EX-99.1

EX-99.1 13 d834095dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

THE MADISON SQUARE GARDEN COMPANY

TWO PENNSYLVANIA PLAZA

NEW YORK, NY 10121

April [●], 2020

Dear Stockholder:

I am pleased to report that the previously announced spin-off by The Madison Square Garden Company, which we refer to as “MSG,” of all of the outstanding shares of common stock of its MSG Entertainment Spinco, Inc. subsidiary is expected to become effective on April 17, 2020. MSG Entertainment Spinco, Inc., a Delaware corporation, which we refer to as “Spinco,” will become a public company on that date and will own the entertainment business currently owned and operated by MSG through its MSG Entertainment business segment and the sports bookings business currently owned and operated by MSG through its MSG Sports business segment, as described in this information statement. On or prior to the Distribution, The Madison Square Garden Company will change its name to “Madison Square Garden Sports Corp.” and Spinco will change its name to “Madison Square Garden Entertainment Corp.” Spinco’s Class A Common Stock will be listed on the New York Stock Exchange, which we refer to as “NYSE,” under the symbol “MSGE” and The Madison Square Garden Company (renamed “Madison Square Garden Sports Corp.”) will change its symbol on NYSE to “MSGS” in connection with the spin-off.

Holders of record of MSG’s Class A Common Stock as of the close of business, New York City time, on April 13, 2020, which will be the record date, will receive one share of Spinco Class A Common Stock for every one share of MSG’s Class A Common Stock held. Holders of record of MSG’s Class B Common Stock as of the close of business on the record date will receive one share of Spinco Class B Common Stock for every one share of MSG Class B Common Stock held. No action is required on your part to receive your Spinco shares. You will not be required either to pay anything for the new shares or to surrender any shares of MSG stock.

No fractional shares of Spinco stock will be issued. If you otherwise would be entitled to a fractional share you will receive a check for the cash value thereof, which generally will be taxable to you. In due course you will be provided with information to enable you to compute your tax bases in both MSG and Spinco stock. MSG expects to obtain an opinion from Sullivan & Cromwell LLP substantially to the effect that, among other things, the distribution by MSG of our Class A Common Stock and Class B Common Stock to the holders of MSG Class A Common Stock and MSG Class B Common Stock, respectively (i.e., the distribution), will qualify as a tax-free distribution for U.S. federal income tax purposes.

The enclosed information statement describes the distribution of shares of Spinco stock and contains important information about Spinco, including financial statements. I suggest that you read it carefully. If you have any questions regarding the Distribution, please contact MSG’s transfer and distribution agent, EQ Shareowner Services, at 1-800-468-9716 (U.S. toll free) or 651-450-4064 (International).

Sincerely,

James L. Dolan

Executive Chairman and Chief Executive Officer

Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the U.S. Securities and Exchange Commission.

PRELIMINARY INFORMATION STATEMENT

SUBJECT TO COMPLETION, DATED APRIL 1, 2020

INFORMATION STATEMENT

MSG Entertainment Spinco, Inc.

Distribution of

Class A Common Stock

Par Value, $0.01 Per Share

Class B Common Stock

Par Value, $0.01 Per Share

This information statement is being furnished in connection with the distribution by The Madison Square Garden Company (“MSG”) to holders of its common stock of all of the outstanding shares of MSG Entertainment Spinco, Inc. (collectively, “we,” “us,” “our,” “Spinco,” or the “Company”) common stock. Prior to such distribution, we will enter into a series of transactions with MSG pursuant to which we will own the entertainment business that was owned and operated by MSG through its MSG Entertainment business segment, as well as the sports bookings business that was owned and operated by MSG through its MSG Sports business segment, as described in this information statement.

Shares of our Class A Common Stock will be distributed to holders of MSG Class A Common Stock of record as of the close of business, New York City time, on April 13, 2020, which will be the record date. Each such holder will receive one share of our Class A Common Stock for every one share of MSG’s Class A Common Stock held on the record date. Shares of our Class B Common Stock will be distributed to holders of MSG’s Class B Common Stock as of the close of business on the record date. Each holder of MSG’s Class B Common Stock will receive one share of our Class B Common Stock for every one share of MSG’s Class B Common Stock held on the record date. We refer to this distribution of securities as the “Distribution.” The Distribution will be effective at 11:59 p.m., New York City time, on April 17, 2020. For MSG stockholders who own common stock in registered form, in most cases the transfer and distribution agent will credit their shares of Spinco common stock to book entry accounts established to hold their MSG common stock. Our transfer and distribution agent will send these stockholders a statement reflecting their Spinco common stock ownership shortly after April 17, 2020. For stockholders who own MSG common stock through a broker or other nominee, their shares of Spinco common stock will be credited to their accounts by the broker or other nominee. Stockholders will receive a cash payment in lieu of fractional shares, which generally will be taxable. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”

No stockholder approval of the Distribution is required or sought. We are not asking you for a proxy and you are requested not to send us a proxy. MSG stockholders will not be required to pay for the shares of our common stock to be received by them in the Distribution, or to surrender or to exchange shares of MSG common stock in order to receive our common stock, or to take any other action in connection with the Distribution. There is currently no trading market for our common stock.

On or prior to the Distribution, The Madison Square Garden Company will change its name to “Madison Square Garden Sports Corp.” and MSG Entertainment Spinco, Inc. will change its name to “Madison Square Garden Entertainment Corp.” Our Class A Common Stock has been approved for listing on the New York Stock Exchange (“NYSE”). Our Class A Common Stock will trade under the symbol “MSGE” and The Madison Square Garden Company (renamed “Madison Square Garden Sports Corp.”) will change its symbol on NYSE to “MSGS” in connection with the Distribution. We will not list our Class B Common Stock on any securities exchange.

