MSGE 10-Q
Madison Square Garden Entertainment Corp. (MSGE)
10-Q
2025-05-06
For: 2025-03-31
View Original
Added on
April 11, 2026
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 March 31, 2025
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: 001-41627
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| , | |||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
Registrant’s telephone number, including area code: (212) 465-6000
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☑ | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No
Number of shares of common stock outstanding as of April 30, 2025:
| Class A Common Stock par value $0.01 per share | — | |||||||
| Class B Common Stock par value $0.01 per share | — | |||||||
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Page | |||||
1
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except per share data)
| As of | ||||||||||||||
| March 31, | June 30, | |||||||||||||
| 2025 | 2024 | |||||||||||||
| ASSETS | ||||||||||||||
| Current Assets: | ||||||||||||||
| Cash, cash equivalents, and restricted cash | $ | $ | ||||||||||||
| Accounts receivable, net | ||||||||||||||
| Related party receivables, current | ||||||||||||||
| Prepaid expenses and other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Non-Current Assets: | ||||||||||||||
| Property and equipment, net | ||||||||||||||
| Right-of-use lease assets | ||||||||||||||
| Goodwill | ||||||||||||||
| Indefinite-lived intangible assets | ||||||||||||||
Deferred tax assets, net | ||||||||||||||
| Other non-current assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND EQUITY | ||||||||||||||
| Current Liabilities: | ||||||||||||||
| Accounts payable, accrued and other current liabilities | $ | $ | ||||||||||||
| Related party payables, current | ||||||||||||||
| Long-term debt, current | ||||||||||||||
| Operating lease liabilities, current | ||||||||||||||
| Deferred revenue | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Non-Current Liabilities: | ||||||||||||||
| Long-term debt, net of deferred financing costs | ||||||||||||||
| Operating lease liabilities, non-current | ||||||||||||||
| Other non-current liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
Commitments and contingencies (see Note 8) | ||||||||||||||
| Equity (Deficit): | ||||||||||||||
Class A Common Stock (a) | ||||||||||||||
Class B Common Stock (b) | ||||||||||||||
| Additional paid-in-capital | ||||||||||||||
Treasury stock at cost ( | ( | ( | ||||||||||||
Retained earnings | ||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Total equity (deficit) | ( | |||||||||||||
| Total liabilities and equity | $ | $ | ||||||||||||
_________________
(a) Class A Common Stock, $0.01 120,000 46,031 and 45,556 shares issued as of March 31, 2025 and June 30, 2024, respectively.
(b) Class B Common Stock, $0.01 30,000 6,867
See accompanying notes to the unaudited condensed consolidated financial statements.
2
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
Revenues (a) | ||||||||||||||||||||||||||
Revenues from entertainment offerings | $ | $ | $ | $ | ||||||||||||||||||||||
| Food, beverage, and merchandise revenues | ||||||||||||||||||||||||||
Arena license fees and other leasing revenue | ||||||||||||||||||||||||||
| Total revenues | ||||||||||||||||||||||||||
Direct operating expenses (a) | ||||||||||||||||||||||||||
Entertainment offerings, arena license fees, and other leasing direct operating expenses | ( | ( | ( | ( | ||||||||||||||||||||||
Food, beverage, and merchandise direct operating expenses | ( | ( | ( | ( | ||||||||||||||||||||||
| Total direct operating expenses | ( | ( | ( | ( | ||||||||||||||||||||||
Selling, general, and administrative expenses (a) | ( | ( | ( | ( | ||||||||||||||||||||||
| Depreciation and amortization | ( | ( | ( | ( | ||||||||||||||||||||||
| Impairment of long-lived assets | ( | ( | ||||||||||||||||||||||||
| Restructuring charges | ( | ( | ( | ( | ||||||||||||||||||||||
| Operating income | ||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Other (expense) income, net | ( | ( | ( | |||||||||||||||||||||||
| Income from operations before income taxes | ||||||||||||||||||||||||||
| Income tax expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||||||||||||
| Earnings per share attributable to MSG Entertainment’s stockholders: | ||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||||||||||||
Weighted-average number of shares of common stock: | ||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||
| Diluted | ||||||||||||||||||||||||||
_________________
(a) See Note 12. Related Party Transactions for further information on related party arrangements.
See accompanying notes to the unaudited condensed consolidated financial statements.
3
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||||||||||||
| Other comprehensive income, before income taxes: | ||||||||||||||||||||||||||
Pension plans and postretirement plans | ||||||||||||||||||||||||||
| Income tax expense | ( | ( | ( | ( | ||||||||||||||||||||||
Other comprehensive income, net of income taxes | ||||||||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | ||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
4
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
| Nine Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| OPERATING ACTIVITIES: | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Impairment of long-lived assets | ||||||||||||||
| Share-based compensation expense | ||||||||||||||
| Deferred income tax expense | ||||||||||||||
| Amortization of deferred financing costs | ||||||||||||||
| Related party paid in kind interest | ( | |||||||||||||
| Net unrealized and realized loss (gain) on equity investments with readily determinable fair value | ( | |||||||||||||
| Other non-cash adjustments | ||||||||||||||
| Change in assets and liabilities: | ||||||||||||||
| Accounts receivable, net | ( | ( | ||||||||||||
Related party receivables and payables, net | ||||||||||||||
| Prepaid expenses and other current and non-current assets | ( | ( | ||||||||||||
| Accounts payable | ( | |||||||||||||
| Accrued and other current, and non-current liabilities | ( | ( | ||||||||||||
| Deferred revenue | ||||||||||||||
| Operating lease right-of-use assets and lease liabilities | ||||||||||||||
| Net cash provided by operating activities | $ | $ | ||||||||||||
| INVESTING ACTIVITIES: | ||||||||||||||
| Capital expenditures | $ | ( | $ | ( | ||||||||||
Proceeds from sale of investments | ||||||||||||||
Loan to related parties | ( | |||||||||||||
| Other investing activities | ( | ( | ||||||||||||
Net cash used in investing activities | $ | ( | $ | ( | ||||||||||
| FINANCING ACTIVITIES: | ||||||||||||||
Proceeds from revolving credit facility | $ | $ | ||||||||||||
Principal repayment on long-term debt | ( | ( | ||||||||||||
| Repayments on related party loan, net | ( | |||||||||||||
Payments for debt financing costs | ( | |||||||||||||
Taxes paid in lieu of shares issued for equity-based compensation | ( | ( | ||||||||||||
Repurchases of Class A common stock | ( | ( | ||||||||||||
| Other financing activities | ( | |||||||||||||
| Net cash used in financing activities | $ | ( | $ | ( | ||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | |||||||||||||
Cash, cash equivalents, and restricted cash, beginning of period | ||||||||||||||
Cash, cash equivalents, and restricted cash, end of period | $ | $ | ||||||||||||
| Non-cash investing and financing activities: | ||||||||||||||
| Capital expenditures incurred but not yet paid or paid by landlord | $ | $ | ||||||||||||
Non-cash repurchases of Class A common stock in lieu of payment of loan due from related party | $ | $ | ||||||||||||
| Non-cash financing activities | $ | ( | $ | |||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
5
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) (Unaudited)
(in thousands)
Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total Equity (Deficit) | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Tax withholding associated with shares issued for share-based compensation | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||
| Repurchases of Class A common stock, inclusive of excise tax | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Tax withholding associated with shares issued for share-based compensation | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Tax withholding associated with shares issued for share-based compensation | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||
| Repurchases of Class A common stock, inclusive of excise tax | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Tax withholding associated with shares issued for share-based compensation | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||
| Repurchases of Class A common stock, inclusive of excise tax | — | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
6
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
All amounts included in the following Notes to Condensed Consolidated Financial Statements (unaudited) are presented in thousands, except per share data or as otherwise noted.
Note 1. Description of Business and Basis of Presentation
Description of Business
Madison Square Garden Entertainment Corp. (together with its subsidiaries, as applicable, the “Company” or “MSG Entertainment”), is a live entertainment company comprised of iconic venues and marquee entertainment content. Utilizing the Company’s powerful brands and live entertainment expertise, the Company delivers unique experiences that set the standard for excellence and innovation while forging deep connections with diverse and passionate audiences. The Company operates and reports financial information in one reportable segment.
The Company’s portfolio of venues includes: Madison Square Garden (“The Garden”), The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, and The Chicago Theatre. The Company owns and produces the original production, the Christmas Spectacular Starring the Radio City Rockettes (the “Christmas Spectacular”). The Company also books other entertainment and sports events, which showcases a broad array of compelling concerts, family shows and special events, as well as a diverse mix of sporting events, for millions of guests annually.
MSG Entertainment Distribution
On April 20, 2023, Sphere Entertainment Co. (together with its subsidiaries, as applicable, “Sphere Entertainment”) distributed approximately 67 % of the outstanding common stock of the Company to its stockholders (the “Distribution”), with Sphere Entertainment retaining approximately 33 % of the outstanding common stock of the Company in the form of Class A common stock, $0.01 par value per share (“Class A Common Stock”) immediately following the Distribution. As a result, the Company became an independent publicly traded company on April 21, 2023. Following the completion of the secondary offering by Sphere Entertainment of the Company’s Class A Common Stock on September 22, 2023, Sphere Entertainment no longer owns any of the Company’s outstanding common stock. See Note 1. Description of Business and Basis of Presentation to the Company’s audited consolidated and combined financial statements and notes thereto as of June 30, 2024 and 2023 and for the three years ended June 30, 2024, 2023 and 2022 (the “Audited Consolidated and Combined Annual Financial Statements”) included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 filed with the Securities and Exchange Commission (the “SEC”) on August 16, 2024 (the “2024 Form 10-K”) for more information regarding the Distribution.
Basis of Presentation
The Company reports on a fiscal year basis ending on June 30th (“Fiscal Year”). In these unaudited condensed consolidated financial statements, the years ending and ended on June 30, 2026, June 30, 2025 and 2024, respectively, are referred to as “Fiscal Year 2026,” “Fiscal Year 2025” and “Fiscal Year 2024,” respectively.
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and Article 10 of Regulation S-X of the SEC, and should be read in conjunction with the Company’s Audited Consolidated and Combined Annual Financial Statements.
In the opinion of the Company, the accompanying financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2025 and its results of operations for the three and nine months ended March 31, 2025 and 2024 and cash flows for the nine months ended March 31, 2025 and 2024. The condensed consolidated balance sheet as of June 30, 2024 was derived from the Audited Consolidated and Combined Annual Financial Statements but does not contain all of the footnote disclosures from the Audited Consolidated and Combined Annual Financial Statements.
The results of operations for the periods presented are not necessarily indicative of the results that might be expected for future interim periods or for the full year. As a result of the production of the Christmas Spectacular and arena license fees in connection with the use of The Garden by the New York Knicks (the “Knicks”) of the National Basketball Association and the New York Rangers (the “Rangers”) of the National Hockey League, the Company generally earns a disproportionate share of its annual revenues in the second and third quarters of its fiscal year.
Reclassifications
For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation in accordance with GAAP.
7
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 2. Summary of Significant Accounting Policies
A. Principles of Consolidation
All intercompany accounts and balances within the Company’s consolidated businesses have been eliminated.
B. Use of Estimates
The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the provision for credit losses, goodwill, intangible assets, other long-lived assets, deferred tax assets, pension and other postretirement benefit obligations and the related net periodic benefit cost, and other liabilities. In addition, estimates are used in revenue recognition, depreciation and amortization, litigation matters and other matters. Management believes its use of estimates in the financial statements to be reasonable.
Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and, as such, these estimates may ultimately differ from actual results. Changes in estimates resulting from weakness in the economic environment or other factors beyond the Company’s control could be material and would be reflected in the Company’s condensed consolidated financial statements in future periods.
C. Revenue Recognition and Direct Operating Expenses
The Company generates revenue from the provision of services and sale of tangible products, as well as leasing transactions. Revenues are presented under these three categories in the condensed consolidated statements of operations, as described below.
Service revenue, presented as “Revenues from entertainment offerings” primarily includes:
•Ticket sales and other ticket-related revenue;
•Venue license fees for events held at the Company’s venues that the Company does not produce or promote/co-promote;
•Sponsorship and signage;
•Suite licenses and single night suite rentals;
•Advertising commissions and related service fees; and
•Commissions related to the sale of merchandise for which the Company is not the principal in the underlying transaction.
