Madison Square Garden Sports Corp 10-Q for FY2021 Q1

Madison Square Garden Sports Corp. (MSGS)

10-Q 2020-11-09 For: 2020-09-30

Added on April 10, 2026

About this 10-Q

Madison Square Garden Sports Corp filed this 10-Q on November 9, 2020, covering the quarter ended September 30, 2020 (FY2021 Q1).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $57.04M; up 14.4% from $49.85M a year earlier
Net loss: $28.42M; compared with a net loss of $79.98M a year earlier
Diluted EPS: -$1.18; compared with -$3.36 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	—	19,582,001
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 September 30, 2020 (unaudited) and June 30, 2020			1

Consolidated Statements of Operations for the three months ended September 30, 2020 and 2019 (unaudited)			3

Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2020 and 2019 (unaudited)			4

Consolidated Statements of Cash Flows for the three months ended September 30, 2020 and 2019 (unaudited)			5

Consolidated Statements of Equity and Redeemable Noncontrolling Interests for the three months ended September 30, 2020 and 2019 (unaudited)			7

Notes to Consolidated Financial Statements (unaudited)			9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			29

Item 3. Quantitative and Qualitative Disclosures About Market Risk			41

Item 4. Controls and Procedures			42

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			43



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			43



Item 6. Exhibits			44


	September 30, 2020		June 30, 2020
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	23,527	$	77,852
Restricted cash	2,679		12,821

Accounts receivable, net	15,465		7,403

Net related party receivables	8,904		135
Prepaid expenses	35,618		20,634

Other current assets	9,907		9,433
Total current assets	96,100		128,278

Property and equipment, net of accumulated depreciation and amortization of $39,756 and $38,361 as of September 30, 2020 and June 30, 2020, respectively	38,281		39,597
Right-of-use lease assets	720,326		718,051
Amortizable intangible assets, net	2,489		2,754
Indefinite-lived intangible assets	112,144		112,144
Goodwill	226,955		226,955
Other assets	23,071		6,019
Total assets	$	1,219,366	$	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
	September 30,
		2020		2019
Revenues (a)		$	57,038	$	49,850

Operating expenses:
Direct operating expenses (b)		39,786		18,419
Selling, general and administrative expenses (c)		42,996		85,910
Depreciation and amortization		1,660		4,845
Operating loss		(27,404)		(59,324)
Other income (expense):
Interest income		—		293
Interest expense		(1,989)		(577)
Miscellaneous expense, net		(120)		(86)
		(2,109)		(370)
Loss from continuing operations before income taxes		(29,513)		(59,694)
Income tax benefit		498		19,503
Loss from continuing operations		(29,015)		(40,191)
Loss from discontinued operations, net of taxes		—		(40,475)
Net loss		(29,015)		(80,666)
Less: Net loss attributable to nonredeemable noncontrolling interests from continuing operations		(598)		(450)
Less: Net loss attributable to redeemable noncontrolling interests from discontinued operations		—		(163)
Less: Net loss attributable to nonredeemable noncontrolling interests from discontinued operations		—		(72)
Net loss attributable to Madison Square Garden Sports Corp.’s stockholders		$	(28,417)	$	(79,981)

Basic
Continuing operations		$	(1.18)	$	(1.67)
Discontinued operations		—		(1.69)
Basic loss per common share attributable to Madison Square Garden Sports Corp.’s stockholders		$	(1.18)	$	(3.36)
Diluted
Continuing operations		$	(1.18)	$	(1.67)
Discontinued operations		—		(1.69)
Diluted loss per common share attributable to Madison Square Garden Sports Corp.’s stockholders		$	(1.18)	$	(3.36)
Weighted-average number of common shares outstanding:
Basic		24,062		23,827
Diluted		24,062		23,827








	Three Months Ended September 30, 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 June 30, 2020	$	249	$	5,940	$	(167,431)	$	(43,605)	$	(2,139)	$	(206,986)	$	3,551	$	(203,435)
Net loss	—		—		—		(28,417)		—		(28,417)		(598)		(29,015)
Other comprehensive income	—		—		—		—		10		10		—		10
Comprehensive loss	—		—		—		—		—		(28,407)		(598)		(29,005)
Share-based compensation	—		6,345		—		—		—		6,345		—		6,345
Tax withholding associated with shares issued for equity-based compensation	—		(10,930)		—		(2,868)		—		(13,798)		—		(13,798)
Common stock issued under stock incentive plans	—		(1,355)		19,826		(18,471)		—		—		—		—





