Madison Square Garden Sports Corp.

MSGS

US55825T1034

Entertainment Production

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MADISON SQUARE GARDEN SPORTS : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

May 06, 2021 at 06:06 am EDT

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 Sports Corp. and its direct and indirect subsidiaries
(collectively, "we," "us," "our," "MSG Sports," or the "Company"), including,
with respect to the NBA and the NHL 2020-21 seasons, local media rights fees,
and the impact of COVID-19 on our future operations. 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 duration and severity of the coronavirus pandemic and our ability to
effectively manage the impacts, including the availability of The Garden with no
or limited fans and league decisions regarding play;
•the impact of a change in the duration of the 2020-21 NBA and NHL seasons on
our ability to recognize revenue from national media rights fees;
•the level of our revenues, which depends in part on the popularity and
competitiveness of our sports teams;
•costs associated with player injuries, waivers or contract terminations of
players and other team personnel;
•changes in professional sports teams' compensation, including the impact of
signing free agents and trades, subject to league salary caps and the impact of
luxury tax;
•general economic conditions, especially in the New York City metropolitan area;
•the demand for sponsorship arrangements and for advertising;
•competition, for example, from other teams, and other sports and entertainment
options;
•changes in laws, NBA or NHL rules, regulations, guidelines, bulletins,
directives, policies and agreements, including the leagues' respective
collective bargaining agreements with their players' associations, salary caps,
escrow requirements, revenue sharing, NBA luxury tax thresholds and media
rights, or other regulations under which we operate;
•any NBA, NHL or other work stoppage in addition to those related to COVID-19
impacts;
•any economic, political or other actions, such as boycotts, protests, work
stoppages or campaigns by labor organizations;
•seasonal fluctuations and other variation in our operating results and cash
flow from period to period;
•the level of our expenses, including our corporate expenses;
•business, reputational and litigation risk if there is a security incident
resulting in loss, disclosure or misappropriation of stored personal 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 The Garden where the home
games of the Knicks and Rangers are played;
•the evolution of the esports industry and its potential impact on our esports
businesses;
•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 or new businesses into our
operations;
•the operating and financial performance of our strategic acquisitions and
investments, including those we may not control;
•the impact of governmental regulations or laws, including changes in how those
regulations and laws are interpreted and the continued benefit of certain tax
exemptions (including for The Garden) and the ability for us and MSG
Entertainment to maintain necessary permits or licenses;
•the impact of any government plans to redesign New York City's Pennsylvania
Station;
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•a default by our subsidiaries under their respective credit facilities;
•business, economic, reputational and other risks associated with, and the
outcome of, litigation and other proceedings;
•financial community and rating agency perceptions of our business, operations,
financial condition and the industry in which we operate;
•our ownership of professional sports franchises in the NBA and NHL and certain
related transfer restrictions on our common stock;
•the tax-free treatment of the MSGS Distribution and the MSGE Distribution;
•the performance by MSG Entertainment of its obligations under various
agreements with the Company related to the MSGE Distribution and ongoing
commercial arrangements; and
•the factors described under "Risk Factors" in our Annual Report on Form 10-K
for the year ended June 30, 2020.

We disclaim any obligation to update or revise the forward-looking statements
contained herein, except as otherwise required by applicable federal securities
laws.
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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 financial statements and accompanying notes
thereto included in this Quarterly Report on Form 10-Q, as well as the Company's
Annual Report on Form 10-K for the year ended June 30, 2020, to help provide an
understanding of our financial condition, changes in financial condition and
results of operations. Unless the context otherwise requires, all references to
"we," "us," "our," "MSG Sports," or the "Company" refer collectively to Madison
Square Garden Sports Corp., a holding company, and its direct and indirect
subsidiaries through which substantially all of our operations are conducted.
On April 17, 2020, the Company distributed all of the outstanding common stock
of MSG Entertainment to its stockholders. MSG Entertainment owns, directly or
indirectly, the entertainment business previously owned and operated by the
Company through its MSG Entertainment business segment and the sports booking
business previously owned and operated by the Company through its MSG Sports
business segment. In the MSGE Distribution, (a) each holder of the Company's
Class A common stock, received one share of MSG Entertainment Class A common
stock, par value $0.01 per share, for every share of the Company's Class A
common stock held of record as of the close of business, New York City time, on
April 13, 2020, and (b) each holder of the Company's Class B common stock,
received one share of MSG Entertainment Class B common stock, par value $0.01
per share, for every share of the Registrant's Class B common stock held of
record as of the close of business, New York City time, on the Record Date.
Subsequent to the MSGE Distribution, the Company no longer consolidates the
financial results of MSG Entertainment for purposes of its own financial
reporting and the historical financial results of MSG Entertainment have been
reflected in the Company's consolidated financial statements as discontinued
operations for all periods presented through the MSGE Distribution Date.
After giving effect to the MSGE Distribution, the Company operates and reports
financial information in one segment.
Factors Affecting Results of Operations
MSGE Distribution
In connection with the MSGE Distribution, the Company and MSG Entertainment
entered into a number of related party agreements under which both companies
will continue sharing certain revenues and expenses. See Note 16 to the
consolidated financial statements included in "Part I - Item 1. Financial
Statements" of this Quarterly Report on Form 10-Q for discussions of the
Company's related party transactions. The terms of certain related party
agreements impact the comparability of the results of operations, primarily the
following revenues and expenses.
Suite License Fee Revenue
Prior to the MSGE Distribution, suite license fee revenue was recognized based
on the allocations between the Company's MSG Sports and MSG Entertainment
segments and was dependent on the total number of events held at The Garden.
After the MSGE Distribution, the Company recognizes suite license fee revenue
based on the Arena License Agreements and as games are played by the Knicks and
Rangers. In addition, pursuant to the Arena License Agreements, the Company's
aggregate share of the suite license fee is 67.5%, as compared to a higher
percentage allocated to the Knicks and Rangers prior to the MSGE Distribution.
Venue Sponsorship and Signage
Prior to the MSGE Distribution, revenues from the sale of venue interior and
exterior signage and sponsorship rights at The Garden that were not specific to
our teams or entertainment events were allocated between the Company's MSG
Sports and MSG Entertainment segments and recognized over a fiscal year.
Subsequent to the MSGE Distribution, pursuant to the Arena License Agreements,
the Company no longer recognizes revenue related to exterior signage at The
Garden, but rather only from the sale of venue interior signage space and
sponsorship rights, which is now recognized over the Knicks and Rangers seasons.
In addition, prior to the MSGE Distribution, costs associated with sponsorship
and signage sales were allocated between the Company's MSG Sports and MSG
Entertainment segments. Subsequent to the MSGE Distribution, the Company pays
sales commission fees along with the fixed fee pursuant to the sponsorship sales
and service and representation agreements.
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Food, Beverage and Merchandise Sales
Prior to the MSGE Distribution, the Knicks and Rangers reported revenues earned
from food and beverage sales as gross revenue. The costs of food and beverage
sales were reported in direct operating expenses. Pursuant to the Arena License
Agreements, the Knicks and Rangers receive 50% of net profits from the sales of
food and beverage during their games at The Garden. As such, the Company no
longer recognizes costs of sales during the periods after the MSGE Distribution,
and reports revenues earned from food and beverage sales as net revenues. In
addition, pursuant to the Arena License Agreements, the Knicks and Rangers
recognize sales of their merchandise at The Garden net of 30% commission paid to
MSG Entertainment.
Corporate Costs
Results from continuing operations for the periods prior to the MSGE
Distribution include certain corporate overhead expenses that the Company did
not incur in the period after the completion of the MSGE Distribution and does
not expect to incur in future periods, but which do not meet the criteria for
inclusion in discontinued operations. See "- Results of Operations - Comparison
of the three and nine months ended March 31, 2021 versus the three and nine
months ended March 31, 2020" and Note 3 to the consolidated financial statements
included in "Part I - Item 1. Financial Statements" of this Quarterly Report on
Form 10-Q for more information.
Impact of COVID-19 on Our Business
COVID-19 disruptions have materially impacted the Company's revenues and the
Company is recognizing materially less revenues, or in some cases no revenues,
across a number of areas. Those areas include: ticket sales; the Company's share
of suite licenses; sponsorships; signage and in-venue advertising at The Garden;
and food, beverage and merchandise sales. In addition, the Knicks and Rangers
will play fewer games during the 2020-21 regular seasons, with the NBA scheduled
to play a 72-game regular season schedule while the NHL is scheduled to play a
56-game regular season schedule. These compare to traditional 82-game regular
season schedules for both the NBA and NHL.
Subsidiaries of the Company are parties to the Arena License Agreements with a
subsidiary of MSG Entertainment that requires the Knicks and Rangers to play
their home games at The Garden. Under the Arena License Agreements, the Knicks
and Rangers will pay an annual license fee in connection with their respective
use of The Garden. The stated license fee for the first full contract year
ending June 30, 2021 would have been approximately $22,500 for the Knicks and
approximately $16,700 for the Rangers, and then for each subsequent year, the
license fees will be 103% of the license fees for the immediately preceding
contract year. However, while The Garden was closed due to the government
mandated suspension of events as a result of COVID-19, the Knicks and Rangers
were not required to pay license fees to MSG Entertainment under the Arena
License Agreements. When games are played at The Garden by the Knicks and
Rangers either without fans in attendance or with limited fans in attendance due
to government mandated capacity constraints, the applicable rent paid to MSG
Entertainment is reduced by up to 80%. On December 16, 2020 and January 14,
2021, respectively, the Knicks and Rangers resumed playing their homes games at
The Garden as part of the 2020-21 seasons. However, fans were initially
prohibited from attending events due to government-mandated assembly
restrictions. Effective February 23, 2021, New York venues with at least a
10,000-person capacity were permitted to operate at 10% capacity, and the Knicks
and Rangers began playing games at The Garden with a limited number of fans in
attendance on February 23 and 26, respectively. Effective May 19, 2021, The
Garden will be permitted to operate at up to 30% capacity, which would be after
the end of the 2020-21 regular seasons. No assurances can be made that
attendance will remain permissible or at stated capacity limits during the
remainder of the 2020-21 regular seasons and postseasons.
During the nine months ended March 31, 2021, as a result of COVID-19, the
Company implemented cost-reduction measures that included workforce reductions
and limits on discretionary spending. In addition, as a result of the
disruptions caused by COVID-19, certain operating expenses are reduced including
(i) rent payments to MSG Entertainment under the Arena License Agreements, (ii)
NBA league assessments and day-of-game expenses for the Knicks and Rangers
games, and (iii) league revenue sharing and team personnel expense. These
expense reductions will not fully offset revenue losses. Additionally, as the
Knicks and Rangers returned to play in December 2020 and January 2021,
respectively, and with fans having returned to The Garden in February 2021,
certain costs increased and will continue to increase, to the extent that
attendance capacity increases, including day-of-game expenses and certain
selling, general and administrative costs.

