10-Q 1 msgs-20220331.htm 10-Q msgs-20220331
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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
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to
Commission File Number: 1-36900
msgs-20220331_g1.jpg
MADISON SQUARE GARDEN SPORTS CORP.
(Exact name of registrant as specified in its charter) 
Delaware 47-3373056
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
Two Penn Plaza,New York,NY10121
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 465-4111

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common StockMSGSNew 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 filerAccelerated filer
Non-accelerated filerSmaller 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 —19,696,838 
Class B Common Stock par value $0.01 per share —4,529,517 




MADISON SQUARE GARDEN SPORTS CORP.
INDEX TO FORM 10-Q
 
 Page



PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

March 31,
2022
June 30,
2021
(Unaudited) 
ASSETS
Current Assets:
Cash and cash equivalents$49,176 $64,902 
Restricted cash979 7,134 
Accounts receivable, net of allowance for doubtful accounts of $0 and $0 as of March 31, 2022 and June 30, 2021, respectively
92,694 74,197 
Net related party receivables51,391 6,420 
Prepaid expenses21,696 16,724 
Other current assets48,133 15,869 
Total current assets264,069 185,246 
Property and equipment, net of accumulated depreciation and amortization of $45,869 and $42,673 as of March 31, 2022 and June 30, 2021, respectively
33,490 35,716 
Right-of-use lease assets689,580 703,521 
Amortizable intangible assets, net900 1,695 
Indefinite-lived intangible assets112,144 112,144 
Goodwill226,955 226,955 
Deferred income tax assets, net 15,943 
Other assets36,635 28,719 
Total assets$1,363,773 $1,309,939 
See accompanying notes to consolidated financial statements.
1


MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED BALANCE SHEETS (Continued)
(in thousands, except per share data)




March 31,
2022
June 30,
2021
(Unaudited) 
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable$3,324 $2,226 
Net related party payables31,812 17,089 
Debt30,000 30,000 
Accrued liabilities:
Employee related costs129,949 90,269 
League-related accruals87,008 39,276 
Other accrued liabilities26,929 16,442 
Operating lease liabilities, current43,412 41,951 
Deferred revenue102,053 131,025 
Total current liabilities454,487 368,278 
Long-term debt285,000 355,000 
Operating lease liabilities, noncurrent703,718 691,152 
Defined benefit obligations6,106 6,283 
Other employee related costs45,119 57,740 
Deferred tax liabilities, net15,030  
Deferred revenue, noncurrent31,180 31,603 
Other liabilities999 1,749 
Total liabilities1,541,639 1,511,805 
Commitments and contingencies (see Note 10)
Madison Square Garden Sports Corp. Stockholders’ Equity:
Class A Common stock, par value $0.01, 120,000 shares authorized; 19,697 and 19,587 shares outstanding as of March 31, 2022 and June 30, 2021, respectively
204 204 
Class B Common stock, par value $0.01, 30,000 shares authorized; 4,530 shares outstanding as of March 31, 2022 and June 30, 2021
45 45 
Preferred stock, par value $0.01, 15,000 shares authorized; none outstanding as of March 31, 2022 and June 30, 2021
  
Additional paid-in capital12,862 23,102 
Treasury stock, at cost, 751 and 861 shares as of March 31, 2022 and June 30, 2021, respectively
(128,026)(146,734)
Accumulated deficit(62,887)(78,898)
Accumulated other comprehensive loss(1,960)(2,027)
Total Madison Square Garden Sports Corp. stockholders’ equity(179,762)(204,308)
Nonredeemable noncontrolling interests1,896 2,442 
Total equity(177,866)(201,866)
Total liabilities and equity$1,363,773 $1,309,939 

