cash equivalents and restricted cash | $(16,476) | $(10,411) | $(6,065) | -58.3% | | Cash, cash equivalents and restricted cash at end of period | $55,560 | $80,262 | $(24,702) | -30.8% | [Consolidated Statements of Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Equity) The consolidated statements of equity detail changes in stockholders' equity, including net income/loss, other comprehensive income, share-based compensation, and noncontrolling interest adjustments for periods ended December 31, 2021 and 2020 | Metric (in thousands) | Dec 31, 2021 | Sep 30, 2021 | Change | | :-------------------- | :----------- | :----------- | :----- | | Total Madison Square Garden Sports Corp. Stockholders' Equity | $(212,090) | $(234,417) | $22,327 | | Total Equity | $(209,610) | $(232,184) | $22,574 | | Metric (in thousands) | Dec 31, 2021 | Jun 30, 2021 | Change | | :-------------------- | :----------- | :----------- | :----- | | Total Madison Square Garden Sports Corp. Stockholders' Equity | $(212,090) | $(204,308) | $(7,782) | | Total Equity | $(209,610) | $(201,866) | $(7,744) | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed notes to the consolidated financial statements, covering business description, accounting policies, revenue recognition, leases, debt, and related party transactions, offering crucial context [Note 1. Description of Business and Basis of Presentation](index=12&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) MSG Sports owns and operates professional sports teams, including the Knicks and Rangers, as a single segment, significantly impacted by COVID-19 disruptions, though capacity restrictions eased by May 2021 - MSG Sports owns and operates the New York Knicks (NBA), New York Rangers (NHL), two development league teams (Hartford Wolf Pack, Westchester Knicks), and esports franchises (Knicks Gaming, Counter Logic Gaming)[34](index=34&type=chunk) - The company operates and reports financial information in one segment, with the Executive Chairman acting as the Chief Operating Decision Maker (CODM)[34](index=34&type=chunk) - COVID-19 materially impacted revenues in fiscal year 2021 due to suspended/delayed seasons, fewer games, and initial fan prohibitions at The Garden, though full capacity was permitted from May 2021 (with restrictions) and August 2021 (with vaccine proof)[39](index=39&type=chunk)[41](index=41&type=chunk)[43](index=43&type=chunk)[47](index=47&type=chunk) [Note 2. Accounting Policies](index=14&type=section&id=Note%202.%20Accounting%20Policies) This note outlines the company's accounting policies, including consolidation principles, use of estimates, and adoption of new pronouncements, with no material impact from recent changes - The consolidated financial statements include Madison Square Garden Sports Corp. and its subsidiaries, including CLG, where the Company holds a controlling voting interest[50](index=50&type=chunk) - Management uses estimates and assumptions for various financial statement items, including valuation of receivables, goodwill, intangible assets, and deferred taxes, which are evaluated on an ongoing basis[51](index=51&type=chunk)[52](index=52&type=chunk) - The company adopted ASU No. 2019-12, Income Taxes (Topic 740), at the beginning of fiscal year 2022, with no material impact on its consolidated financial statements[53](index=53&type=chunk) [Note 3. Revenue Recognition](index=15&type=section&id=Note%203.%20Revenue%20Recognition) Revenue recognition details are provided, disaggregating revenues by type and outlining contract balances, with significant increases in event-related, media rights, and sponsorship revenues due to COVID-19 recovery Disaggregation of Revenue (in thousands) | Revenue Type | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Event-related | $109,074 | $— | $112,944 | $— | | Media rights | $112,308 | $22,306 | $118,894 | $72,495 | | Sponsorship, signage and suite licenses | $58,534 | $3,995 | $61,704 | $6,945 | | League distributions and other | $9,665 | $2,470 | $14,833 | $6,369 | | Total Revenues | $289,581 | $28,771 | $308,375 | $85,809 | Contract Balances (in thousands) | Contract Balance | Dec 31, 2021 | Jun 30, 2021 | | :----------------- | :----------- | :----------- | | Receivables from contracts with customers, net | $48,993 | $30,834 | | Contract assets, current | $12,053 | $9,604 | | Deferred revenue, including non-current portion | $208,129 | $162,628 | - Revenue recognized for the six months ended December 31, 2021, relating to the deferred revenue balance as of June 30, 2021, was **$62,758 thousand**[62](index=62&type=chunk) [Note 4. Computation of Earnings (Loss) per Common Share](index=17&type=section&id=Note%204.%20Computation%20of%20Earnings%20(Loss)%20per%20Common%20Share) This note reconciles weighted-average shares for basic and diluted EPS calculations, highlighting the dilutive effect of share-based compensation plans Weighted-Average Shares Outstanding (in thousands) | Metric | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic | 24,261 | 24,144 | 24,217 | 24,103 | | Diluted | 24,373 | 24,144 | 24,217 | 24,103 | | Dilutive effect of shares issuable under share-based compensation plans | 112 | — | — | — | [Note 5. Team Personnel Transactions](index=17&type=section&id=Note%205.