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This MD&A is organized as follows:
Results of Operations. This section provides an analysis of our unaudited
results of operations for the three and nine months ended March 31, 2021
compared to the three and nine months ended March 31, 2020.
Liquidity and Capital Resources. This section focuses primarily on (i) the
liquidity and capital resources of the Company, (ii) an analysis of the
Company's cash flows for the nine months ended March 31, 2021 compared to the
nine months ended March 31, 2020, and (iii) certain contractual obligations.
Seasonality of Our Business. This section discusses the seasonal performance of
our business.
Recently Issued Accounting Pronouncements and Critical Accounting Policies. This
section discusses accounting pronouncements that have been adopted by the
Company, recently issued accounting pronouncements not yet adopted by the
Company, as well as the results of the Company's annual impairment testing of
goodwill and identifiable indefinite-lived intangible assets performed during
the first quarter of fiscal year 2021. This section should be read together with
our critical accounting policies, which are discussed in our Annual Report on
Form 10-K for the year ended June 30, 2020 under "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Recently Issued Accounting Pronouncements and Critical Accounting Policies -
Critical Accounting Policies" and in the notes to the consolidated financial
statements of the Company included therein.
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Results of Operations
Comparison of the three and nine months ended March 31, 2021 versus the three
and nine months ended March 31, 2020
The table below sets forth, for the periods presented, certain historical
financial information.


                                           Three Months Ended                                                       Nine Months Ended
                                               March 31,                           Change (a)                           March 31,                            Change (a)
                                        2021               2020                 $                %               2021               2020                  $                %
Revenues                            $ 183,010          $  267,631          $ (84,621)           (32) %       $ 268,819          $  610,279          $ (341,460)           (56) %
Direct operating expenses             126,510             161,388            (34,878)           (22) %         182,957             377,590            (194,633)           (52) %
Selling, general and
administrative expenses                46,803              90,045            (43,242)           (48) %         138,708             266,283            (127,575)           (48) %
Depreciation and amortization           1,573               5,573             (4,000)           (72) %           4,840              15,338             (10,498)           (68) %
Operating income (loss)                 8,124              10,625             (2,501)           (24) %         (57,686)            (48,932)             (8,754)           (18) %
Other expense:
Interest expense, net                  (2,930)               (702)            (2,228)               NM          (7,406)             (1,549)             (5,857)               NM
Miscellaneous expense, net                (46)               (142)                96             68  %            (236)               (316)                 80             25  %
Income (loss) from continuing
operations before income
taxes                                   5,148               9,781             (4,633)           (47) %         (65,328)            (50,797)            (14,531)           (29) %
Income tax benefit (expense)              (53)             (5,598)             5,545             99  %             275              11,132             (10,857)           (98) %
Income (loss) from continuing
operations                              5,095               4,183                912             22  %         (65,053)            (39,665)            (25,388)           (64) %
Loss from discontinued
operations, net of taxes                    -            (145,249)           145,249                NM               -             (89,718)             89,718                NM
Net income (loss)                       5,095            (141,066)           146,161                NM         (65,053)           (129,383)             64,330             50  %
Less: Net loss attributable
to nonredeemable
noncontrolling interests from
continued operations                     (373)               (785)               412             52  %          (1,479)             (1,700)                221             13  %
Less: Net loss attributable
to redeemable noncontrolling
interests from discontinued
operations                                  -             (22,447)            22,447                NM               -             (23,851)             23,851                NM
Less: Net income attributable
to nonredeemable
noncontrolling interests from
discontinued operations                     -                 195               (195)               NM               -                  37                 (37)               NM
Net income (loss)
attributable to Madison
Square Garden Sports Corp.'s
stockholders                        $   5,468          $ (118,029)         $ 123,497                NM       $ (63,574)         $ (103,869)         $   40,295             39  %


_________________

NM - Percentage is not meaningful



(a)Operating results were materially impacted by the coronavirus pandemic.
Please see "- Factors Affecting Results of Operations - Impact of COVID-19 on
Our Business" for more information.
For the three and nine months ended March 31, 2020, the reported financial
results of the Company reflect the results of the MSG Entertainment business
segment and the sports booking business, previously owned and operated by the
Company through its MSG Sports business segment, as discontinued operations. In
addition, results from continuing operations for the same period include certain
corporate overhead expenses that the Company did not incur in the period after
the completion of the MSGE Distribution and does not expect to incur in future
periods, but which do not meet the criteria for inclusion in discontinued
operations. The reported financial results of the Company for the three and nine
months ended March 31, 2021 reflect the Company's results on a standalone basis,
including the Company's actual corporate overhead.
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Revenues
Revenues decreased $84,621, or 32%, to $183,010 for the three months ended
March 31, 2021 as compared to the prior year period. Revenues decreased
$341,460, or 56%, to $268,819 for the nine months ended March 31, 2021 as
compared to the prior year period. The net decrease was attributable to the
following:
                                                                            Three               Nine
                                                                            Months             Months
Decrease in pre/regular season ticket-related revenues                   $ (87,797)         $ (202,788)
Decrease in suite license fee revenues                                     (25,280)            (67,467)

