Madison Square Garden Entertainment Corp. [MSGE] Filings

10-Q 1 msge-20220331.htm 10-Q msge-20220331

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 10-Q

________________________

(Mark One)


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

For the quarterly period ended March 31, 2022


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

For the transition period from to

Commission File Number: 001-39245

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

(Exact name of registrant as specified in its charter)


Delaware						84-3755666
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

Two Penn Plaza

New York

10121

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (212) 465-6000

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

Number of shares of common stock outstanding as of April 29, 2022:


Class A Common Stock par value $0.01 per share	—	27,346,267
Class B Common Stock par value $0.01 per share	—	6,866,754

Table of Contents

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

INDEX TO FORM 10-Q


			Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets as of March 31, 202 2 and June 30, 2021			1

Consolidated Statements of Operations for the three and nine months ended March 31, 2022 and 2021			3

Consolidated Statements of Comprehensive Loss for the three and nine months ended March 31, 2022 and 2021			4

Consolidated Statement s of Cash Flows for the nine months ended March 31, 2022 and 2021			5

Consolidated Statements of Stockholders' Equity and Redeemable Noncontrolling Interests for the three and nine months ended March 31, 2022 and 2021			7

Notes to Consolidated Financial Statements			11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			53

Item 3. Quantitative and Qualitative Disclosures About Market Risk			80

Item 4. Controls and Procedures			81

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			82

Item 1A. Risk Factors			82

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			83

Item 6. Exhibits			84

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands)


	March 31, 2022		June 30, 2021

ASSETS
Current Assets:
Cash and cash equivalents	$	999,063	$	1,516,992
Restricted cash	21,690		22,984

Accounts receivable, net	250,853		184,613

Net related party receivables	58,835		31,916
Prepaid income taxes	3,705		12,772
Prepaid expenses	77,257		67,445

Other current assets	46,771		36,014

Total current assets	1,458,174		1,872,736

Investments in nonconsolidated affiliates	44,697		49,221
Property and equipment, net	2,707,193		2,156,292
Right-of-use lease assets	462,479		280,579
Amortizable intangible assets, net	177,069		198,274
Indefinite-lived intangible assets	63,801		63,801
Goodwill	500,181		502,195
Other assets	166,825		166,781
Total assets	$	5,580,419	$	5,289,879


See accompanying notes to unaudited consolidated financial statements.

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MADISON SQUARE GARDEN ENTERTAINMENT CORP.
CONSOLIDATED BALANCE SHEETS (Unaudited) (Continued)
(in thousands, except per share data)
	March 31, 2022		June 30, 2021

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Current Liabilities:
Accounts payable	$	40,380	$	26,644
Net related party payables, current	76,075		23,173
Current portion of long-term debt, net of deferred financing costs	65,989		53,973
Income taxes payable	—		2,527
Accrued liabilities:
Employee related costs	95,185		91,853
Other accrued liabilities	310,030		210,749
Operating lease liabilities, current	67,012		73,423
Collections due to promoters	46,744		37,877

Deferred revenue	263,494		209,651

Total current liabilities	964,909		729,870

Long-term debt, net of deferred financing costs	1,584,072		1,650,628
Operating lease liabilities, noncurrent	440,319		233,556
Defined benefit and other postretirement obligations	51,424		54,179
Other employee related costs	18,059		21,193
Collections due to promoters, noncurrent	—		6,625
Deferred tax liabilities, net	185,481		200,325
Other liabilities	76,755		75,263
Total liabilities	3,321,019		2,971,639
Commitments and contingencies (see Note 12)
Redeemable noncontrolling interests	137,778		137,834
Madison Square Garden Entertainment Corp. Stockholders’ Equity:
Class A Common stock, par value $0.01, 120,000 shares authorized; 27,341 and 27,093 shares outstanding as of March 31, 2022 and June 30, 2021, respectively	273		271
Class B Common stock, par value $0.01, 30,000 shares authorized; 6,867 shares outstanding as of March 31, 2022 and June 30, 2021	69		69
Preferred stock, par value $0.01, 15,000 shares authorized; none outstanding as of March 31, 2022 and June 30, 2021	—		—
Additional paid-in capital	2,334,271		2,294,775

Accumulated deficit	(190,793)		(96,341)

Accumulated other comprehensive loss	(37,010)		(30,272)
Total Madison Square Garden Entertainment Corp. stockholders’ equity	2,106,810		2,168,502
Nonredeemable noncontrolling interests	14,812		11,904
Total equity	2,121,622		2,180,406
Total liabilities, redeemable noncontrolling interests and equity	$	5,580,419	$	5,289,879

See accompanying notes to unaudited consolidated financial statements.