See accompanying notes to consolidated financial statements.
2

MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
 Three Months EndedNine Months Ended
March 31,March 31,
2022202120222021
Revenues (a)
$337,774 $183,010 $646,149 $268,819 
Operating expenses:
Direct operating expenses (b)
206,273 126,510 407,698 182,957 
Selling, general and administrative expenses (c)
68,902 46,803 172,230 138,708 
Depreciation and amortization1,206 1,573 3,847 4,840 
Operating income (loss)61,393 8,124 62,374 (57,686)
Other income (expense):
Interest income52 9 145 9 
Interest expense(2,470)(2,939)(9,158)(7,415)
Miscellaneous expense, net(63)(46)(190)(236)
(2,481)(2,976)(9,203)(7,642)
Income (loss) from operations before income taxes58,912 5,148 53,171 (65,328)
Income tax (expense) benefit(34,993)(53)(30,939)275 
Net income (loss)23,919 5,095 22,232 (65,053)
Less: Net loss attributable to nonredeemable noncontrolling interests(584)(373)(1,711)(1,479)
Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders$24,503 $5,468 $23,943 $(63,574)
Basic earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders$1.01 $0.23 $0.99 $(2.64)
Diluted earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders$1.00 $0.22 $0.98 $(2.64)
Weighted-average number of common shares outstanding:
Basic24,275 24,156 24,235 24,120 
Diluted24,394 24,344 24,377 24,120 
_________________
(a)Includes revenues from related parties of $75,851 and $80,322 for the three months ended March 31, 2022 and 2021, respectively, and $153,229 and $103,752 for the nine months ended March 31, 2022 and 2021, respectively.
(b)Includes net charges from related parties of $40,796 and $24,855 for the three months ended March 31, 2022 and 2021, respectively, and $80,828 and $28,119 for the nine months ended March 31, 2022 and 2021, respectively.
(c)Includes net charges from related parties of $20,493 and $14,957 for the three months ended March 31, 2022 and 2021, respectively, and $51,620 and $39,214 for the nine months ended March 31, 2022 and 2021, respectively.
See accompanying notes to consolidated financial statements.
3

MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands)
Three Months EndedNine Months Ended
March 31,March 31,
2022202120222021
Net income (loss)$23,919 $5,095 $22,232 $(65,053)
Other comprehensive income, before income taxes:
Pension plans:
Amounts reclassified from accumulated other comprehensive loss:
Amortization of actuarial loss included in net periodic benefit cost
33 57 99 77 
Other comprehensive income, before income taxes33 57 99 77 
Income tax expense related to items of other comprehensive income(10) (32) 
Other comprehensive income, net of income taxes23 57 67 77 
Comprehensive income (loss)23,942 5,152 22,299 (64,976)
Less: Comprehensive loss attributable to nonredeemable noncontrolling interests(584)(373)(1,711)(1,479)
Comprehensive income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders$24,526 $5,525 $24,010 $(63,497)

See accompanying notes to consolidated financial statements.
4



MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

Nine Months Ended
March 31,
20222021
Cash flows from operating activities:
Net income (loss)$22,232 $(65,053)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization3,847 4,840 
Provision for (benefit from) deferred income taxes30,939 (275)
Share-based compensation expense19,178 26,193 
Recovery of doubtful accounts (175)
Other non-cash adjustments1,547 806 
Change in assets and liabilities:
Accounts receivable, net(18,497)(74,940)
Net related party receivables(44,142)(4,913)
Prepaid expenses and other assets(43,620)(14,823)
Accounts payable1,086 (747)
Net related party payables8,535 2,748 
Accrued and other liabilities84,548 19,700 
Deferred revenue(29,388)33,156 
Operating lease right-of-use assets and lease liabilities27,968 19,116 
Net cash provided by (used in) operating activities64,233 (54,367)
Cash flows from investing activities:
Capital expenditures(886)(437)
Other investing activities(250) 
Net cash used in investing activities(1,136)(437)
Cash flows from financing activities:
Taxes paid in lieu of shares issued for equity-based compensation(12,142)(13,891)
Proceeds from share issuance 808 
Proceeds from revolving credit facilities 30,000 
Proceeds from NHL advance 30,000 
Repayment of revolving credit facility(70,000) 
Payment of contingent consideration (200)
Payments for financing costs(2,836)(4,562)
Net cash (used in) provided by financing activities(84,978)42,155 
Net decrease in cash, cash equivalents and restricted cash(21,881)(12,649)
Cash, cash equivalents and restricted cash at beginning of period72,036 90,673 
Cash, cash equivalents and restricted cash at end of period$50,155 $78,024 
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid$73 $38 

See accompanying notes to consolidated financial statements.