Decrease in pre/regular season food, beverage and merchandise sales

                                                                      (16,409)            (36,335)
Decrease in sponsorship and signage revenues                                (1,618)            (28,349)
Increase (decrease) in local media rights fees from MSG Networks            22,847             (22,194)
Increase in revenues from league distributions                              22,493              15,514
Other net increases                                                          1,143                 159
                                                                         $ (84,621)         $ (341,460)


The decreases in pre/regular season ticket-related revenues for the three and
nine months ended March 31, 2021 were a result of government-mandated assembly
restrictions and the Knicks and Rangers playing games at The Garden with no fans
in attendance until February 23 and 26, respectively, and after that, playing
games with attendance restricted to 10% capacity. We will continue recognizing
reduced ticket-related revenues until attendance increases for Knicks and
Rangers home games at The Garden. The three and nine month periods ended March
31, 2020 were impacted by the suspension of the Knicks and Rangers 2019-20
regular seasons in March 2020.
The decreases in suite license fee revenues for the three and nine months ended
March 31, 2021 were a result of ongoing government-mandated assembly
restrictions at The Garden, as discussed above. For Knicks and Rangers games
played with a limited number of fans in attendance, access to suites was sold by
way of individual tickets, thus no suite license revenue was recognized for the
three and nine months ended March 31, 2021. In addition, the nine months ended
March 31, 2021 includes the impact of the MSGE Distribution. See "- Factors
Affecting Results of Operations - MSGE Distribution - Suite License Fee Revenue"
for more information. Suite license fee revenues are not expected to be material
in the current fiscal year.
The decreases in pre/regular season food and beverage sales for the three and
nine months ended March 31, 2021 were primarily due to the impact of the MSGE
Distribution and a result of ongoing government-mandated assembly restrictions
at The Garden, as discussed above. See "- Factors Affecting Results of
Operations - MSGE Distribution - Food, Beverage and Merchandise Sales" for more
information. The decreases in pre/regular season merchandise sales for the three
and nine months ended March 31, 2021 were a result of ongoing
government-mandated assembly restrictions at The Garden, as discussed above. We
will continue to recognize reduced revenues from pre/regular season food,
beverage and merchandise sales until attendance increases for Knicks and Rangers
home games at The Garden.
The decrease in sponsorship and signage revenues for the three months ended
March 31, 2021 was primarily a result of ongoing government-mandated assembly
restrictions at The Garden, as discussed above, and the impact of the MSGE
Distribution, offset by sales of new sponsorship and signage inventory. The
decrease in sponsorship and signage revenues for the nine months ended March 31,
2021 was primarily due to (i) the delayed start of the 2020-21 NBA and NHL
regular seasons, (ii) ongoing government-mandated assembly restrictions at The
Garden, as discussed above, and (iii) the impact of the MSGE Distribution. This
decrease was offset by sales of new sponsorship and signage inventory. See "-
Factors Affecting Results of Operations - MSGE Distribution - Venue Sponsorship
and Signage" for more information.
The increase in local media rights fees from MSG Networks for the three months
ended March 31, 2021 was primarily due to the compressed timing of the NBA and
NHL 2020-21 seasons and the impact of the suspended 2019-20 regular seasons in
the prior year period, partially offset by the impact of the reduced NHL 2020-21
regular season schedule. After suspending the 2019-20 seasons in March 2020 due
to the COVID-19 pandemic, the NHL and NBA subsequently resumed play and
completed their seasons in September and October 2020, respectively. The
decrease in local media rights fees from MSG Networks for the nine months ended
March 31, 2021 was primarily due to the delayed start of the 2020-21 NBA and NHL
regular seasons and as a result of the shortened NBA and NHL 2020-21 regular
season schedules, partially offset by contractual rate increases. The Knicks'
regular season began on December 23, 2020, while the Rangers' regular season
began on January 14, 2021. In addition, the decrease for the nine months ended
March 31, 2021 was slightly offset by the recognition of local media rights fees
from MSG Networks associated with the Rangers' participation in the Stanley Cup
Qualifiers during the first quarter of fiscal year 2021. The Company expects
that local media rights fees from MSG Networks will be reduced for fiscal year
2021 as a result of the shortened NHL 2020-21 regular season schedule. However,
for the fourth quarter of fiscal year 2021, the Company anticipates that local
media rights fees from
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MSG Networks will be higher as compared with the prior year period due to the
timing of the 2020-21 NBA and NHL regular seasons, as well as the impact of the
suspended 2019-20 regular seasons in the prior year period. Furthermore, the
Company expects local media rights fees from MSG Networks to be higher for
fiscal year 2021 as compared with the prior year, which reflects contractual
rate increases and the net impact of the shortened seasons in both periods.
The increase in revenues from league distributions for the three months ended
March 31, 2021 was primarily due to the compressed timing of the NBA and NHL
2020-2021 seasons and higher national media rights fees as a result of the lower
recognition in the prior year period of national media rights fees related to
the 2019-20 NBA and NHL seasons, which were recognized during the first quarter
of fiscal year 2021, that otherwise would have been recognized during the third
and fourth quarters of fiscal year 2020. After suspending the 2019-20 seasons in
March 2020 due to the COVID-19 pandemic, the NHL and NBA subsequently resumed
play and completed their seasons in September and October 2020, respectively.
The increase in revenues from league distributions for the nine months ended
March 31, 2021 was primarily due to the recognition of the remainder of national
media rights fees related to the 2019-20 NBA and NHL seasons which were
recognized during the first quarter of fiscal year 2021, partially offset by
lower national media rights fees as a result of the delayed start of the 2020-21
NBA and NHL regular seasons as discussed above and decreases in other league
distributions.
Direct operating expenses
Direct operating expenses decreased $34,878, or 22%, to $126,510 for the three
months ended March 31, 2021 as compared to the prior year period. Direct
operating expenses decreased $194,633, or 52%, to $182,957 for the nine months
ended March 31, 2021 as compared to the prior year period. The net decrease was
attributable to the following:
                                                                          Three               Nine
                                                                          Months             Months

Decrease in net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax

(54,841) $ (71,640) Decrease in pre/regular season expense associated with food, beverage and merchandise sales

                                            (8,373)            (19,218)

Decrease in other team operating expenses not discussed elsewhere in this table

                                                   (1,921)            (36,233)

Inclusion of operating lease costs associated with the Knicks and Rangers playing home games at The Garden

                              20,357              22,567
Increase (decrease) in team personnel compensation                        11,894             (64,547)

Increase (decrease) in net provisions for certain team personnel transactions

                                                               2,428             (11,761)
Other net decreases, including expenses that did not meet the
criteria for inclusion in discontinued operations in the prior
year period                                                               (4,422)            (13,801)
                                                                       $ (34,878)         $ (194,633)

Net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax were as follows:


                                                          Three Months Ended                                       Nine Months Ended
                                                               March 31,                                               March 31,
                                               2021              2020             Decrease             2021              2020             Decrease
Net provisions for league revenue
sharing expense (net of escrow and
excluding playoffs) and NBA luxury
tax                                        $ (31,773)         $ 23,068

$ (54,841) $ (22,463) $ 49,177 $ (71,640)