IN REVIEWING THIS INFORMATION STATEMENT, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE CAPTION “RISK FACTORS” BEGINNING ON PAGE 28.

WE ARE AN EMERGING GROWTH COMPANY AS DEFINED IN THE JUMPSTART OUR BUSINESS STARTUPS ACT OF 2012. REFER TO “RISK FACTORS — THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO US AS AN ‘EMERGING GROWTH COMPANY’ MAY MAKE OUR CLASS A COMMON STOCK LESS ATTRACTIVE TO INVESTORS” AND “BUSINESS — EMERGING GROWTH COMPANY STATUS.”

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS INFORMATION STATEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THIS INFORMATION STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES.

Stockholders of MSG with inquiries related to the Distribution should contact MSG’s transfer and distribution agent, EQ Shareowner Services, at 1-800-468-9716 (U.S. toll free) or 651-450-4064 (International).

The date of this information statement is April [●], 2020.

TABLE OF CONTENTS


SUMMARY			1
Our Company			1
Coronavirus Impacts			1
Pending Sale of the Forum			2
Our Strengths			3
Our Strategy			3
Key Challenges			6
Company Information			7
THE DISTRIBUTION			8
SELECTED HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL DATA			12
QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION			15
THE DISTRIBUTION			21
General			21
Manner of Effecting the Distribution			21
Reasons for the Distribution			22
Results of the Distribution			22
Material U.S. Federal Income Tax Consequences of the Distribution			23
Listing and Trading of Our Common Stock			26
Reason for Furnishing this Information Statement			27
RISK FACTORS			28
BUSINESS			48
General			48
Coronavirus Impacts			48
Our Strengths			48
Our Strategy			49
Our Business			52
Our Bookings Business			52
Our Productions			54
Our Entertainment Dining and Nightlife Offerings			54
Our Festival Offering			55
Our Performance Venues			55
Pending Sale of the Forum — Membership Interest Purchase Agreement			60
Other Investments			61
Garden of Dreams Foundation			61
Regulation			61
Competition			63
Employees			63
Properties			63
Legal Proceedings			64
Financial Information About Geographic Areas			64
Emerging Growth Company Status			64
DIVIDEND POLICY			66
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION			67
SELECTED FINANCIAL DATA			81
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			83
Introduction			84
Coronavirus Impacts			85
Proposed Distribution and Basis of Presentation			87


		i


Business Overview			88
Revenue Sources			88
Expenses			91
Factors Affecting Operating Results			92
Purchase Accounting Adjustments			93
Investments in Nonconsolidated Affiliates			94
Combined Results of Operations			94
Comparison of the Six Months Ended December 31, 2019 versus the Six Months Ended December 31, 2018			94
Comparison of the Year Ended June 30, 2019 versus the Year Ended June 30, 2018			99
Comparison of the Year Ended June 30, 2018 versus the Year Ended June 30, 2017			105
Supplemental Management’s Discussion and Analysis of Pro Forma Segment Results			110
Liquidity and Capital Resources			127
Overview			127
MSG Spheres			129
Financing Agreements			130
Bilateral Letters of Credit Lines			130
Cash Flow Discussion			130
Contractual Obligations and Off-Balance Sheet Arrangements			132
Seasonality of Our Business			134
Recently Issued Accounting Pronouncements and Critical Accounting Policies			134
Critical Accounting Policies			134
CORPORATE GOVERNANCE AND MANAGEMENT			141
Corporate Governance			141
Our Directors			142
Our Executive Officers			151
EXECUTIVE COMPENSATION			153
Introduction			153
Compensation Discussion & Analysis			153
Executive Summary			153
MSG’s Executive Compensation Program Objectives and Philosophy			153
Elements of MSG’s Compensation Program			154
MSG’s 2019 Fiscal Year Annual Compensation Opportunities Mix			155
MSG’s Compensation Governance Practices			156
MSG’s 2019 Fiscal Year Alignment Awards			156
MSG’s Compensation Program Practices and Policies			157
Role of the MSG Compensation Committee			158
Role of the Independent MSG Compensation Consultant			158
Role of MSG Executive Officers in Determining Compensation			159
MSG’s Performance Objectives			159
Tally Sheets			159
Elements of MSG’s Compensation Program			160
Holding Requirements			168
MSG’s Benefits			168
MSG’s Perquisites			169
MSG’s Post-Termination Compensation			170
Tax Deductibility of Compensation			170
Employment Agreements			171
Key Elements of 2020 Expected Compensation from the Company			174
Historical Compensation Information			175
Grants of MSG Plan-Based Awards			177
Outstanding MSG Equity Awards at June 30, 2019			179