Direct operating expenses related to the provision of services and leasing, presented as “Entertainment offerings, arena license fees, and other leasing direct operating expenses”, primarily include:
•Event production costs including direct personnel expenses;
•Venue operations and infrastructure costs; (a)
•Venue rental costs for venues not owned by the Company;
•Sponsorship and signage fulfillment costs;
•Contractual revenue sharing expenses related to suite licenses and certain internal signage; and
•Event-related marketing and advertising costs.
Product revenue, presented as “Food, beverage, and merchandise revenues”, includes:
•Sales of food and beverage during events held at the Company’s venues; and
•Sales of the Company’s merchandise at the Company’s venues and via traditional retail channels.
Direct operating expenses related to the sale of products, presented as “Food, beverage, and merchandise direct operating expenses” include:
•Costs of goods sold including direct personnel expenses; and
8
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
•Contractual revenue sharing expenses related to food and beverage sold at events held by Madison Square Garden Sports Corp. (together with its subsidiaries, as applicable, “MSG Sports”) at The Garden.
Lease revenue, presented as “Arena license fees and other leasing revenue”, includes:
•Rental fees related to the arena license agreements that require the Knicks and the Rangers to play their home games at The Garden (the “Arena License Agreements”) with MSG Sports; and
•Sublease income.
_________________
(a) Venue operations and infrastructure costs are not specifically allocated to each revenue category, but are instead attributed in their entirety to service revenue, which is the Company’s principal revenue category. Leasing direct operating expenses materially consist of venue operations and infrastructure costs. As a result, the Company combines service and leasing direct operating expenses within “Entertainment offerings, arena license fees, and other leasing direct operating expenses” for presentation purposes.
The Company recognizes revenue when, or as, performance obligations under the terms of a contract are satisfied, which generally occurs when, or as, control of promised goods or services is transferred to customers. Revenue is measured as the amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services (“transaction price”). To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the most likely amount to which the Company expects to be entitled. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and the determination of whether to include such estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information that is reasonably available. The Company accounts for taxes collected from customers and remitted to governmental authorities on a net basis and excludes these amounts from revenues.
In addition, the Company defers certain costs to fulfill the Company’s contracts with customers to the extent such costs relate directly to the contracts, are expected to generate resources that will be used to satisfy the Company’s performance obligations under the contracts, and are expected to be recovered through revenue generated under the contracts. Contract fulfillment costs are expensed as the Company satisfies the related performance obligations.
Arrangements with Multiple Performance Obligations
The Company enters into arrangements with multiple performance obligations, such as multi-year sponsorship agreements, which may derive revenues for the Company, as well as Sphere Entertainment and MSG Sports within a single arrangement. The Company also derives revenue from similar types of arrangements which are entered into by Sphere Entertainment and MSG Sports. Payment terms for such arrangements can vary by contract, but payments are generally due in installments throughout the contractual term. The performance obligations included in each sponsorship agreement vary and may include advertising and other benefits such as, but not limited to, signage at The Garden and the Company’s other venues, digital advertising, event or property-specific advertising, as well as non-advertising benefits such as suite licenses and event tickets. Further, these arrangements may require the Company to purchase the customers’ goods or services. To the extent the Company’s multi-year arrangements provide for performance obligations that are consistent over the multi-year contractual term, such performance obligations generally meet the definition of a series as provided for under the accounting guidance. If performance obligations are concluded to meet the definition of a series, the contractual fees for all years during the contract term are aggregated and the related revenue is recognized proportionately as the underlying performance obligations are satisfied.
The timing of revenue recognition for each performance obligation is dependent upon the facts and circumstances surrounding the Company’s satisfaction of its respective performance obligation. The Company allocates the transaction price for such arrangements to each performance obligation within the arrangement based on the estimated relative standalone selling price of the performance obligation. The Company’s process for determining its estimated standalone selling prices involves management’s judgment and considers multiple factors including company specific and market specific factors that may vary depending upon the unique facts and circumstances related to each performance obligation. Key factors considered by the Company in developing an estimated standalone selling price for its performance obligations include, but are not limited to, prices charged for similar performance obligations, the Company’s ongoing pricing strategy and policies, and consideration of pricing of similar performance obligations sold in other arrangements with multiple performance obligations.
The Company may incur costs such as commissions to obtain its multi-year sponsorship agreements. The Company assesses such costs for capitalization on a contract by contract basis. To the extent costs are capitalized, the Company estimates the useful life of the related contract asset, which may be the underlying contract term or the estimated customer life depending on the facts and circumstances surrounding the contract. The contract asset is amortized over the estimated useful life.
9
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Principal versus Agent Revenue Recognition
The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service before transfer to the customer. When the Company concludes that it controls the good or service before transfer to the customer, the Company is considered a principal in the transaction and records revenue on a gross basis. When the Company concludes that it does not control the good or service before transfer to the customer but arranges for another entity to provide the good or service, the Company acts as an agent and records revenue on a net basis in the amount it earns for its agency service.
Contract Balances
Amounts collected in advance of the Company’s satisfaction of its contractual performance obligations are recorded as a contract liability within Deferred revenue and are recognized as the Company satisfies the related performance obligations. Amounts collected in advance of events for which the Company is not the promoter or co-promoter do not represent contract liabilities and are recorded within Accounts payable, accrued and other current liabilities on the accompanying consolidated balance sheets. Amounts recognized as revenue for which the Company has a right to consideration for goods or services transferred to customers and for which the Company does not have an unconditional right to bill as of the reporting date are recorded as contract assets. Contract assets are transferred to accounts receivable once the Company’s right to consideration becomes unconditional.
Production Costs for the Company’s Original Productions
The Company defers certain costs of productions such as creative design, scenery, wardrobes, rehearsal and other related costs for the Company’s proprietary shows, reported under Prepaid expenses and other current assets and Other non-current assets. Deferred production costs are amortized on a straight-line basis over the course of a production’s performance period using the expected life of a show’s assets and are recorded as a component of Entertainment offerings, arena license fees, and other leasing direct operating expenses on the Company’s condensed consolidated statement of operations. Deferred production costs are subject to recoverability assessments whenever there is an indication of potential impairment.
Revenue Sharing Expenses
Revenue sharing expenses are determined based on contractual agreements between the Company and MSG Sports, primarily related to suite licenses, certain internal signage and in-venue food and beverage sales and are recorded as a component of Entertainment offerings, arena license fees, and other leasing direct operating expenses on the Company’s condensed consolidated statement of operations.
D. Recently Issued and Adopted Accounting Pronouncements
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Improvement to Reportable Segment Disclosures. This ASU aims to improve segment disclosures through enhanced disclosures about significant segment expenses. The standard requires disclosure of significant expense categories and amounts for such expenses, including those segment expenses that are regularly provided to the chief operating decision maker, easily computable from information that is regularly provided, or significant expenses that are expressed in a form other than actual amounts. This standard will be effective for the Company as of and for Fiscal Year 2025 and is required to be applied retrospectively to all prior periods presented in the financial statements. This standard will not have an impact on the Company’s consolidated financial statements, but will result in changes to certain of the Company’s segment reporting disclosures, the impacts of which the Company continues to evaluate.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, a final standard on improvements to income tax disclosures which applies to all entities subject to income taxes. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be helpful to understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, assess income tax information that affects cash flow forecasts and capital allocation decisions, and identify potential opportunities to increase future cash flows. This standard will be effective for the Company in Fiscal Year 2026 and should be applied prospectively. The Company is currently evaluating the impact of the additional disclosure requirements on the Company’s income tax disclosures.
10
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, as amended by ASU 2025-01, which was issued in January 2025, requiring disclosure, in the notes to financial statements, of specified information about certain costs and expenses at each interim and annual reporting period. This ASU provided an effective date for the standard to be for annual periods beginning with the Company’s Fiscal Year ending June 30, 2028, and interim reporting periods beginning in the Company’s Fiscal Year Ending June 30, 2029. Early adoption of ASU 2024-03 is permitted. This amended ASU may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this guidance on the Company’s financial statement disclosures.
Note 3. Revenue Recognition
Contracts with Customers
All revenue recognized in the condensed consolidated statements of operations is considered to be revenue from contracts with customers in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue From Contracts with Customers, except for revenues from the Arena License Agreements, leases and subleases that are accounted for in accordance with ASC Topic 842, Leases.
Disaggregation of Revenue
The following table disaggregates the Company’s revenues by revenue category for the three and nine months ended March 31, 2025 and 2024. The footnotes to the table provide additional disclosure with respect to the timing of transfer of goods or services to the customer for each category.
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
Ticketing and venue license fee revenues (a) | $ | $ | $ | $ | ||||||||||||||||||||||
Sponsorship and signage, suite license, and advertising commission revenues (b) | ||||||||||||||||||||||||||
Other (c) | ||||||||||||||||||||||||||
| Total revenues from entertainment offerings | ||||||||||||||||||||||||||
Food, beverage, and merchandise revenues (d) | ||||||||||||||||||||||||||
Total revenues from contracts with customers | ||||||||||||||||||||||||||
| Arena license fees and other leasing revenue | ||||||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | ||||||||||||||||||||||
_________________
(a) Amounts include ticket sales, including other ticket-related revenue, and venue license fees from the Company’s events such as (i) concerts, (ii) the presentation of the Christmas Spectacular and (iii) other live entertainment and sporting events. Revenues from entertainment offerings are generally recognized at a point in time.
(b) Sponsorship and signage, suite license, and advertising commission revenues are generally recognized over time.
(c) Other primarily consists of revenues from sponsorship sales representation agreements and venue tours which are generally recognized over time and at a point in time, respectively.
(d) Food, beverage, and merchandise revenues are generally recognized at a point in time.
Contract Balances
The following table provides information about the opening and closing contract balances from the Company’s contracts with customers as of March 31, 2025 and June 30, 2024:
As of | ||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||
Receivables from contracts with customers, net (a) | $ | $ | ||||||||||||
Contract assets, current (b) | $ | $ | ||||||||||||
Deferred revenue, including non-current portion (c) | $ | $ | ||||||||||||
(a) Receivables from contracts with customers, net, which are reported in Accounts receivable, net and Related party receivables, current in the Company’s accompanying condensed consolidated balance sheets, represent the Company’s unconditional rights to consideration under its contracts with customers. As of March 31, 2025 and June 30, 2024, the Company’s receivables from contracts with customers above included $9,807 and $2,432 , respectively, related to various
11
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
related parties. See Note 12. Related Party Transactions for further details on related party arrangements.
(b) Contract assets, current, which are reported in Prepaid expenses and other current assets in the Company’s accompanying condensed consolidated balance sheets, primarily relate to the Company’s rights to consideration for goods or services transferred to customers, for which the Company does not have an unconditional right to bill as of the reporting date. Contract assets are transferred to accounts receivable once the Company’s right to consideration becomes unconditional.
(c) Deferred revenue primarily relates to the Company’s receipt of consideration from customers in advance of the Company’s transfer of goods or services to the customers. Deferred revenue is reduced and the related revenue is recognized once the underlying goods or services are transferred to a customer. Revenue recognized for the three and nine months ended March 31, 2025 relating to the Deferred revenue balance as of June 30, 2024 was $19,845 and $178,188 , respectively.
Transaction Price Allocated to the Remaining Performance Obligations
As of March 31, 2025, the Company’s remaining performance obligations under contracts were $577,885 , of which 40 % is expected to be recognized over the next two years and an additional 60 % of the balance is expected to be recognized thereafter. This primarily relates to performance obligations under sponsorship and suite license agreements that have original expected durations longer than one year and for which the consideration is not variable. In developing the estimated revenue, the Company applies the allowable practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less.
Note 4. Restructuring Charges
During the three and nine months ended March 31, 2025, the Company recognized restructuring charges of $84 and $14 , respectively, related to termination benefits for certain corporate executives and employees. During the three and nine months ended March 31, 2024, the Company recorded restructuring charges of $2,362 and $14,803 , respectively, inclusive of $0 and $6,788 of share-based compensation expenses, respectively, which are accrued in Accounts payable, accrued and other current liabilities and Additional paid-in-capital on the accompanying condensed consolidated balance sheets. Changes to the Company’s restructuring liability through March 31, 2025 were as follows:
Restructuring Liability | ||||||||
| June 30, 2024 | $ | |||||||
| Restructuring charges | ||||||||
Payments | ( | |||||||
| March 31, 2025 | $ | |||||||
Note 5. Investments
As of March 31, 2025, the Company held an investment in Townsquare Media, Inc. (“Townsquare”). The Company also previously held an investment in DraftKings Inc. (“DraftKings”), which was sold during the first quarter of Fiscal Year 2024:
• Townsquare is a media, entertainment and digital marketing solutions company that is listed on the New York Stock Exchange (“NYSE”) under the symbol “TSQ.”