The decrease in net provisions for league revenue sharing expense (net of escrow
and excluding playoffs) and NBA luxury tax for the three and nine months ended
March 31, 2021 primarily reflects lower provisions for league revenue sharing
expense (net of escrow) of $52,762 and $69,908, respectively, primarily as a
result of the COVID-19 pandemic. In addition, the nine months ended March 31,
2021 includes adjustments to revenue sharing expense (net of escrow) for the
2019-20 NBA and NHL seasons. Based on the completion of the 2019-20 NBA and NHL
seasons during the first quarter of fiscal year 2021, the Company recognized a
portion of revenue sharing expense (net of escrow) related to those seasons that
otherwise would have been recognized during the third and fourth quarters of
fiscal year 2020.
The Knicks were not a luxury tax payer for the 2019-20 season and, therefore,
received an equal share of the portion of luxury tax receipts that were
distributed to non-tax paying teams. The Knicks' roster as of March 31, 2021
would not result in the team being a luxury tax payer for the 2020-21 season.
The actual amounts for the 2020-21 season may vary significantly from the
recorded provisions based on actual operating results for each league and all
teams within each league for the season and other factors.
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The decreases in pre/regular season expense associated with food and beverage
sales for the three and nine months ended March 31, 2021 were due to the impact
of the MSGE Distribution. See "- Factors Affecting Results of Operations - MSGE
Distribution - Food, Beverage and Merchandise Sales" for more information. The
decreases in pre/regular season expense associated with merchandise sales for
the three and nine months ended March 31, 2021 were a result of ongoing
government-mandated assembly restrictions at The Garden, as discussed above. We
will continue to recognize reduced expense associated with merchandise sales
until attendance increases for Knicks and Rangers home games at The Garden.
The decreases in other team operating expenses not discussed elsewhere in this
table for the three and nine months ended March 31, 2021 were primarily driven
by ongoing government-mandated assembly restrictions at The Garden, as discussed
above. In addition, the decrease for the nine months ended March 31, 2021 was
impacted by the delayed start of the 2020-21 NBA and NHL regular seasons. We
expect that certain of our team operating expenses will be reduced due to the
shortened 2020-21 NBA and NHL regular seasons and ongoing government-mandated
assembly restrictions at The Garden.
The increase in team personnel compensation for the three months ended March 31,
2021 was primarily driven by the impact of the compressed timing of the 2020-21
NBA and NHL regular seasons and the impact of the suspensions of the 2019-20 NBA
and NHL regular seasons due to COVID-19 during the third quarter of fiscal year
2020, partially offset by lower player compensation. The decrease in team
personnel compensation for the nine months ended March 31, 2021 was primarily
due to lower player compensation and the net impact of the delayed start and
shortened 2020-21 NBA and NHL regular seasons, slightly offset by the
recognition of player compensation expense during the first quarter of fiscal
year 2021 that otherwise would have been recognized during the third and fourth
quarters of fiscal year 2020 as a result of the NBA completing the 2019-20
season in October 2020. While the Company anticipates that the team personnel
compensation expense will be higher during the fourth quarter of fiscal year
2021 as compared to the prior year period as a result of the timing of the
2020-21 NBA and NHL regular seasons, we expect the team personnel compensation
expense to be lower during fiscal year 2021, as compared to prior fiscal year as
a result of COVID-19.
Net provisions for certain team personnel transactions were as follows:
                                                         Three Months Ended                                       Nine Months Ended
                                                              March 31,                                               March 31,
                                                                               Increase                                                  Increase
                                             2021             2020            (Decrease)             2021              2020             (Decrease)
Waivers/contract terminations             $ 3,305          $    43

$ 3,262 $ 14,420 $ 26,962 $ (12,542) Player trades

                                   -              834                  (834)            2,583             1,802                  781

Net provisions for certain team
personnel transactions                    $ 3,305          $   877

$ 2,428 $ 17,003 $ 28,764 $ (11,761)




Selling, general and administrative expenses
Selling, general and administrative expenses for the three months ended
March 31, 2021 decreased $43,242, or 48%, to $46,803 as compared to the prior
year period. Selling, general and administrative expenses for the nine months
ended March 31, 2021 decreased $127,575, or 48%, to $138,708 as compared to the
prior year period. For the three and nine months ended March 31, 2021, the
decrease was primarily due to lower corporate overhead costs, which in the prior
year periods included certain corporate expenses that the Company did not incur
during the current year periods and does not expect to incur in future periods,
but which did not meet the criteria for inclusion in discontinued operations.
This decrease in selling, general and administrative expenses was slightly
offset by fees related to the Company's sponsorship sales and service
representation agreements with MSG Entertainment.
Depreciation and amortization
Depreciation and amortization for the three months ended March 31, 2021
decreased $4,000, or 72%, to $1,573 as compared to the prior year period. For
the nine months ended March 31, 2021 depreciation and amortization decreased
$10,498, or 68%, to $4,840 as compared to the prior year period. The decreases
for the three and nine months ended March 31, 2021 were primarily due to
depreciation in the prior year period that do not meet the criteria for
inclusion in discontinued operations and, to a lesser extent, certain asset
being fully amortized. The decrease was partially offset by higher depreciation
on assets placed into service during the third quarter of fiscal year 2020.
Operating income (loss)
Operating income for the three months ended March 31, 2021 decreased $2,501 to
$8,124 as compared to the prior year period primarily due to a decrease in
revenues, partially offset by lower selling, general and administrative
expenses, direct operating expenses and, to a lesser extent, a decrease in
depreciation and amortization.
Operating loss for the nine months ended March 31, 2021 increased $8,754, or
18%, to $57,686 as compared to the prior year period primarily due to a decrease
in revenues, partially offset by lower direct operating expenses, selling,
general and administrative expenses and, to a lesser extent, a decrease in
depreciation and amortization.
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Interest expense, net
Net interest expense for the three months ended March 31, 2021 increased $2,228
to $2,930 as compared to the prior year period. Net interest expense for the
nine months ended March 31, 2021 increased $5,857 to $7,406 as compared to the
prior year period. For the three and nine months ended March 31, 2021 the
increases were primarily due to the Knicks and Rangers revolving credit
facilities, which were initially drawn on in March 2020, with subsequent
additional drawings in November 2020.
Income taxes
See Note 17 to the consolidated financial statements included in "Part I - Item
1. Financial Statements" of this Quarterly Report on Form 10-Q for discussions
of the Company's income taxes.
Adjusted operating income (loss)
The Company evaluates performance based on several factors, of which the key
financial measure is operating income (loss) excluding (i) deferred rent expense
under the Arena License Agreements with MSG Entertainment, (ii) depreciation,
amortization and impairments of property and equipment, goodwill and other
intangible assets, (iii) share-based compensation expense or benefit,
(iv) restructuring charges or credits, (v) gains or losses on sales or
dispositions of businesses, and (vi) the impact of purchase accounting
adjustments related to business acquisitions, which is referred to as adjusted
operating income (loss), a non-GAAP measure.
Management 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. In addition, management believes that given the length of
the Arena License Agreements and resulting magnitude of the difference in
deferred rent expense and the cash rent payments, the exclusion of deferred rent
expense provides investors with a clearer picture of the Company's operating
performance.
The Company believes adjusted operating income (loss) is an appropriate measure
for evaluating the operating performance of the Company. Adjusted operating
income (loss) 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 adjusted operating income (loss) measures as the
most important indicators of its business performance and evaluates management's
effectiveness with specific reference to these indicators.
Adjusted operating income (loss) 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 adjusted operating income (loss) 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 adjusted
operating income (loss).

