Financial Performance - Revenues for the three months ended September 30, 2022, increased by $106,708, or 36%, to $401,218 compared to $294,510 in the prior year[142]. - The net loss for the three months ended September 30, 2022, was $44,043, a decrease of $32,612, or 43%, compared to a net loss of $76,655 in the prior year[142]. - Adjusted operating income decreased by $7,478, or 73%, to $2,779 compared to $10,257 in the prior year[154]. - The operating loss for the three months ended September 30, 2022 was $75,308, an improvement of $39,373, or 34%, compared to a loss of $114,681 in the prior year period[166]. - Adjusted operating loss for the three months ended September 30, 2022 was $44,440, an improvement of $26,952, or 38%, compared to the adjusted operating loss of $71,392 in the prior year period[167]. - The Entertainment segment's revenues increased by $112,863 to $147,102, attributed to higher event-related revenues and the return of live events[160]. - Revenues for Tao Group Hospitality increased by $13,187, or 11%, to $132,651 for the three months ended September 30, 2022, driven by new venue openings and the reopening of previously closed venues[180]. Expenses and Costs - Direct operating expenses rose by $88,140, or 53%, to $253,901, while selling, general and administrative expenses decreased by $10,429, or 6%, to $164,410[142]. - Direct operating expenses for the three months ended September 30, 2022 increased by $65,463 to $101,765 compared to the prior year period, primarily due to higher event-related expenses and venue operating costs[162]. - Direct operating expenses for Tao Group Hospitality increased by $15,484, or 25%, to $76,577 for the three months ended September 30, 2022, primarily due to increased staffing and inflation-related costs[182]. - Selling, general and administrative expenses for MSG Networks decreased by $30,159, or 63%, to $17,816 for the three months ended September 30, 2022, reflecting lower acquisition-related costs[174]. - The increase in direct operating expenses for MSG Networks was primarily due to higher rights fees expense and other programming costs, totaling $6,997 for the three months ended September 30, 2022[173]. Debt and Financing - The Company has incurred a substantial amount of debt, impacting its ability to obtain additional financing if required[121]. - The total debt outstanding as of September 30, 2022, was $1,756,898[190]. - The MSGN Term Loan Facility has a principal amount of $1,100,000, with no borrowings or letters of credit outstanding as of September 30, 2022[201]. - The National Properties Credit Facilities include a $650,000 senior secured term loan facility and a $100,000 revolving credit facility, with compliance on financial covenants as of September 30, 2022[205][208]. - The Tao Credit Facilities consist of a $75,000 term loan facility and a $60,000 revolving credit facility, with outstanding letters of credit totaling $750 as of September 30, 2022[209][212]. - The company plans to utilize cash on hand and cash flows from operations to finance the remaining construction costs of MSG Sphere, with potential for additional capital if necessary[196]. Operational Insights - The Company reported that its operations and results were not materially impacted by the COVID-19 pandemic during the three months ended September 30, 2022, compared to the prior year period[134]. - Attendance at venues may be affected by government actions and health concerns, which could impact revenues from events and sponsorships[121]. - The demand for MSG Networks programming is influenced by the popularity of the sports teams and events broadcasted, as well as the ability to renew affiliation agreements with distributors[121]. - The Company faces risks related to economic conditions, which may lead to lower demand for entertainment offerings and negatively affect revenues[137]. - The company is exploring additional domestic and international markets for future MSG Sphere venues[199]. Cash Flow and Liquidity - As of September 30, 2022, the company's unrestricted cash and cash equivalents were $441,350, down from $828,540 as of June 30, 2022[190]. - As of September 30, 2022, cash, cash equivalents, and restricted cash totaled $458,893, down from $846,010 as of June 30, 2022[214]. - Net cash used in operating activities increased by $88,171 to $81,183 compared to the prior year, primarily due to changes in working capital assets and liabilities[215]. - Net cash used in investing activities rose by $138,916 to $285,218, mainly due to increased capital expenditures for the MSG Sphere[216]. - Net cash used in financing activities decreased by $24,774 to $20,023 compared to the prior year, attributed to the repayment of the Tao Revolving Credit Facility in the prior year[217]. Future Outlook - The company expects MSG Sphere to generate substantial revenue and adjusted operating income annually from various content and sponsorship opportunities[193]. - The Company expects a disproportionate share of revenues and operating income in the second and third quarters of the fiscal year due to seasonal factors[218][219].
Sphere Entertainment (SPHR) - 2023 Q1 - Quarterly Report