•DraftKings is a fantasy sports contest and sports gambling provider that is listed on the Nasdaq Stock Market (“NASDAQ”) under the symbol “DKNG.”
As of March 31, 2025, the Company also held other equity investments held in trust under the Company’s Executive Deferred Compensation Plan. Refer to Note 10. Pension Plans and Other Postretirement Benefit Plans for further details regarding the plan.
The fair value of the Company’s equity investments with readily determinable fair value was determined based on quoted market prices in active markets on the NYSE and NASDAQ, respectively, which are classified within Level I of the fair value hierarchy.
12
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The carrying value of the Company’s investments, which is reported under Other non-current assets in the accompanying condensed consolidated balance sheets as of March 31, 2025 and June 30, 2024, is as follows:
As of | ||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||
| Equity investments with readily determinable fair values: | ||||||||||||||
| Townsquare Class A common stock | $ | $ | ||||||||||||
| Other equity investments with readily determinable fair values held in trust under the Company’s Executive Deferred Compensation Plan | ||||||||||||||
Equity method investments and equity investments without readily determinable fair values(a) | ||||||||||||||
| Total investments | $ | $ | ||||||||||||
_______________
(a) Inclusive of the Company’s investment in Oak View Group’s Crown Properties Collection, LLC ("CPC”).
The following table summarizes the realized and unrealized (loss) gain on equity investments with readily determinable fair value, which is reported in Other (expense) income, net for the three and nine months ended March 31, 2025 and 2024:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Unrealized (loss) gain — Townsquare | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
Unrealized (loss) gain — Executive Deferred Compensation Plan | ( | |||||||||||||||||||||||||
Realized gain from shares sold — DraftKings | ||||||||||||||||||||||||||
Realized gain from shares sold — Townsquare | ||||||||||||||||||||||||||
| Total realized and unrealized (loss) gain | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
| Supplemental information on realized gain: | ||||||||||||||||||||||||||
| Shares of common stock sold — DraftKings | ||||||||||||||||||||||||||
| Cash proceeds from common stock sold — DraftKings | $ | $ | $ | $ | ||||||||||||||||||||||
Shares of common stock sold — Townsquare | ||||||||||||||||||||||||||
Cash proceeds from common stock sold — Townsquare | $ | $ | $ | $ | ||||||||||||||||||||||
Note 6. Property and Equipment, Net
As of March 31, 2025 and June 30, 2024, Property and equipment, net consisted of the following:
| As of | ||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||
| Land | $ | $ | ||||||||||||
| Buildings | ||||||||||||||
Equipment, furniture, and fixtures | ||||||||||||||
Leasehold improvements | ||||||||||||||
| Construction in progress | ||||||||||||||
| Total Property and equipment | $ | $ | ||||||||||||
Less: accumulated depreciation and amortization | ( | ( | ||||||||||||
| Property and equipment, net | $ | $ | ||||||||||||
The Company recorded depreciation and amortization expense on property and equipment of $14,372 and $42,336 for the three and nine months ended March 31, 2025, respectively, and $13,182 and $39,972 for the three and nine months ended March 31, 2024, respectively, which is recognized in Depreciation and amortization in the accompanying condensed consolidated statements of operations.
13
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 7. Goodwill and Intangible Assets
As of March 31, 2025 and June 30, 2024, the carrying amount of Goodwill was $69,041
The Company’s Indefinite-lived intangible assets as of March 31, 2025 and June 30, 2024 were as follows:
| As of | ||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||
| Trademarks | $ | $ | ||||||||||||
| Photographic related rights | ||||||||||||||
| Total indefinite-lived intangible assets | $ | $ | ||||||||||||
During the first quarter of Fiscal Year 2025, the Company performed its annual qualitative impairment test of Goodwill and Indefinite-lived intangible assets and determined that there were no impairments of Goodwill or Indefinite-lived intangible assets identified as of the impairment test date.
Note 8. Commitments and Contingencies
Commitments
See Note 11. Commitments and Contingencies, included in the Company’s Audited Consolidated and Combined Annual Financial Statements, for details on the Company’s commitments. The Company’s commitments as of June 30, 2024 included a total of $323,178 (primarily related to contractual obligations).
During the nine months ended March 31, 2025, the Company did not have any material changes in its non-cancelable contractual obligations (other than activities in the ordinary course of business). See Note 9. Credit Facilities for details of the principal repayments required under the Company’s credit facilities.
Delayed Draw Term Loan Facility
On April 20, 2023, a subsidiary of the Company, MSG Entertainment Holdings, LLC (“MSG Entertainment Holdings”), entered into a delayed draw term loan facility (the “DDTL Facility”) with Sphere Entertainment. Pursuant to the DDTL Facility, MSG Entertainment Holdings committed to lend up to $65,000 in delayed draw term loans to Sphere Entertainment on an unsecured basis until October 20, 2024. See Note 11. Commitments and Contingencies included in the Company’s Audited Consolidated and Combined Annual Financial Statements for more information regarding the DDTL Facility. On July 14, 2023, Sphere Entertainment drew down the full amount of $65,000 under the DDTL Facility. On August 9, 2023, Sphere Entertainment repaid the full principal amount of the DDTL Facility and accrued interest and commitment fees by delivering 1,923 shares of the Company’s Class A Common Stock held by Sphere Entertainment, as permitted as payment under the DDTL Facility. Such shares have been classified by the Company pursuant to the Stock Repurchase Program (as defined and further explained in Note 13. Additional Financial Information) as treasury shares and are no longer outstanding on the date of repayment.
Legal Matters
The Company is a defendant in various lawsuits. Although the outcome of these lawsuits cannot be predicted with certainty (including the extent of available insurance, if any), management does not believe that resolution of these lawsuits will have a material adverse effect on the Company.
14
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 9. Credit Facilities
See Note 12. Credit Facilities, included in the Company’s Audited Consolidated and Combined Annual Financial Statements for more information regarding the Company’s credit facilities. The following table summarizes the presentation of the outstanding balances under the Company’s credit facilities as of March 31, 2025 and June 30, 2024:
| As of | ||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||
| Current Portion | ||||||||||||||
National Properties Term Loan Facility | $ | $ | ||||||||||||
Current portion of long-term debt | $ | $ | ||||||||||||
As of | ||||||||||||||||||||||||||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||||||||||||||||||||||||||
| Principal | Unamortized Deferred Financing Costs | Net | Principal | Unamortized Deferred Financing Costs | Net | |||||||||||||||||||||||||||||||||
| Non-current Portion | ||||||||||||||||||||||||||||||||||||||
National Properties Term Loan Facility | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
National Properties Revolving Credit Facility | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Long-term debt, net of deferred financing costs | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
National Properties Facilities
General. MSG National Properties, LLC (“MSG National Properties”), MSG Entertainment Holdings and certain subsidiaries of MSG National Properties are party to a credit agreement dated June 30, 2022 (as amended, the “National Properties Credit Agreement”) with JP Morgan Chase Bank, N.A., as administrative agent and the lenders and L/C issuers party thereto, providing for a five-year , $650,000 senior secured term loan facility (the “National Properties Term Loan Facility”) and a five-year , $150,000 revolving credit facility (the “National Properties Revolving Credit Facility” and, together with the National Properties Term Loan Facility, the “National Properties Facilities”). Up to $25,000 of the National Properties Revolving Credit Facility is available for the issuance of letters of credit. As of March 31, 2025, outstanding letters of credit were $18,367 and the remaining balance available under the National Properties Revolving Credit Facility was $131,633 .
Interest Rates. Borrowings under the current National Properties Facilities bear interest at a floating rate, which at the option of MSG National Properties may be either (a) a base rate plus an applicable margin ranging from 1.50 % to 2.50 % per annum, determined based on the total leverage ratio of MSG National Properties and its restricted subsidiaries, or (b) adjusted Term SOFR (i.e., Term SOFR plus 0.10 %) plus an applicable margin ranging from 2.50 % to 3.50 % per annum, determined based on the total leverage ratio of MSG National Properties and its restricted subsidiaries. The National Properties Credit Agreement requires MSG National Properties to pay a commitment fee ranging from 0.30 % to 0.50 % in respect of the daily unused commitments under the National Properties Revolving Credit Facility. MSG National Properties is also required to pay customary letter of credit fees, as well as fronting fees, to banks that issue letters of credit pursuant to the National Properties Credit Agreement. The interest rate on the National Properties Facilities as of March 31, 2025 was 6.92 %.
Principal Repayments. Subject to customary notice and minimum amount conditions, the Company may voluntarily repay outstanding loans under the National Properties Facilities or terminate commitments under the National Properties Revolving Credit Facility, at any time, in whole or in part, subject only to customary breakage costs in the case of prepayment of Term SOFR loans. The National Properties Facilities will mature on June 30, 2027. The principal obligations under the National Properties Term Loan Facility are to be repaid in quarterly installments beginning with the fiscal quarter ended March 31, 2023, in an aggregate amount equal to 2.50 % per annum (0.625 % per quarter), stepping up to 5.0 % per annum (1.25 % per quarter) in the fiscal quarter ending September 30, 2025, with the balance due at the maturity of the facility. The principal obligations under the National Properties Revolving Credit Facility are due at the maturity of the facility. Under certain circumstances, MSG National Properties is required to make mandatory prepayments on loans outstanding, including prepayments in an amount equal to the net cash proceeds of certain sales of assets or casualty insurance and/or condemnation recoveries (subject to certain reinvestment, repair or replacement rights), subject to certain exceptions.
15
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Covenants. The National Properties Credit Agreement includes financial covenants requiring MSG National Properties and its restricted subsidiaries to maintain a specified minimum liquidity level, a specified minimum debt service coverage ratio and a specified maximum total leverage ratio. The minimum liquidity level is set at $50,000 , and is tested based on the level of average daily liquidity, consisting of cash and cash equivalents and available revolving commitments, over the last month of each quarter over the life of the National Properties Facilities. The debt service coverage ratio covenant began testing in the fiscal quarter ended December 31, 2022, and was set at a ratio of 2 :1 before stepping up to 2.5 :1 in the fiscal quarter ended September 30, 2024. The leverage ratio covenant began testing in the fiscal quarter ended June 30, 2023. It is tested based on the ratio of MSG National Properties and its restricted subsidiaries’ consolidated total indebtedness to adjusted operating income, with an initial maximum ratio of 6 :1, which stepped down to 5.5 :1 in the fiscal quarter ended June 30, 2024 and steps down to 4.5 :1 in the fiscal quarter ending June 30, 2026. As of March 31, 2025, MSG National Properties and its restricted subsidiaries were in compliance with the covenants of the National Properties Credit Agreement.
In addition to the financial covenants discussed above, the National Properties Credit Agreement and the related security agreement contain certain customary representations and warranties, affirmative and negative covenants and events of default. The National Properties Credit Agreement contains certain restrictions on the ability of MSG National Properties and its restricted subsidiaries to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the National Properties Credit Agreement, including the following: (i) incur additional indebtedness; (ii) create liens on certain assets; (iii) make investments, loans or advances in or to other persons; (iv) pay dividends and distributions or repurchase capital stock (which will restrict the ability of MSG National Properties to make cash distributions to the Company); (v) repay, redeem or repurchase certain indebtedness; (vi) change its lines of business; (vii) engage in certain transactions with affiliates; (viii) amend their respective organizational documents; (ix) merge or consolidate; and (x) make certain dispositions.
Guarantors and Collateral. All obligations under the National Properties Facilities are guaranteed by MSG Entertainment Holdings and MSG National Properties’ existing and future direct and indirect domestic subsidiaries, other than the subsidiaries that own The Garden and certain other excluded subsidiaries (the “Subsidiary Guarantors”).
