Madison Square Garden Sports Corp 10-Q for FY2021 Q2

Madison Square Garden Sports Corp. (MSGS)

10-Q 2021-02-03 For: 2020-12-31

Added on April 10, 2026

About this 10-Q

Madison Square Garden Sports Corp filed this 10-Q on February 3, 2021, covering the quarter ended December 31, 2020 (FY2021 Q2).

Headline figures

Quarter ended December 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $28.77M; down 90.2% from $292.8M a year earlier
Net loss: $40.63M; compared with net income of $94.14M a year earlier
Diluted EPS: -$1.68; compared with $3.93 a year earlier

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Delaware						47-3373056
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	MSGS	New York Stock Exchange


Class A Common Stock par value $0.01 per share	—	19,587,113
Class B Common Stock par value $0.01 per share	—	4,529,517


			Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets as of December 31, 2020 (unaudited) and June 30, 2020			1

Consolidated Statements of Operations for the three and six months ended December 31, 2020 and 2019 (unaudited)			3

Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended December 31, 2020 and 2019 (unaudited)			4

Consolidated Statements of Cash Flows for the six months ended December 31, 2020 and 2019 (unaudited)			5

Consolidated Statements of Equity and Redeemable Noncontrolling Interests for the three and six months ended December 31, 2020 and 2019 (unaudited)			7

Notes to Consolidated Financial Statements (unaudited)			11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			32

Item 3. Quantitative and Qualitative Disclosures About Market Risk			46

Item 4. Controls and Procedures			46

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			47



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			47



Item 6. Exhibits			48


	December 31, 2020		June 30, 2020
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	70,762	$	77,852
Restricted cash	9,500		12,821

Accounts receivable, net	24,897		7,403

Net related party receivables	11,935		135
Prepaid expenses	47,535		20,634

Other current assets	10,851		9,433
Total current assets	175,480		128,278

Property and equipment, net of accumulated depreciation and amortization of $41,098 and $38,361 as of December 31, 2020 and June 30, 2020, respectively	37,034		39,597
Right-of-use lease assets	711,882		718,051
Amortizable intangible assets, net	2,224		2,754
Indefinite-lived intangible assets	112,144		112,144
Goodwill	226,955		226,955
Other assets	26,398		6,019
Total assets	$	1,292,117	$	1,233,798


See accompanying notes to consolidated financial statements.


			☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2020		2019		2020		2019
Revenues (a)	$	28,771	$	292,798	$	85,809	$	342,648

Operating expenses:
Direct operating expenses (b)	16,661		197,783		56,447		216,202
Selling, general and administrative expenses (c)	48,909		90,328		91,905		176,238
Depreciation and amortization	1,607		4,920		3,267		9,765
Operating loss	(38,406)		(233)		(65,810)		(59,557)
Other income (expense):
Interest income	—		233		—		526
Interest expense	(2,487)		(796)		(4,476)		(1,373)
Miscellaneous expense, net	(70)		(88)		(190)		(174)
	(2,557)		(651)		(4,666)		(1,021)
Loss from continuing operations before income taxes	(40,963)		(884)		(70,476)		(60,578)
Income tax benefit (expense)	(170)		(2,773)		328		16,730
Loss from continuing operations	(41,133)		(3,657)		(70,148)		(43,848)
Income from discontinued operations, net of taxes	—		96,006		—		55,531
Net income (loss)	(41,133)		92,349		(70,148)		11,683
Less: Net loss attributable to nonredeemable noncontrolling interests from continuing operations	(508)		(465)		(1,106)		(915)
Less: Net loss attributable to redeemable noncontrolling interests from discontinued operations	—		(1,241)		—		(1,404)
Less: Net loss attributable to nonredeemable noncontrolling interests from discontinued operations	—		(86)		—		(158)
Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders	$	(40,625)	$	94,141	$	(69,042)	$	14,160

