Madison Square Garden Sports (MSGS) - 2025 Q4 - Annual Report

PART I Business MSG Sports owns and operates the New York Knicks (NBA) and New York Rangers (NHL), leveraging strong market presence and partnerships to drive revenue - MSG Sports owns and operates the New York Knicks (NBA) and New York Rangers (NHL), along with development league teams (Hartford Wolf Pack, Westchester Knicks)[17] - The company's strategy focuses on developing championship-caliber teams, maximizing live sports content value through media rights, and driving sponsorship and suite sales via integrated marketing with MSG Entertainment and Sphere Entertainment[19] - Local media rights agreements with MSG Networks for the Knicks and Rangers were amended in June 2025, reducing fees and shortening terms to expire after the 2028-29 seasons[19] Risk Factors MSG Sports faces significant risks including intense competition, dependence on team popularity, financial volatility, economic downturns, and reliance on affiliated entities - The company's financial results are substantially dependent on the continued popularity and competitive success of the Knicks and Rangers, which cannot be assured[55] - Local media rights revenue, a significant stream, decreased by $17.9 million in fiscal year 2025 due to amendments with MSG Networks, which reduced fees (Knicks 28%, Rangers 18%) and shortened contract terms to 2028-29[67] - The Dolan Family Group controls approximately 70.7% of the total voting power, enabling them to prevent a change in control and elect directors, and potentially leading to conflicts of interest due to shared officers and directors with affiliated entities[123][126][133] Unresolved Staff Comments The company reported no unresolved staff comments from the SEC Cybersecurity MSG Sports maintains a comprehensive cyber risk management program with Audit Committee oversight, including testing, incident response, and training - The company's cyber risk management program includes regular system security testing, a cybersecurity incident response policy, periodic employee security awareness training, comprehensive vulnerability analysis, and network activity monitoring[137][141] - The Chief Security Officer (CSO), shared with MSG Entertainment, leads the tactical incident response team and reports annually to the Audit Committee on cybersecurity risks[139][140][144] - A past payment card issue in November 2016 at MSG Entertainment venues, including The Garden, highlights the ongoing nature of cybersecurity threats[145] Properties MSG Sports licenses Madison Square Garden Arena, owns a training center, and subleases office space from MSG Entertainment - The Knicks and Rangers play home games at Madison Square Garden Arena, licensed from MSG Entertainment[146] - The company owns the 114,000 square-foot Madison Square Garden Training Center in Greenburgh, NY[146] - Administrative and executive offices are located at Two Pennsylvania Plaza, New York City, under a sublease agreement with MSG Entertainment[147] Legal Proceedings MSG Sports is a defendant in various lawsuits, but management does not anticipate a material adverse effect from their resolution - The company is involved in various lawsuits, but management believes their resolution will not have a material adverse effect[148] Mine Safety Disclosures This item is not applicable to Madison Square Garden Sports Corp PART II Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's Class A Common Stock is listed on the NYSE, with an ongoing share repurchase program and a special cash dividend paid in October 2022 Stock Performance Comparison (June 30, 2020 - June 30, 2025) | Index | 6/30/20 | 6/30/21 | 6/30/22 | 6/30/23 | 6/30/24 | 6/30/25 | | :--------------------------------- | :------ | :------ | :------ | :------ | :------ | :------ | | Madison Square Garden Company Sports Corp. | $100.00 | $117.48 | $102.80 | $134.02 | $134.08 | $148.92 | | Russell 3000 Index | $100.00 | $144.16 | $124.18 | $147.71 | $181.87 | $209.69 | | Bloomberg Americas Entertainment Index | $100.00 | $230.15 | $121.64 | $144.03 | $145.28 | $155.90 | - As of June 30, 2025, approximately $185 million remained under the $525 million Class A Common Stock share repurchase program. No share repurchase activity occurred during the three months ended June 30, 2025[158] - A special cash dividend of $7.00 per share was declared on October 6, 2022, and paid on October 31, 2022[156] Item 6. [Reserved] This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes MSG Sports' financial condition and results for fiscal years 2025 and 2024, reporting a net loss of $22.4 million in 