All obligations under the National Properties Facilities, including the guarantees of those obligations, are secured by certain of the assets of MSG National Properties and the Subsidiary Guarantors (collectively, “Collateral”) including, but not limited to, a pledge of some or all of the equity interests held directly or indirectly by MSG National Properties in each Subsidiary Guarantor. The Collateral does not include, among other things, any interests in The Garden or the leasehold interests in Radio City Music Hall or the Beacon Theatre.
Interest payments and loan principal repayments made by the Company under the National Properties Credit Agreement were as follows:
| Interest Payments | Principal Repayments | |||||||||||||||||||||||||
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
National Properties Facilities | $ | $ | $ | $ | ||||||||||||||||||||||
The carrying value and fair value of the Company’s debt reported in the accompanying condensed consolidated balance sheets were as follows:
As of | ||||||||||||||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||||||||||||||
Carrying Value (a) | Fair Value | Carrying Value (a) | Fair Value | |||||||||||||||||||||||
National Properties Facilities | $ | $ | $ | $ | ||||||||||||||||||||||
(a) The total carrying value of the Company’s debt as of March 31, 2025 and June 30, 2024 is equal to the current and non-current principal payments for the Company’s credit agreements excluding unamortized deferred financing costs of $7,591 and $10,127 , respectively.
The Company’s long-term debt is classified within Level II of the fair value hierarchy as it is valued using quoted indices of similar instruments for which the inputs are readily observable.
Note 10. Pension Plans and Other Postretirement Benefit Plans
See Note 13. Pension Plans and Other Postretirement Benefit Plans, included in the Company’s Audited Consolidated and Combined Annual Financial Statements for more information regarding the Pension Plans, Postretirement Plan, the Madison Square Garden 401(k) Savings Plans, The Madison Square Garden 401(k) Savings Plan (the “401(k) Plan”), the MSG Entertainment Holdings, LLC
16
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Excess Savings Plan (together with the 401(k) Plan, the “Savings Plans”), together with the associated excess savings plan, and the Madison Square Garden 401(k) Union Plan (the “Union Savings Plan”).
Defined Benefit Pension Plans and Other Postretirement Benefit Plans
The following tables present components of net periodic benefit cost for the Pension Plans and Postretirement Plan included in the accompanying condensed consolidated statements of operations for the three and nine months ended March 31, 2025 and 2024. Service cost is recognized in direct operating expenses and selling, general and administrative expenses. All other components of net periodic benefit cost are reported in Other (expense) income, net.
| Pension Plans | Postretirement Plan | |||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest cost | ||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ||||||||||||||||||||||||
| Recognized actuarial loss | ||||||||||||||||||||||||||
Net periodic cost | $ | $ | $ | $ | ||||||||||||||||||||||
| Pension Plans | Postretirement Plan | |||||||||||||||||||||||||
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest cost | ||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ||||||||||||||||||||||||
| Recognized actuarial loss | ||||||||||||||||||||||||||
| Net periodic cost | $ | $ | $ | $ | ||||||||||||||||||||||
Contributions for Qualified Defined Benefit Pension Plans
During the three and nine months ended March 31, 2025, the Company contributed $0 and $3,300 , respectively, to a non-contributory, qualified cash balance retirement plan covering the Company’s non-union employees.
Defined Contribution Plans
For the three and nine months ended March 31, 2025 and 2024, expenses related to the Savings Plans and Union Savings Plan included in the accompanying condensed consolidated statements of operations are as follows:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Savings Plans | $ | $ | $ | $ | ||||||||||||||||||||||
| Union Savings Plan | $ | $ | $ | $ | ||||||||||||||||||||||
Executive Deferred Compensation
See Note 13. Pension Plans and Other Postretirement Benefit Plans, included in the Company’s Audited Consolidated and Combined Annual Financial Statements, for more information regarding the Company’s Executive Deferred Compensation Plan (the “Deferred Compensation Plan”). The Company recorded compensation income of $45 for the three months ended March 31, 2025 and compensation expense of $149 for the nine months ended March 31, 2025 and compensation expense of $233 and $432 , respectively, for the three and nine months ended March 31, 2024, each within Selling, general, and administrative expenses to reflect the remeasurement of the Deferred Compensation Plan liability. In addition, the Company recorded a loss of $45 for the three months ended March 31, 2025 and a gain of $149 for the nine months ended March 31, 2025 and gains of $233 and $432 , respectively, for the three and nine months ended March 31, 2024, within Other (expense) income, net to reflect remeasurement of the fair value of assets under the Deferred Compensation Plan.
17
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table summarizes amounts recognized related to the Deferred Compensation Plan in the accompanying condensed consolidated balance sheets:
| As of | ||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||
Deferred Compensation Plan assets (included in Other non-current assets) | $ | $ | ||||||||||||
Deferred Compensation Plan liabilities (included in Other non-current liabilities) | $ | ( | $ | ( | ||||||||||
Note 11. Share-based Compensation
The Company has two share-based compensation plans: the 2023 Employee Stock Plan and the 2023 Stock Plan for Non-Employee Directors. See Note 14. Share-based Compensation, included in the Company’s Audited Consolidated and Combined Annual Financial Statements, for more information on these plans.
Share-based compensation expense for the Company’s restricted stock units (“RSUs”) and performance stock units (“PSUs”) are recognized in the condensed consolidated statements of operations as a component of direct operating expenses or selling, general, and administrative expenses. The following table summarizes the Company’s share-based compensation expense:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
Share-based compensation expense (a) | $ | $ | $ | $ | ||||||||||||||||||||||
Fair value of awards vested (b) | $ | $ | $ | $ | ||||||||||||||||||||||
(a) The expense shown excludes $6,788 for the nine months ended March 31, 2024, which was reclassified to Restructuring charges in the accompanying condensed consolidated statements of operations as detailed in Note 4. Restructuring Charges.
(b) To fulfill required statutory tax withholding obligations for the applicable income and other employment taxes, RSUs and PSUs with an aggregate value of $693 and $15,062 , and $993 and $13,222 , respectively, were retained by the Company during the three and nine months ended March 31, 2025 and 2024, respectively.
For the three and nine months ended March 31, 2025, weighted-average shares used in the calculation for diluted earnings per share (“EPS”) consisted of 48,271 and 48,445 weighted-average shares of Class A Common Stock, respectively, comprised of basic EPS weighted-average shares of Class A Common Stock of 47,955 and 48,171 respectively, and the dilutive effect of 316 and 274 shares of Class A Common Stock, respectively, issuable under share-based compensation plans. For the three and nine months ended March 31, 2025, weighted-average anti-dilutive shares primarily consisted of 701 618
As of March 31, 2025, there was $40,672 of unrecognized compensation cost related to unvested RSUs and PSUs held by the Company’s direct employees. The cost is expected to be recognized over a weighted-average period of approximately 2.0 years.
Award Activity
RSUs
During the nine months ended March 31, 2025 and 2024, 484 and 624 RSUs were granted, respectively, and 542 and 688 RSUs vested, respectively.
PSUs
During the nine months ended March 31, 2025 and 2024, 386 and 506 PSUs were granted, respectively, and 400 and 273 PSUs vested, respectively.
Note 12. Related Party Transactions
As of March 31, 2025, members of the Dolan family, including trusts for the benefit of members of the Dolan family (collectively, the “Dolan Family Group”) collectively beneficially owned 100 % of the Company’s outstanding Class B Common Stock, $0.01 par value per share (“Class B Common Stock”) and approximately 3.6 % of the Company’s outstanding Class A Common Stock (inclusive of options exercisable within 60 days of March 31, 2025) for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended. Such shares of Class A Common Stock and Class B Common Stock, collectively, represent approximately 64.1 % of the aggregate voting power of the Company’s outstanding common stock. Members of the Dolan Family Group are also the controlling stockholders of Sphere Entertainment, MSG Sports, and AMC Networks Inc.
18
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
See Note 17. Related Party Transactions, included in the Company’s Audited Consolidated and Combined Annual Financial Statements for a description of the Company’s current related party arrangements. There have been no material changes in such related party arrangements as of March 31, 2025, except as described below.
In the third quarter of Fiscal Year 2024, the Company entered into a commercial agreement with CPC, under which CPC provided sponsorship sales services. The Company recorded commission expense of $1,345 and $2,848 , and $854 and $1,013 for the three and nine months ended March 31, 2025 and 2024, respectively. As of March 31, 2025 and June 30, 2024, prepaid expenses associated with this arrangement were $5,968 and $5,993 , respectively, and are reported under Prepaid expenses and other current assets, and Other non-current assets in the accompanying condensed consolidated balance sheets. The Company provided a notice of termination with respect to the commercial agreement on September 20, 2024 and has subsequently negotiated a wind down.
From time to time the Company enters into arrangements with 605, LLC (“605”). James L. Dolan, the Company’s Executive Chairman, Chief Executive Officer and a director, and his spouse, Kristin A. Dolan, owned 605 until September 13, 2023. Kristin A. Dolan is also the founder and was the Chief Executive Officer of 605. 605 provides audience measurement and data analytics services to the Company and its subsidiaries in the ordinary course of business. In August 2022, a subsidiary of Sphere Entertainment entered into a three-year agreement with 605, valued at $750 , covering several customer analysis projects per year in connection with events held at the Company’s venues, which was assigned to the Company in connection with the Distribution. Pursuant to this arrangement, the Company recognized $0 and $34 of expense for the three and nine months ended March 31, 2024, respectively. On September 13, 2023, 605 was sold to iSpot.tv, and James L. Dolan and Kristin A. Dolan now hold a minority interest in iSpot.tv. As a result, as of September 13, 2023, 605 is no longer considered to be a related party.
Revenues and Operating Expenses
The following table summarizes the composition and amounts of the transactions with the Company’s affiliates. The significant components of these amounts are discussed below. These amounts are reflected in revenues and operating expenses in the accompanying condensed consolidated statements of operations for the three and nine months ended March 31, 2025 and 2024:
| Three Months | Nine Months Ended | |||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
| Operating credits (expenses): | ||||||||||||||||||||||||||
| Revenue sharing expenses | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Reimbursement under Arena License Arrangements | ||||||||||||||||||||||||||
| Cost reimbursement from MSG Sports | ||||||||||||||||||||||||||
Cost reimbursement from Sphere Entertainment | ||||||||||||||||||||||||||
| Other operating expenses, net | ( | ( | ( | ( | ||||||||||||||||||||||
Total operating credits (expenses), net (a) | $ | $ | $ | $ | ||||||||||||||||||||||
(a) Of the total operating credits (expenses), net, $1,145 and $(3 ) for the three and nine months ended March 31, 2025 and $1,661 and $(895 ) for the three and nine months ended March 31, 2024, respectively, are included in direct operating expenses in the accompanying condensed consolidated statements of operations, and $27,013 and $90,153 for the three and nine months ended March 31, 2025 and $36,488 and $113,095 for the three and nine months ended March 31, 2024, respectively, are included in selling, general, and administrative expenses in the accompanying condensed consolidated statements of operations.
Revenues
The Company recorded $33,595 and $61,880 of revenues under the Arena License Agreements for the three and nine months ended March 31, 2025, respectively. In addition to the Arena License Agreements, during the three and nine months ended March 31, 2025, the Company’s revenues from related parties primarily reflected amounts earned under sponsorship sales and service representation agreements of $8,227 and $16,892 , respectively, and merchandise sharing revenues of $2,547 and $5,518 , respectively, with MSG Sports. The Company also earned sublease revenue from related parties of $1,719 and $8,359 during the three and nine months ended March 31, 2025, respectively.
The Company recorded $35,588 and $61,441 of revenues under the Arena License Agreements for the three and nine months ended March 31, 2024, respectively. In addition, during the three and nine months ended March 31, 2024, the Company recorded revenues under sponsorship sales and service representation agreements of $7,234 and $15,503 , and merchandise sharing revenues of $2,789 and $5,087 , respectively, with MSG Sports. The Company also earned sublease revenue from related parties of $761 and $2,258 during the three and nine months ended March 31, 2024, respectively.
19
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 13. Additional Financial Information
The following table provides a summary of the amounts recorded as Cash, cash equivalents, and restricted cash:
| As of | ||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||
Total cash, cash equivalents, and restricted cash | $ | $ | ||||||||||||
The Company’s Cash, cash equivalents, and restricted cash are classified within Level I of the fair value hierarchy as they are valued using observable inputs that reflect quoted prices for identical assets in active markets. The Company’s restricted cash includes cash deposited in escrow and operating accounts. The Company has deposited cash in escrow and operating accounts related to general liability insurance obligations.