Basic
Continuing operations	$	(1.68)	$	(0.13)	$	(2.86)	$	(1.80)
Discontinued operations	—		4.07		—		2.39
Basic income (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders	$	(1.68)	$	3.94	$	(2.86)	$	0.59
Diluted
Continuing operations	$	(1.68)	$	(0.13)	$	(2.86)	$	(1.79)
Discontinued operations	—		4.06		—		2.38
Diluted income (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders	$	(1.68)	$	3.93	$	(2.86)	$	0.59
Weighted-average number of common shares outstanding:
Basic	24,144		23,913		24,103		23,870
Diluted	24,144		23,979		24,103		23,977



	Three Months Ended December 31, 2020
	Common Stock Issued		Additional Paid-In Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Madison Square Garden Sports Corp. Stockholders’ Equity		Non - redeemable Noncontrolling Interests		Total Equity
Balance as of September 30, 2020	$	249	$	—	$	(147,605)	$	(93,361)	$	(2,129)	$	(242,846)	$	2,953	$	(239,893)
Net loss	—		—		—		(40,625)		—		(40,625)		(508)		(41,133)
Other comprehensive income	—		—		—		—		10		10		—		10
Comprehensive loss	—		—		—		—		—		(40,615)		(508)		(41,123)
Share-based compensation	—		15,981		—		—		—		15,981		—		15,981
Tax withholding associated with shares issued for equity-based compensation	—		(93)		—		—		—		(93)		—		(93)
Common stock issued under stock incentive plans	—		(20)		20		—		—		—		—		—

Adjustments to noncontrolling interests	—		(436)		—		—		—		(436)		436		—





Balance as of December 31, 2020	$	249	$	15,432	$	(147,585)	$	(133,986)	$	(2,119)	$	(268,009)	$	2,881	$	(265,128)

See accompanying notes to consolidated financial statements.



MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS (Continued)
(Unaudited)
(in thousands)

	Three Months Ended December 31, 2019
	Common Stock Issued		Additional Paid-In Capital		Treasury Stock		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Total Madison Square Garden Sports Corp. Stockholders’ Equity		Non - redeemable Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
Balance as of September 30, 2019	$	249	$	2,819,449	$	(186,583)	$	(50,978)	$	(56,602)	$	2,525,535	$	19,447	$	2,544,982	$	67,464
Net income (loss)	—		—		—		94,141		—		94,141		(551)		93,590		(1,241)
Other comprehensive income	—		—		—		—		23,532		23,532		—		23,532		—
Comprehensive income (loss)	—		—		—		—		—		117,673		(551)		117,122		(1,241)
Share-based compensation	—		17,926		—		—		—		17,926		—		17,926		—
Tax withholding associated with shares issued for equity-based compensation	—		(2,818)		—		—		—		(2,818)		—		(2,818)		—
Common stock issued under stock incentive plans	—		(690)		690		—		—		—		—		—		—

Contribution from noncontrolling interest holders	—		—		—		—		—		—		2,000		2,000		—
Distributions to noncontrolling interest holders	—		—		—		—		—		—		(535)		(535)		—

Balance as of December 31, 2019	$	249	$	2,833,867	$	(185,893)	$	43,163	$	(33,070)	$	2,658,316	$	20,361	$	2,678,677	$	66,223

See accompanying notes to consolidated financial statements.


	Three Months Ended		Six Months Ended
	December 31, 2019		December 31, 2019
Revenues	$	336,260	$	501,375
Direct operating expenses	173,756		287,972
Selling, general and administrative expenses	58,138		114,885
Depreciation and amortization	23,291		47,437

Operating income	81,075		51,081
Other income (expense):
Loss in equity method investments	(1,170)		(2,643)
Interest income	6,036		13,059
Interest expense	(919)		(2,183)
Miscellaneous income, net	9,387		14,551
Income from discontinued operations before income taxes	94,409		73,865
Income tax benefit (expense)	1,597		(18,334)
Net income from discontinued operations	96,006		55,531
Less: Net loss attributable to redeemable noncontrolling interests	(1,241)		(1,404)
Less: Net loss attributable to nonredeemable noncontrolling interests	(86)		(158)
Net income from discontinued operations attributable to Madison Square Garden Sports Corp.’s stockholders	$	97,333	$	57,093