2025 due to higher direct operating expenses Key Financial Highlights (Years Ended June 30, in thousands) | Metric | 2025 | 2024 | Change (Amount) | Change (%) | | :------------------------------------- | :--------- | :--------- | :-------------- | :--------- | | Revenues | $1,039,220 | $1,027,149 | $12,071 | 1% | | Direct operating expenses | $755,118 | $616,514 | $138,604 | 22% | | Selling, general and administrative expenses | $266,076 | $261,433 | $4,643 | 2% | | Operating income | $14,808 | $146,038 | $(131,230) | (90)% | | Net (loss) income | $(22,438) | $58,771 | $(81,209) | NM | | Adjusted operating income | $38,156 | $172,242 | $(134,086) | (78)% | - The decrease in operating income and net income was primarily driven by a significant increase in direct operating expenses, including higher NBA luxury tax expense and team personnel transaction costs[226][217] - Local media rights fees decreased by $17.9 million in fiscal year 2025 due to a 28% reduction for the Knicks and an 18% reduction for the Rangers, effective January 1, 2025, as a result of amendments to agreements with MSG Networks[214][208] Quantitative and Qualitative Disclosures about Market Risk MSG Sports' primary market risk is interest rate exposure on variable-rate borrowings, with a 100 basis point increase raising annual interest expense by $2.7 million - The company's primary market risk is interest rate exposure on variable-rate borrowings under credit facilities[280] - As of June 30, 2025, $267 million was outstanding under credit facilities. A hypothetical 100 basis point increase in floating interest rates would increase annual interest expense by approximately $2.7 million[281] Financial Statements and Supplementary Data This item incorporates by reference the audited consolidated financial statements and supplementary data, which begin on page F-1 - The financial statements and supplementary data are incorporated by reference and begin on page F-1[282] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reported no changes in or disagreements with accountants on accounting and financial disclosure Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of June 30, 2025 - The company's disclosure controls and procedures were effective as of June 30, 2025[285] - Management concluded that internal control over financial reporting was effective as of June 30, 2025, based on the COSO framework[288] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[290] Other Information The company reported no other information required under this item Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to Madison Square Garden Sports Corp PART III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 proxy statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 proxy statement[295] Executive Compensation Executive compensation details are incorporated by reference from the company's 2025 annual meeting proxy statement - Executive compensation details are incorporated by reference from the 2025 proxy statement[296] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership information for beneficial owners and management is incorporated by reference from the 2025 proxy statement - Security ownership information is incorporated by reference from the 2025 proxy statement[297] Certain Relationships and Related Transactions, and Director Independence Details on related party transactions and director independence are incorporated by reference from the 2025 proxy statement - Details on related party transactions and director independence are incorporated by reference from the 2025 proxy statement[298] Principal Accountant Fees and Services Information on principal accountant fees and services is incorporated by reference from the 2025 proxy statement - Information on principal accountant fees and services is incorporated by reference from the 2025 proxy statement[299] PART IV Exhibits and Financial Statement Schedules This section lists all financial statements, schedules, and exhibits filed as part of the 10-K report, including various agreements and certifications - The report includes financial statements, Schedule II – Valuation and Qualifying Accounts, and a comprehensive list of exhibits[302] - Exhibits include distribution agreements, articles of incorporation, bylaws, registration rights agreements, employee matters agreements, credit agreements, arena license agreements, and sponsorship sales agreements[302][304][306] - Certain confidential information has been omitted from exhibits, and some exhibits are furnished rather than filed, affecting their liability under the Securities Exchange Act of 