Prepaid expenses and other current assets consisted of the following:
| As of | ||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||
Prepaid revenue sharing expense | $ | $ | ||||||||||||
Other prepaid expenses | ||||||||||||||
| Current contract assets | ||||||||||||||
Inventory (a) | ||||||||||||||
| Other | ||||||||||||||
| Total prepaid expenses and other current assets | $ | $ | ||||||||||||
(a) Inventory is mostly comprised of food and liquor for the venues.
Other non-current assets consisted of the following:
| As of | ||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||
Unbilled lease receivable (a) | $ | $ | ||||||||||||
Investments (b) | ||||||||||||||
| Deferred costs | ||||||||||||||
| Other | ||||||||||||||
| Total other non-current assets | $ | $ | ||||||||||||
(a) Unbilled lease receivable relates to the amounts recorded under the Arena License Agreement.
(b) See Note 5. Investments for more information on long-term investments.
Accounts payable, accrued and other current liabilities consisted of the following:
| As of | ||||||||||||||
| March 31, 2025 | June 30, 2024 | |||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Accrued payroll and employee related liabilities | ||||||||||||||
| Cash due to promoters | ||||||||||||||
| Accrued expenses and other current liabilities | ||||||||||||||
| Total accounts payable, accrued and other current liabilities | $ | $ | ||||||||||||
20
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Concentration of Risk
As of March 31, 2025, the Company had no customers that made up 10% or more of Accounts receivable, net on the accompanying condensed consolidated balance sheets. As of June 30, 2024, there was one customer that made up 12 % of Accounts receivable, net on the accompanying condensed consolidated balance sheets.
For the three and nine months ended March 31, 2025 and March 31, 2024, the Company had no customers that made up 10% or more of total revenues in the accompanying condensed consolidated statements of operations.
Leases
In February 2025, the Company recognized a right-of-use lease asset of $116,963 and an additional lease obligation of $115,335 as the Company took possession of additional space in its New York corporate office. Subsequently, the Company recognized a partial impairment of $9,700
Stock Repurchase Program
On March 29, 2023, the Company’s Board of Directors authorized a share repurchase program to repurchase up to $250,000 of the Company’s Class A Common Stock (the “Stock Repurchase Program”). Pursuant to the Stock Repurchase Program, shares of Class A Common Stock may be purchased from time to time in open market or private transactions, block trades or such other manner as the Company may determine in accordance with applicable insider trading and other securities laws and regulations. The timing and amount of purchases will depend on market conditions and other factors. For the three and nine months ended March 31, 2025, the Company repurchased 436,008 and 1,117,601 shares of Class A Common Stock for $14,692 and $39,692 , excluding excise tax, respectively. As of March 31, 2025, the Company had approximately $70,000 remaining available under its Stock Repurchase Program for repurchases.
Other (expense) income, net
Other (expense) income, net includes the following:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| Net periodic benefit costs (excluding service costs) | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Realized and unrealized (loss) gain on investments | ( | ( | ||||||||||||||||||||||||
| Other | ( | |||||||||||||||||||||||||
| Total other (expense) income, net | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
Income Taxes
During the nine months ended March 31, 2025 and March 31, 2024, the Company made income tax payments of $13,453 and $58 , respectively.
Income tax expense for the three and nine months ended March 31, 2025 of $7,252 and $43,124 , respectively, reflects an effective tax rate of 47 % and 40 %, respectively. The estimated annual effective tax rate exceeds the statutory federal tax rate of 21% primarily due to state and local taxes and nondeductible officers’ compensation. The Company expects to utilize its net operating losses during Fiscal Year 2025 and as such is a federal taxpayer.
Income tax expense for the three and nine months ended March 31, 2024 of $2 and $397 , respectively, reflects an effective tax rate of 0 % and 1 %. The estimated annual effective tax rate is lower than the statutory federal tax rate of 21% primarily due to a decrease in the valuation allowance, partially offset by state and local taxes.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this MD&A, there are statements concerning the future operating and future financial performance of Madison Square Garden Entertainment Corp. and its direct and indirect subsidiaries (collectively, “we,” “us,” “our,” “MSG Entertainment,” or the “Company”). Words such as “expects,” “anticipates,” “believes,” “estimates,” “may,” “will,” “should,” “could,” “potential,” “continue,” “intends,” “plans,” and similar words and terms used in the discussion of future operating and future financial performance identify forward-looking statements. Investors are cautioned that such forward-looking statements are not guarantees of future performance, results or events and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:
•the level of our expenses, including our corporate expenses;
•the level of our revenues, which depends in part on the popularity of the Christmas Spectacular Starring the Radio City Rockettes (the “Christmas Spectacular”), the sports teams whose games are played at Madison Square Garden (“The Garden”) and other events which are presented in our venues, and our ability to attract such events;
•the on-ice and on-court performance of the sports teams whose games we host in our venues;
•the level of our capital expenditures and other investments;
•general economic conditions, especially in the New York City and Chicago metropolitan areas where we have business activities, including the impact of a recession on our business;
•the demand for sponsorship and suite arrangements;
•competition, for example, from other venues and sports and entertainment options, including of new competing venues;
•the effect of any postponements or cancellations by third-parties or the Company of scheduled events, whether as a result of a pandemic or other public health emergency due to operational challenges and other health and safety concerns or otherwise;
•the extent to which attendance at our venues may be impacted by government actions, renewed health concerns by potential attendees and reduced tourism;
•the impact on the payments we receive under the arena license agreements (the “Arena License Agreements”) that require the New York Knicks (the “Knicks”) of the National Basketball Association (the “NBA”) and the New York Rangers (the “Rangers”) of the National Hockey League (the “NHL”) to play their home games at The Garden as a result of government-mandated capacity restrictions, league restrictions and/or social-distancing or vaccination requirements, if any, at Knicks and Rangers games;
•changes in laws, guidelines, bulletins, directives, policies and agreements, and regulations under which we operate;
•any economic, social or political actions, such as boycotts, protests, work stoppages or campaigns by labor organizations, including the unions representing players and officials of the NBA and NHL, or other work stoppage;
•seasonal fluctuations and other variations in our operating results and cash flow from period to period;
•enhancements or changes to existing productions and the investments associated with such enhancements or changes;
•business, reputational and litigation risk if there is a cyber or other security incident resulting in loss, disclosure or misappropriation of stored personal information, or disclosure of confidential information or other breaches of our information security;
•activities or other developments that discourage or may discourage congregation at prominent places of public assembly, including our venues;
•the acquisition or disposition of assets or businesses and/or the impact of, and our ability to successfully pursue, acquisitions or other strategic transactions;
•our ability to successfully integrate acquisitions, new venues or new businesses into our operations;
•our internal control environment and our ability to identify and remedy any future material weaknesses;
•the costs associated with, and the outcome of, litigation, including any negative publicity, and other proceedings to the extent uninsured, including litigation or other claims against companies we invest in or acquire;
22
•the impact of governmental regulations or laws, including potential legislation related to ticketing, changes in how those regulations and laws are interpreted, as well as the continued benefit of certain tax exemptions and the ability to maintain necessary permits or licenses;
•the impact of any government plans to redesign New York City’s Penn Station;
•the impact of sports league rules, regulations and/or agreements and changes thereto;
•the substantial amount of debt incurred, the ability of our subsidiaries to make payments on, or repay or refinance, such debt under the National Properties Credit Agreement and our ability to obtain additional financing, to the extent required;
•financial community perceptions of our business, operations, financial condition and the industries in which we operate;
•changes in international trade policies and practices, including tariffs, and the economic impacts, volatility and uncertainty resulting therefrom;
•our ability to effectively manage any impacts of a pandemic or other public health emergency (including COVID-19 variants) as well as renewed actions taken in response by governmental authorities or certain professional sports leagues, including ensuring compliance with rules and regulations imposed upon our venues, to the extent applicable;
•the performance by Madison Square Garden Sports Corp. (together with its subsidiaries, as applicable, “MSG Sports”) of its obligations under various agreements with the Company and ongoing commercial arrangements, including the Arena License Agreements;
•the tax-free treatment of the Distribution (as defined below);
•our ability to achieve the intended benefits of the Distribution;
•failure of the Company or Sphere Entertainment Co. (together with its subsidiaries, as applicable, “Sphere Entertainment”) to satisfy its obligations under services agreements or agreements entered into in connection with the Distribution; and
•the additional factors described under “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024 filed with the Securities and Exchange Commission on August 16, 2024 (the “2024 Form 10-K”).
We disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securities laws. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
All dollar amounts included in the following MD&A are presented in thousands, except as otherwise noted.
Introduction
This MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s unaudited condensed and consolidated financial statements and accompanying notes thereto included in this Quarterly Report on Form 10-Q, as well as the Company’s audited consolidated and combined financial statements and notes thereto as of June 30, 2024 and 2023 and for the three years ended June 30, 2024, 2023 and 2022 (the “Audited Consolidated and Combined Annual Financial Statements”) included in the 2024 Form 10-K, to help provide an understanding of our financial condition, changes in financial condition and results of operations.
The Company reports on a fiscal year basis ending on June 30th (“Fiscal Year”). In this MD&A, the years ending and ended on June 30, 2025 and 2024, respectively, are referred to as “Fiscal Year 2025” and “Fiscal Year 2024,” respectively.
Our MD&A is organized as follows:
Business Overview. This section provides a general description of our business, as well as other matters that we believe are important in understanding our results of operations and financial condition and in anticipating future trends.
Results of Operations. This section provides an analysis of our unaudited results of operations for the three and nine months ended March 31, 2025 and 2024.
23
Liquidity and Capital Resources. This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the nine months ended March 31, 2025 and 2024, as well as certain contractual obligations.
Seasonality of Our Business. This section discusses the seasonal performance of our business.
Recently Issued Accounting Pronouncements and Critical Accounting Estimates. This section discusses accounting pronouncements that have been adopted by the Company and recently issued accounting pronouncements not yet adopted by the Company. This section should be read together with our critical accounting estimates, which are discussed in the 2024 Form 10-K under “Management's Discussion and Analysis of Financial Condition and Results of Operations — Recently Issued Accounting Pronouncements and Critical Accounting Estimates — Critical Accounting Estimates” and in the notes to the Audited Consolidated and Combined Annual Financial Statements of the Company included therein.
Business Overview
We are a live entertainment company comprised of iconic venues and marquee entertainment content. Utilizing the Company’s powerful brands and live entertainment expertise, the Company delivers unique experiences that set the standard for excellence and innovation while forging deep connections with diverse and passionate audiences.
We manage our business through one reportable segment. The Company’s portfolio of venues includes: The Garden, The Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, and The Chicago Theatre. The Company’s business includes the original production, the Christmas Spectacular. The Company also has an entertainment and sports bookings business, which showcases a broad array of compelling concerts, family shows and special events, as well as a diverse mix of sporting events, for millions of guests annually.
The Company conducts a significant portion of its operations at venues that it either owns or operates under long-term leases. The Company owns The Garden, The Theater at Madison Square Garden, and The Chicago Theatre, and leases Radio City Music Hall and the Beacon Theatre.
All of the Company’s revenues and assets are attributed to or located in the United States and are primarily concentrated in the New York City metropolitan area.
MSG Entertainment Distribution
On April 20, 2023, Sphere Entertainment distributed approximately 67% of the outstanding common stock of the Company to its stockholders (the “Distribution”), with Sphere Entertainment retaining approximately 33% of the outstanding common stock of MSG Entertainment in the form of Class A common stock, $0.01 par value per share (“Class A Common Stock”), immediately following the Distribution. As a result, the Company became an independent publicly traded company on April 21, 2023. Following the completion of the secondary offering by Sphere Entertainment of the Company’s Class A Common Stock on September 22, 2023, Sphere Entertainment no longer owns any of the Company’s outstanding common stock. See Note 1. Description of Business and Basis of Presentation to the Company’s Audited Consolidated and Combined Annual Financial Statements for more information regarding the Distribution.
Factors Affecting Results of Operations
Our operating results are largely dependent on our ability to attract concerts and other events to our venues, revenues under various agreements entered into with MSG Sports, and the continuing popularity of the Christmas Spectacular. Certain of these factors in turn depend on the popularity and/or performance of the sports teams whose games we host at The Garden.