5

MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(in thousands) 
Three Months Ended March 31, 2022
Common
Stock
Issued
Additional
Paid-In
Capital
Treasury
Stock
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Total Madison Square Garden Sports Corp. Stockholders Equity
Non -
redeemable
Noncontrolling
Interests
Total Equity
Balance as of December 31, 2021$249 $6,460 $(129,426)$(87,390)$(1,983)$(212,090)$2,480 $(209,610)
Net income (loss)— — — 24,503 — 24,503 (584)23,919 
Other comprehensive income— — — — 23 23 — 23 
Comprehensive income (loss)— — — — — 24,526 (584)23,942 
Share-based compensation
— 6,973 — — — 6,973 — 6,973 
Common stock issued under stock incentive plans
— (571)1,400  — 829 — 829 
Balance as of March 31, 2022$249 $12,862 $(128,026)$(62,887)$(1,960)$(179,762)$1,896 $(177,866)
See accompanying notes to consolidated financial statements.
6

MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED STATEMENTS OF EQUITY (Continued)
(Unaudited)
(in thousands)
Three Months Ended March 31, 2021
Common Stock IssuedAdditional
Paid-In
Capital
Treasury
Stock
Accumulated DeficitAccumulated
Other
Comprehensive Loss
Total Madison Square Garden Sports Corp. Stockholders Equity
Non -
redeemable
Noncontrolling
Interests
Total Equity
Balance as of December 31, 2020$249 $15,432 $(147,585)$(133,986)$(2,119)$(268,009)$2,881 $(265,128)
Net income (loss)— — — 5,468 — 5,468 (373)5,095 
Other comprehensive income— — — — 57 57 — 57 
Comprehensive income (loss)— — — — — 5,525 (373)5,152 
Share-based compensation
— 3,867 — — — 3,867 — 3,867 
Common stock issued under stock incentive plans
— (43)851 — — 808 — 808 
Adjustments to noncontrolling interests— 71 — — — 71 (71) 
Balance as of March 31, 2021$249 $19,327 $(146,734)$(128,518)$(2,062)$(257,738)$2,437 $(255,301)
See accompanying notes to consolidated financial statements.
7

MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED STATEMENTS OF EQUITY (Continued)
(Unaudited)
(in thousands)
Nine Months Ended March 31, 2022
Common
Stock
Issued
Additional
Paid-In
Capital
Treasury
Stock
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Total Madison Square Garden Sports Corp. Stockholders Equity
Non -
redeemable
Noncontrolling
Interests
Total Equity
Balance as of June 30, 2021$249 $23,102 $(146,734)$(78,898)$(2,027)$(204,308)$2,442 $(201,866)
Net income (loss)— — — 23,943 — 23,943 (1,711)22,232 
Other comprehensive income— — — — 67 67 — 67 
Comprehensive income (loss)— — — — — 24,010 (1,711)22,299 
Share-based compensation
— 19,178 — — — 19,178 — 19,178 
Tax withholding associated with shares issued for equity-based compensation
— (18,306)— — — (18,306)— (18,306)
Common stock issued under stock incentive plans
— (9,947)18,708 (7,932)— 829 — 829 
Adjustments to noncontrolling interests— (1,165)— — — (1,165)1,165  
Balance as of March 31, 2022$249 $12,862 $(128,026)$(62,887)$(1,960)$(179,762)$1,896 $(177,866)
See accompanying notes to consolidated financial statements.
8

MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED STATEMENTS OF EQUITY (Continued)
(Unaudited)
(in thousands)
Nine Months Ended March 31, 2021
Common Stock IssuedAdditional
Paid-In
Capital
Treasury
Stock
Accumulated DeficitAccumulated
Other
Comprehensive Loss
Total Madison Square Garden Sports Corp. Stockholders Equity
Non -
redeemable
Noncontrolling
Interests
Total Equity
Balance as of June 30, 2020$249 $5,940 $(167,431)$(43,605)$(2,139)$(206,986)$3,551 $(203,435)
Net loss— — (63,574)— (63,574)(1,479)(65,053)
Other comprehensive income— — — — 77 77 — 77 
Comprehensive loss— — — — — (63,497)(1,479)(64,976)
Share-based compensation
— 26,193 — — — 26,193 — 26,193 
Tax withholding associated with shares issued for equity-based compensation
— (11,023)— (2,868)— (13,891)— (13,891)
Common stock issued under stock incentive plans
— (1,418)20,697 (18,471)— 808 — 808 
Adjustments to noncontrolling interests— (365)— — — (365)365  
Balance as of March 31, 2021$249 $19,327 $(146,734)$(128,518)$(2,062)$(257,738)$2,437 $(255,301)
See accompanying notes to consolidated financial statements.