%20Team%20Personnel%20Transactions) Team personnel transactions resulted in a net credit for the three months and reduced net provisions for the six months ended December 31, 2021, compared to the prior year Team Personnel Transactions (in thousands) | Period | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net provisions | $(302) | $2,839 | $425 | $13,712 | [Note 6. Cash, Cash Equivalents and Restricted Cash](index=18&type=section&id=Note%206.%20Cash,%20Cash%20Equivalents%20and%20Restricted%20Cash) This note summarizes cash, cash equivalents, and restricted cash balances, showing a decrease in total cash and equivalents at December 31, 2021, compared to June 30, 2021 Cash, Cash Equivalents and Restricted Cash (in thousands) | Metric | Dec 31, 2021 | Jun 30, 2021 | | :----- | :----------- | :----------- | | Cash and cash equivalents | $54,815 | $64,902 | | Restricted cash | $745 | $7,134 | | Total cash, cash equivalents and restricted cash | $55,560 | $72,036 | - Restricted cash as of December 31, 2021, primarily included cash deposited in an escrow account[72](index=72&type=chunk) [Note 7. Leases](index=18&type=section&id=Note%207.%20Leases) The company's lease obligations primarily cover executive offices and The Garden for its sports teams, with operating lease costs significantly increasing due to resumed full contractual payments for Arena License Agreements - The company's leases primarily consist of executive offices and the Arena License Agreements for The Garden, which allow the Knicks and Rangers to play home games until June 30, 2055[73](index=73&type=chunk)[76](index=76&type=chunk) - The Sublease Agreement for principal executive offices was extended to October 31, 2024, leading to a non-cash addition of **$1,244 thousand** to right-of-use assets and operating lease liabilities[74](index=74&type=chunk) Operating Lease Costs (in thousands) | Lease Cost Type | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Operating lease cost (Direct operating expenses) | $27,860 | $2,308 | $29,267 | $2,398 | | Operating lease cost (Selling, general and administrative expenses) | $613 | $611 | $1,224 | $1,222 | | Total lease cost | $28,514 | $2,946 | $30,568 | $3,671 | - Maturities of operating lease liabilities as of December 31, 2021, total **$2,316,392 thousand** in future lease payments, with a weighted average remaining lease term of **33.1 years** and a weighted average discount rate of **7.13%**[87](index=87&type=chunk)[84](index=84&type=chunk) [Note 8. Goodwill and Intangible Assets](index=20&type=section&id=Note%208.%20Goodwill%20and%20Intangible%20Assets) The company's annual impairment tests for goodwill and indefinite-lived intangible assets in Q1 FY2022 identified no impairment, with goodwill at **$226.955 million** and indefinite-lived assets at **$112.144 million** - Goodwill carrying amount as of December 31, 2021, and June 30, 2021, was **$226,955 thousand**, with no impairment identified in the annual test[88](index=88&type=chunk) Indefinite-Lived Intangible Assets (in thousands) | Asset Type | Dec 31, 2021 | | :---------------------- | :----------- | | Sports franchises | $111,064 | | Photographic related rights | $1,080 | | Total | $112,144 | Amortizable Intangible Assets, Net (in thousands) | Asset Type | Dec 31, 2021 | Jun 30, 2021 | | :------------------ | :----------- | :----------- | | Trade names | $268 | $498 | | Non-compete agreements | $280 | $520 | | Other intangibles | $617 | $677 | | Total | $1,165 | $1,695 | - Amortization expense for intangible assets was **$265 thousand** for both the three months ended December 31, 2021 and 2020, and **$530 thousand** for both the six months ended December 31, 2021 and 2020[89](index=89&type=chunk) [Note 9. Fair Value Measurements](index=21&type=section&id=Note%209.%20Fair%20Value%20Measurements) This note details fair value measurements for the company's financial instruments, including cash equivalents and debt, with Level I for money market/time deposits and Level II for debt, all approximating fair values Assets Measured at Fair Value (in thousands) | Asset Type | Fair Value Hierarchy | Dec 31, 2021 | Jun 30, 2021 | | :---------------- | :------------------- | :----------- | :----------- | | Money market account | I | $12,419 | $33,820 | | Time deposits | I | $35,005 | $5,000 | | Total | | $47,424 | $38,820 | Carrying Value and Fair Value of Financial Instruments (in thousands) | Liability Type | Dec 31, 2021 Carrying Value | Dec 31, 2021 Fair Value | Jun 30, 2021 Carrying Value | Jun 30, 2021 Fair Value | | :------------- | :-------------------------- | :---------------------- | :-------------------------- | :---------------------- | | Debt, current | $30,000 | $30,000 | $30,000 | $30,000 | | Long-term debt | $330,000 | $330,000 | $355,000 | $355,000 | [Note 10. Commitments and Contingencies](index=21&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) The company's commitments primarily involve employment agreements and future lease payments, and while a defendant in lawsuits, management does not anticipate a material adverse effect from their resolution - Commitments primarily consist of obligations under employment agreements with professional sports teams' personnel and future lease payments (see Note 7)[94](index=94&type=chunk) - The company is a defendant in various lawsuits, but management does not believe their resolution will have a material adverse effect[95](index=95&type=chunk) [Note 11. Debt](index=21&type=section&id=Note%2011.