1934[310] Form 10-K Summary The company has elected not to provide a Form 10-K summary - The company has elected not to provide summary information for its Form 10-K[309] Report of Independent Registered Public Accounting Firm Opinion on the Financial Statements Deloitte & Touche LLP issued an unqualified opinion, stating the consolidated financial statements present fairly the financial position, results, and cash flows in conformity with GAAP - Deloitte & Touche LLP provided an unqualified opinion on the consolidated financial statements for the periods ended June 30, 2025, 2024, and 2023[325] Opinion on Internal Control over Financial Reporting Deloitte & Touche LLP also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of June 30, 2025 - Deloitte & Touche LLP issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of June 30, 2025[336] Critical Audit Matter The evaluation of related parties and related party transactions was a critical audit matter due to complex relationships and significant auditor judgment - The evaluation of related parties and related party transactions was identified as a critical audit matter due to the high degree of auditor judgment required[331] - The Dolan Family Group is the majority beneficial owner of the Company and several related entities, leading to numerous related party transactions[330] - Audit procedures included testing internal controls, inquiries with management, reviewing agreements, analyzing general ledger, and obtaining confirmations from related parties[332] Consolidated Financial Statements Consolidated Balance Sheets Total assets increased to $1.47 billion in 2025 from $1.35 billion in 2024, with a total equity deficit of $(281.4) million Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Total assets | $1,472,974 | $1,346,292 | | Total liabilities | $1,754,413 | $1,612,602 | | Total equity | $(281,439) | $(266,310) | | Cash and cash equivalents | $144,617 | $89,136 | | Right-of-use lease assets | $760,456 | $694,566 | | Operating lease liabilities, noncurrent | $841,050 | $749,952 | | League-related accruals | $196,567 | $120,876 | Consolidated Statements of Operations The company reported a net loss of $22.4 million in 2025, a significant decline from 2024, primarily due to a 22% increase in direct operating expenses Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | 2025 | 2024 | 2023 | | :---------------------------------------------------- | :--------- | :--------- | :--------- | | Revenues | $1,039,220 | $1,027,149 | $887,447 | | Direct operating expenses | $755,118 | $616,514 | $548,811 | | Operating income | $14,808 | $146,038 | $85,174 | | Net (loss) income | $(22,438) | $58,771 | $45,628 | | Basic (loss) earnings per common share | $(0.93) | $2.45 | $1.90 | | Diluted (loss) earnings per common share | $(0.93) | $2.44 | $1.89 | - Revenues from related parties amounted to $177.4 million in 2025, $197.6 million in 2024, and $190.0 million in 2023[348] - Direct operating expenses include net charges from related parties of $102.3 million in 2025, $104.6 million in 2024, and $100.5 million in 2023[348] Consolidated Statements of Comprehensive (Loss) Income The company reported a comprehensive loss of $(22.4) million in 2025, a decline from comprehensive income in 2024, primarily due to the net loss Consolidated Statements of Comprehensive (Loss) Income (in thousands) | Metric | 2025 | 2024 | 2023 | | :---------------------------------------------------------------- | :--------- | :--------- | :--------- | | Net (loss) income | $(22,438) | $58,771 | $45,628 | | Other comprehensive income, net of income taxes | $55 | $57 | $177 | | Comprehensive (loss) income attributable to Madison Square Garden Sports Corp.'s stockholders | $(22,383) | $58,828 | $47,970 | Consolidated Statements of Cash Flows Net cash provided by operating activities remained stable at $91.6 million in 2025, with an overall increase in cash, cash equivalents, and restricted cash by $58.3 million Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 2025 | 2024 | 2023 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Net cash provided by operating activities | $91,607 | $92,131 | $152,473 | | Net cash used in investing activities | $(6,920) | $(8,898) | $(17,759) | | Net cash used in financing activities | $(26,406) | $(28,785) | $(185,273) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $58,281 | $54,448 | $(50,559) | | Cash, cash equivalents and restricted cash at end of period | $153,188 | $94,907 | $40,459 | - Changes in working capital assets and liabilities significantly impacted operating cash flow, driven by increased accruals