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The following are the reconciliations of operating income (loss) to adjusted
operating income (loss) for the three and nine months ended March 31, 2021 as
compared to the prior year period:
                                        Three Months Ended                                                      Nine Months Ended
                                             March 31,                            Change                            March 31,                            Change
                                      2021               2020                $               %               2021               2020                $                %
Operating income (loss)           $    8,124          $ 10,625          $ (2,501)           (24) %       $ (57,686)         $ (48,932)         $  (8,754)           (18) %
Deferred rent                         16,478                 -                                              18,280                  -
Depreciation and
amortization (a)                       1,573             5,573                                               4,840             15,338
Share-based compensation               3,867            11,508                                              26,193             39,559
Restructuring charges                      -                 -                                               1,644                  -
Other purchase accounting
adjustments                                -                50                                                   -                150
Adjusted operating income
(loss)                            $   30,042          $ 27,756          $  2,286              8  %       $  (6,729)         $   6,115          $ (12,844)               NM


_________________
(a)Depreciation and amortization includes purchase accounting adjustments of
$265 and $266 for the three months ended March 31, 2021 and 2020, respectively
and $795 and $804 for the nine months ended March 31, 2021 and 2020,
respectively.
Adjusted operating income for the three months ended March 31, 2021 increased
$2,286, or 8%, to $30,042 as compared to the prior year period primarily due to
decreases in direct operating expenses and selling, general and administrative
expenses, offset by lower revenues.
Adjusted operating income for the nine months ended March 31, 2021 decreased
$12,844 to an adjusted operating loss of $6,729 as compared to the prior year
period primarily due to lower revenues, partially offset by decreases in direct
operating expenses and selling, general and administrative expenses.
Liquidity and Capital Resources
Overview
Our operations and operating results have been, and continue to be, materially
impacted by the COVID-19 pandemic and government and league actions taken in
response. The Knicks and Rangers will play fewer games during the 2020-21
regular seasons, with the NBA scheduled to play a 72-game regular season while
the NHL is scheduled to play a 56-game regular season. These both compare to
traditional 82-game regular season schedules for the NBA and NHL. In addition,
while games have resumed at The Garden, fan attendance is limited due to ongoing
government-mandated assembly restrictions. For more information about the
impacts and risks to the Company as a result of COVID-19, see "- Factors
Affecting Results of Operations - Impact of COVID-19 on Our Business" and "Item
1A. Risk Factors - Our Operations and Operating Results Have Been, and Continue
to be, Materially Impacted by the COVID-19 Pandemic and Government and League
Actions Taken in Response" in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2020. In addition, see also Note 1 to the
consolidated financial statements included in "Part I - Item 1. Financial
Statements" of this Quarterly Report on Form 10-Q for further information.
Our primary sources of liquidity are cash and cash equivalents and available
borrowing capacity under our credit facilities as well as cash flow from our
operations. There can be no assurance, however, that our expenses will not
exceed our revenues, thereby presenting an ongoing use of liquidity. On November
6, 2020, the Company amended and extended the 2016 Knicks Credit Agreement and
the 2017 Rangers Credit Agreement, and entered into the 2020 Knicks Holdings
Credit Agreement (together with the 2020 Knicks Credit Agreement and the 2020
Rangers Credit Agreement, the "New Financing"), which provide for additional
liquidity. In addition, the NHL advanced the Company $30,000, which the league
made available to each team following the completion of the NHL's approximately
$1,000,000 private placement in January 2021 (the "2021 Rangers NHL Advance
Agreement").
Our principal uses of cash include the operation of our businesses, working
capital-related items, the repayment of outstanding debt, and potential
repurchases of shares of the Company's Class A Common Stock.
As of March 31, 2021, we had approximately $69,100 in Cash and cash equivalents.
In addition, as of March 31, 2021, the Company's deferred revenue obligations
were approximately $133,200, net of billed, but not yet collected deferred
revenue. This balance is primarily comprised of obligations in connection with
tickets, suites and local and national media rights. In addition, the Company's
deferred revenue obligations included $30,000 from the NBA, which the league
provided to each team following the completion of the NBA's $900,000 private
placement in December 2020. The prepaid media rights payments and certain
sponsorships are expected to be earned throughout the 2020-21 NBA and NHL
seasons. As a general matter, deferred revenue
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obligations relating to suites, tickets and certain sponsorships will be
addressed, to the extent necessary, through credits, make-goods and/or refunds,
as applicable.
We regularly monitor and assess our ability to meet our net funding and
investing requirements. The decisions of the Company as to the use of its
available liquidity will be based upon the ongoing review of the funding needs
of the business, management's view of a favorable allocation of cash resources,
and the timing of cash flow generation. To the extent the Company desires to
access alternative sources of funding through the capital and credit markets,
restrictions imposed by the NBA and NHL and challenging U.S. and global economic
and market conditions could adversely impact its ability to do so at that time.
We believe we have sufficient liquidity, including approximately $69,100 in Cash
and cash equivalents as of March 31, 2021, along with $220,000 of additional
available borrowing capacity under existing credit facilities, to fund our
operations and satisfy any obligations with respect to the return or application
of deferred revenue over the next 12 months.
2020 Knicks Revolving Credit Facility
On November 6, 2020, Knicks LLC, a wholly owned subsidiary of the Company,
entered into the 2020 Knicks Credit Agreement with a syndicate of lenders
providing for the 2020 Knicks Revolving Credit Facility to fund working capital
needs and for general corporate purposes. The 2020 Knicks Revolving Credit
Facility increased borrowing capacity from $200,000 to $275,000. Amounts
borrowed may be distributed to the Company except during an event of default.
The 2020 Knicks Revolving Credit Facility requires Knicks LLC to comply with a
debt service ratio of 1.5:1.0 over a trailing four quarter period. As of
March 31, 2021, Knicks LLC was in compliance with this financial covenant.
The 2020 Knicks Revolving Credit Facility will mature and any unused commitments
thereunder will expire on November 6, 2023. All borrowings under the 2020 Knicks
Revolving Credit Facility are subject to the satisfaction of certain customary
conditions. Borrowings bear interest at a floating rate, which at the option of
Knicks LLC may be either (i) a base rate plus a margin ranging from 0.50% to
0.75% per annum or (ii) LIBOR plus a margin ranging from 1.50% to 1.75% per
annum. Knicks LLC is required to pay a commitment fee ranging from 0.25% to
0.30% per annum in respect of the average daily unused commitments under the
2020 Knicks Revolving Credit Facility. The outstanding balance under the 2020
Knicks Revolving Credit Facility was $220,000 as of March 31, 2021.
All obligations under the 2020 Knicks Revolving Credit Facility are secured by a
first lien security interest in certain of Knicks LLC's assets, including, but
not limited to, (i) the Knicks LLC's membership rights in the NBA, (ii) revenues
to be paid to the Knicks LLC by the NBA pursuant to certain U.S. national
broadcast agreements, and (iii) revenues to be paid to Knicks LLC pursuant to
local media contracts.
Subject to customary notice and minimum amount conditions, Knicks LLC may
voluntarily prepay outstanding loans under the 2020 Knicks Revolving Credit
Facility at any time, in whole or in part, without premium or penalty (except
for customary breakage costs with respect to Eurocurrency loans). Knicks LLC is
required to make mandatory prepayments in certain circumstances, including
without limitation if the maximum available amount under the 2020 Knicks
Revolving Credit Facility is greater than 350% of qualified revenues.
In addition to the financial covenant described above, the 2020 Knicks Credit
Agreement and related security agreements contain certain customary
representations and warranties, affirmative covenants and events of default. The
2020 Knicks Revolving Credit Facility contains certain restrictions on the
ability of Knicks LLC to take certain actions as provided in (and subject to
various exceptions and baskets set forth in) the 2020 Knicks Revolving Credit
Facility, including the following: (i) incurring additional indebtedness and
contingent liabilities; (ii) creating liens on certain assets; (iii) making
restricted payments during the continuance of an event of default under the 2020
Knicks Revolving Credit Facility; (iv) engaging in sale and leaseback
transactions; (v) merging or consolidating; and (vi) taking certain actions that
would invalidate the secured lenders' liens on any Knicks LLC's collateral.
2020 Knicks Holdings Revolving Credit Facility
On November 6, 2020, Knicks Holdings entered into the 2020 Knicks Holdings
Credit Agreement with a syndicate of lenders providing for the 2020 Knicks
Holdings Revolving Credit Facility to fund working capital needs and for general
corporate purposes. The 2020 Knicks Holdings Revolving Credit Facility provides
for $75,000 of borrowing capacity.
The 2020 Knicks Holdings Revolving Credit Facility requires Knicks Holdings to
comply with a debt service ratio of 1.1:1.0 over a trailing four quarter period.
As of March 31, 2021, Knicks Holdings was in compliance with this financial
covenant.
The 2020 Knicks Holdings Revolving Credit Facility will mature and any unused
commitments thereunder will expire on November 6, 2023. All borrowings under the
2020 Knicks Holdings Revolving Credit Facility are subject to the satisfaction
of certain customary conditions. Borrowings under the 2020 Knicks Holdings
Revolving Credit Facility bear interest at a floating rate, which at the option
of Knicks Holdings may be either (i) a base rate plus a margin ranging from
1.00% to 1.25% per annum or (ii) LIBOR plus a margin ranging from 2.00% to 2.25%
per annum. Knicks Holdings is required to pay a commitment fee ranging from
0.375%
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to 0.50% per annum in respect of the average daily unused commitments under the
2020 Knicks Holdings Revolving Credit Facility. The 2020 Knicks Holdings
Revolving Credit Facility is currently undrawn as of March 31, 2021.
All obligations under the 2020 Knicks Holdings Revolving Credit Facility are
secured by debt service and distribution accounts maintained by Knicks Holdings,
and includes a guarantee from MSG NYK Holdings, LLC, an indirect wholly-owned
subsidiary of the Company and the direct parent of Knicks Holdings.
Subject to customary notice and minimum amount conditions, Knicks Holdings may
voluntarily prepay outstanding loans under the 2020 Knicks Holdings Revolving
Credit Facility at any time, in whole or in part, without premium or penalty
(except for customary breakage costs with respect to Eurocurrency loans). Knicks
Holdings is required to make mandatory prepayments in certain circumstances,
including if the amount of commitments under the 2020 Knicks Holdings Revolving
Credit Facility increase above $350,000.
In addition to the financial covenant described above, the 2020 Knicks Holdings
Revolving Credit Facility and related security agreements contain certain
customary representations and warranties, affirmative covenants and events of
default. The 2020 Knicks Holdings Revolving Credit Facility contains certain
restrictions on the ability of Knicks Holdings to take certain actions as
provided in (and subject to various exceptions and baskets set forth in) the
2020 Knicks Holdings Revolving Credit Facility, including the following: (i)
incurring additional indebtedness and contingent liabilities; (ii) creating
liens on certain assets; (iii) making restricted payments during the continuance
of an event of default under the 2020 Knicks Holdings Revolving Credit Facility;
(iv) engaging in sale and leaseback transactions; (v) merging or consolidating;
and (vi) taking certain actions that would invalidate the secured lenders' liens
on any Knicks Holdings' collateral.
2020 Rangers Revolving Credit Facility
On November 6, 2020, Rangers LLC entered into the 2020 Rangers Credit Agreement
with a syndicate of lenders providing for the 2020 Rangers Revolving Credit
Facility to fund working capital needs and for general corporate purposes. The
2020 Rangers Revolving Credit Facility increased borrowing capacity from
$150,000 to $250,000. Amounts borrowed may be distributed to the Company except
during an event of default.
The 2020 Rangers Revolving Credit Facility requires Rangers LLC to comply with a
debt service ratio of 1.5:1.0 over a trailing four quarter period. As of
March 31, 2021, Rangers LLC was in compliance with this financial covenant.
The 2020 Rangers Revolving Credit Facility will mature and any unused
commitments thereunder will expire on November 6, 2023. All borrowings under the
2020 Rangers Revolving Credit Facility are subject to the satisfaction of
certain customary conditions. Borrowings bear interest at a floating rate, which
at the option of Rangers LLC may be either (i) a base rate plus a margin ranging
from 0.75% to 1.25% per annum or (ii) LIBOR plus a margin ranging from 1.75% to
2.25% per annum. Rangers LLC is required to pay a commitment fee ranging from
0.375% to 0.625% per annum in respect of the average daily unused commitments
under the 2020 Rangers Revolving Credit Facility. The outstanding balance under
the 2020 Rangers Revolving Credit Facility was $160,000 as of March 31, 2021.
All obligations under the 2020 Rangers Revolving Credit Facility are, subject to
the 2021 Rangers NHL Advance Agreement, secured by a first lien security
interest in certain of Rangers LLC's assets, including, but not limited to, (i)
Rangers LLC's membership rights in the NHL, (ii) revenues to be paid to Rangers
LLC by the NHL pursuant to certain U.S. and Canadian national broadcast
agreements, and (iii) revenues to be paid to Rangers LLC pursuant to local media
contracts.
Subject to customary notice and minimum amount conditions, Rangers LLC may
voluntarily prepay outstanding loans under the 2020 Rangers Revolving Credit
Facility at any time, in whole or in part, without premium or penalty (except
for customary breakage costs with respect to Eurocurrency loans). Rangers LLC is
required to make mandatory prepayments in certain circumstances, including
without limitation if qualified revenues are less than 17% of the maximum
available amount under the 2020 Rangers Revolving Credit Facility.
In addition to the financial covenant described above, the 2020 Rangers Credit
Agreement and related security agreements contain certain customary
representations and warranties, affirmative covenants and events of default. The
2020 Rangers Revolving Credit Facility contains certain restrictions on the
ability of Rangers LLC to take certain actions as provided in (and subject to
various exceptions and baskets set forth in) the 2020 Rangers Revolving Credit
Facility, including the following: (i) incurring additional indebtedness and
contingent liabilities; (ii) creating liens on certain assets; (iii) making
restricted payments during the continuance of an event of default under the 2020
Rangers Revolving Credit Facility; (iv) engaging in sale and leaseback
transactions; (v) merging or consolidating; and (vi) taking certain actions that
would invalidate the secured lenders' liens on any of Rangers LLC's assets
securing the obligations under the 2020 Rangers Revolving Credit Facility.