%20Debt) This note details the company's debt structure, including amended Knicks and Rangers Revolving Credit Facilities extended to December 2026, the termination of Knicks Holdings facility, and an NHL advance agreement, with total outstanding debt of **$330 million** as of December 31, 2021 - The 2021 Knicks Revolving Credit Facility was amended and restated, providing up to **$275,000 thousand**, maturing December 14, 2026, with an outstanding balance of **$220,000 thousand** as of December 31, 2021[99](index=99&type=chunk)[100](index=100&type=chunk) - The 2021 Rangers Revolving Credit Facility was amended and restated, providing up to **$250,000 thousand**, maturing December 14, 2026, with an outstanding balance of **$110,000 thousand** as of December 31, 2021[109](index=109&type=chunk)[110](index=110&type=chunk) - The 2020 Knicks Holdings Revolving Credit Facility was terminated on December 14, 2021[105](index=105&type=chunk) - Rangers LLC received a **$30,000 thousand** advance from the NHL under the 2021 Rangers NHL Advance Agreement, bearing **3.00% interest**, with an outstanding balance of **$30,000 thousand** as of December 31, 2021[115](index=115&type=chunk)[116](index=116&type=chunk) [Note 12. Benefit Plans](index=24&type=section&id=Note%2012.%20Benefit%20Plans) This note outlines the company's defined benefit pension and defined contribution plans, detailing net periodic benefit costs and expenses for the three and six months ended December 31, 2021 Net Periodic Benefit Cost for MSGS Pension Plans (in thousands) | Component | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :---------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Interest cost | $31 | $60 | $62 | $120 | | Recognized actuarial loss | $33 | $10 | $66 | $20 | | Total Net periodic benefit cost | $64 | $70 | $128 | $140 | Expenses Related to Savings Plans (in thousands) | Period | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Expenses | $899 | $506 | $1,838 | $1,104 | [Note 13. Share-based Compensation](index=25&type=section&id=Note%2013.%20Share-based%20Compensation) Share-based compensation expense decreased for the three and six months ended December 31, 2021, partly due to a prior-year one-time equity award cancellation, with vested RSUs valued at **$38.828 million** Share-based Compensation Expense (in thousands) | Period | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Expense | $7,354 | $15,981 | $12,205 | $22,326 | - The decrease in share-based compensation expense in 2021 is partly due to a **$7,400 thousand** expense recognized in 2020 from the cancellation of a one-time equity award[126](index=126&type=chunk) - The fair value of RSUs that vested during the six months ended December 31, 2021, was **$38,828 thousand**[127](index=127&type=chunk) [Note 14. Stock Repurchase Program](index=26&type=section&id=Note%2014.%20Stock%20Repurchase%20Program) The company's board authorized a **$525 million** Class A Common Stock repurchase program in September 2015, with **$259.639 million** remaining available as of December 31, 2021, and no repurchases during the six months ended December 31, 2021 and 2020 - The company has a **$525,000 thousand** Class A Common Stock repurchase program authorized in September 2015[132](index=132&type=chunk) - As of December 31, 2021, **$259,639 thousand** of availability remained under the stock repurchase authorization[133](index=133&type=chunk) - No share repurchase activities occurred during the six months ended December 31, 2021, or 2020[133](index=133&type=chunk) [Note 15. Related Party Transactions](index=26&type=section&id=Note%2015.%20Related%20Party%20Transactions) The company engages in various related party transactions with MSG Entertainment and Dolan family entities, including Arena License Agreements, media rights, and sponsorship sales, with significant increases in both revenues and expenses for the three and six months ended December 31, 2021 - The Dolan family group beneficially owns **100%** of Class B Common Stock and approximately **3.1%** of Class A Common Stock, representing about **70.6%** of aggregate voting power[135](index=135&type=chunk) - Key related party agreements include Arena License Agreements, media rights agreements, sponsorship sales and service representation agreements, and a Transition Services Agreement (TSA) with MSG Entertainment[136](index=136&type=chunk) Related Party Revenues and Operating Expenses (in thousands) | Metric | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenues | $70,131 | $14,369 | $77,378 | $23,430 | | Corporate general and administrative expenses, net | $11,755 | $8,237 | $21,354 | $19,880 | | Costs associated with Sponsorship sales and service representation agreements | $5,735 | $2,322 | $8,468 | $4,680 | | Costs associated with Arena License Agreements | $39,056 | $2,494 | $41,016 | $2,854 | [Note 16. Income Taxes](index=28&type=section&id=Note%2016.