for NBA luxury tax, revenue sharing, and league assessments, and higher deferred revenue[245] - Financing activities in 2025 saw lower repayments under credit facilities compared to 2024, and principal repayments under the Rangers NHL Advance Agreement[248] Consolidated Statements of Equity The total equity deficit increased to $(281.4) million in 2025, primarily due to the net loss incurred in fiscal year 2025 Consolidated Statements of Equity Highlights (in thousands) | Metric | June 30, 2025 | June 30, 2024 | June 30, 2023 | | :---------------------------------------------------- | :------------ | :------------ | :------------ | | Total Equity | $(281,439) | $(266,310) | $(337,234) | | Accumulated deficit | $(137,596) | $(115,139) | $(173,910) | | Share-based compensation | $17,935 | $21,291 | $25,203 | | Tax withholding associated with shares issued for equity-based compensation | $(10,662) | $(9,195) | $(17,897) | Notes to Consolidated Financial Statements Note 1. Description of Business and Basis of Presentation This note describes MSG Sports' core business, corporate history, and its operation as a single segment with a fiscal year ending June 30 - MSG Sports owns and operates the New York Knicks (NBA) and New York Rangers (NHL), along with development league teams[368] - The company completed its conversion from a Delaware to a Nevada corporation on June 10, 2025[374] - The company operates and reports financial information in one segment, with its Executive Chairman and CEO serving as the Chief Operating Decision Maker[369] Note 2. Summary of Significant Accounting Policies This note details significant accounting policies, including revenue recognition, direct operating expenses, income taxes, and recently adopted accounting pronouncements - The company's critical accounting policies involve significant judgment and estimates, particularly in areas like valuation of goodwill, intangible assets, investments, deferred tax assets, and revenue recognition for multi-year sponsorship agreements[377][257][260] - The NBA CBA includes a luxury tax for teams exceeding salary thresholds, with rates increasing for repeat taxpayers. The Knicks were a luxury tax payer for the 2024-25 season[387] - The company adopted ASU No. 2023-01 (Leases: Common Control Arrangements) and ASU No. 2023-07 (Segment Reporting) in fiscal year 2025, with the latter applied retrospectively[428][431] Note 3. Revenue Recognition This note outlines revenue recognition policies, detailing sources like event-related income, media rights, and sponsorships, and highlights amended local media rights agreements Revenues by Type of Goods or Services (in thousands) | Revenue Type | 2025 | 2024 | 2023 | | :-------------------------------- | :--------- | :--------- | :--------- | | Event-related | $462,533 | $458,213 | $362,527 | | Media rights | $285,566 | $297,756 | $288,965 | | Sponsorship, signage and suite licenses | $230,184 | $210,742 | $196,483 | | League distributions and other | $60,937 | $60,438 | $39,472 | | Total revenues | $1,039,220 | $1,027,149 | $887,447 | - Local media rights fees for the Knicks and Rangers were reduced by 28% and 18% respectively, effective January 1, 2025, and the contract expiration date was changed to the end of the 2028-29 season[454] - MSG Networks issued penny warrants to the Company, exercisable for 19.9% of its equity interests, concurrent with the media rights amendments[448] Note 4. Computation of (Loss) Earnings per Common Share This note provides the calculation of basic and diluted EPS, reporting a loss of $(0.93) per share for 2025 due to the net loss Earnings Per Common Share (EPS) (in thousands, except per share data) | Metric | 2025 | 2024 | 2023 | | :---------------------------------------------------------------- | :--------- | :--------- | :--------- | | Net (loss) income allocable to common shares | $(22,457) | $58,771 | $45,751 | | Weighted-average shares for basic EPS | 24,089 | 24,011 | 24,090 | | Basic (loss) earnings per common share | $(0.93) | $2.45 | $1.90 | | Diluted (loss) earnings per common share | $(0.93) | $2.44 | $1.89 | - Common stock equivalents were anti-dilutive in 2025 due to the net loss, resulting in basic and diluted EPS being the same[406] Note 5. Team Personnel Transactions Net provisions for team personnel transactions significantly increased to $49.1 million in 2025, reflecting substantial activity in player management Net Provisions for Team Personnel Transactions (in thousands) | Transaction Type | 2025 | 2024 | 2023 | | :------------------------------------- | :--------- | :--------- | :--------- | | Waivers/contract