The Company’s future performance is dependent in part on general economic conditions and the effect of these conditions on our customers. Weak economic conditions may lead to lower demand for suite licenses and tickets to our live productions, concerts, family shows and other events, which would also negatively affect concession and merchandise sales, and lower levels of sponsorship and venue signage. These conditions may also affect the number of concerts, family shows and other events that take place in the future. An economic downturn could adversely affect our business and results of operations.
24
Results of Operations
Total revenue is presented in three categories consisting of (i) Revenues from entertainment offerings, (ii) Food, beverage, and merchandise revenues, and (iii) Arena license fees and other leasing revenues. In addition, total direct operating expenses is presented in two categories consisting of (i) Entertainment offerings, arena license fees and other leasing direct operating expenses and (ii) Food, beverage, and merchandise direct operating expenses. Prior period financial information has been revised to conform with the current period presentation.
Comparison of the three and nine months ended March 31, 2025 versus the three and nine months ended March 31, 2024.
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| 2025 | 2024 | Amount | Percentage | |||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||
Revenues from entertainment offerings | $ | 160,214 | $ | 146,221 | $ | 13,993 | 10 | % | ||||||||||||||||||
| Food, beverage, and merchandise revenues | 45,808 | 45,380 | 428 | 1 | % | |||||||||||||||||||||
Arena license fees and other leasing revenue(a) | 36,443 | 36,712 | (269) | (1) | % | |||||||||||||||||||||
| Total revenues | 242,465 | 228,313 | 14,152 | 6 | % | |||||||||||||||||||||
| Direct operating expenses | ||||||||||||||||||||||||||
Entertainment offerings, arena license fees, and other leasing direct operating expenses | (107,995) | (112,997) | 5,002 | 4 | % | |||||||||||||||||||||
Food, beverage, and merchandise direct operating expenses | (30,875) | (29,024) | (1,851) | (6) | % | |||||||||||||||||||||
Total direct operating expenses | (138,870) | (142,021) | 3,151 | 2 | % | |||||||||||||||||||||
Selling, general, and administrative expenses | (52,112) | (53,945) | 1,833 | 3 | % | |||||||||||||||||||||
| Depreciation and amortization | (14,372) | (13,182) | (1,190) | (9) | % | |||||||||||||||||||||
| Impairment of long-lived assets | (9,700) | — | (9,700) | NM | ||||||||||||||||||||||
| Restructuring charges | (84) | (2,362) | 2,278 | 96 | % | |||||||||||||||||||||
| Operating income | 27,327 | 16,803 | 10,524 | 63 | % | |||||||||||||||||||||
| Interest income | 710 | 341 | 369 | 108 | % | |||||||||||||||||||||
| Interest expense | (11,800) | (14,425) | 2,625 | 18 | % | |||||||||||||||||||||
| Other (expense) income, net | (949) | 78 | (1,027) | NM | ||||||||||||||||||||||
| Income from operations before income taxes | 15,288 | 2,797 | 12,491 | NM | ||||||||||||||||||||||
| Income tax expense | (7,252) | (2) | (7,250) | NM | ||||||||||||||||||||||
Net income | $ | 8,036 | $ | 2,795 | $ | 5,241 | 188 | % | ||||||||||||||||||
25
| Nine Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| 2025 | 2024 | Amount | Percentage | |||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||
Revenues from entertainment offerings | $ | 593,571 | $ | 581,025 | $ | 12,546 | 2 | % | ||||||||||||||||||
| Food, beverage, and merchandise revenues | 124,104 | 127,379 | (3,275) | (3) | % | |||||||||||||||||||||
Arena license fees and other leasing revenue(a) | 70,921 | 64,787 | 6,134 | 9 | % | |||||||||||||||||||||
Total revenues | 788,596 | 773,191 | 15,405 | 2 | % | |||||||||||||||||||||
| Direct operating expenses | ||||||||||||||||||||||||||
Entertainment offerings, arena license fees, and other leasing direct operating expenses | (358,755) | (375,786) | 17,031 | 5 | % | |||||||||||||||||||||
Food, beverage, and merchandise direct operating expenses | (74,898) | (70,673) | (4,225) | (6) | % | |||||||||||||||||||||
Total direct operating expenses | (433,653) | (446,459) | 12,806 | 3 | % | |||||||||||||||||||||
Selling, general, and administrative expenses | (155,047) | (151,156) | (3,891) | (3) | % | |||||||||||||||||||||
| Depreciation and amortization | (42,336) | (39,972) | (2,364) | (6) | % | |||||||||||||||||||||
| Impairment of long-lived assets | (9,700) | — | (9,700) | NM | ||||||||||||||||||||||
| Restructuring charges | (14) | (14,803) | 14,789 | 100 | % | |||||||||||||||||||||
| Operating income | 147,846 | 120,801 | 27,045 | 22 | % | |||||||||||||||||||||
| Interest income | 1,447 | 2,275 | (828) | (36) | % | |||||||||||||||||||||
| Interest expense | (38,798) | (43,761) | 4,963 | 11 | % | |||||||||||||||||||||
| Other expense, net | (2,763) | (1,545) | (1,218) | (79) | % | |||||||||||||||||||||
| Income from operations before income taxes | 107,732 | 77,770 | 29,962 | 39 | % | |||||||||||||||||||||
| Income tax expense | (43,124) | (397) | (42,727) | NM | ||||||||||||||||||||||
Net income | $ | 64,608 | $ | 77,373 | $ | (12,765) | (16) | % | ||||||||||||||||||
______________________________________________________
(a) Arena license fees and other leasing revenue are recognized on a straight line basis and are comprised of a contractual cash component plus or minus a non-cash component for each period presented. Arena license fees include operating lease revenue of (i) $21,746 and $40,048 collected in cash for the three and nine months ended March 31, 2025, respectively, and $22,372 and $38,610 for the three and nine months ended March 31, 2024, respectively, and (ii) a non-cash portion of $11,848 and $21,833 for the three and nine months ended March 31, 2025 respectively, and $13,216 and $22,831 for the three and nine months ended March 31, 2024, respectively.
NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.
Revenues
Revenues for the three and nine months ended March 31, 2025 increased $14,152 and $15,405, respectively, as compared to the prior year period.
Revenues from Entertainment Offerings
For the three months ended March 31, 2025 the increase in revenues from entertainment offerings was primarily due to (i) higher revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $6,250, (ii) higher revenues from the presentation of the Christmas Spectacular production of $4,907, and (iii) higher revenues from venue-related sponsorship, signage, and suite license fees of $4,628, partially offset by lower event-related revenues of $3,601.
The increase in revenues of $6,250 subject to the sharing of economics with MSG Sports pursuant to the Arena License agreements was primarily due to higher suite license revenues (excluding the portion retained by the Company).
The increase in revenues of $4,907 from the presentation of the Christmas Spectacular production was primarily due to an increase in ticket-related revenue, which reflected higher per-show revenue and, to a lesser extent, five additional performances as compared to the prior year quarter. The increase in per-show revenue was primarily due to higher average per-show attendance and, to a lesser extent, higher average ticket yield as compared to the prior year period.
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The increase in revenues of $4,628 from venue-related sponsorship, signage and suite license fees was primarily due to higher suite license revenues (excluding the portion shared with MSG Sports pursuant to the Arena License agreements).
The decrease in event-related revenues of $3,601 was due to (i) lower revenues from concerts of $21,912, which mainly reflects lower per-concert revenues primarily due to a shift in the mix of events at The Garden from promoted events to rentals and a decrease in the number of events at the Company’s venues, partially offset by (ii) higher revenues from other live entertainment and sporting events (excluding the Knicks and Rangers) of $18,311, which was primarily due to higher per-event revenues and an increase in the number of events at the Company’s venues.
For the nine months ended March 31, 2025, the increase in revenues from entertainment offerings was primarily due to (i) higher revenues from the presentation of the Christmas Spectacular production of $20,058, (ii) higher revenues subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $13,429, and (iii) higher revenues from sponsorship and suites of $5,069, which was partially offset by lower event-related revenues of $27,656.
The increase in revenues of $20,058 from the presentation of the Christmas Spectacular production, as compared to the prior year period, was primarily due to higher ticket-related revenues. This reflected higher per-show revenue and, to a lesser extent, an increase in the number of performances as compared to the prior year period. The increase in per-show ticket-related revenues was due to higher average ticket yield and higher average per-show attendance as compared to the prior year period.
The increase in revenues of $13,429 subject to the sharing of economics with MSG Sports pursuant to the Arena License agreements was primarily due to higher suite license revenues (excluding the portion retained by the Company).
The increase in revenues of $5,069 from suites and sponsorship was primarily due to higher suite license revenues (excluding the portion shared with MSG Sports pursuant to the Arena License agreements).
The decrease in event-related revenues of $27,656 was due to lower revenues from concerts of $40,502 which reflects lower per-concert revenues primarily due to a shift in the mix of the events at The Garden from promoted events to rentals, and a decrease in the number of events at The Garden, partially offset by and higher revenues from other live entertainment and sporting events (excluding the Knicks and Rangers) of $12,846, which was primarily due to an increase in the number of events at The Garden and to a lesser extent, higher per-show revenues from other live entertainment and sporting events.
Food, Beverage, and Merchandise Revenues
For the three months ended March 31, 2025, the increase in food, beverage, and merchandise revenues was primarily due to higher food and beverage sales at other live entertainment and sporting events (excluding the Knicks and Rangers), partially offset by lower food and beverage sales at concerts.
The increase in food and beverage sales at other live entertainment and sporting events was due to an increase in the number of events held at the Company’s venues and higher per-event revenues, both as compared to the prior year quarter.
The decrease in food and beverage sales at concerts was primarily due to fewer concerts held at the Company’s venues as compared to the prior year quarter.
For the nine months ended March 31, 2025, the decrease in food, beverage and merchandise revenues was primarily due to (i) lower food and beverage sales at concerts at the Company’s venues as compared to the prior year period, partially offset by (ii) higher food and beverage sales at other live entertainment and sporting events, (iii) higher food, beverage and merchandise sales related to the Christmas Spectacular production, and (iv) higher food and beverage sales at Knicks and Rangers games.
The decrease in food and beverage sales at concerts was due to lower per-concert revenues and, to a lesser extent, fewer concerts at The Garden, both as compared to the prior year period.
The increase in food and beverage sales at other live entertainment and sporting events was due to additional events at The Garden and, to a lesser extent, higher average per-event revenues in the current year period.
The increase in food and beverage sales at Knicks and Rangers games was due to higher average per-game revenues in the current year period, and to a lesser extent, the impact of one combined additional Knicks and Rangers game played at The Garden.
The increase in food, beverage and merchandise sales related to the Christmas Spectacular production was due to higher average per-show revenues and, to a lesser extent, the impact of seven additional shows, both as compared to the prior year period.
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Arena License Fees and Other Leasing Revenue
For the three months ended March 31, 2025, the decrease in revenues was due to lower arena license fees from MSG Sports pursuant to the Arena License Agreements due to a combined two fewer Knicks and Rangers games played at The Garden in the current year period, mostly offset by an increase in other leasing revenue.
For the nine months ended March 31, 2025, the increase in revenues was primarily due to other leasing revenue and, to a lesser extent, higher arena license fees from MSG Sports pursuant to the Arena License Agreements due to one combined additional Knicks and Rangers game played at The Garden in the current year period.
In the three and nine months ended March 31, 2025, the Knicks and Rangers played a combined 43 and 80 pre/regular season games at The Garden, respectively, as compared to 45 and 79 combined pre/regular season games, respectively, in the prior year periods.
Direct operating expenses
Direct operating expenses for the three and nine months ended March 31, 2025 decreased $3,151 and $12,806, respectively as compared to the prior year period.
Direct Operating Expenses Associated with Entertainment Offerings, Arena License Fees and Other Leasing
For the three months ended March 31, 2025, the decrease in direct operating expenses associated with entertainment offerings, arena license fees, and other leasing primarily reflects lower event-related expenses of $8,977 and, to a lesser extent, a decrease in venue operating costs of $2,240, partially offset by an increase in direct operating expenses subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $6,589.
The decrease in event-related expenses of $8,977 reflects (i) lower direct operating expenses from concerts of $17,543, mainly due to lower per-concert expenses, primarily as a result of a shift in the mix of events at The Garden from promoted events to rentals and, to a lesser extent, a decrease in the number of events at the Company’s venues partially offset by (ii) higher direct operating expenses from other live entertainment and sporting events (excluding the Knicks and Rangers) of $8,566, primarily due to higher per-event expenses and an increase in the number of events at the Company’s venues.