		ii


MSG Stock Vested			181
MSG Pension Benefits			181
MSG Nonqualified Deferred Compensation			184
Termination and Severance			184
Our Equity Compensation Plan Information			189
Treatment of Outstanding Awards			196
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			198
Introduction			198
Relationship Between MSG and Us After the Distribution			198
Other Arrangements and Agreements with MSG Networks and/or AMC Networks			204
Dolan Family Arrangements			204
Certain Relationships and Potential Conflicts of Interest			206
Related Party Transaction Approval Policy			206
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS			208
Beneficial Ownership of Stock			208
SHARES ELIGIBLE FOR FUTURE SALE			220
Rule 144			220
Employee Stock Awards			220
Non-Employee Director Stock Awards			220
Registration Rights Agreements			220
DESCRIPTION OF CAPITAL STOCK			222
Class A Common Stock and Class B Common Stock			222
Preferred Stock			224
Certain Corporate Opportunities and Conflicts			224
Section 203 of the Delaware General Corporation Law			226
Limitation on Personal Liability			226
INDEMNIFICATION OF DIRECTORS AND OFFICERS			227
AVAILABLE INFORMATION			228
INDEX TO COMBINED FINANCIAL STATEMENTS			F-1


		iii

SUMMARY

The following is a summary of certain of the information contained in this information statement. This summary is included for convenience only and should not be considered complete. This summary is qualified in its entirety by more detailed information contained elsewhere in this information statement, which should be read in its entirety.

Unless the context otherwise requires, all references to “we,” “us,” “our,” “Spinco” or the “Company” refer to MSG Entertainment Spinco, Inc., together with its direct and indirect subsidiaries. Where we describe in this information statement our business activities, we do so as if the transfer of the entertainment business owned and operated by MSG through its MSG Entertainment business segment and the sports bookings business owned and operated by MSG through its MSG Sports business segment, to Spinco has already occurred.

Our Company

The Company is a leader in live experiences comprised of iconic venues; marquee entertainment content; popular dining and nightlife offerings; and a premier music festival that, together, entertain approximately 12 million guests a year. Utilizing our powerful brands and live entertainment expertise, the Company delivers unique experiences that set the standard for excellence and innovation while forging deep connections with diverse and passionate audiences. The Company’s portfolio of venues includes: Madison Square Garden (“The Garden”), Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, the Forum in Inglewood, CA and The Chicago Theatre. In addition, the Company is constructing a state-of-the-art venue, MSG Sphere, in Las Vegas and plans to build a second MSG Sphere in London. The Company also includes the original production, the Christmas Spectacular Starring the Radio City Rockettes (“Christmas Spectacular”), as well as Boston Calling Events, LLC (“BCE”), the entertainment production company that owns and operates the Boston Calling Music Festival, and TAO Group Holdings LLC (“Tao Group Hospitality”), a hospitality group with globally recognized entertainment dining and nightlife brands.

Coronavirus Impacts

Our operations and operating results have been, and continue to be, materially impacted by the coronavirus pandemic and government actions taken in response. On the date of this information statement, virtually all of our business operations are shut down and it is not clear when those operations will resume.

As of March 31, 2020, as a result of government mandated assembly limitations and closures, all of our scheduled events at The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, The Chicago Theatre and the Forum are postponed or cancelled through April, and continue to be impacted throughout the month of May. We are not recognizing any revenue from those events and it is unclear whether and to what extent those events will be rescheduled. Additionally, public officials have imposed mandates limiting restaurants and bars to only take-out and delivery service and requiring that nightlife venues close in the cities in which Tao Group Hospitality operates. As a result, all Tao Group Hospitality venues in the United States and a majority of Tao Group Hospitality venues outside of the United States are currently closed, which has resulted in the business being materially impacted. It is unclear how long these restrictions will be in effect.

The Company is currently building a state-of-the-art venue in Las Vegas, called MSG Sphere. This is a complex construction project with cutting-edge technology that relies on subcontractors obtaining components

from a variety of sources around the world. The widespread global effects of COVID-19 have resulted in significant impediments to construction that are beyond our control, including disruptions to our supply chain. As a result, we will implement a temporary suspension of construction, with all work ceasing over approximately the next two weeks, and expect to incur some additional expense related to this stopping and starting of construction. At this time, we are unable to determine the full impact of coronavirus-related disruptions, however they may impact our cost estimates. The Company remains committed to building a state-of-the-art venue in Las Vegas and looks forward to quickly and efficiently resuming construction as soon as practicable. As a result of this delay, we do not expect to achieve our goal of opening the venue in calendar year 2021.

We are unable to predict when we will be permitted or able to resume normal business operations and what the longer-term effects, if any, of these events will be. See “Risk Factors — Our Operations and Operating Results Have Been, and Continue to be, Materially Impacted by Coronavirus and Government Actions Taken in Response” and “Management’s Discussion and Analysis — Introduction — Coronavirus Impacts.”

Following the completion of the spin-off, MSG Entertainment and MSG will be parties to Arena License Agreements (the “Arena License Agreements”) pursuant to which MSG will make payments to MSG Entertainment for use of The Garden. Absent the current suspension of our ability to operate The Garden, these payments would have been approximately $0.9 million per month for the remainder of our 2020 fiscal year and were anticipated to be approximately $39.1 million for our 2021 fiscal year. Rent actually received will be reduced from these amounts for so long as the National Basketball Association (“NBA”) and National Hockey League (“NHL”) seasons are delayed or cancelled. As a result of the suspension of our business due to coronavirus, however, rent payments due under the Arena License Agreements are not required to be made during the suspension of our ability to operate at The Garden as a result of the force majeure provisions in the agreements. Even if our operation of The Garden and the NBA and NHL seasons were to resume during the coronavirus outbreak, or thereafter, if capacity at The Garden is limited to 1,000 or fewer attendees, amounts payable under the Arena License Agreements would be reduced by 80%. If our operation of The Garden resumes, future rent payments due under the Arena License Agreements will be payable even if the NBA or NHL seasons do not resume simultaneously or at all. See “Certain Relationships and Related Party Transactions — Relationship between MSG and Us After the Distribution — Arena License Agreements” for more detail.