%20Income%20Taxes) Income tax expense for the three months ended December 31, 2021, was **$17.115 million** with a **53%** effective rate, while the six months saw a **$4.054 million** benefit with a **71%** effective rate due to share-based awards - Income tax expense for the three months ended December 31, 2021, was **$17,115 thousand**, with an effective tax rate of **53%**[146](index=146&type=chunk) - Income tax benefit for the six months ended December 31, 2021, was **$4,054 thousand**, with an effective tax rate of **71%**, influenced by **$752 thousand** of excess tax benefit on share-based payment awards[147](index=147&type=chunk) - The City of New York commenced an audit of state income tax returns for fiscal years 2016 and 2017, but the company does not expect material changes[150](index=150&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting COVID-19's impact, substantial improvements in operating and net income, liquidity, capital resources, and critical accounting policies [Introduction](index=31&type=section&id=Introduction) This introduction sets the context for the MD&A, noting the company's structure after the MSG Entertainment distribution and its operation as a single segment - After the MSGE Distribution on April 17, 2020, the company operates and reports financial information in one segment[157](index=157&type=chunk)[158](index=158&type=chunk) [Factors Affecting Results of Operations](index=31&type=section&id=Factors%20Affecting%20Results%20of%20Operations) The COVID-19 pandemic significantly impacted operations, leading to suspended seasons and fan prohibitions, and while restrictions eased, management acknowledges potential long-term effects on fan attendance and discretionary spending - COVID-19 disruptions materially impacted revenues in fiscal year 2021 due to suspended/delayed NBA and NHL seasons, fewer games, and initial fan prohibitions at The Garden[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) - Effective May 19, 2021, and August 17, 2021, The Garden was permitted to host guests at full capacity, subject to restrictions including vaccination proof[163](index=163&type=chunk)[168](index=168&type=chunk) - Management is unable to predict longer-term effects of COVID-19, with fan attendance potentially impacted by variants, reduced tourism, and public hesitancy, which could lead to declines in discretionary spending on sporting events[169](index=169&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) The company saw substantial improvement in operating results for the three and six months ended December 31, 2021, driven by significant revenue increases from COVID-19 recovery, shifting from operating loss to income despite higher expenses Key Financial Highlights (in thousands) | Metric | 3 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2020 | Change | % Change | | :----- | :-------------------------- | :-------------------------- | :----- | :------- | | Revenues | $289,581 | $28,771 | $260,810 | NM | | Direct operating expenses | $192,847 | $16,661 | $176,186 | NM | | Selling, general and administrative expenses | $59,600 | $48,909 | $10,691 | 22% | | Operating income (loss) | $35,919 | $(38,406) | $74,325 | NM | | Net income (loss) attributable to Madison Square Garden Sports Corp.'s stockholders | $15,845 | $(40,625) | $56,470 | NM | | Metric | 6 Months Ended Dec 31, 2021 | 6 Months Ended Dec 31, 2020 | Change | % Change | | :----- | :-------------------------- | :-------------------------- | :----- | :------- | | Revenues | $308,375 | $85,809 | $222,566 | NM | | Direct operating expenses | $201,425 | $56,447 | $144,978 | NM | | Selling, general and administrative expenses | $103,328 | $91,905 | $11,423 | 12% | | Operating income (loss) | $981 | $(65,810) | $66,791 | NM | | Net income (loss) attributable to Madison Square Garden Sports Corp.'s stockholders | $(560) | $(69,042) | $68,482 | 99% | - Revenue increases were driven by: pre/regular season ticket-related revenues (**+$100,802 thousand** for 3 months, **+$104,484 thousand** for 6 months), local media rights fees (**+$50,871 thousand** for 3 months, **+$49,107 thousand** for 6 months), league distributions (**+$44,790 thousand** for 3 months, **+$3,575 thousand** for 6 months), suite license fees (**+$34,349 thousand** for 3 months, **+$34,613 thousand** for 6 months), and sponsorship/signage revenues (**+$20,190 thousand** for 3 months, **+$20,146 thousand** for 6 months)[176](index=176&type=chunk) - Direct operating expenses increased primarily due to higher team personnel compensation (**+$91,147 thousand** for 3 months, **+$77,685 thousand** for 6 months), other team operating expenses (**+$36,423 thousand** for 3 months, **+$35,752 thousand** for 6 months), and operating lease costs for games at The Garden (**+$25,459 thousand** for 3 months, **+$26,770 thousand** for 6 months)[183](index=183&type=chunk) - Adjusted operating income improved by **$74,683 thousand** for the three months and **$64,306 thousand** for the six months ended December 31, 2021, reflecting the revenue recovery partially offset by increased operating expenses[197](index=197&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash, credit facilities, and operating cash flow, with **$54.8 million** in cash and **$195 million** available borrowing capacity as of December 31, 2021, deemed sufficient for foreseeable operations - Primary liquidity sources are cash and cash equivalents, available borrowing capacity under credit facilities, and cash flow from operations[199](index=199&type=chunk) - As of December 31, 2021, the company had **$54,800 thousand** in Cash and cash equivalents and **$195,000 thousand** of additional available borrowing capacity under existing credit facilities[204](index=204&type=chunk) - Net cash provided by operating activities for the six months ended December 31, 2021, was **$24,030 thousand**, a significant improvement from a net cash outflow of **$21,633 thousand** in the prior year[208](index=208&type=chunk) - Net cash used in financing activities for the six months ended December 31, 2021, was **$39,879 thousand**, compared to net cash provided of **$11,363 thousand** in the prior year, due to additional borrowings in the prior year and a partial repayment on