Balance as of September 30, 2020	$	249	$	—	$	(147,605)	$	(93,361)	$	(2,129)	$	(242,846)	$	2,953	$	(239,893)

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 September 30, 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 June 30, 2019	$	249	$	2,845,961	$	(207,790)	$	29,003	$	(46,923)	$	2,620,500	$	18,260	$	2,638,760	$	67,627
Net loss	—		—		—		(79,981)		—		(79,981)		(522)		(80,503)		(163)
Other comprehensive loss	—		—		—		—		(9,679)		(9,679)		—		(9,679)		—
Comprehensive loss	—		—		—		—		—		(89,660)		(522)		(90,182)		(163)
Share-based compensation	—		18,141		—		—		—		18,141		—		18,141		—
Tax withholding associated with shares issued for equity-based compensation	—		(23,446)		—		—		—		(23,446)		—		(23,446)		—
Common stock issued under stock incentive plans	—		(21,207)		21,207		—		—		—		—		—		—

Contribution from noncontrolling interest holders	—		—		—		—		—		—		1,709		1,709


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

See accompanying notes to consolidated financial statements.


	Three Months Ended
	September 30, 2019
Revenues	$	165,115
Direct operating expenses	114,216
Selling, general and administrative expenses	56,747
Depreciation and amortization	24,146

Operating loss	(29,994)
Other income (expense):
Loss in equity method investments	(1,473)
Interest income	7,023
Interest expense	(1,264)
Miscellaneous income, net	5,164
Loss from discontinued operations before income taxes	(20,544)
Income tax expense	(19,931)
Net loss from discontinued operations	(40,475)
Less: Net loss attributable to redeemable noncontrolling interests	(163)
Less: Net loss attributable to nonredeemable noncontrolling interests	(72)
Net loss from discontinued operations attributable to Madison Square Garden Sports Corp.’s stockholders	$	(40,240)


	Three Months Ended
	September 30, 2019
Non-cash items included in net income (loss):
Depreciation and amortization	$	24,146

Share-based compensation expense	3,095






Cash flows from investing activities:
Capital expenditures	$	86,390

Non-cash investing activities:

Capital expenditures incurred but not yet paid	$	39,592


	September 30,		June 30,
	2020		2020
Receivables from contracts with customers, net (a)	$	16,174	$	8,035
Contract assets, current (b)	4,390		4,112
Deferred revenue, including non-current portion (c), (d)	139,985		128,362


Fiscal Year 2021 (remainder)	$	20,280
Fiscal Year 2022	26,945
Fiscal Year 2023	7,389
Fiscal Year 2024	6,092
Fiscal Year 2025	5,065
Thereafter	12,262
	$	78,033


	As of
	September 30, 2020		June 30, 2020		September 30, 2019		June 30, 2019
Captions on the consolidated balance sheets:
Cash and cash equivalents	$	23,527	$	77,852	$	1,643	$	4,317
Restricted cash (a)	2,679		12,821		21,294		21,519
Cash, cash equivalents and restricted cash on the consolidated statements of cash flows	$	26,206	$	90,673	$	22,937	$	25,836




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


September 30, 2020	Gross		Accumulated Amortization		Net
Trade names	$	2,300	$	(1,457)	$	843
Non-compete agreements	2,400		(1,520)		880
Other intangibles	1,200		(434)		766
	$	5,900	$	(3,411)	$	2,489


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


	September 30, 2020				June 30, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value





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


	Line Item in the Company’s Consolidated Balance Sheet	September 30, 2020		June 30, 2020
Right-of-use assets:
Operating leases	Right-of-use lease assets	$	720,326	$	718,051
Lease liabilities:
Operating leases, current (a)	Operating lease liabilities, current	$	38,789	$	39,131
Operating leases, noncurrent (a)	Operating lease liabilities, noncurrent	682,079		679,053
Total lease liabilities		$	720,868	$	718,184