Pending Sale of the Forum

Since June 2012, we have owned the Forum in Inglewood, CA, which serves the Greater Los Angeles area. The Forum, which has flexible seating that ranges from 7,000 seats to 17,600 seats, is the only arena-sized venue in the country dedicated to music and entertainment.

On March 24, 2020, MSG and certain of its subsidiaries, which will become subsidiaries of the Company following the Distribution, entered into a Membership Interest Purchase Agreement contemplating the sale of the Forum and the settlement of related litigation described under “Risk Factors — Our Business Faces Intense and Wide-Ranging Competition Which May Have a Material Negative Effect on Our Business and Results of Operations.” Pursuant to the Membership Interest Purchase Agreement, the buyer has agreed to pay the Company total cash consideration of $400 million for the sale of the Forum and the legal settlement, subject to certain adjustments, and the transaction is estimated to result in net proceeds to the Company of approximately $256 million (which amount remains subject to change). The transaction is subject to customary closing conditions and is expected to close during the second calendar quarter of 2020. See “Business — Pending Sale of the Forum — Membership Interest Purchase Agreement” for a description of the Membership Interest Purchase Agreement.

The pending sale of the Forum has been reflected in the unaudited pro forma combined financial information presented in this information memorandum. See “Unaudited Pro Forma Combined Financial

Information.” The unaudited pro forma combined balance sheet includes an adjustment to retained earnings of $210 million related to the pending transaction, which reflects proceeds related to (i) the sale of the Forum and (ii) the settlement of certain related litigation, both of which are components of other income (expense).

Our Strengths

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Strong and growing presence in major live entertainment markets through:

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A portfolio of world-renowned venues;

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Marquee live entertainment brands and content; and

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Many of the most recognized brands in entertainment dining and nightlife.

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Deep industry relationships that drive top-tier performers and a wide variety of events to the Company’s venues;

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Proven track record of delivering significant value for partners through innovative sponsorships and premium hospitality;

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Reputation for world-class customer experience driven by decades of expertise in marketing, ticket sales and venue operations;

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Expertise in utilizing data to drive decisions to maximize revenue and the guest experience;

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Established history of successfully planning and executing comprehensive venue design and construction projects;

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Long-term agreements to host home games at The Garden for two of the most recognized franchises in professional sports — the NBA’s New York Knicks and the NHL’s New York Rangers; and

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Strong and seasoned management team.

Our Strategy

Our strategy is to create world-class live experiences, utilizing our iconic venues, exclusive entertainment content, and expertise in venue management, bookings, marketing, sales and premium hospitality. We believe the Company’s unique assets and capabilities, coupled with our deep relationships in the entertainment industry and our strong connection with our diverse and passionate audiences, are what set the Company apart. As an entertainment pioneer, we remain committed to pursuing new opportunities to innovate through the use of technology that will heighten the entertainment experience.

Key components of our strategy include:

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A unique strategy for our performance venues. The Company has a collection of iconic performance venues through which we deliver live entertainment and sporting events. This portfolio includes our New York venues — The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall and the Beacon Theatre; as well as the Forum in Inglewood, CA and The Chicago Theatre. These venues, along with our venue management capabilities, effective bookings strategies and proven expertise in sponsorships, marketing, ticketing and hospitality, have positioned the Company as an industry leader in live entertainment. We intend to leverage our unique assets, expertise and approach to ensure we create unmatched experiences for the benefit of all our stakeholders.

the world’s most important entertainment destinations. The Company has also purchased land in Stratford, London, which we expect will become home to the second MSG Sphere.

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Maximizing the live entertainment experience for our customers. We use our first-class operations, coupled with new innovations and our ability to attract top talent, to deliver unforgettable experiences for our guests — whether they are first-time visitors or repeat customers — ensuring they return to our venues. We have a track record of designing world-class facilities that exceed our customers’ expectations. This includes our renovations of The Garden, the Forum, Radio City Music Hall and the Beacon Theatre to deliver top-quality amenities such as state-of-the-art lighting, sound and staging, a full suite of hospitality offerings and enhanced premium products. In addition to better on-site amenities, we continue to explore new ways to utilize technology to improve the customer experience and create communities around our live events. From the way our customers buy their food and beverage; to how we market and process their tickets; to the content we provide them to enhance their entertainment experience, we strive to give our customers the best experience in the industry. For example, we survey thousands of guests annually across our venues to collect data on how we can better optimize their experience. Our commitment to exceptional service and innovation will be elevated even further with the introduction of MSG Sphere — a venue that is being built, from the ground up, to deliver an entirely new guest experience through the use of advanced, cutting-edge architectural, visual and audio technologies that will create a fully immersive and customized entertainment experience. See “Business — Our Business — Our Performance Venues — MSG Sphere” for a description of the key design features of MSG Sphere that we believe will deliver this entirely new guest experience.

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Leveraging our live entertainment expertise to increase productivity across our performance venues. Part of what drives our success is our “artist first” approach, which has created significant growth at our venues over our history. This is reflected in our renovation of the Forum, which set a new bar for the artist experience by delivering superior acoustics and an intimate feel, along with amenities such as star-caliber dressing rooms and dedicated areas for production and touring crews. This talent-friendly environment, coupled with more date availability and our top-tier service, not only attracts artists to our West Coast venue, but also brings them back for repeat performances. We will continue to use our “artist first” approach to attract the industry’s top talent with the goal of increasing utilization across all our venues through more multi-night and multi-market concerts and other events, including more recurring high-profile shows that help expand our base of events. Examples of this strategy include our residencies, which feature legendary performers playing our venues each month, and have included Billy Joel at The Garden and Jerry Seinfeld at the Beacon Theatre.