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MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in thousands, except share and per share data)


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2022		2021		2022		2021
Revenues (a)	$	460,127	$	214,318	$	1,271,076	$	553,616
Operating expenses:
Direct operating expenses (b)	262,476		110,022		724,495		301,750
Selling, general and administrative expenses (c)	157,598		103,425		494,714		281,100
Depreciation and amortization	28,639		39,611		88,602		93,698
Impairment and other (gains) losses, net	(5,319)		—		(5,480)		—
Restructuring charges	14,690		—		14,690		21,299
Operating income (loss)	2,043		(38,740)		(45,945)		(144,231)
Other income (expense):
Loss in equity method investments	(1,528)		(2,314)		(4,509)		(5,578)
Interest income	774		792		2,322		2,401
Interest expense	(5,831)		(6,503)		(23,246)		(17,038)
Miscellaneous income (expense), net	(8,449)		27,483		(28,096)		53,932
	(15,034)		19,458		(53,529)		33,717
Loss from operations before income taxes	(12,991)		(19,282)		(99,474)		(110,514)
Income tax benefit (expense)	(6,315)		(6,556)		8,532		(15,715)
Net loss	(19,306)		(25,838)		(90,942)		(126,229)
Less: Net income (loss) attributable to redeemable noncontrolling interests	(442)		(6,860)		4,412		(14,091)
Less: Net loss attributable to nonredeemable noncontrolling interests	(1,373)		(718)		(902)		(2,250)
Net loss attributable to Madison Square Garden Entertainment Corp.’s stockholders	$	(17,491)	$	(18,260)	$	(94,452)	$	(109,888)

Basic and diluted loss per common share attributable to Madison Square Garden Entertainment Corp.’s stockholders	$	(0.51)	$	(0.79)	$	(2.76)	$	(3.48)

Weighted-average number of common shares outstanding:
Basic and diluted	34,320		34,060		34,230		34,083

_________________

(a)Includes revenues from related parties of $35,259 and $16,291 for the three months ended March 31, 2022 and 2021, respectively, and $70,148 and $23,752 for the nine months ended March 31, 2022 and 2021, respectively.

(b)Includes net charges from related parties of $37,198 and $36,222 for the three months ended March 31, 2022 and 2021, respectively, and $117,186 and $111,409 for the nine months ended March 31, 2022 and 2021, respectively.

(c)Includes net charges to related parties of $(9,635) and $(7,638) for the three months ended March 31, 2022 and 2021, respectively, and $(27,048) and $(28,626) for the nine months ended March 31, 2022 and 2021, respectively.

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(in thousands)


	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2022		2021			2022		2021
Net loss	$	(19,306)	$	(25,838)		$	(90,942)	$	(126,229)
Other comprehensive income (loss), before income taxes:




Amortization of prior service credit included in net periodic benefit cost	510		416			1,530		1,310
Cumulative translation adjustments	(5,912)		1,499			(9,844)		27,333
Other comprehensive income (loss), before income taxes	(5,402)		1,915			(8,314)		28,643
Income tax benefit (expense) related to items of other comprehensive income (loss)	1,024		(350)			1,576		(5,334)
Other comprehensive income (loss), net of income taxes	(4,378)		1,565			(6,738)		23,309
Comprehensive loss	(23,684)		(24,273)			(97,680)		(102,920)
Less: Net income (loss) attributable to redeemable noncontrolling interests	(442)		(6,860)			4,412		(14,091)
Less: Net loss attributable to nonredeemable noncontrolling interests	(1,373)		(718)			(902)		(2,250)
Comprehensive loss attributable to Madison Square Garden Entertainment Corp.’s stockholders	$	(21,869)	$	(16,695)		$	(101,190)	$	(86,579)

See accompanying notes to unaudited consolidated financial statements.