terminations | $39,215 | $(332) | $2,000 | | Player trades | $9,800 | $(1,500) | $2,000 | | Season-ending player injuries | $133 | $2,613 | $412 | | Net provisions | $49,148 | $781 | $4,412 | - The significant increase in net provisions for team personnel transactions in 2025 was primarily due to higher costs from waivers/contract terminations and player trades[220] Note 6. Cash, Cash Equivalent and Restricted Cash Cash and cash equivalents increased to $144.6 million in 2025, with restricted cash primarily held in escrow per the NHL CBA Cash, Cash Equivalents and Restricted Cash (in thousands) | Metric | June 30, 2025 | June 30, 2024 | June 30, 2023 | | :------------------------------------------ | :------------ | :------------ | :------------ | | Cash and cash equivalents | $144,617 | $89,136 | $40,398 | | Restricted cash | $8,571 | $5,771 | $61 | | Total cash, cash equivalents and restricted cash | $153,188 | $94,907 | $40,459 | - Restricted cash primarily consists of amounts withheld from player salaries and deposited into an escrow account as required by the NHL CBA[408] Note 7. Leases This note details operating leases for the Madison Square Garden Arena and corporate offices, with a weighted average remaining lease term of 28.1 years Right-of-Use Assets and Lease Liabilities (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Operating leases ROU assets | $760,456 | $694,566 | | Operating lease liabilities, current | $52,618 | $50,267 | | Operating lease liabilities, noncurrent | $841,050 | $749,952 | | Total lease liabilities | $893,668 | $800,219 | - The Arena License Agreements for The Garden have a term through June 30, 2055, with fixed payments increasing by 3% annually[477] - As of June 30, 2025, the weighted average remaining lease term for operating leases was 28.1 years, and the weighted average discount rate was 7.05%[485] Note 8. Property and Equipment Total property and equipment, net, was $29.0 million in 2025, with depreciation and amortization expense of $3.2 million for the year Property and Equipment, Net (in thousands) | Asset Category | June 30, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------ | | Land | $5,153 | $5,153 | | Buildings | $51,713 | $51,645 | | Equipment | $21,957 | $22,878 | | Leasehold improvements | $658 | $564 | | Furniture and fixtures | $2,841 | $555 | | Construction in progress | $275 | $27 | | Less accumulated depreciation and amortization | $(53,635) | $(52,281) | | Total property and equipment, net | $28,962 | $28,541 | - Depreciation and amortization expense on property and equipment was $3.2 million for the year ended June 30, 2025[487] Note 9. Goodwill and Intangible Assets Goodwill remained at $226.5 million and indefinite-lived intangible assets totaled $103.6 million in 2025, with no impairments identified Goodwill and Indefinite-Lived Intangible Assets (in thousands) | Asset Category | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Goodwill | $226,523 | $226,523 | | Sports franchises | $102,564 | $102,564 | | Photographic related rights | $1,080 | $1,080 | | Total indefinite-lived intangible assets | $103,644 | $103,644 | - No impairment of goodwill or identifiable indefinite-lived intangible assets was identified during the annual impairment tests in the first quarter of fiscal year 2025[488][490] Note 10. Investments Total investments decreased to $54.7 million in 2025, including equity method investments, equity investments with readily determinable fair values, and derivative instruments Investments (in thousands) | Investment Category | June 30, 2025 | June 30, 2024 | | :---------------------------------------------------------------- | :------------ | :------------ | | Equity method investments (NRG, Other) | $11,028 | $12,574 | | Equity investments with readily determinable fair values (Xtract One, Deferred Comp Plan) | $32,826 | $36,217 | | Equity investments without readily determinable fair values | $9,262 | $6,757 | | Derivative instruments (Xtract One warrants) | $1,604 | $6,995 | | Total investments | $54,720 | $62,543 | - The company received penny warrants exercisable for 19.9% of MSG Networks' equity interests as part of the media rights agreements amendments, accounted for as an equity method investment[497] - Unrealized losses on Xtract One common stock and warrants, along with losses from the NRG investment, contributed to a decrease in investment value[499][494] Note 11. Fair Value Measurements This note details fair value measurements of assets, categorized into a three-level hierarchy, with Level III inputs including Xtract One warrants valued using Black-Scholes