Another part of our “artist first” approach is how we use our diverse collection of venues. With seating capacities and configurations that range from 2,800 to 21,000, our venue pipeline enables us to shepherd an artist through their growth and development, helping us to cultivate and develop deeper industry relationships. Examples of this include Trevor Noah, whose history with us includes a succession of sold-out shows — first at the Beacon Theatre in 2016, followed by Radio City in 2018, and ultimately, at Madison Square Garden in 2019. Brandi Carlile, who, after playing the Beacon Theatre, The Chicago Theatre and Radio City throughout her career, headlined The Garden in September 2019. Our portfolio of venues also enables us to work with artists across multiple markets, further strengthening our partnerships as well as our opportunities for more extensive engagements. In 2018, we announced a dual-city, multi-year booking agreement with the Tedeschi Trucks Band that includes the band performing multi-shows annually through 2022 at both the Beacon Theatre and Chicago Theatre.

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partners. In February 2018, we unveiled our vision for MSG Sphere, along with our plans to construct these state-of-the-art venues in Las Vegas and London. MSG Sphere venues will utilize advanced, cutting-edge technologies to create an entirely new platform that is expected to redefine how immersion and storytelling come together in entertainment experiences. Because of the transformative nature of these venues, we believe there will be other markets — both domestic and international — where MSG Sphere can be successful. The design of MSG Sphere will be flexible to accommodate a wide range of sizes and capacities — from large-scale to smaller and more intimate — based on the needs of the individual market. Controlling and booking a network of world-class venues provides the Company with a number of avenues for potential growth, including driving increased bookings and greater marketing and sponsorship opportunities. As we explore selectively extending the MSG Sphere network, we will be open to multiple types of transaction structures, including owned, operated, managed, licensed and joint ventures. As we work with various companies to develop the technologies needed for MSG Sphere venues, we are focused on obtaining appropriate strategic rights with respect to intellectual property.

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An innovative approach to marketing and sales. Our Company possesses powerful and attractive assets able to deliver significant exposure for marketing partners who share our vision of creating brand new experiences and innovative opportunities to engage with audiences. We also benefit from being part of a broader entertainment and sports offering as a result of our various agreements with MSG and MSG Networks Inc. (“MSG Networks”), under which the Company will offer an integrated approach to marketing partnerships and corporate hospitality solutions to drive sponsorship, signage and suite sales.

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Delivering unrivaled exposure for our partners. Our assets are highly sought after by companies that value the popularity of our venues and brands, which include Madison Square Garden — The World’s Most Famous Arena — as well as Radio City’s cherished holiday tradition, the celebrated Christmas Spectacular production. Utilizing these powerful platforms, we collaborate with companies to create elevated experiences that showcase their brands in meaningful ways. With the debut of MSG Sphere, we expect the value proposition for our partners to continue to expand as we introduce unprecedented opportunities for them to connect with our guests. MSG Sphere in Las Vegas will feature cutting-edge technology capable of delivering innovative activations. For example, the 366-feet tall by 516-feet wide venue will feature an exterior covered in fully programmable LED, creating a digital showcase for brands, events and partners.

The attractiveness of our assets is further strengthened by various agreements that enable our Company to deliver compelling, broad-based marketing platforms by combining our live entertainment assets, MSG’s professional sports brands, and MSG Networks’ media inventory. This integrated approach to marketing partnerships — which delivers unrivaled entertainment, sports and media exposure in the New York market — has already attracted world-class partners such as JPMorgan Chase, Anheuser-Busch, Charter Communications, Delta Air Lines, Kia, Lexus, PepsiCo and Squarespace.

The Company also offers premium corporate hospitality offerings. For example, The Garden — which, in fiscal 2019, hosted more than 230 entertainment and sporting events, offers a wide array of hospitality products that cater to a variety of audiences. These suites and clubs — which provide exclusive private spaces, first-class amenities and some of the best seats in The Garden — are primarily licensed to corporate customers through multi-year agreements, most of which have annual escalators. We believe the unique combination of our entertainment offerings and MSG’s premium live sporting events, along with the continued importance of corporate hospitality to our guests, positions us well to continue to grow this business. And as the Company’s expansion plans progress, our MSG Sphere venues will deliver additional hospitality options in other major markets.

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Understanding our customers. We continue to forge deep direct-to-consumer relationships with customers and fans, with a focus on understanding how consumers interact with every aspect of the

Company. A key component of this strategy is our large and growing proprietary database of millions of customers, which drives revenue and engagement across our events, benefiting the Company through ticket sales and sponsorship activation. This database provides us with an opportunity to tailor offerings and cross-promote our products and services, introducing customers to our wide range of assets and brands.

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A growing portfolio of proprietary content. We continue to explore the creation of proprietary content — including the development of attraction-like shows for our existing and planned venues — that enables us to benefit from being both content creator and venue operator. Content development will ultimately give us greater control over the utilization of our venues, making us less reliant on touring schedules. The Company is supporting this strategy with the creation of a groundbreaking studio that will include expertise from all areas of entertainment. In addition, we are developing a set of tools specifically for MSG Sphere that makes content creation for this powerful platform an intuitive experience and maximizes the potential of the venues’ immersive technologies — whether someone is adapting existing content or developing original creations. The Company expects to collaborate with third-party creators and to also develop its own catalogue of unique and compelling material that can be used across MSG Sphere venues. This will range from original attractions, purpose-built for MSG Sphere, to the establishment of a dynamic library of content that can be used by artists or third parties who want to bring their experiences to life — whether for concerts, residencies or corporate events. The Company’s creation of new proprietary content will also include exploring opportunities for our world-renowned entertainment brand — the Radio City Rockettes.