the 2021 Rangers Credit Agreement in the current year[210](index=210&type=chunk) [Seasonality of Our Business](index=38&type=section&id=Seasonality%20of%20Our%20Business) The company typically earns disproportionate revenues in the second and third fiscal quarters due to its NBA and NHL teams, though COVID-19 disruptions in 2020 shifted some FY2020 revenues to Q1 FY2021 - The company typically earns a disproportionate share of revenues in the second and third fiscal quarters due to its NBA and NHL sports teams[211](index=211&type=chunk) - COVID-19 disruptions in 2020 caused certain revenues that would have been recognized in Q3/Q4 FY2020 to be recognized in Q1 FY2021[211](index=211&type=chunk) [Recently Issued Accounting Pronouncements and Critical Accounting Policies](index=38&type=section&id=Recently%20Issued%20Accounting%20Pronouncements%20and%20Critical%20Accounting%20Policies) This section refers to Note 2 for accounting pronouncements and discusses annual impairment testing for goodwill and indefinite-lived intangible assets, confirming no impairment in Q1 FY2022 - The company performed its annual impairment test of goodwill and identifiable indefinite-lived intangible assets during the first quarter of fiscal year 2022, with no impairments identified[213](index=213&type=chunk)[216](index=216&type=chunk)[218](index=218&type=chunk) - Goodwill impairment testing is performed at the reporting unit level, which is the same as or one level below the operating segment, and involves a qualitative assessment or quantitative analysis[214](index=214&type=chunk) - Identifiable indefinite-lived intangible assets, such as sports franchises and photographic related rights, are tested annually for impairment using a qualitative assessment or quantitative analysis[217](index=217&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on floating-rate credit facility borrowings, where a **100 basis point** increase would raise annual interest expense by approximately **$3.3 million** on **$330 million** outstanding debt - The company has potential interest rate risk exposure related to outstanding borrowings under its credit facilities, which bear interest at a floating rate[222](index=222&type=chunk) - As of December 31, 2021, total borrowings outstanding under credit facilities were **$330 million**[223](index=223&type=chunk) - A hypothetical **100 basis point** increase in floating interest rates would increase annual interest expense by approximately **$3.3 million**[223](index=223&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's management concluded that disclosure controls and procedures were effective as of December 31, 2021, with no material changes to internal control over financial reporting during the quarter - The company's disclosure controls and procedures were effective as of December 31, 2021[224](index=224&type=chunk) - No material changes occurred in the company's internal control over financial reporting during the quarter ended December 31, 2021[225](index=225&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various lawsuits, but management believes their resolution will not have a material adverse effect - The company is a defendant in various lawsuits[228](index=228&type=chunk) - Management does not believe the resolution of these lawsuits will have a material adverse effect on the company[228](index=228&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a **$525 million** Class A Common Stock repurchase program, with approximately **$260 million** remaining as of December 31, 2021, and no repurchase activity during the three months ended December 31, 2021 - The company has a **$525 million** Class A Common Stock share repurchase program authorized in September 2015[229](index=229&type=chunk) - Approximately **$260 million** remained available under the authorization as of December 31, 2021[229](index=229&type=chunk) - No share repurchase activity occurred during the three months ended December 31, 2021[229](index=229&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including employment agreements, credit agreement amendments, certifications, and financial statements in iXBRL format - Exhibits include employment agreements for key executives (Victoria Mink, Andrew Lustgarten, James L. Dolan)[231](index=231&type=chunk) - Amendments to the credit agreements for New York Knicks, LLC and New York Rangers, LLC are filed as exhibits[231](index=231&type=chunk) - Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are included[231](index=231&type=chunk)

Madison Square Garden Sports Corp. (NYSE:MSGS) Q2 2021 Earnings Conference Call February 3, 2022 10:00 AM ET Company Participants Ari Danes - Investor Relations Andy Lustgarten - President & Chief Executive Officer Victoria Mink - Executive Vice President, Chief Financial Officer & Treasurer Conference Call Participants David Karnovsky - JPMorgan Brandon Ross - LightShed Partners Curry Baker - Guggenheim Securities Paul Golding - Macquarie Capital David Joyce - Barclays David Katz - Jefferies LLC Operator G ...

Madison Square Garden Sports Corp. (NYSE:MSGS) Q1 2022 Earnings Conference Call November 10, 2021 10:00 AM ET Company Participants Ari Danes - Investor Relations Andy Lustgarten - President & Chief Executive Officer Victoria Mink - Executive Vice President, Chief Financial Officer & Treasurer Conference Call Participants David Karnovsky - JPMorgan Ben Swinburne - Morgan Stanley Brandon Ross - LightShed Partners John Janedis - Wolfe Research Operator Good morning. Thank you for standing by, and welcome to th ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ________________________ (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-36900 MADISON SQUARE GARDEN SPORTS CORP. (Exact name of registrant as specified in ...