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2021 Rangers NHL Advance Agreement
On March 19, 2021, Rangers LLC, Rangers Holdings, LLC and MSG NYR Holdings LLC
entered into the 2021 Rangers NHL Advance Agreement with the NHL, pursuant to
which the NHL advanced $30,000 to Rangers LLC. The advance is to be utilized
solely and exclusively to pay for Rangers LLC operating expenses.
All obligations under the 2021 Rangers NHL Advance Agreement are senior to and
shall have priority over all secured and other indebtedness of Rangers LLC,
Rangers Holdings, LLC, and MSG NYR Holdings LLC. All borrowings under the 2021
Rangers NHL Advance Agreement were made on a non-revolving basis and bear
interest at 3.00% per annum, ending on the date any such advances are fully
repaid. Advances received under the 2021 Rangers NHL Advance Agreement are
payable upon demand by the NHL. It is expected that the advanced amount will be
set off against funds that would otherwise be paid, distributed or transferred
by the NHL to Rangers LLC. The outstanding balance under the 2021 Rangers NHL
Advance Agreement was $30,000 as of March 31, 2021.
Delayed Draw Term Loan Credit Facilities
As an additional source of liquidity for the Company in response to the COVID-19
pandemic, on April 17, 2020, MSG NYR Holdings, LLC and MSG NYK Holdings, LLC,
two indirect wholly-owned subsidiaries of the Company, each entered into a
separate delayed draw term loan credit agreement with MSG Entertainment Group,
LLC, a wholly-owned subsidiary of MSG Entertainment, as lender (the "DDTL
Facilities"). The credit agreement for MSG NYK Holdings, LLC provided for a
$110,000 senior unsecured delayed draw term loan facility and the credit
agreement for MSG NYR Holdings, LLC provided for a $90,000 senior unsecured
delayed draw term loan facility.
On November 6, 2020, prior to making any borrowings under the DDTL Facilities,
the Company terminated the DDTL Facilities in their entirety in connection with
the New Financing.
Financing Agreements and Stock Repurchases
See Note 12 and Note 15 to the consolidated financial statements included in
"Part I - Item 1. Financial Statements" of this Quarterly Report on Form 10-Q
for discussions of the Company's debt obligations and various financing
agreements, and the Company's stock repurchases, respectively.
Contractual Obligations
The Company did not have any material changes in its contractual obligations
since the end of fiscal year 2020 other than activities in the ordinary course
of business.
Cash Flow Discussion
The following table summarizes the Company's cash flow activities for the nine
months ended March 31, 2021 and 2020:
                                                                      Nine Months Ended March 31,
                                                                       2021                   2020
Net loss                                                         $