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Utilizing our world-class hospitality expertise. The Company owns a controlling interest in Tao Group Hospitality — a leader in the hospitality industry. Tao Group Hospitality currently operates 30 entertainment dining and nightlife venues in New York City, Las Vegas, Los Angeles, Chicago, Singapore and Sydney, Australia with widely recognized brands that include: Tao, Marquee, Lavo, Avenue, Beauty & Essex and Cathédrale. Tao Group Hospitality is actively developing opportunities in select markets — both domestically and internationally — to expand. Since September 2018, Tao Group Hospitality has opened TAO Chicago, along with new entertainment dining and nightlife venues as part of the Moxy Chelsea and Moxy East Village hotels in New York City. Tao Group Hospitality also debuted three new venues in Singapore — Marquee, Avenue, and KOMA. In addition to its expansion plans, Tao Group Hospitality has become a valuable strategic partner for the Company. This includes at The Garden, where Tao Group Hospitality is playing a larger role in our food and hospitality offerings, as well as in Las Vegas, where it has a 14-year history in the market and is helping to create a world-class guest experience for MSG Sphere.

Key Challenges

Following the Distribution, we may face a number of challenges, both pre-existing and as a result of the Distribution, including:

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Effectively managing the impacts of coronavirus and the government mandated suspension of our business operations;

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Intense competition in the market and industry in which we operate, including with other leisure-time activities such as television, motion pictures and sporting events and other live performances, concert venues, restaurants and nightlife venues;

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Dependence upon the continued popularity of the entertainment and sporting events presented in our venues and our existing brands (including the Christmas Spectacular and the NBA’s New York Knicks and the NHL’s New York Rangers), which are sensitive to customer tastes, and our ability to attract popular artists, groups and events to our venues;

•

Difficulties in successfully designing, constructing, financing and operating new venues in Las Vegas, London and other markets, including the impact of any unexpected construction delays and/or cost overruns.

Because we plan to include many new features in MSG Sphere in Las Vegas and MSG Sphere in London, we may face challenges in the design and implementation of these new venues. In addition, we expect the costs of these new ventures to be substantial and, while it is always difficult to provide a definitive construction cost and timing estimate for large-scale construction projects, it is particularly challenging for a project such as MSG Sphere. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — MSG Spheres” for additional cost-related information;

•

The growth of revenue at Tao Group Hospitality depends upon continually adding new venues, as well as maximizing the revenues of existing venues. Successfully adding new venues depends upon Tao Group Hospitality’s ability to identify desirable locations and to design and open appealing venues;

•

Lack of an operating history as a stand-alone public company;

•

Strength or weakness of, as well as volatility and less predictability in, our operating results and cash flow because the Company’s results will no longer include cash flows from the MSG Sports business, certain of which are more predictable; and

•

Volatility in the market price and trading volume of our common stock. The market price for our common stock could fluctuate significantly for many reasons following the Distribution, including the lack of an existing public market for our stock, the information set forth under “Risk Factors” and other reasons unrelated to our performance.

See the section entitled “Risk Factors” for more information on each of these key challenges.

Company Information

We are a Delaware corporation with our principal executive offices at Two Pennsylvania Plaza, New York, NY 10121. Our telephone number is +1 (212) 465-6000, our website is www.msgentertainment.com. Spinco is a holding company and conducts substantially all of its operations through its subsidiaries.

Spinco was incorporated on November 21, 2019 and is a direct, wholly owned subsidiary of MSG. MSG’s board of directors approved the Distribution on March 31, 2020. Prior to the Distribution, the Company will acquire the subsidiary of MSG that owns, directly and indirectly, the subsidiaries, businesses and other assets described in this information statement. Where we describe in this information statement our business activities, we do so as if these transfers have already occurred.

On or prior to the Distribution, The Madison Square Garden Company will change its name to “Madison Square Garden Sports Corp.” and MSG Entertainment Spinco, Inc. will change its name to “Madison Square Garden Entertainment Corp.” Our Class A Common Stock has been approved for listing on NYSE under the symbol “MSGE” and The Madison Square Garden Company (renamed “Madison Square Garden Sports Corp.”) will change its symbol on NYSE to “MSGS” in connection with the Distribution. We will not list our Class B Common Stock on any securities exchange.

THE DISTRIBUTION

Please see “The Distribution” for a more detailed description of the matters described below.

Distributing Company

MSG, which is a live sports and entertainment business. In addition to the MSG Entertainment business that is being transferred to Spinco, MSG also owns and operates a sports business under its MSG Sports business segment.

Distributed Company

Spinco, a wholly owned subsidiary of MSG, which will own and operate the entertainment business currently owned and operated by MSG through its MSG Entertainment business segment as well as the sports bookings business currently owned and operated by MSG through its MSG Sports business segment, as described in this information statement. Please see “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for information concerning this business.

Distribution Ratio

Each holder of MSG Class A Common Stock will receive a distribution of one share of our Class A Common Stock for every one share of MSG Class A Common Stock held on the record date and each holder of MSG Class B Common Stock will receive a distribution of one share of our Class B Common Stock for every one share of MSG Class B Common Stock held on the record date.