PART I [Business](index=3&type=section&id=Item%201.%20Business) MSG Sports is a professional sports company owning iconic franchises whose revenue from tickets, media, and sponsorships was impacted by COVID-19 - The company owns a portfolio of professional sports teams, including the **New York Knicks (NBA)**, **New York Rangers (NHL)**, Hartford Wolf Pack (AHL), Westchester Knicks (NBAGL), and two esports franchises, Knicks Gaming and Counter Logic Gaming (CLG)[11](index=11&type=chunk) - A key strategy is to maximize the value of live sports content through long-term local and national media rights agreements[15](index=15&type=chunk) - The company has long-term (35-year) Arena License Agreements with MSG Entertainment for the Knicks and Rangers to play their home games at Madison Square Garden, which includes revenue sharing[14](index=14&type=chunk)[23](index=23&type=chunk) - The **COVID-19 pandemic materially impacted revenues in FY2021** due to shortened seasons, government-mandated limits on fan attendance, and reduced ticket sales, suite licenses, sponsorships, and merchandise sales[27](index=27&type=chunk)[60](index=60&type=chunk) - As of June 30, 2021, the company had approximately **415 full-time and 242 part-time employees**, with approximately 16% of the workforce represented by unions[50](index=50&type=chunk)[54](index=54&type=chunk) [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, market competition, team performance, labor disputes, and substantial indebtedness [Sports Business Risks](index=10&type=section&id=Sports%20Business%20Risks) - The **COVID-19 pandemic has materially impacted operations** and operating results, leading to shortened seasons, limited fan attendance, and reduced revenues, with a resurgence posing future risks[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - The business faces **intense competition** for attendance, viewership, and advertising from numerous other professional and collegiate sports teams in the New York City metropolitan area[67](index=67&type=chunk)[68](index=68&type=chunk) - Financial results are substantially dependent on the **continued popularity and competitive success of the Knicks and Rangers**, which drives ticket sales, sponsorships, and media rights value[72](index=72&type=chunk) - Actions by the NBA and NHL, such as changes to media rights, revenue sharing, and league expansion, can have a **material negative effect** on the company's business[75](index=75&type=chunk)[78](index=78&type=chunk)[81](index=81&type=chunk) [Economic and Business Relationship Risks](index=14&type=section&id=Economic%20and%20Business%20Relationship%20Risks) - Subsidiaries have incurred **substantial indebtedness**, with **$220 million** outstanding under the Knicks facility and **$135 million** under the Rangers facility as of June 30, 2021[86](index=86&type=chunk) - The company has a history of operating losses, reporting losses of approximately **$78 million in FY2021**, **$94 million in FY2020**, and **$58 million in FY2019**[93](index=93&type=chunk) - The company does not own Madison Square Garden and relies on Arena License Agreements with MSG Entertainment, which expire in 2055[97](index=97&type=chunk) - The business is dependent on unionized labor, particularly NBA and NHL players, and **future labor disputes could have a material negative effect**[108](index=108&type=chunk) - The company relies on MSG Entertainment for various services under a transition services agreement, and a breach or termination could cause operational difficulties[109](index=109&type=chunk)[110](index=110&type=chunk)[112](index=112&type=chunk) [Operational Risks](index=18&type=section&id=Operational%20Risks) - The business is exposed to risks from terrorist activity, pandemics, or other events that discourage public assembly at The Garden, which could reduce attendance and revenue[114](index=114&type=chunk) - The company faces continually evolving **cybersecurity risks**, including data breaches and ransomware attacks, which could lead to business disruption and financial losses[121](index=121&type=chunk)[123](index=123&type=chunk) [Corporate Governance Risks](index=20&type=section&id=Corporate%20Governance%20Risks) - The company is controlled by the **Dolan Family Group**, which held approximately **70.7% of the total voting power** as of July 30, 2021, giving them control over stockholder decisions[138](index=138&type=chunk)[140](index=140&type=chunk) - The company has elected to be a **"controlled company"** under NYSE rules, allowing it to opt out of certain corporate governance requirements[142](index=142&type=chunk) - Overlapping key officers and directors with MSG Entertainment and/or AMC Networks may lead to **conflicts of interest**[147](index=147&type=chunk)[148](index=148&type=chunk) [Properties](index=23&type=section&id=Item%202.