(65,053) $ (129,383) Adjustments to reconcile net loss to net cash (used in) provided by operating activities

                                         31,389              244,646
Subtotal                                                                (33,664)             115,263
Changes in working capital assets and liabilities                       (20,703)              (4,130)
Net cash (used in) provided by operating activities                     (54,367)             111,133
Net cash used in investing activities                                      (437)            (494,631)
Net cash provided by financing activities                                42,155              306,818

Effect of exchange rates on cash, cash equivalents and restricted cash

                                                               -                3,916

Net decrease in cash, cash equivalents and restricted cash $ (12,649) $ (72,764)




Operating Activities
Net cash used in operating activities for the nine months ended March 31, 2021
was $54,367 as compared to net cash provided by operating activities in the
prior year period of $111,133. This change is primarily due to the decrease in
net loss adjusted for non-cash items. Net cash provided by operating activities
for the prior year period was not adjusted to exclude net cash provided by
discontinued operations.

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Investing Activities
Net cash used in investing activities for the nine months ended March 31, 2021
decreased by $494,194 to $437 as compared to the prior year period primarily
driven by investing activities in discontinued operations in the prior year
period. Investing activities included in discontinued operations in the prior
year period primarily consisted of purchases of short-term investments and
capital expenditures related to MSG Entertainment's planned MSG Spheres in Las
Vegas and London partially offset by proceeds from maturity of short-term
investments, a loan repayment received from subordinated note and proceeds
received from the sale of interest in a nonconsolidated affiliate.
Financing Activities
Net cash provided by financing activities for the nine months ended March 31,
2021 decreased by $264,663 to $42,155 as compared to the prior year period
primarily due to the higher initial borrowings in the prior year period compared
to the additional borrowings in the current year period under, the now, amended
and extended 2020 Knicks Credit Agreement and 2020 Rangers Credit Agreement and
financing costs incurred in the current year period associated with the New
Financing. This decrease was slightly offset by (i) proceeds from the 2021
Rangers NHL Advance Agreement, (ii) repayments of a credit facility included in
discontinued operations in the prior year period as compared to none in the
current year period, and (iii) lower taxes paid in lieu of shares issued for
equity-based compensation in the current year period as compared to the prior
year period.
Seasonality of Our Business
The Company's dependence on revenues from its NBA and NHL sports teams generally
means that it earns a disproportionate share of its revenues in the second and
third quarters of the Company's fiscal year. On March 11 and 12, 2020,
respectively, the NBA and NHL suspended their 2019-20 seasons due to COVID-19.
In July and August 2020, the NBA and NHL, respectively, resumed their seasons
and the NHL and NBA subsequently completed their seasons in September and
October 2020, respectively. As a result, the Company recognized certain revenues
that otherwise would have been recognized during the third and fourth quarter of
fiscal year 2020 during the first quarter of fiscal year 2021. In addition, due
to the delayed start of the 2020-21 NBA and NHL seasons in December 2020 and
January 2021, respectively, the Company recognized certain revenues during the
third quarter of fiscal year 2021 and will recognize certain revenues during the
fourth quarter of fiscal year 2021, that otherwise would have been recognized
during the second and third quarters of fiscal year 2021, respectively.
Recently Issued Accounting Pronouncements and Critical Accounting Policies
Recently Issued Accounting Pronouncements
See Note 2 to the consolidated financial statements included in "Part I - Item
1. Financial Statements" of this Quarterly Report on Form 10-Q for discussion of
recently issued accounting pronouncements.
Critical Accounting Policies
The following discussion has been included to provide the results of our annual
impairment testing of goodwill and identifiable indefinite-lived intangible
assets performed during the first quarter of fiscal year 2021. There have been
no material changes to the Company's critical accounting policies from those set
forth in our Annual Report on Form 10-K for the year ended June 30, 2020.
Goodwill
The carrying amount of goodwill as of March 31, 2021 is $226,955. Goodwill is
tested annually for impairment as of August 31st and at any time upon the
occurrence of certain events or changes in circumstances. The Company performs
its goodwill impairment test at the reporting unit level, which is the same as
or one level below the operating segment level. The Company has one operating
and reportable segment, and one reporting unit for goodwill impairment testing
purposes.
The Company has the option to perform a qualitative assessment to determine if
an impairment is more likely than not to have occurred. If the Company can
support the conclusion that it is not more likely than not that the fair value
of a reporting unit is less than its carrying amount, the Company would not need
to perform a quantitative impairment test for that reporting unit. If the
Company cannot support such a conclusion or the Company does not elect to
perform the qualitative assessment, the first step of the goodwill impairment
test is used to identify potential impairment by comparing the fair value of a
reporting unit with its carrying amount, including goodwill. The estimates of
the fair value of the Company's reporting units are primarily determined using
discounted cash flows and comparable market transactions. These valuations are
based on estimates and assumptions including projected future cash flows,
discount rates, determination of appropriate market comparables and the
determination of whether a premium or discount should be applied to comparables.
Significant judgments inherent in a discounted cash flow analysis include the
selection of the appropriate discount rate, the estimate of the amount and
timing of projected future cash flows and identification of appropriate
continuing growth rate assumptions. The discount rates used in the analysis are
intended to reflect the risk inherent in the projected future cash flows. The
amount of an impairment loss is measured as the amount by which a reporting
unit's carrying value exceeds its fair value determined in step one, not to
exceed the carrying amount of goodwill.

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The Company elected to perform the qualitative assessment of impairment for the
Company's reporting unit for the fiscal year 2021 impairment test. These
assessments considered factors such as:
•macroeconomic conditions;
•industry and market considerations;
•market capitalization;
•cost factors;
•overall financial performance of the reporting unit;
•other relevant company-specific factors such as changes in management, strategy
or customers; and
•relevant reporting unit specific events such as changes in the carrying amount
of net assets.
The Company performed its most recent annual impairment test of goodwill during
the first quarter of fiscal year 2021, and there was no impairment of goodwill.
Based on this impairment test, the Company concluded it was not more likely than
not that the fair value of the reporting unit was less than its carrying amount.
Identifiable Indefinite-Lived Intangible Assets
Identifiable indefinite-lived intangible assets are tested annually for
impairment as of August 31st and at any time upon the occurrence of certain
events or substantive changes in circumstances. The following table sets forth
the amount of identifiable indefinite-lived intangible assets reported in the
Company's consolidated balance sheet as of March 31, 2021:
Sports franchises             $ 111,064
Photographic related rights       1,080
                              $ 112,144