Securities to be Distributed

Based on 19,461,991 shares of MSG Class A Common Stock and 4,529,517 shares of MSG Class B Common Stock outstanding on March 30, 2020, approximately 19,461,991 shares of our Class A Common Stock and 4,529,517 shares of our Class B Common Stock will be distributed. The shares of our common stock to be distributed will constitute all of the outstanding shares of our common stock immediately after the Distribution. MSG stockholders will not be required to pay for the shares of our common stock to be received by them in the Distribution, or to surrender or exchange shares of MSG common stock in order to receive our common stock, or to take any other action in connection with the Distribution.

Fractional Shares

Fractional shares of our common stock will not be distributed. Fractional shares of our Class A Common Stock will be aggregated and sold in the public market by the transfer and distribution agent and stockholders will receive a cash payment in lieu of a fractional share. Similarly, fractional shares of our Class B Common Stock will be aggregated, converted to Class A Common Stock, and sold in the public market by the transfer and distribution agent. The aggregate net cash proceeds of these sales will be distributed ratably to the stockholders who would otherwise have received fractional interests. These proceeds generally will be taxable to those stockholders.

Distribution Agent, Transfer Agent and
Registrar for the Shares

EQ Shareowner Services will be the distribution agent, transfer agent and registrar for the shares of our common stock.

Record Date

The record date is the close of business, New York City time, on April 13, 2020.

Distribution Date

11:59 p.m., New York City time, on April 17, 2020.

Material U.S. Federal Income Tax
Consequences of the Distribution

MSG expects to obtain an opinion from Sullivan & Cromwell LLP substantially to the effect that, among other things, the distribution by MSG of our Class A Common Stock and Class B Common Stock to the holders of MSG Class A Common Stock and MSG Class B Common Stock, respectively (i.e., the Distribution), will qualify as a tax-free distribution under the Internal Revenue Code of 1986, as amended (the “Code”). For U.S. federal income tax purposes, the Distribution is not expected to result in the recognition of gain to MSG with respect to the distribution of our Class A Common Stock or our Class B Common Stock to the MSG stockholders and, except to the extent a stockholder receives cash in lieu of fractional shares of our common stock, no income, gain or loss will be recognized by, and no amount will be included in the income of, such holder upon the receipt of shares of our common stock pursuant to the Distribution. The opinion will not be binding on the Internal Revenue Service (“IRS”) or the courts. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.” Certain transactions related to the Distribution that are not addressed by the opinion could result in the recognition of income or gain by MSG. The opinion will rely on factual representations and reasonable assumptions, which, if incorrect or inaccurate, may jeopardize the ability to rely on such opinion.

Stock Exchange Listing

There is not currently a public market for our common stock. Our Class A Common Stock has been approved for listing on NYSE. Our Class A Common Stock will trade under the symbol “MSGE” and The Madison Square Garden Company (renamed “Madison Square Garden Sports Corp.”) will change its symbol on NYSE to “MSGS” in connection with the Distribution. It is anticipated that trading will commence on a when-issued basis prior to the Distribution. On the first trading day following the date of the Distribution, when-issued trading in respect of our Class A Common Stock will end and regular way trading will begin. Our Class B Common Stock will not be listed on any securities exchange.

Relationship between MSG and Us after
the Distribution

Following the Distribution, we will be a separate public company. We and MSG have entered into a distribution agreement (the “Distribution Agreement”) and several ancillary agreements for the purpose of accomplishing the distribution of our common stock to MSG’s common stockholders. These agreements also govern our relationship with MSG subsequent to the Distribution and provide for the allocation of employee benefit, tax and some other liabilities and obligations attributable to periods prior to, at and after the

Distribution. These agreements also include arrangements with respect to transition services (the “Transition Services Agreement”) and a number of ongoing commercial relationships. The Distribution Agreement includes an agreement that we and MSG will provide each other with appropriate indemnities with respect to liabilities arising out of the business being transferred to us by MSG. In connection with the Distribution, a subsidiary of ours will enter into Arena License Agreements with subsidiaries of MSG that will require two of MSG’s professional sports teams — the Knicks and Rangers — to play their home games at The Garden. We will also be party to other arrangements with MSG and its subsidiaries. See “Certain Relationships and Related Party Transactions — Relationship between MSG and Us After the Distribution.”

Overlapping Directors and Officers and Potential Conflicts of Interest

Following the Distribution, there will be an overlap between certain officers of the Company, MSG and MSG Networks. James L. Dolan will serve as the Executive Chairman and Chief Executive Officer of the Company and as the Executive Chairman of both MSG and MSG Networks. Andrew Lustgarten will serve as the President of the Company and as the President and Chief Executive Officer of MSG. In addition, Gregg G. Seibert will serve as a Vice Chairman of the Company, MSG, MSG Networks and AMC Networks, Inc. (“AMC Networks”), a company controlled by members of the Dolan family. Furthermore, immediately following the Distribution, 10 of the members of Board of Directors of the Company (the “Board of Directors” or the “Board”) will also serve as directors of MSG, nine will serve as directors of MSG Networks and seven will serve as directors of AMC Networks (each of MSG, MSG Networks and AMC Networks is referred to as an “Other Entity”), including our Executive Chairman and Chief Executive Officer.