%20Properties) The company licenses Madison Square Garden, owns a training center in NY, leases a performance center in CA, and subleases its main offices - The company licenses Madison Square Garden from MSG Entertainment for its Knicks and Rangers home games[150](index=150&type=chunk) - Owns the Madison Square Garden Training Center in Greenburgh, NY (approx 114,000 sq ft) and leases the CLG Performance Center in Los Angeles, CA (approx 8,000 sq ft)[150](index=150&type=chunk) - Subleases approximately 47,000 sq ft of office space for its administrative and executive offices from MSG Entertainment at Two Pennsylvania Plaza, New York City[151](index=151&type=chunk) [Legal Proceedings](index=24&type=section&id=Item%203.%20Legal%20Proceedings) The company is a defendant in various lawsuits but management does not believe their resolution will have a material adverse effect - The company is a defendant in various lawsuits, but management does not expect the outcomes to have a material adverse effect[153](index=153&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=25&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A stock trades on the NYSE, no dividends were paid in FY2021, and $260 million remains under its share repurchase program - Class A Common Stock trades on the NYSE under the symbol **"MSGS"**; there is no public market for the Class B Common Stock[157](index=157&type=chunk)[160](index=160&type=chunk) - The company **did not pay any cash dividends** during fiscal year 2021 and does not have current plans to pay dividends in the foreseeable future[162](index=162&type=chunk) - As of June 30, 2021, approximately **$260 million remained available** under the company's $525 million stock repurchase authorization, though no shares were repurchased during FY2021[163](index=163&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) COVID-19 heavily impacted FY2021 performance, causing a 31% revenue decrease to $415.7 million and an operating loss of $78.4 million [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Consolidated Results of Operations (FY2021 vs. FY2020) | | Years Ended June 30, | | Change | | | :--- | :--- | :--- | :--- | :--- | | | **2021** | **2020** | **Amount** | **Percentage** | | **Revenues** | $415,721 | $603,319 | $(187,598) | (31)% | | **Direct operating expenses** | 281,890 | 359,970 | (78,080) | (22)% | | **Selling, general and administrative expenses** | 206,700 | 319,675 | (112,975) | (35)% | | **Operating loss** | (78,443) | (93,866) | 15,423 | 16% | | **Loss from continuing operations** | (15,897) | (118,641) | 102,744 | 87% | | **Net loss attributable to stockholders** | (13,954) | (182,388) | 168,434 | 92% | - **Revenues decreased by 31%** primarily due to lower pre/regular season ticket-related revenues (-$192.4M), suite license fee revenues (-$67.4M), and food, beverage, and merchandise sales (-$35.6M), all driven by COVID-19 restrictions[235](index=235&type=chunk) - The revenue decline was partially offset by a **$98.3 million increase in league distributions**, mainly from higher national media rights fees and a $21.0 million NHL expansion fee[235](index=235&type=chunk)[239](index=239&type=chunk) - **Direct operating expenses decreased by 22%** due to lower net provisions for league revenue sharing (-$44.2M), reduced team operating expenses, and lower food/beverage costs[242](index=242&type=chunk) - **Selling, general and administrative (SG&A) expenses decreased by 35%**, primarily due to lower corporate overhead costs following the MSGE Distribution[251](index=251&type=chunk) Reconciliation of Operating Loss to Adjusted Operating Loss | | Years Ended June 30, | | Change | | | :--- | :--- | :--- | :--- | :--- | | | **2021** | **2020** | **Amount** | **Percentage** | | **Operating loss** | $(78,443) | $(93,866) | $15,423 | 16% | | Deferred rent | 28,305 | — | | | | Depreciation and amortization | 5,574 | 17,540 | | | | Share-based compensation | 30,437 | 48,693 | | | | Restructuring charges | 1,597 | — | | | | **Adjusted operating loss** | **$(12,530)** | **$(27,466)** | **$14,936** | **54%** | [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary sources of liquidity are cash on hand (**$64.9M** as of June 30, 2021), cash flow from operations, and available borrowing capacity[266](index=266&type=chunk)[268](index=268&type=chunk) - As of June 30, 2021, the company had **$245 million of additional available borrowing capacity** and believes it has sufficient liquidity to fund operations for the next 12 months[270](index=270&type=chunk) Outstanding Debt as of June 30, 2021 | Facility | Outstanding Balance (in millions) | | :--- | :--- | | 2020 Knicks Revolving Credit Facility | $220 | | 2020 Rangers Revolving Credit Facility | $135 | | 2021 Rangers NHL Advance | $30 | | 2020 Knicks Holdings Revolving Credit Facility | $0 | Cash Flow Summary (FY2021 vs. FY2020) | | Years Ended June 30, (in thousands) | | | :--- | :--- | :--- | | | **2021** | **2020** | | Net cash provided by (used in) operating activities | $(35,326) | $3,568 | | Net cash used in investing activities | (466) | (514,863) | | Net cash provided by (used in) financing activities | 17,155 | (520,588) | | Net decrease in cash, cash equivalents and restricted cash | $(18,637) | $(1,027,228) | [Critical Accounting Policies](index=45&type=section&id=Critical%20Accounting%20Policies) - For contracts with multiple performance obligations, the transaction price is allocated based on the **estimated relative standalone selling price** of each obligation, which involves significant management judgment[304](index=304&type=chunk)[305](index=305&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually as of August 31; the FY2021 assessment concluded **no impairment was likely**[308](index=308&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk) - The company