The decrease in venue operating costs of $2,240 was primarily due to lower employee compensation and benefits and other cost decreases.
The increase in direct operating expenses of $6,589 subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements primarily reflects direct operating expenses incurred as a result of the increase in suite license fee revenues.
For the nine months ended March 31, 2025, the decrease in direct operating expenses associated with entertainment offerings, arena license fees, and other leasing primarily reflects lower event-related expenses of $26,116 and a decrease in venue operating costs of partially $3,703, offset by an increase in direct operating expenses subject to the sharing of economics with MSG Sports pursuant to the Arena License Agreements of $12,564.
The decrease in event-related expenses of $26,116 reflects (i) lower direct operating expenses from concerts of $35,380, primarily due to lower per-concert expenses due to a shift in the mix of events at The Garden from promoted events to rentals, and (ii) higher direct operating expenses from other live entertainment and sporting events (excluding the Knicks and Rangers) of $9,264.
The decrease in venue operating costs of $3,703 was primarily due to lower variable operating costs.
Direct Operating Expenses Associated with Food, Beverage, and Merchandise
For the three months ended March 31, 2025, the increase in food, beverage and merchandise direct operating expenses was primarily driven by an increase in food and beverage costs related to other live entertainment and sporting events (excluding the Knicks and Rangers), partially offset by a decrease in food and beverage costs related to concerts at the Company’s venues.
For the nine months ended March 31, 2025, the increase in food, beverage and merchandise direct operating expenses was primarily driven by higher food, beverage and merchandise costs related to other live entertainment and sporting events, Knicks and Rangers games at The Garden, and the Christmas Spectacular production, which was partially offset by a decrease in food and beverage costs related to fewer concerts at The Garden.
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Selling, general, and administrative expenses
For the three and nine months ended March 31, 2025, selling, general, and administrative expenses decreased $1,833 and increased $3,891, respectively, as compared to the prior year period.
For the three months ended March 31, 2025, the decrease of $1,833 was primarily due to a decrease in employee compensation and benefits partially offset by other net cost increases.
For the nine months ended March 31, 2025, the increase of $3,891 was primarily due to (i) higher rent expense, and (ii) an increase in employee compensation and benefits, including executive management transition costs of $4,562 recognized in the current year period partially offset by (iii) decreases in professional fees and other costs.
Depreciation and amortization
For the three and nine months ended March 31, 2025, depreciation and amortization increased $1,190 and $2,364, respectively, as compared to the prior year period primarily due to the increase in fixed assets in the first and second quarter of Fiscal Year 2025.
Impairment of long-lived assets
For the three and nine months ended March 31, 2025, impairment of long-lived assets increased $9,700, as compared to the prior year period due to impairment losses recognized on the Company’s right-of-use assets due to the decision to stop utilizing one of the floors in its New York office in the third quarter of Fiscal Year 2025.
Restructuring charges
For the three and nine months ended March 31, 2025, restructuring charges decreased $2,278 and $14,789, respectively, as compared to the prior year period, which reflects termination benefits provided in the prior year period due to a workforce reduction of certain executives and employees.
Operating income
For the three and nine months ended March 31, 2025, operating income increased by $10,524 and $27,045, respectively, as compared to the prior year period. The increase in operating income for the three months ended March 31, 2025 was primarily due to an increase in revenues and, to a lesser extent, a decrease in direct operating expenses and restructuring charges, partially offset by an increase in impairment of long-lived assets. The increase in operating income for the nine months ended March 31, 2025 was primarily due to an increase in revenues, a decrease in direct operating expenses and lower restructuring charges, partially offset by an increase in selling, general and administrative expenses and impairment of long-lived assets.
Interest income
For the three and nine months ended March 31, 2025, interest income increased $369 and decreased $828, respectively, as compared to the prior year period. The increase in interest income for the three months ended March 31, 2025 was primarily due to higher average balances in the Company’s cash, cash equivalents and restricted cash for the quarter. The decrease in interest income for the nine months ended March 31, 2025 was primarily due to lower average balances for the first half of Fiscal Year 2025 and lower interest rates in the Company’s cash, cash equivalents and restricted cash.
Interest expense
For the three and nine months ended March 31, 2025, interest expense decreased $2,625 and $4,963, respectively, as compared to the prior year period primarily due to lower average borrowings and lower interest rates under the National Properties Facilities (as defined below under Liquidity and Capital Resources).
Other (expense) income, net
For the three months ended March 31, 2025, other expense, net was $949, as compared to other income, net of $78 in the corresponding prior year period. The change for the three months ended March 31, 2025 was primarily due to (i) a change in unrealized gains to an unrealized loss of $837 associated with the investment in Townsquare Media, Inc., and (ii) a change in unrealized gains to an unrealized loss of $278 associated with the Company’s Executive Deferred Compensation Plan.
For the nine months ended March 31, 2025, other expense, net was $2,763, as compared to $1,545 in the corresponding prior year period. The change for the nine months ended March 31, 2025 was primarily due to (i) the absence of a $1,658 net gain associated with the investment in DraftKings Inc. recognized in the prior period, (ii) a decrease in dividend income of $455 associated with the
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investment in Townsquare Media, as compared to the prior period, and (iii) a decrease in unrealized gains from the Company’s other investments of $323, as compared to the prior period, partially offset by (iv) a decrease in realized and unrealized loss of $1,232 associated with the investment in Townsquare Media.
Income tax expense
In general, the Company is required to use an estimated annual effective tax rate to measure the tax benefit or tax expense recognized in an interim period. The estimated annual effective tax rate is revised on a quarterly basis.
Income tax expense for the three and nine months ended March 31, 2025 of $7,252 and $43,124, respectively, reflects an effective tax rate of 47% and 40%, respectively. The estimated annual effective tax rate exceeds the statutory federal tax rate of 21% primarily due to state and local taxes and nondeductible officers’ compensation. The Company expects to utilize its net operating losses during Fiscal Year 2025 and as such is a federal taxpayer.
Income tax expense for the three and nine months ended March 31, 2024 of $2 and $397, respectively, reflects an effective tax rate of 0% and 1%, respectively. The estimated annual effective tax rate is lower than the statutory federal tax rate of 21% primarily due to the offset of the valuation allowance, partially offset by state and local taxes.
Adjusted operating income (loss) (“AOI”)
During the third quarter of Fiscal Year 2024, the Company amended the definition of adjusted operating income so that the non-cash portion of operating lease revenue related to the Company’s Arena License Agreements with MSG Sports is no longer excluded in all periods presented.
The Company evaluates its performance based on several factors, of which the key financial measure is adjusted operating income (loss), a non-GAAP financial measure. We define adjusted operating income (loss) as operating income (loss) excluding:
(i) depreciation, amortization and impairments of property and equipment, goodwill and other long-lived assets, including right-of-use assets and related lease costs,
(ii) share-based compensation expense,
(iii) restructuring charges or credits,
(iv) merger, spin-off, and acquisition-related costs, including merger-related litigation expenses,
(v) gains or losses on sales or dispositions of businesses and associated settlements,
(vi) the impact of purchase accounting adjustments related to business acquisitions,
(vii) amortization for capitalized cloud computing arrangement costs, and
(viii) gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan.
The Company excludes impairments of long-lived assets, including right-of-use assets and related lease costs, as these expenses do not represent core business operating results of the Company. The Company believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the Company’s business without regard to the settlement of an obligation that is not expected to be made in cash. The Company eliminates merger, spin-off, and acquisition-related transaction costs, when applicable, because the Company does not consider such costs to be indicative of the ongoing operating performance of the Company as they result from an event that is of a non-recurring nature, thereby enhancing comparability. In addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan, provides investors with a clearer picture of the Company’s operating performance given that, in accordance with GAAP, gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan are recognized in Operating income whereas gains and losses related to the remeasurement of the assets under the executive deferred compensation plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Other (expense) income, net, which is not reflected in Operating income.
The Company believes AOI is an appropriate measure for evaluating the operating performance of the Company on a consolidated basis. AOI and similar measures with similar titles are common performance measures used by investors and analysts to analyze the Company’s performance. The Company uses revenues and AOI measures as the most important indicators of its business performance and evaluates management’s effectiveness with specific reference to these indicators.
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AOI should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP. Since AOI is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. The Company has presented the components that reconcile operating income (loss), the most directly comparable GAAP financial measure, to AOI.
The following is a reconciliation of operating income to adjusted operating income for the three and nine months ended March 31, 2025 as compared to the prior year periods:
| Three Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| 2025 | 2024 | Amount | Percentage | |||||||||||||||||||||||
| Operating income | $ | 27,327 | $ | 16,803 | $ | 10,524 | 63 | % | ||||||||||||||||||
| Depreciation and amortization | 14,372 | 13,182 | 1,190 | 9 | % | |||||||||||||||||||||
| Impairment of long-lived assets | 9,700 | — | 9,700 | NM | ||||||||||||||||||||||
Share-based compensation (excluding share-based compensation included in restructuring charges) | 6,250 | 5,611 | 639 | 11 | % | |||||||||||||||||||||
| Restructuring charges | 84 | 2,362 | (2,278) | (96) | % | |||||||||||||||||||||
| Amortization for capitalized cloud computing arrangement costs | 183 | 388 | (205) | (53) | % | |||||||||||||||||||||
| Remeasurement of deferred compensation plan liabilities | (45) | 191 | (236) | NM | ||||||||||||||||||||||
| Adjusted operating income | $ | 57,871 | $ | 38,537 | $ | 19,334 | 50 | % | ||||||||||||||||||
| Nine Months Ended | ||||||||||||||||||||||||||
| March 31, | Change | |||||||||||||||||||||||||
| 2025 | 2024 | Amount | Percentage | |||||||||||||||||||||||
| Operating income | $ | 147,846 | $ | 120,801 | $ | 27,045 | 22 | % | ||||||||||||||||||
| Depreciation and amortization | 42,336 | 39,972 | 2,364 | 6 | % | |||||||||||||||||||||
| Impairment of long-lived assets | 9,700 | — | 9,700 | NM | ||||||||||||||||||||||
| Share-based compensation (excluding share-based compensation included in restructuring charges) | 21,834 | 19,561 | 2,273 | 12 | % | |||||||||||||||||||||
| Restructuring charges | 14 | 14,803 | (14,789) | (100) | % | |||||||||||||||||||||
Merger, spin-off, and acquisition-related costs (a) | 1,361 | 2,035 | (674) | (33) | % | |||||||||||||||||||||
| Amortization for capitalized cloud computing arrangement costs | 552 | 836 | (284) | (34) | % | |||||||||||||||||||||
| Remeasurement of deferred compensation plan liabilities | 149 | 389 | (240) | (62) | % | |||||||||||||||||||||
| Adjusted operating income | $ | 223,792 | $ | 198,397 | $ | 25,395 | 13 | % | ||||||||||||||||||
________________________________________________________
(a) This adjustment represents non-recurring transaction costs incurred by the Company.
NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.
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Liquidity and Capital Resources
Sources and Uses of Liquidity
Our primary sources of liquidity are cash and cash equivalents, cash flows from our business operations and available borrowing capacity under the National Properties Revolving Credit Facility (as defined below). Our principal uses of cash include working capital-related items (including funding our operations), capital spending, debt service, investments and related loans and advances that we may fund from time to time. We may also use cash to continue to repurchase shares of our Class Common A Stock pursuant to the share repurchase program authorized by our Board of Directors on March 29, 2023, of which there was approximately $70,000 remaining as of March 31, 2025. Our decisions as to the use of our available liquidity will be based upon the ongoing review of the funding needs of the business, the optimal allocation of cash resources, and the timing of cash flow generation. To the extent that we desire to access alternative sources of funding through the capital and credit markets, challenging U.S. and global economic and market conditions could adversely impact our ability to do so at that time.
We regularly monitor and assess our ability to meet our net funding and investing requirements. As of March 31, 2025, the Company’s unrestricted cash and cash equivalents balance was $88,953. The principal balance of the Company’s total debt outstanding as of March 31, 2025 was $613,438 and the Company had $131,633 of available borrowing capacity under the National Properties Revolving Credit Facility. We believe we have sufficient liquidity from cash and cash equivalents, available borrowing capacity under our credit facilities and cash flows from operations to fund our operations and satisfy any obligations for the foreseeable future.