9

MADISON SQUARE GARDEN SPORTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
All amounts included in the following Notes to Consolidated Financial Statements are presented in thousands, except per share data or as otherwise noted.
Note 1. Description of Business and Basis of Presentation
Description of Business
Madison Square Garden Sports Corp. (together with its subsidiaries (collectively, “we,” “us,” “our,” “MSG Sports,” or the “Company”) owns and operates a portfolio of assets featuring some of the most recognized teams in all of sports, including the New York Knickerbockers (“Knicks”) of the National Basketball Association (“NBA”) and the New York Rangers (“Rangers”) of the National Hockey League (“NHL”). Both the Knicks and the Rangers play their home games in Madison Square Garden Arena (“The Garden”). The Company’s other professional sports franchises include two development league teams — the Hartford Wolf Pack of the American Hockey League (“AHL”) and the Westchester Knicks of the NBA G League (“NBAGL”). These professional sports franchises are collectively referred to herein as the “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 — the Madison Square Garden Training Center in Greenburgh, NY and the CLG Performance Center in Los Angeles, CA. CLG and Knicks Gaming are collectively referred to herein as the “esports teams,” and together with the sports teams, the “teams.”
The Company operates and reports financial information in one segment. The Company’s decision to organize as one operating segment and report in one segment is based upon its internal organizational structure; the manner in which its operations are managed; the criteria used by the Company’s Executive Chairman, its Chief Operating Decision Maker (“CODM”), to evaluate segment performance. The Company’s CODM reviews total company operating results to assess overall performance and allocate resources.
The Company was incorporated on March 4, 2015 as an indirect, wholly-owned subsidiary of MSG Networks Inc. (“MSG Networks”). All the outstanding common stock of the Company was distributed to MSG Networks shareholders (the “MSGS Distribution”) on September 30, 2015.
On April 17, 2020 (the “MSGE Distribution Date”), the Company distributed all of the outstanding common stock of Madison Square Garden Entertainment Corp. (formerly MSG Entertainment Spinco, Inc. and referred to herein as “MSG Entertainment”) to its stockholders (the “MSGE Distribution”). 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 (the “Record Date”), 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.
Basis of Presentation
The accompanying unaudited consolidated interim financial statements (referred to as the “Financial Statements” herein) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and Article 10 of Regulation S-X of the SEC for interim financial information, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 (“fiscal year 2021”). The Financial Statements presented in this Quarterly Report on Form 10-Q are unaudited; however, in the opinion of management, the Financial Statements reflect all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods presented. The results of operations for the periods presented are not necessarily indicative of the results that might be expected for future interim periods or for the full year. The dependence of MSG Sports on revenues from its NBA and NHL sports teams generally means it earns a disproportionate share of its revenues in the second and third quarters of the Company’s fiscal year. However, on March 11 and 12, 2020, the NBA and NHL, respectively, suspended their 2019-20 seasons due to COVID-19. In July and August 2020, the NBA and NHL, respectively, resumed their seasons. 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.
Reclassifications
Certain reclassifications have been made in order to conform to the current period’s presentation and relate to the separation of League-related accruals, which was previously reported in Other accrued liabilities in the consolidated balance sheet as of June 30, 2021.
10

MADISON SQUARE GARDEN SPORTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Continued)