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MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Nine Months Ended
	March 31,
	2022		2021
Cash flows from operating activities:
Net loss	$	(90,942)	$	(126,229)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	88,602		93,698
Impairment and other (gains) losses, net	(5,480)		—
Amortization of deferred financing costs	6,548		4,078
Benefit from deferred income taxes	(11,872)		(37,630)
Share-based compensation expense	62,321		57,421

Loss in equity method investments	4,509		5,578

Net unrealized loss (gains) on equity investments with readily determinable fair value	28,303		(52,662)
Provision for credit losses	1,170		31

Other non-cash adjustments	(91)		271
Change in assets and liabilities:
Accounts receivable	(64,496)		(32,588)
Receivables from related parties, net of payables	25,983		(6,939)
Prepaid expenses and other assets	(48,773)		(20,215)
Accounts payable	14,926		(7,207)
Prepaid/payable for income taxes	5,783		1,436
Accrued and other liabilities	8,977		(16,419)
Collections due to promoters, including noncurrent portion	2,242		(6,452)
Deferred revenue	54,195		21,487
Operating lease right-of-use assets and lease liabilities	24,296		8,225
Net cash provided by (used in) operating activities	$	106,201	$	(114,116)
Cash flows from investing activities:
Capital expenditures, net	$	(516,494)	$	(324,597)
Capitalized interest	(32,202)		(21,223)


Proceeds from maturity of short-term investments	—		339,110

Proceeds from sale of equity securities	—		22,079



Cash received for notes receivable	—		6,328
Other investing activities	770		137
Net cash (used in) provided by investing activities	$	(547,926)	$	21,834
See accompanying notes to unaudited consolidated financial statements.

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MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

(in thousands)


	Nine Months Ended
	March 31,
	2022		2021
Cash flows from financing activities:


Proceeds from issuance of term loan, net of issuance discount	$	—	$	630,500
Proceeds from revolving credit facility	—		14,500
Taxes paid in lieu of shares issued for equity-based compensation	(15,652)		(8,208)
Noncontrolling interest holders’ capital contributions	5,400		700
Distributions to noncontrolling interest holders	(3,367)		—
Distributions to related parties associated with the settlement of certain share-based awards	(2,256)		(1,771)
Put option payments to redeemable noncontrolling interest holders	(895)		—
Repayments of revolving credit facility	(15,000)		—
Principal repayments on long-term debt	(45,750)		(31,500)

Payments for financing costs	—		(14,623)

Net cash (used in) provided by financing activities	$	(77,520)	$	589,598
Effect of exchange rates on cash, cash equivalents and restricted cash	22		7,918
Net (decrease) increase in cash, cash equivalents and restricted cash	(519,223)		505,234
Cash, cash equivalents and restricted cash at beginning of period	1,539,976		1,121,141
Cash, cash equivalents and restricted cash at end of period	$	1,020,753	$	1,626,375
Non-cash investing and financing activities:
Investments and loans to nonconsolidated affiliates	$	731	$	—

Capital expenditures incurred but not yet paid	$	192,360	$	67,954
Share-based compensation capitalized in property and equipment	$	2,264	$	4,541

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

AND REDEEMABLE NONCONTROLLING INTERESTS

(Unaudited)

(in thousands)



	Three Months Ended March 31, 2022
	Common Stock Issued		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Madison Square Garden Entertainment Corp. Stockholders’ Equity		Non - redeemable Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
Balance as of December 31, 2021	$	342	$	2,317,415	$	(173,302)	$	(32,632)	$	2,111,823	$	15,992	$	2,127,815	$	142,004

Net loss	—		—		(17,491)		—		(17,491)		(1,373)		(18,864)		(442)
Other comprehensive loss	—		—		—		(4,378)		(4,378)		—		(4,378)		—
Comprehensive loss	—		—		—		—		(21,869)		(1,373)		(23,242)		(442)
Share-based compensation	—		18,537		—		—		18,537		—		18,537		—

Tax withholding associated with shares issued for equity-based compensation	—		(412)		—		—		(412)		—		(412)		—



Accretion of put options	—		—		—		—		—		—		—		587
Put option payments to redeemable noncontrolling interest holders	—		—		—		—		—		—		—		(895)
Contributions from noncontrolling interest holders	—		—		—		—		—		723		723		—
Distribution to related parties associated with the settlement of certain share-based awards	—		(1,269)		—		—		(1,269)		—		(1,269)		(471)
Distributions to noncontrolling interest holders	—		—		—		—		—		(530)		(

Madison Square Garden Entertainment Corp. [MSGE] Filings
10-Q	[2022-05-09]
10-Q	[2022-02-09]
10-Q	[2021-11-09]
10-K	[2021-08-23]
10-Q	[2021-05-07]
10-Q	[2021-02-12]
10-Q	[2020-11-16]
10-K	[2020-08-31]
10-Q	[2020-05-18]