Financing Agreements
See Note 9. Credit Facilities, to the financial statements included in “— Item 1. Financial Statements” of this Quarterly Report on Form 10-Q for discussions of the Company’s debt obligations and financing agreements.
National Properties Facilities
General. MSG National Properties, LLC (“MSG National Properties”), MSG Entertainment Holdings, LLC (“MSG Entertainment Holdings”) and certain subsidiaries of MSG National Properties are party to a credit agreement dated June 30, 2022 (as amended, the “National Properties Credit Agreement”) with JP Morgan Chase Bank, N.A., as administrative agent and the lenders and L/C issuers party thereto, providing for a five-year, $650,000 senior secured term loan facility (the “National Properties Term Loan Facility”) and a five-year, $150,000 revolving credit facility (the “National Properties Revolving Credit Facility” and, together with the National Properties Term Loan Facility, the “National Properties Facilities”). Up to $25,000 of the National Properties Revolving Credit Facility is available for the issuance of letters of credit. As of March 31, 2025, outstanding letters of credit were $18,367 and the remaining balance available under the National Properties Revolving Credit Facility was $131,633.
Interest Rates. Borrowings under the current National Properties Facilities bear interest at a floating rate, which at the option of MSG National Properties may be either (a) a base rate plus an applicable margin ranging from 1.50% to 2.50% per annum, determined based on the total leverage ratio of MSG National Properties and its restricted subsidiaries, or (b) adjusted Term SOFR (i.e., Term SOFR plus 0.10%) plus an applicable margin ranging from 2.50% to 3.50% per annum, determined based on the total leverage ratio of MSG National Properties and its restricted subsidiaries. The National Properties Credit Agreement requires MSG National Properties to pay a commitment fee ranging from 0.30% to 0.50% in respect of the daily unused commitments under the National Properties Revolving Credit Facility. MSG National Properties is also required to pay customary letter of credit fees, as well as fronting fees, to banks that issue letters of credit pursuant to the National Properties Credit Agreement. The interest rate on the National Properties Facilities as of March 31, 2025 was 6.92%.
Principal Repayments. Subject to customary notice and minimum amount conditions, the Company may voluntarily repay outstanding loans under the National Properties Facilities or terminate commitments under the National Properties Revolving Credit Facility, at any time, in whole or in part, subject only to customary breakage costs in the case of prepayment of Term SOFR loans. The National Properties Facilities will mature on June 30, 2027. The principal obligations under the National Properties Term Loan Facility are to be repaid in quarterly installments beginning with the fiscal quarter ended March 31, 2023, in an aggregate amount equal to 2.50% per annum (0.625% per quarter), stepping up to 5.0% per annum (1.25% per quarter) in the fiscal quarter ending September 30, 2025, with the balance due at the maturity of the facility. Under certain circumstances, MSG National Properties is required to make mandatory prepayments on loans outstanding, including prepayments in an amount equal to the net cash proceeds of certain sales of assets or casualty insurance and/or condemnation recoveries (subject to certain reinvestment, repair or replacement rights), subject to certain exceptions.
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Covenants. The National Properties Credit Agreement includes financial covenants requiring MSG National Properties and its restricted subsidiaries to maintain a specified minimum liquidity level, a specified minimum debt service coverage ratio and a specified maximum total leverage ratio. The minimum liquidity level is set at $50,000, and is tested based on the level of average daily liquidity, consisting of cash and cash equivalents and available revolving commitments, over the last month of each quarter over the life of the National Properties Facilities. The debt service coverage ratio covenant began testing in the fiscal quarter ended December 31, 2022, and was set at a ratio of 2:1 before stepping up to 2.5:1 in the fiscal quarter ended September 30, 2024. The leverage ratio covenant began testing in the fiscal quarter ended June 30, 2023. It is tested based on the ratio of MSG National Properties and its restricted subsidiaries’ consolidated total indebtedness to adjusted operating income, with an initial maximum ratio of 6:1, which stepped down to 5.5:1 in the fiscal quarter ended June 30, 2024 and steps down to 4.5:1 in the fiscal quarter ending June 30, 2026. As of March 31, 2025, MSG National Properties and its restricted subsidiaries were in compliance with the covenants of the National Properties Credit Agreement.
In addition to the financial covenants discussed above, the National Properties Credit Agreement and the related security agreement contain certain customary representations and warranties, affirmative and negative covenants and events of default. The National Properties Credit Agreement contains certain restrictions on the ability of MSG National Properties and its restricted subsidiaries to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the National Properties Credit Agreement, including the following: (i) incur additional indebtedness; (ii) create liens on certain assets; (iii) make investments, loans or advances in or to other persons; (iv) pay dividends and distributions or repurchase capital stock (which will restrict the ability of MSG National Properties to make cash distributions to the Company); (v) repay, redeem or repurchase certain indebtedness; (vi) change its lines of business; (vii) engage in certain transactions with affiliates; (viii) amend their respective organizational documents; (ix) merge or consolidate; and (x) make certain dispositions.
Guarantors and Collateral. All obligations under the National Properties Facilities are guaranteed by MSG Entertainment Holdings and MSG National Properties’ existing and future direct and indirect domestic subsidiaries, other than the subsidiaries that own The Garden and certain other excluded subsidiaries (the “Subsidiary Guarantors”). All obligations under the National Properties Facilities, including the guarantees of those obligations, are secured by certain of the assets of MSG National Properties and the Subsidiary Guarantors (collectively, “Collateral”) including, but not limited to, a pledge of some or all of the equity interests held directly or indirectly by MSG National Properties in each Subsidiary Guarantor. The Collateral does not include, among other things, any interests in The Garden or the leasehold interests in Radio City Music Hall or the Beacon Theatre.
Contractual Obligations
During the nine months ended March 31, 2025, the Company did not have any material changes in its non-cancelable contractual obligations (other than activities in the ordinary course of business). See Note 6. Property and Equipment, Net and Note 8. Commitments and Contingencies, to the financial statements included in “— Item 1. Financial Statements” of this Quarterly Report on Form 10-Q for further details on the Company’s contractual obligations.
Cash Flow Discussion
As of March 31, 2025, cash, cash equivalents and restricted cash totaled $89,474, as compared to $33,555 as of June 30, 2024. The following table summarizes the Company’s cash flow activities for the nine months ended March 31, 2025 and 2024:
| Nine Months Ended | ||||||||||||||
| March 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Net cash provided by operating activities | $ | 142,308 | $ | 111,054 | ||||||||||
| Net cash used in investing activities | (19,379) | (72,625) | ||||||||||||
| Net cash used in financing activities | (67,010) | (94,476) | ||||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | 55,919 | $ | (56,047) | ||||||||||
Operating Activities
Net cash provided by operating activities for the nine months ended March 31, 2025 increased by $31,254 as compared to the prior year period, primarily due to an increase in Net income adjusted for non-cash items of $22,679, and an increase in cash flows from changes in working capital of $8,575. The increase in cash flows from changes in working capital was primarily driven by (i) a smaller increase in accounts receivable as compared to the prior year period, due to the timing of cash collections, and (ii) an increase in the net operating lease liabilities in the current year period, as the Company took possession of additional office space in New York. These increases were partially offset by (iii) negative net cash outflows from related party receivables and payables, due to the timing
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and settlement of the underlying related party transactions, (iv) a decrease in accounts payable, due to the timing of payments to vendors, (v) a decrease in accrued and other current and non-current liabilities, primarily as a result of timing of settlements with promoters, and (vi) a smaller increase in deferred revenue, due to the timing of billing and recognition of suite license and sponsor signage revenues, in each case as compared to the nine months ended March 31, 2024.
Investing Activities
Net cash used in investing activities for the nine months ended March 31, 2025 decreased by $53,246 to $19,379 as compared to the prior year period primarily due to (i) the absence of a loan to a related party under the delayed draw term loan facility, partially offset by fewer proceeds received from the sale of investments in the current year period as compared to the prior year period.
Financing Activities
Net cash used in financing activities for the nine months ended March 31, 2025 decreased by $27,466 to $67,010 as compared to the prior year period primarily due to (i) a decrease in principal debt repayments, and (ii) a decrease in stock repurchases, partially offset by (iii) a decrease in proceeds received from the National Properties Revolving Credit Facility.
Seasonality of Our Business
The revenues the Company earns from the Christmas Spectacular and arena license fees from MSG Sports in connection with the Knicks’ and Rangers’ use of The Garden generally means the Company earns a disproportionate share of its revenues and operating income in the second and third quarters of the Company’s fiscal year, with the first and fourth fiscal quarters being disproportionately lower.
Recently Issued Accounting Pronouncements and Critical Accounting Estimates
Recently Issued and Adopted Accounting Pronouncements
See Note 2. Summary of Significant Accounting Policies, to the financial statements included in “— Item 1. Financial Statements” of this Quarterly Report on Form 10-Q for discussion of recently issued accounting pronouncements.
Critical Accounting Estimates
There have been no material changes to the Company’s critical accounting estimates from those set forth in the 2024 Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There were no material changes to the disclosures regarding market risks in connection with our pension and postretirement plans. See Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of the 2024 Form 10-K.
Potential Interest Rate Risk Exposure
The Company, through its subsidiary, MSG National Properties, is subject to potential interest rate risk exposure related to borrowings incurred under its credit facilities. Changes in interest rates may increase interest expense payments with respect to any borrowings incurred under these credit facilities. The effect of a hypothetical 200 basis point increase in floating interest rate prevailing as of March 31, 2025 and continuing for a full year would increase the Company’s interest expense on the outstanding amounts under the credit facilities by $12,269.
Item 4. Controls and Procedures
Our management, with the participation of our Executive Chairman and Chief Executive Officer and our Executive Vice President and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our Executive Chairman and Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2025.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a defendant in various lawsuits. Although the outcome of these lawsuits cannot be predicted with certainty (including the extent of available insurance, if any), management does not believe that resolution of these lawsuits will have a material adverse effect on the Company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On March 29, 2023, the Company’s Board of Directors authorized a share repurchase program to repurchase up to $250 million of the Company’s Class A Common Stock (the “Stock Repurchase Program”). Pursuant to the Stock Repurchase Program, shares of Class A Common Stock may be purchased from time to time in open market or private transactions, block trades or such other manner as the Company may determine in accordance with applicable insider trading and other securities laws and regulations. The timing and amount of purchases will depend on market conditions and other factors. For the nine months ended March 31, 2025, the Company repurchased 1,117,601 shares of Class A Common Stock for approximately $40 million. As of March 31, 2025, the Company had approximately $70 million remaining available for repurchases under the Stock Repurchase Program.
The following table provides information with respect to the Company’s purchases of its Class A Common Stock during the quarter ended March 31, 2025:
| Period | Total Number of Shares Purchased | Average Price Paid per Share (a) | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Fair Value of Shares that May Yet Be Purchased Under the Program | ||||||||||||||||||||||
| January 2025 | — | $ | — | — | $ | 84,488,503 | ||||||||||||||||||||
| February 2025 | — | — | — | 84,488,503 | ||||||||||||||||||||||
| March 2025 | 436,008 | 33.70 | 436,008 | 69,796,313 | ||||||||||||||||||||||
| 436,008 | $ | 33.70 | 436,008 | $ | 69,796,313 | |||||||||||||||||||||
_________________
(a) The average price paid per share excludes excise tax.
Item 6. Exhibits
(a) Index to Exhibits
_________________
EXHIBIT NO. | DESCRIPTION | ||||||||||
101 | The following materials from the Madison Square Garden Entertainment Corp. Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of operations, (iii) condensed consolidated statements of comprehensive income, (iv) condensed consolidated statements of cash flows, (v) condensed consolidated statements of equity (deficit), and (vi) notes to condensed consolidated financial statements. | ||||||||||
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 formatted in Inline XBRL and contained in Exhibit 101. | ||||||||||
† This exhibit is a management contract or a compensatory plan or arrangement.
* Furnished herewith. These exhibits shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 6th day of May 2025.
| Madison Square Garden Entertainment Corp. | ||||||||
| By: | /s/ LAYTH TAKI | |||||||
| Name: | Layth Taki | |||||||
| Title: | Senior Vice President, Controller and Principal Accounting Officer | |||||||
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