Impact of COVID-19
COVID-19 disruptions have materially impacted the Company’s operations and operating results, with the Company recognizing materially less revenues, or in some cases no revenues, across a number of areas during fiscal years 2020 and 2021. The Company’s operations and operating results were also impacted by temporary declines in attendance in fiscal year 2022, due to ongoing reduced tourism levels as well as an increase in cases during certain months of the fiscal year due to a COVID-19 variant.
In March 2020, the NBA and NHL suspended their 2019-20 seasons due to COVID-19. As a result of the suspension of the 2019-20 NBA and NHL seasons and subsequent resumption of play in July and August 2020, respectively, during the first quarter of fiscal year 2021, the Company recognized certain revenues that otherwise would have been recognized during the third and fourth quarters of fiscal year 2020.
In addition, the start of the 2020-21 NBA and NHL regular seasons were delayed, and the Knicks and the Rangers played fewer games, with the NBA playing a 72-game regular season schedule and the NHL playing a 56-game regular season schedule. These compare to traditional 82-game regular season schedules for both the NBA and NHL.
On December 16, 2020, and January 14, 2021, respectively, the Knicks and the Rangers resumed playing their homes games at The Garden as part of their 2020-21 seasons. However, fans were initially prohibited from attending games 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 the 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, event venues such as The Garden were permitted to host guests at full capacity, subject to certain restrictions, including, for example, restrictions for unvaccinated guests. As a result, the Knicks played three home playoff games with ticket sales of approximately 15,000-16,500 per game during the fiscal year ended June 30, 2021.
These disruptions materially impacted the Company’s revenues across a number of areas, including, ticket sales; the Company’s share of suite licenses; sponsorships; signage and in-venue advertising at The Garden; local media rights fees; and food, beverage and merchandise sales.
In connection with the MSGE Distribution, we entered into the Arena License Agreements with MSG Entertainment. The Garden was not available for use between April 17, 2020 (the date of the MSGE Distribution) and the start of the NBA and NHL 2020-21 seasons in December 2020 and January 2021, respectively, due to the government-mandated suspension of events in response to COVID-19, and was available at reduced capacity through May 2021. As a result, the Company was not required to pay license fees to MSG Entertainment under the Arena License Agreements until games resumed at The Garden, and the Company paid substantially reduced fees while attendance was limited. Effective July 1, 2021, the Company began paying license fees to MSG Entertainment under the Arena License Agreements in their full contractual amounts.
During fiscal year 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 were reduced, including, in addition to the reduced payments to MSG Entertainment under the Arena License Agreements described above, (i) NBA league assessments and day-of-game expenses for Knicks and Rangers games, and (ii) league revenue sharing, net of escrow and team personnel expense. These expense reductions did not fully offset revenue losses.
As a result of New York City regulations effective August 17, 2021, indoor entertainment venues such as The Garden were permitted to host guests at full capacity, subject to certain restrictions, including that all guests 12 years of age and older show proof of at least one dose of a COVID-19 vaccine. Following updated New York City regulations, effective January 29, 2022, all guests five years of age and older and all employees were required to provide proof that they have received either two doses of a two-shot COVID-19 vaccination, or one dose of a single-shot vaccine. Children under age five could attend events with a vaccinated adult, but children ages two to four were required to wear a mask while inside venues such as The Garden. Effective March 7, 2022, New York City lifted all COVID-19 vaccination requirements pertaining to guests in attendance at indoor entertainment venues, followed by a lifting of vaccination requirements applicable to professional athletes competing in such venues effective March 24, 2022. Also, in April 2022, New York State terminated the last of its mandatory COVID-19 rules for indoor venues. As a result, there are no capacity restrictions or vaccination requirements applicable to fan attendance at games at The Garden as of the date of this filing.
The Knicks and the Rangers each completed their full 82-game regular season schedules for the 2021-22 season in April 2022 and the Rangers are currently competing in the playoffs. Fan attendance during the regular season was impacted by the COVID-19 pandemic including the emergence of certain variants and ongoing reduced tourism levels.
11

MADISON SQUARE GARDEN SPORTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Continued)