The Company has the option to perform a qualitative assessment to determine if
an impairment is more likely than not to have occurred. In the qualitative
assessment, the Company must evaluate the totality of qualitative factors,
including any recent fair value measurements, that impact whether an
indefinite-lived intangible asset other than goodwill has a carrying amount that
more likely than not exceeds its fair value. The Company must proceed to
conducting a quantitative analysis, if the Company (i) determines that such an
impairment is more likely than not to exist, or (ii) forgoes the qualitative
assessment entirely. Under the quantitative assessment, the impairment test for
identifiable indefinite-lived intangible assets consists of a comparison of the
estimated fair value of the intangible asset with its carrying value. If the
carrying value of the intangible asset exceeds its fair value, an impairment
loss is recognized in an amount equal to that excess. For all periods presented,
the Company elected to perform a qualitative assessment of impairment for the
indefinite-lived intangible assets. These assessments considered the events and
circumstances that could affect the significant inputs used to determine the
fair value of the intangible asset. Examples of such events and circumstances
include:
•cost factors;
•financial performance;
•legal, regulatory, contractual, business or other factors;
•other relevant company-specific factors such as changes in management, strategy
or customers;
•industry and market considerations; and
•macroeconomic conditions.
The Company performed its most recent annual impairment test of identifiable
indefinite-lived intangible assets during the first quarter of fiscal year 2021,
and there were no impairments identified. Based on this impairment test, the
Company concluded it was not more likely than not that the fair value of the
indefinite-lived intangible assets was less than their carrying amount.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Except for the broad effects of COVID-19 as a result of its negative impact on
the global economy and major financial markets, there were no material changes
to the disclosures regarding market risks in connection with our interest rate
risk exposure and commodity risk exposure. See Item 7A, "Quantitative and
Qualitative Disclosures About Market Risk," of our Annual Report on Form 10-K
for the year ended June 30, 2020. In addition, see Item 2, "- Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Factors Affecting Results of Operations - Impact of COVID-19 on Our Business" of
this Quarterly Report on Form 10-Q for discussions of disruptions caused by
COVID-19.

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  Table of Contents
Potential interest rate risk exposure:
We have potential interest rate risk exposure related to outstanding borrowings
incurred under our credit facilities. Changes in interest rates may increase
interest expense payments with respect to any borrowings incurred under the
credit facilities.
Borrowings under our credit facilities incur interest, depending on our
election, at a floating rate based upon LIBOR, the U.S. Federal Funds Rate or
the U.S. Prime Rate, plus, in each case, a fixed spread. If appropriate, we may
seek to reduce such exposure through the use of interest rate swaps or similar
instruments. As of March 31, 2021, we had a total of $380 million borrowings
outstanding under our credit facilities. The effect of a hypothetical 100 basis
point increase in floating interest rates prevailing as of March 31, 2021 and
continuing for a full year would increase interest expense by approximately $3.8
million.
Item 4. Controls and Procedures
An evaluation was carried out under the supervision and with the participation
of the Company's management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Securities Exchange Act of 1934). Based on that evaluation, the Company's
Chief Executive Officer and Chief Financial Officer concluded that as of
March 31, 2021 the Company's disclosure controls and procedures were effective.
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) of the Securities
Exchange Act of 1934) during the quarter ended March 31, 2021 that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
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Table of Contents

Latest news about Madison Square Garden Sports Corp.

Xtract One Technologies Down 4% After Boosting Public Offering and Announcing Investment by Strategic Partner	Apr. 22	MT
Madison Square Garden Sports Corp. Appoints Jamaal Lesane to Serve as the Interim President and Chief Operating Officer	Apr. 03	CI
Madison Square Garden Sports Chief Operating Officer Departs	Apr. 02	MT
Madison Square Garden Sports Corp. Announces Separation of David Hopkinson, President and Chief Operating Officer	Apr. 01	CI
Madison Square Garden Sports Insider Sold Shares Worth $5,332,222, According to a Recent SEC Filing	Feb. 29	MT
Tranche Update on Madison Square Garden Sports Corp.'s Equity Buyback Plan announced on November 5, 2015.	Feb. 06	CI
Madison Square Garden Sports Corp. Provides Revenue Guidance for the Year 2024	Feb. 06	CI
Transcript : Madison Square Garden Sports Corp., Q2 2024 Earnings Call, Feb 06, 2024	Feb. 06
Madison Square Garden Sports' Fiscal Q2 Earnings, Revenue Fall	Feb. 06	MT
Earnings Flash (MSGS) MADISON SQUARE GARDEN SPORTS Reports Q2 Revenue $326.9M, vs. Street Est of $327.6M	Feb. 06	MT
Madison Square Garden Sports Corp. Reports Earnings Results for the Second Quarter and Six Months Ended December 31, 2023	Feb. 06	CI
North American Morning Briefing : Rate Doubts Keep -2-	Feb. 06	DJ
Madison Square Garden Sports Corp. Announces Marketing Partnership with Nexen Tire	Nov. 13	CI
Tranche Update on Madison Square Garden Sports Corp.'s Equity Buyback Plan announced on November 5, 2015.	Nov. 02	CI
Earnings Flash (MSGS) MADISON SQUARE GARDEN SPORTS Posts Q1 Revenue $43M, vs. Street Est of $25M	Nov. 02	MT
Madison Square Garden Sports Corp. Reports Earnings Results for the First Quarter Ended September 30, 2023	Nov. 02	CI
North American Morning Briefing : Mood Lifted on -2-	Nov. 02	DJ
Top Midday Decliners	23-10-12	MT
Madison Square Garden Sports, Madison Square Garden Entertainment Pick Beyond Meat as Official Plant-based Partner	23-10-12	MT
Communications Services Up Slightly as Strike Settlement Seen Damaging -- Communications Services Roundup	23-09-25	DJ
Madison Square Garden Entertainment Forms New Entity With Sphere, Oak View to Manage Global Partnerships, Sponsorships	23-09-08	MT
Four former US Navy officers cleared in Fat Leonard case due to prosecutor misconduct	23-09-06	RE
Tranche Update on Madison Square Garden Sports Corp.'s Equity Buyback Plan announced on November 5, 2015.	23-08-17	CI
Madison Square Garden Sports Shares Fall After Fiscal Q4 Loss, Lower Revenue	23-08-17	MT
Madison Square Garden Sports Swings to Quarterly Loss as Revenue Slides on Fewer Games	23-08-17	MT

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Madison Square Garden Sports Corp. is a professional sports company. The Company owns and operates a portfolio of assets featuring teams in sports, including the New York Knickerbockers (Knicks) of the National Basketball Association (NBA) and the Rangers of the National Hockey League (NHL). Its other professional sports franchises include two development league teams, such as the Hartford Wolf Pack of the American Hockey League and the Westchester Knicks of the NBA G League. Its professional sports franchises are referred to as sports teams. In addition, the Company owns Knicks Gaming, an esports franchise that competes in the NBA 2K League, as well as a controlling interest in Counter Logic Gaming (CLG), a North American esports organization. The Company also operates two professional sports team performance centers, such as the Madison Square Garden Training Center in Greenburgh, and the CLG Performance Center in Los Angeles. CLG and Knicks Gaming are referred to as esports teams.

Sector

Entertainment Production

Calendar

2024-04-30 - Q3 2024 Earnings Release (Projected)

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Ratings for Madison Square Garden Sports Corp.

Trading Rating

Investor Rating

ESG Refinitiv

D+

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Analysts' Consensus

Sell

Buy

Mean consensus

BUY

Number of Analysts

Last Close Price

182.2 USD

Average target price

243.4 USD

Spread / Average Target

+33.61%

Consensus

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Sector Movie, TV Production & Distribution

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MADISON SQUARE GARDEN SPORTS CORP.	+0.21%	4.36B
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BEIJING JETSEN TECHNOLOGY CO., LTD	-10.24%	1.68B

Movie, TV Production & Distribution

Madison Square Garden Sports Corp.

Equities

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US55825T1034

Entertainment Production

MADISON SQUARE GARDEN SPORTS : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

Latest news about Madison Square Garden Sports Corp.

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Company Profile

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Ratings for Madison Square Garden Sports Corp.

Analysts' Consensus

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Quarterly earnings - Rate of surprise

Sector Movie, TV Production & Distribution