	Six Months Ended
	December 31, 2019
Non-cash items included in net income (loss):
Depreciation and amortization	$	47,437

Share-based compensation expense	5,534






Cash flows from investing activities:
Capital expenditures	$	208,122

Non-cash investing activities:

Capital expenditures incurred but not yet paid	$	46,151


	December 31,		June 30,
	2020		2020
Receivables from contracts with customers, net (a)	$	25,887	$	8,035
Contract assets, current (b)	4,276		4,112
Deferred revenue, including non-current portion (c), (d)	232,307		128,362


Fiscal Year 2021 (remainder)	$	18,833
Fiscal Year 2022	74,791
Fiscal Year 2023	47,966
Fiscal Year 2024	34,515
Fiscal Year 2025	23,896
Thereafter	29,809
	$	229,810


	As of
	December 31, 2020		June 30, 2020		December 31, 2019		June 30, 2019
Captions on the consolidated balance sheets:
Cash and cash equivalents	$	70,762	$	77,852	$	2,425	$	4,317
Restricted cash (a)	9,500		12,821		25,103		21,519
Cash, cash equivalents and restricted cash on the consolidated statements of cash flows	$	80,262	$	90,673	$	27,528	$	25,836




Sports franchises	$	111,064
Photographic related rights	1,080
	$	112,144


December 31, 2020	Gross		Accumulated Amortization		Net
Trade names	$	2,300	$	(1,572)	$	728
Non-compete agreements	2,400		(1,640)		760
Other intangibles	1,200		(464)		736
	$	5,900	$	(3,676)	$	2,224


June 30, 2020	Gross		Accumulated Amortization		Net
Trade names	$	2,300	$	(1,342)	$	958
Non-compete agreements	2,400		(1,400)		1,000
Other intangibles	1,200		(404)		796
	$	5,900	$	(3,146)	$	2,754


	December 31, 2020				June 30, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value





Liabilities
Long-term debt (a)	$	380,000	$	380,000	$	350,000	$	350,000


	Line Item in the Company’s Consolidated Balance Sheet	December 31, 2020		June 30, 2020
Right-of-use assets:
Operating leases	Right-of-use lease assets	$	711,882	$	718,051
Lease liabilities:
Operating leases, current (a)	Operating lease liabilities, current	$	26,807	$	39,131
Operating leases, noncurrent (a)	Operating lease liabilities, noncurrent	687,535		679,053
Total lease liabilities		$	714,342	$	718,184


	Line Item in the Company’s Consolidated Statement of Operations	Three Months Ended December 31,				Six Months Ended December 31,
		2020		2019		2020		2019
Operating lease cost	Direct operating expenses	$	2,308	$	96	$	2,398	$	185
Operating lease cost	Selling, general and administrative expenses	611		—		1,222		—
Short-term lease cost	Direct operating expenses	27		42		51		84
Short term lease costs	Selling, general and administrative expenses	—		—		—		—
Total lease cost		$	2,946	$	138	$	3,671	$	269


Fiscal Year 2021 (remainder)	$	6,390
Fiscal Year 2022	43,563
Fiscal Year 2023	45,029
Fiscal Year 2024	44,937
Fiscal Year 2025	44,052
Thereafter	2,158,686
Total lease payments	2,342,657
Less imputed interest	(1,628,315)
Total lease liabilities	$	714,342



The following table provides a reconciliation of the deferred and contingent consideration liabilities in connection with the CLG acquisition:

	Six Months Ended December 31, 2020
Balance as of June 30, 2020	$	336
Contingent consideration payment	(200)
Change in fair value of contingent consideration(a)	(136)
Balance as of December 31, 2020	$	—