It is unclear to what extent COVID-19 concerns, including with respect to new variants, could result in renewed governmental and league restrictions on attendance or otherwise impact attendance of games at The Garden. The Company’s business is also particularly sensitive to discretionary business and consumer spending. A pandemic such as COVID-19 could impede economic activity in impacted regions or globally over the long-term, causing a global recession and leading to a further decline in discretionary spending on sporting events and other leisure activities, including declines in domestic and international tourism, which could result in long-term effects on the Company’s business.
Note 2. Accounting Policies
Principles of Consolidation
The consolidated financial statements of the Company include the accounts of Madison Square Garden Sports Corp. and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. In addition, the consolidated financial statements of the Company include the accounts from CLG, in which the Company has a controlling voting interest. The Company’s consolidation criteria are based on authoritative accounting guidance for voting interest, controlling interest or variable interest entities. CLG is consolidated with the equity owned by other shareholders shown as nonredeemable noncontrolling interests in the accompanying consolidated balance sheets, and the other shareholders’ portion of net earnings (loss) and other comprehensive income (loss) shown as net income (loss) or comprehensive income (loss) attributable to nonredeemable noncontrolling interests in the accompanying consolidated statements of operations and consolidated statements of comprehensive income (loss), respectively.
Use of Estimates
The preparation of the accompanying Financial Statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of accounts receivable, other current assets, goodwill, intangible assets, other long-lived assets, deferred tax valuation allowance, and other liabilities. In addition, estimates are used in revenue recognition, revenue sharing expense (net of escrow), luxury tax expense, income tax expense, performance and share-based compensation, depreciation and amortization, litigation matters and other matters, as well as in the valuation of contingent consideration and noncontrolling interests resulting from business combination transactions. Management believes its use of estimates in the Financial Statements to be reasonable.
Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and, as such, these estimates may ultimately differ from actual results. Changes in estimates resulting from weakness in the economic environment or other factors beyond the Company’s control could be material and would be reflected in the Company’s financial statements in future periods.
Recently Issued Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU eliminates certain exceptions to the general approach in Accounting Standards Codification (“ASC”) Topic 740 and includes methods of simplification to the existing guidance. The Company adopted this standard as of the beginning of fiscal year 2022, and the adoption did not have a material impact on its consolidated financial statements.
12

MADISON SQUARE GARDEN SPORTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Continued)

Note 3. Revenue Recognition
Contracts with Customers
All revenue recognized in the consolidated statements of operations is considered to be revenue from contracts with customers. For the three and nine months ended March 31, 2022 and 2021, the Company did not have any material impairment losses on receivables or contract assets arising from contracts with customers.
Disaggregation of Revenue
The following table disaggregates the Company’s revenues by type of goods or services in accordance with the required entity-wide disclosure requirements set forth in ASC Subtopic 280-10-50-38 to 40 and the disaggregation of revenue required disclosures in accordance with ASC Subtopic 606-10-50-5 for the three and nine months ended March 31, 2022 and 2021:
Three Months EndedNine Months Ended
March 31,March 31,
2022202120222021
Event-related (a)
$119,728 $4,552 $232,672 $4,552 
Media rights (b)
124,803 139,963 243,697 212,458 
Sponsorship, signage and suite licenses76,715 25,391 138,419 32,336 
League distributions and other16,528 13,104 31,361 19,473 
Total revenues from contracts with customers$337,774 $183,010 $646,149 $268,819 
_________________
(a)Consists of (i) ticket sales and other ticket-related revenues, and (ii) food, beverage and merchandise sales at The Garden.
(b)Consists of (i) local media rights fees, (ii) revenue from the distribution through league-wide national and international television contracts, and (iii) other local radio rights fees.


13

MADISON SQUARE GARDEN SPORTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Continued)