accounts for its use of Madison Square Garden under the Arena License Agreements as operating leases, with liabilities measured at the present value of future lease payments[317](index=317&type=chunk)[328](index=328&type=chunk)[330](index=330&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=48&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuation on its variable-rate debt, with a 1% rate increase adding $3.6 million in annual expense - The company has potential **interest rate risk** from outstanding borrowings under its credit facilities, which bear interest at floating rates[331](index=331&type=chunk)[332](index=332&type=chunk) - As of June 30, 2021, with $355 million in borrowings outstanding, a hypothetical **100 basis point increase** in interest rates would increase annual interest expense by approximately **$3.6 million**[332](index=332&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective as of June 30, 2021 - Management, including the CEO and CFO, concluded that as of June 30, 2021, the company's **disclosure controls and procedures were effective**[337](index=337&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of June 30, 2021, a conclusion audited and confirmed by Deloitte & Touche LLP[340](index=340&type=chunk)[341](index=341&type=chunk) PART III [Directors, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=50&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Required information on directors, compensation, ownership, and accountant fees is incorporated by reference from the 2021 proxy statement - Information regarding Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accountant Fees is **incorporated by reference** from the proxy statement for the 2021 annual meeting of shareholders[346](index=346&type=chunk)[347](index=347&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk)[350](index=350&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=51&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K report - This section lists all documents filed as part of the report, including financial statements, schedules, and exhibits such as credit agreements, employment contracts, and related-party agreements[353](index=353&type=chunk) Financial Statements and Notes [Consolidated Financial Statements](index=63&type=section&id=Consolidated%20Financial%20Statements) For FY2021, the company reported total assets of $1.31 billion, a net loss of $14.0 million, and a stockholders' deficit of $204.3 million Key Balance Sheet Data (as of June 30, 2021) | | Amount (in thousands) | | :--- | :--- | | **Total Assets** | **$1,309,939** | | Cash and cash equivalents | $64,902 | | Right-of-use lease assets | $703,521 | | Goodwill | $226,955 | | **Total Liabilities** | **$1,511,805** | | Long-term debt | $355,000 | | Operating lease liabilities, noncurrent | $691,152 | | **Total Madison Square Garden Sports Corp. stockholders' equity** | **$(204,308)** | Key Income Statement Data (for the year ended June 30, 2021) | | Amount (in thousands) | | :--- | :--- | | **Revenues** | **$415,721** | | Operating loss | $(78,443) | | Loss from continuing operations | $(15,897) | | **Net loss attributable to stockholders** | **$(13,954)** | | **Basic and Diluted EPS** | **$(0.58)** | [Notes to Consolidated Financial Statements](index=72&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the impact of COVID-19, the MSG Entertainment spin-off, accounting policies, and extensive related-party transactions [Note 3. Discontinued Operations](index=81&type=section&id=Note%203.%20Discontinued%20Operations) - Following the April 17, 2020 distribution, the historical results of the MSG Entertainment business have been classified as **discontinued operations** for all periods presented[513](index=513&type=chunk) [Note 8. Leases](index=87&type=section&id=Note%208.%20Leases) - The company accounts for its use of Madison Square Garden under 35-year Arena License Agreements as operating leases, resulting in a Right-of-Use asset of **$703.5 million** and a total lease liability of **$733.1 million** as of June 30, 2021[557](index=557&type=chunk)[571](index=571&type=chunk) - The weighted average remaining lease term for operating leases was **33.7 years** with a weighted average discount rate of **7.13%** as of June 30, 2021[573](index=573&type=chunk) [Note 13. Debt](index=93&type=section&id=Note%2013.%20Debt) Debt Facilities Summary (as of June 30, 2021) | Facility | Capacity (in thousands) | Outstanding (in thousands) | Maturity | | :--- | :--- | :--- | :--- | | 2020 Knicks Revolving Credit Facility | $275,000 | $220,000 | Nov 2023 | | 2020 Knicks Holdings Revolving Credit Facility | $75,000 | $0 | Nov 2023 | | 2020 Rangers Revolving Credit Facility | $250,000 | $135,000 | Nov 2023 | | 2021 Rangers NHL Advance | $30,000 | $30,000 | On Demand | [Note 17. Related Party Transactions](index=104&type=section&id=Note%2017.%20Related%20Party%20Transactions) - The company has extensive related party transactions with MSG Entertainment, MSG Networks, and AMC Networks, all controlled by the **Dolan Family Group**[678](index=678&type=chunk) - Key agreements include Arena License Agreements, media rights agreements, sponsorship sales agreements, and a Transition Services Agreement with MSG Entertainment[679](index=679&type=chunk) - For FY2021, revenues from related parties (primarily MSG Networks) were **$147.0 million**, representing **35% of total consolidated revenues**[694](index=694&type=chunk)[719](index=719&type=chunk)