Fiscal Year 2021 (remainder)	$	30,736
Fiscal Year 2022	43,552
Fiscal Year 2023	45,019
Fiscal Year 2024	44,937
Fiscal Year 2025	44,052
Thereafter	2,158,686
Total lease payments	2,366,982
Less imputed interest	(1,646,114)
Total lease liabilities	$	720,868



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

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


	MSGE Pension Plans & MSGS Pension Plans				Postretirement Plan
	Three Months Ended				Three Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Service cost	$	—	$	28	$	—	$	18
Interest cost	60		1,328		—		28
Expected return on plan assets	—		(1,331)		—		—
Recognized actuarial loss	10		336		—		3


Net periodic benefit cost	$	70	$	361	$	—	$	49


	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	113	48	$	161.27
Vested	(99)	(100)	$	242.62
Forfeited	(10)	(13)	$	254.57
Unvested award balance, September 30, 2020	279	262	$	239.65


	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	—	$	—
Balance as of September 30, 2020	543	$	225.79	5.80	$	441
Exercisable as of September 30, 2020	287	$	221.43	5.88	$	294


	Three Months Ended September 30,
		2020		2019
Revenues		$	9,061	$	6,327
Operating expenses (credits):
Corporate general and administrative credits, net — MSG Networks		$	(219)	$	(2,602)
Corporate general and administrative expenses, net — MSG Entertainment		11,862		—
Costs associated with the Sponsorship sales and service representation agreements		2,358		—
Other operating expenses (credits), net		360		(55)


	Three Months Ended
	September 30,				Change (a)
	2020		2019		Amount		Percentage
Revenues	$	57,038	$	49,850	$	7,188	14	%
Direct operating expenses	39,786		18,419		21,367		116	%
Selling, general and administrative expenses	42,996		85,910		(42,914)		(50)	%
Depreciation and amortization	1,660		4,845		(3,185)		(66)	%
Operating loss	(27,404)		(59,324)		31,920		54	%
Other expense:
Interest expense, net	(1,989)		(284)		(1,705)		NM
Miscellaneous expense, net	(120)		(86)		(34)		(40)	%
Loss from continuing operations before income taxes	(29,513)		(59,694)		30,181		51	%
Income tax benefit	498		19,503		(19,005)		(97)	%
Loss from continuing operations	(29,015)		(40,191)		11,176		28	%
Loss from discontinued operations, net of taxes	—		(40,475)		40,475		NM
Net loss	(29,015)		(80,666)		51,651		64	%
Less: Net loss attributable to nonredeemable noncontrolling interests from continued operations	(598)		(450)		(148)		(33)	%
Less: Net loss attributable to redeemable noncontrolling interests from discontinued operations	—		(163)		163		NM
Less: Net loss attributable to nonredeemable noncontrolling interests from discontinued operations	—		(72)		72		NM
Net loss attributable to Madison Square Garden Sports Corp.’s stockholders	$	(28,417)	$	(79,981)	$	51,564	64	%




Increase in revenues from league distributions	$	30,341
Increase in local media rights fees from MSG Networks	2,139
Decrease in suite license fee revenue	(14,002)
Decrease in pre/regular season ticket-related revenues	(6,302)
Decrease in sponsorship and signage revenues	(2,890)
Decrease in pre/regular season food, beverage and merchandise sales	(1,291)
Other net decreases	(807)
	$	7,188




Increase in team personnel compensation	$	13,410
Increase in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax	11,633
Increase in other team operating expenses not discussed elsewhere in this table primarily due to higher league assessments	1,275
Increase in net provisions for certain team personnel transactions	630
Decrease in pre/regular season expense associated with food, beverage and merchandise sales	(655)
Other net decreases, including expenses that did not meet the criteria for inclusion in discontinued operations in the prior year period	(4,926)
	$	21,367


	Three Months Ended
	September 30,				Change
	2020		2019		Amount		Percentage
Operating loss	$	(27,404)	$	(59,324)	$	31,920	54	%
Share-based compensation	6,345		13,796
Depreciation and amortization (a)	1,660		4,845
Restructuring charges	1,644		—
Other purchase accounting adjustments	—		50
Adjusted operating loss	$	(17,755)	$	(40,633)	$	22,878	56	%


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.
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.
10.3						Security Agreement, dated as of November 6, 2020, between Knicks Holdings, LLC and JPMorgan Chase Bank, N.A., as collateral agent.
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.
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 September 30, 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