The timing of revenue recognition, billings and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheet. The following table provides information about contract balances from the Company’s contracts with customers as of March 31, 2022 and June 30, 2021.
March 31,June 30,
20222021
Receivables from contracts with customers, net (a)
$66,547 $30,834 
Contract assets, current (b)
42,779 9,604 
Deferred revenue, including non-current portion (c), (d)
133,233 162,628 
_________________
(a)Receivables from contracts with customers, net, which are reported in Accounts receivable, net and Net related party receivables in the Company’s accompanying consolidated balance sheets, represent the Company’s unconditional rights to consideration under its contracts with customers. As of March 31, 2022 and June 30, 2021, the Company’s receivables reported above included $9,344 and $213, respectively, related to various related parties associated with contracts with customers. See Note 15 for further details on related party arrangements. Receivables from contracts with customers, net, excludes amounts recorded in Accounts receivable, net, associated with amounts due from the NBA and NHL related to escrow and player compensation recoveries and luxury tax payments. As of March 31, 2022, the Company had receivable balances related to escrow and player compensation recoveries of $23,790 and $7,511, recorded in Accounts receivable, net and Other assets, respectively. As of June 30, 2021, the Company had receivable balances related to escrow and player compensation recoveries of $36,525 and $10,700, recorded in Accounts receivable, net and Other assets, respectively.
(b)Contract assets, current, which are reported as Other current assets in the Company’s accompanying consolidated balance sheets, primarily relate to the Company’s rights to consideration for goods or services transferred to the customer, for which the Company does not have an unconditional right to bill as of the reporting date. Contract assets are transferred to accounts receivable once the Company’s right to consideration becomes unconditional. The Company had contract asset balances related to local media rights of $21,238 and $0 as of March 31, 2022 and June 30, 2021, respectively. See Note 15 for further details on these related party arrangements.
(c)Deferred revenue, including non-current portion primarily relates to the Company’s receipt of consideration from customers or billing customers in advance of the Company’s transfer of goods or services to those customers. Deferred revenue is reduced and the related revenue is recognized once the underlying goods or services are transferred to a customer. The non-current portion of deferred revenue primarily consists of a $30,000 receipt from the NBA in December 2020 of league distributions in advance of the Company’s recognition. The Company’s deferred revenue related to local media rights was $0 and $260 as of March 31, 2022 and June 30, 2021, respectively. See Note 15 for further details on these related party arrangements.
(d)Revenue recognized for the nine months ended March 31, 2022 relating to the deferred revenue balance as of June 30, 2021 was $111,580.

14

MADISON SQUARE GARDEN SPORTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Continued)

Transaction Price Allocated to the Remaining Performance Obligations
The following table depicts the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2022 and is based on current projections. In developing the estimated revenue, the Company applies the allowable practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less. Additionally, the Company has elected to exclude variable consideration from its disclosure related to the remaining performance obligations under its local media rights arrangements, league-wide national and international television contracts, and certain other arrangements with variable consideration.
Fiscal Year 2022 (remainder)$25,311 
Fiscal Year 2023115,040 
Fiscal Year 202495,512 
Fiscal Year 202559,451 
Fiscal Year 202641,455 
Thereafter41,026 
$377,795 
Note 4. Computation of Earnings (Loss) per Common Share
The following table presents a reconciliation of weighted-average shares used in the calculations of basic and diluted earnings (loss) per common share attributable to the Company’s stockholders (“EPS”) and the number of shares excluded from diluted earnings (loss) per common share, as they were anti-dilutive.  
Three Months EndedNine Months Ended
 March 31,March 31,
 2022202120222021
Weighted-average shares (denominator):
Weighted-average shares for basic EPS
24,275 24,156 24,235 24,120 
Dilutive effect of shares issuable under share-based compensation plans
119 188 142  
Weighted-average shares for diluted EPS
24,394 24,344 24,377 24,120 
Weighted-average shares excluded from diluted earnings (loss) per share   331 
Note 5. Team Personnel Transactions
Direct operating and selling, general and administrative expenses in the accompanying consolidated statements of operations include net provisions for transactions relating to the Company’s teams for waiver/contract termination costs, player trades and season-ending injuries (“Team personnel transactions”). Team personnel transactions were net provisions of $304 (net of insurance recovery of $656), and $3,305 for the three months ended March 31, 2022 and 2021, respectively, and net provisions of $729 (net of insurance recovery of $656), and $17,003 for the nine months ended March 31, 2022 and 2021, respectively.