	December 31, 2020 (a)		June 30, 2020
Other current assets	$	1,756	$	675
Other assets	3,219		264



	MSGE Pension Plans & MSGS Pension Plans				Postretirement Plan
	Three Months Ended				Three Months Ended
	December 31,				December 31,
	2020		2019		2020		2019
Service cost	$	—	$	20	$	—	$	17
Interest cost	60		1,328		—		27
Expected return on plan assets	—		(1,328)		—		—
Recognized actuarial loss	10		344		—		2


Net periodic benefit cost	$	70	$	364	$	—	$	46


	Number of		Weighted-Average Fair Value Per Share at Date of Grant (a)
	Nonperformance Based Vesting RSUs	Performance Based Vesting RSUs
Unvested award balance, June 30, 2020	275	327	$	262.13
Granted	123	48	$	162.22
Vested	(110)	(100)	$	239.33
Forfeited / Cancelled	(12)	(48)	$	284.89
Unvested award balance, December 31, 2020	276	227	$	235.04


	Number of Time Vesting Options	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value

Balance as of June 30, 2020	543	$	225.79
Granted	—	$	—
Cancelled	(449)	$	242.51
Balance as of December 31, 2020	94	$	145.78	6.96	$	3,595
Exercisable as of December 31, 2020	94	$	145.78	6.96	$	3,595


	Three		Six
	Months		Months
Decrease in pre/regular season ticket-related revenues	$	(108,689)	$	(114,991)
Decrease in local media rights fees from MSG Networks	(47,180)		(45,041)
Decrease in revenues from league distributions	(37,320)		(6,979)
Decrease in suite license fee revenues	(28,185)		(42,187)
Decrease in sponsorship and signage revenues	(23,841)		(26,731)
Decrease in pre/regular season food, beverage and merchandise sales	(18,635)		(19,926)
Other net decreases	(177)		(984)
	$	(264,027)	$	(256,839)


EXHIBIT NO.						DESCRIPTION
10.1						Amended and Restated Credit Agreement, dated as of November 6, 2020, by and among New York Knicks, LLC, JPMorgan Chase Bank, N.A. as administrative agent and collateral agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company ’s Quarterly Report on F orm 10-Q for the quarter ended September 30, 2020 filed on November 9, 2020).
10.2						Credit Agreement, dated as of November 6, 2020, by and among Knicks Holdings, LLC, JPMorgan Chase Bank, N.A. as administrative agent and collateral agent, and the lenders party thereto (incorporated by reference to Exh ibit 10.2 to the Company ’s Quarterly Report on Form 10-Q for the quarter ended S eptember 30, 2020 filed on November 9, 2020).
10.3						Security Agreement, dated as of November 6, 2020, between Knicks Holdings, LLC and JPMorgan Chase Bank, N.A., as collateral agent (incorporated by reference to Exhibit 10.3 to the Company ’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 filed on November 9, 2020).
10.4						Amended and Restated Credit Agreement, dated as of November 6, 2020, by and among New York Rangers, LLC, JPMorgan Chase Bank, N.A. as administrative agent and collateral agent, and the lenders party thereto (incorporated by reference to Exhibit 10.4 to the Com pany ’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 filed on November 9, 2020).
10.5						Employment Agreement dated as of December 18, 2020 between Madison Square Garden Sports Corp. and Lawrence J. Burian (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 18, 2020). †
31.1						Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification by the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase.
101.DEF						XBRL Taxonomy Extension Definition Linkbase.
101.LAB						XBRL Taxonomy Extension Label Linkbase.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase.
104						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2020 formatted in Inline XBRL and contained in Exhibit 101.


Madison Square Garden Sports Corp.

By:	/S/ VICTORIA M. MINK
	Name:	Victoria M. Mink
	Title:	Executive Vice President, Chief Financial Officer and Treasurer


/s/ Andrew Lustgarten
Andrew Lustgarten
President and Chief Executive Officer