Assets Measured at Fair Value (in thousands) | Asset Category | Fair Value Hierarchy | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------------- | :------------ | :------------ | | Money market accounts | I | $95,367 | $37,594 | | Time deposits | I | $48,263 | $49,510 | | Equity investments | I | $32,826 | $36,217 | | Warrants | III | $1,604 | $6,995 | | Total assets measured at fair value | | $178,060 | $130,316 | - Level III assets, primarily Xtract One warrants, are valued using the Black-Scholes option pricing model with key assumptions including expected term (1.30 years), expected volatility (70.78%), and risk-free interest rate (3.85%) as of June 30, 2025[504] - The fair value of the company's debt (current and long-term) is classified within Level II and is consistent with its carrying amount due to variable interest rates[506][508] Note 12. Commitments and Contingencies The company's contractual obligations and off-balance sheet arrangements totaled $3.7 billion as of June 30, 2025, with $438.2 million due in fiscal year 2026 Contractual Obligations and Off-Balance Sheet Arrangements (in thousands) | Period | Off-Balance Sheet Commitments | Contractual Obligations reflected on the Balance Sheet | Total | | :-------------------------- | :---------------------------- | :----------------------------------- | :--------- | | Fiscal year ending June 30, 2026 | $291,215 | $68,584 | $359,799 | | Fiscal year ending June 30, 2027 | $278,966 | $15,239 | $294,205 | | Fiscal year ending June 30, 2028 | $198,390 | $15,498 | $213,888 | | Fiscal year ending June 30, 2029 | $73,421 | $3,875 | $77,296 | | Fiscal year ending June 30, 2030 | $40,083 | $1,840 | $41,923 | | Thereafter | $42,635 | $7,358 | $49,993 | | Total | $924,710 | $112,394 | $1,037,104 | - Off-balance sheet commitments primarily consist of obligations under employment agreements for professional sports teams' personnel[509] - Legal matters are not expected to have a material adverse effect on the company[511] Note 13. Debt The company's debt includes $267 million outstanding on the Knicks Revolving Credit Facility and $24 million from the Rangers NHL Advance Agreement as of June 30, 2025 Debt Balances (in thousands) | Debt Facility | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Knicks Revolving Credit Facility | $267,000 | $275,000 | | Rangers Revolving Credit Facility | $0 | $0 | | Rangers NHL Advance Agreement | $24,000 | $30,000 | | Total Debt | $291,000 | $305,000 | - The Knicks Revolving Credit Facility had an outstanding balance of $267 million as of June 30, 2025, with an interest rate of 5.68%[515] - The Rangers NHL Advance Agreement had an outstanding balance of $24 million as of June 30, 2025, bearing interest at 3.00% per annum and payable upon demand by the NHL[532] Note 14. Benefit Plans This note details the company's defined benefit pension plans, defined contribution plans, multiemployer plans, and the Executive Deferred Compensation Plan Net Periodic Benefit Cost for Pension Plans (in thousands) | Component | 2025 | 2024 | 2023 | | :-------------------------- | :--- | :--- | :--- | | Interest cost | $251 | $272 | $239 | | Recognized actuarial loss | $81 | $37 | $18 | | Settlement loss recognized | $437 | $30 | $30 | | Net periodic benefit cost | $769 | $339 | $287 | - The company contributes to multiemployer defined benefit pension plans, including the National Basketball Association Players' Pension Plan (Yellow Zone as of 2/2/2024) and the National Hockey League Players' Retirement Benefit Plan (Green Zone as of 4/30/2024)[553] - The Executive Deferred Compensation Plan's liability and corresponding assets held in trust are remeasured at fair value, with compensation expense of $2.2 million and offsetting gains of $2.2 million recognized in 2025[556] Note 15. Share-based Compensation Share-based compensation expense was $17.9 million in 2025, with $20.6 million of unrecognized cost remaining for unvested awards - Share-based compensation expense was $17.9 million for the year ended June 30, 2025, recognized as a component of selling, general and administrative expenses[566] - As of June 30, 2025, $20.6 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of approximately 1.8 years[567] Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) Activity (in thousands, except per share data) | Metric | RSUs (Number) | PSUs (Number) | Weighted-Average Fair Value Per Share At Date of Grant | | :-------------------------------- | :------------ | :------------ | :------------------------------------------------------- | | Unvested award balance as of June 30, 2024 | 105 | 153 | $170.61 | | Granted | 56 | 48 | $207.32 | | Vested | (64) | (59) | $174.98 | | Forfeited | (2) | (3) | $173.51 | | Unvested award balance as of June 30, 2025 | 95 | 139 | $184.56 | Note 16. Stock Repurchase Program Approximately $184.6 million remained available under the $525 million Class A Common Stock share repurchase program as of June 30, 2025 - As of June 30, 2025, $184.6 million remained under the $525 million Class A Common Stock share repurchase program[576] - No shares were repurchased under the program during the year ended June 30, 2025[576] - A $75 million accelerated share repurchase (ASR) program was completed on January 31, 2023, with an average purchase price of $164.31 per share[574] Note 17. Related Party Transactions This note details extensive related party transactions with Dolan Family Group-controlled entities, including arena licensing, media rights, and business services - The Dolan Family Group controls approximately 70.7% of the company's aggregate voting power and also controls Sphere Entertainment, MSG Entertainment, and AMC Networks Inc[579] - Key related party agreements include Arena License Agreements, media rights agreements with MSG Networks, Sponsorship Sales and Service Representation Agreements, and a Services Agreement with MSG Entertainment[581][580] Revenues and Operating Expenses (Credits) from Affiliates (in thousands) | Metric | 2025 | 2024 | 2023 | | :---------------------------------------------------------------- | :--------- | :--------- | :--------- | | Revenues | $177,389 | $197,640 | $190,000 | | Expense pursuant to the Services Agreement | $36,491 | $37,346 | $36,458 | | Operating lease expense associated with the Arena License Agreements | $67,619 | $67,619 | $67,619 | | Costs associated with the Sponsorship Sales and Service Representation Agreements | $20,876 | $19,319 | $19,329 | | Other operating (credits) expenses, net | $(2,127) | $(1,867) | $84 | Note 18. Income Taxes Income tax expense was $5.2 million in 2025, with a net deferred tax asset of $34.8 million, and the company is evaluating the OBBBA tax reform Income Tax Expense (Benefit) (in thousands) | Component | 2025 | 2024 | 2023 | | :-------------------------- | :--------- | :--------- | :--------- | | Current expense | $56,935 | $54,032 | $29,271 | | Deferred (benefit) expense | $(51,769) | $(7,135) | $15,022 | | Income tax expense | $5,166 | $46,897 | $44,293 | Net Deferred Tax Asset (Liability) (in thousands) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Total deferred tax assets | $146,952 | $99,718 | | Less valuation allowance | $(4,337) | $(4,160) | | Total deferred tax liabilities | $(107,794) | $(112,483) | | Net deferred tax asset (liability) | $34,821 | $(16,925) | - The effective tax rate for 2025 was (30)%, differing from the statutory federal rate primarily due to nondeductible officers' compensation and state and local tax expense[230][589] Note 19. Additional Financial Information Prepaid expenses totaled $43.4 million in 2025, with MSG Networks accounting for 15% of revenues and 11.4% of the workforce being unionized Prepaid Expenses (in thousands) | Category | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Prepaid employee-related costs | $34,850 | $25,134 | | Other prepaid expenses | $8,567 | $5,822 | | Total prepaid expenses | $43,417 | $30,956 | - MSG Networks accounted for 15% of the company's consolidated revenues for the year ended June 30, 2025[599] - Approximately 11.4% of the company's workforce (115 full-time and part-time employees) is subject to collective bargaining agreements[600] Note 20. Segment Information The company operates as a single operating segment, with the CODM reviewing consolidated net (loss) income for performance assessment and resource allocation - The company operates as one operating segment, and its CODM reviews consolidated net (loss) income for performance assessment and resource allocation[602] Selected Financial Information by Segment (in thousands) | Expense Category | 2025 | 2024 | 2023 | | :---------------------------------------------------------------- | :--------- | :--------- | :--------- | | Ticketing and sponsorship sales related expenses | $(64,272) | $(62,347) | $(62,651) | | Marketing & event-related expenses | $(58,037) | $(65,993) | $(60,392) | | Corporate & administrative | $(113,142) | $(102,482) | $(92,071) | | Operating lease expenses and other rental expenses associated with the Arena License Agreements | $(69,337) | $(69,288) | $(69,749) | | Team operating expenses | $(508,295) | $(380,027) | $(365,016) | | Other segment items | $(208,111) | $(197,810) | $(148,817) |