15

MADISON SQUARE GARDEN SPORTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Continued)

Note 6. Cash, Cash Equivalents and Restricted Cash
The following table provides a summary of the amounts recorded as cash, cash equivalents and restricted cash.
As of
March 31,
2022
June 30,
2021
March 31,
2021
June 30,
2020
Captions on the consolidated balance sheets:
Cash and cash equivalents$49,176 $64,902 $69,128 $77,852 
Restricted cash (a)
979 7,134 8,896 12,821 
Cash, cash equivalents and restricted cash on the consolidated statements of cash flows
$50,155 $72,036 $78,024 $90,673 
_________________
(a)Restricted cash as of March 31, 2022 and June 30, 2020 primarily included cash deposited in an escrow account (see Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 for more information). For all other periods, restricted cash relates to the Company’s revolving credit facilities (see Note 11 for more information).
Note 7. Leases
The Company’s leases primarily consist of the lease of the Company’s principal executive offices under the Sublease Agreement with MSG Entertainment (the “Sublease Agreement”) and the lease of CLG Performance Center. In addition, the Company accounts for the rights of use of The Garden pursuant to the Arena License Agreements as leases under the ASC Topic 842, Leases. See Note 8 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 for more information regarding the Company’s accounting policies associated with its leases.
In November 2021, MSG Entertainment entered into a new lease for principal executive offices at Two Pennsylvania Plaza in New York (the “New MSGE Lease Agreement”). In accordance with the terms of the Sublease Agreement and the New MSGE Lease Agreement, the lease term of the Sublease Agreement was extended until October 31, 2024. The Company has accounted for this extension as a lease remeasurement and remeasured the right-of-use asset and operating lease liability utilizing the Company’s incremental borrowing rate as of the date of remeasurement. As a result of the remeasurement, non-cash additions to the right-of-use asset and operating lease liability of $1,244 were recorded during the nine months ended March 31, 2022.
In accordance with the terms of the Sublease Agreement, the Company has committed to enter into a new sublease agreement with MSG Entertainment for a lease term equivalent to the New MSGE Lease Agreement term, which ends January 31, 2046. In addition, in connection with the New MSGE Lease Agreement, the Company has entered into a commitment whereby if the New MSGE Lease Agreement were terminated under certain circumstances, the Company would be required to enter into a new lease for executive offices in Two Pennsylvania Plaza directly with the landlord, with a consistent lease term through January 31, 2046. As the Company has not yet entered into a new sublease for or taken possession of the new executive office space at Two Pennsylvania Plaza, no additional right-of-use assets or operating lease liabilities have been recorded as of March 31, 2022 related to the commitments discussed above.
In connection with the MSGE Distribution, the Company entered into the Arena License Agreements with MSG Entertainment that end on June 30, 2055 and allow the Knicks and the Rangers to continue to play their home games at The Garden. The Arena License Agreements provide for fixed payments to be made from inception through June 30, 2055 in 12 equal installments during each year of the contractual term. Absent the reduced payments due to the government-mandated suspension of events at The Garden in response to COVID-19 described below, the stated license fee for the first full contract year ended 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 are 103% of the license fees for the immediately preceding contract year.
The Garden was not available for use between April 17, 2020 and the start of the NBA and NHL 2020-21 seasons in December 2020 and January 2021, respectively, due to the government-mandated suspension of events in response to COVID-19, and as a result the Company was not required to pay license fees to MSG Entertainment under the Arena License Agreements.
During the three and nine months ended March 31, 2022 and 2021, the Company recognized operating lease costs associated with the Arena License Agreements with respect to games played at The Garden.
16

MADISON SQUARE GARDEN SPORTS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Continued)

As of March 31, 2022, the Company’s existing operating leases, which are recorded in the accompanying financial statements, have remaining lease terms ranging from 5 months to 33 years. In certain instances, leases include options to renew, with varying option terms. The exercise of lease renewals, if available under the lease options, is generally at the Company’s discretion and is considered in the Company’s assessment of the respective lease term. The Company’s lease agreements do not contain material residual value guarantees or material restrictive covenants.
The following table summarizes the ROU assets and lease liabilities recorded on the Company’s accompanying consolidated balance sheets as of March 31, 2022 and June 30, 2021:
Line Item in the Company’s Consolidated Balance SheetMarch 31,
2022
June 30,
2021
Right-of-use assets:
Operating leases
Right-of-use lease assets$689,580 $703,521 
Lease liabilities:
Operating leases, current (a)
Operating lease liabilities, current$43,412 $41,951 
Operating leases, noncurrent (a)
Operating lease liabilities, noncurrent