The overlapping directors and officers may have actual or apparent conflicts of interest with respect to matters involving or affecting each company. In addition, after the Distribution, certain of our directors and officers will continue to own stock and/or stock options or other equity awards of an Other Entity. These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for our Company and an Other Entity.

occur by reason of the fact that any such individual directs a corporate opportunity (other than certain limited types of opportunities set forth in our amended and restated certificate of incorporation) to one or more of the Other Entities instead of the Company, or does not refer or communicate information regarding such corporate opportunities to the Company. These provisions in our amended and restated certificate of incorporation will also expressly validate certain contracts, agreements, arrangements and transactions (and amendments, modifications or terminations thereof) between the Company and the Other Entities and, to the fullest extent permitted by law, will provide that the actions of the Overlap Persons in connection therewith are not breaches of fiduciary duties owed to the Company, any of its subsidiaries or their respective stockholders.

See “Certain Relationships and Related Party Transactions — Certain Relationships and Potential Conflicts of Interest” and “Description of Capital Stock — Certain Corporate Opportunities and Conflicts.”

Control by Dolan Family

Following the Distribution, we will be controlled by the Dolan family, including trusts for the benefit of members of the Dolan family (collectively, the “Dolan Family Group”). We have been informed that the Dolan Family Group will enter into a stockholders agreement (the “Stockholders Agreement”) relating, among other things, to the voting of its shares of our Class B Common Stock. As a result, following the Distribution, we will be a “controlled company” under the corporate governance rules of NYSE. Our Board of Directors has elected not to comply with the NYSE requirements for a majority-independent board of directors and an independent corporate governance and nominating committee because of our status as a controlled company. The Dolan Family Group also controls MSG, MSG Networks and AMC Networks.

See “Risk Factors — We are Controlled by the Dolan Family.” Immediately following the Distribution, 10 of the members of our Board of Directors will be members of the Dolan family.

Post-Distribution Dividend Policy

We do not expect to pay any cash dividends on our common stock in the foreseeable future. All decisions regarding the payment of dividends will be made by our Board of Directors from time to time in accordance with applicable law.

Risk Factors

Stockholders should carefully consider the matters discussed under “Risk Factors.”

SELECTED HISTORICAL AND UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

The historical operating and balance sheet data included in the following selected financial data table have been derived from the combined financial statements as of December 31, 2019 and June 30, 2019 and for the six months ended December 31, 2019 and 2018 and the combined financial statements as of June 30, 2019, 2018 and 2017 and for the three years ended June 30, 2019, 2018 and 2017 of Spinco. The historical financial information presented below does not necessarily reflect what our results of operations and financial position would have been if we had operated as a separate publicly-traded entity during those periods. The selected historical financial data presented below should be read in conjunction with the combined financial statements included elsewhere in this information statement and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Also set forth below are summary unaudited pro forma combined balance sheet data as of December 31, 2019 and summary unaudited pro forma combined statements of income data for the six months ended December 31, 2019 and the year ended June 30, 2019. See “Unaudited Pro Forma Combined Financial Information” for more information.

As discussed in note (a) below, our operating results for the year ended June 30, 2018 are not directly comparable with the year ended June 30, 2017 primarily due to the timing of our acquisition of a controlling interest in Tao Group Hospitality.


	Pro Forma Combined *^{(f) (h)}*						Historical
	Six Months Ended December 31,			Year Ended June 30,			Six Months Ended December 31,						Years Ended June 30,
	2019			2019			2019			2018			2019			2018			2017
	(in thousands, except per share information)
Operating Data *^(a), (b)*:
Revenues	$	535,719		$	973,828		$	567,177		$	582,366		$	1,048,909		$	988,990		$	711,022
Lease Revenues		33,421			70,798			—			—			—			—			—

Operating income (loss)		(2,068	)		(43,387	)		(455	)		31,110			(45,597	)		(31,282	)		(98,406	)

Net income (loss)		16,970			(35,128	)		22,284			48,811			(30,138	)		1,887			(112,611	)
Less: Net loss attributable to redeemable noncontrolling interests		(1,404	)		(7,299	)		(1,404	)		(3,655	)		(7,299	)		(628	)		(4,370	)
Less: Net income (loss) attributable to nonredeemable noncontrolling interests		(157	)		(4,945	)		(157	)		(2,441	)		(4,945	)		(4,383	)		304

Net income (loss) attributable to the Company	$	18,531		$	(22,884	)	$	23,845		$	54,907		$	(17,894	)	$	6,898		$	(108,545	)

Balance Sheet Data *^(a)*:
Total assets	$	4,193,049					$	3,579,993		$	3,325,651		$	3,315,759		$	3,287,771		$	3,271,497
Long-term debt (including current portion), net of deferred financing costs ^(c)		257,952						35,952			102,846			54,598			105,700			105,433
Total Company divisional/stockholders’ equity		3,091,127						2,605,885			2,572,299			2,572,048			2,478,113			2,442,418
Pro forma earnings (loss) per share ^(d)
Basic	$	0.78		$	(0.96	)
Diluted	$	0.77		$	(0.96	)
Pro forma weighted-average common shares outstanding ^(d):
Basic		23,870			23,767
Diluted		23,977			23,767


	Pro Forma *^{(f) (h)}*
	Six Months Ended December 31,			Year Ended June 30,
	2019			2019
	(in thousands, except per share information)
Other Financial Data:
Reconciliation of Operating income (loss) to Adjusted operating income (loss) ^(e)
Operating income (loss) ^(f)	$	(2,068	)	$	(43,387	)
Share-based compensation		16,025			37,780
Depreciation and amortization ^(g)		50,600			101,828
Other purchase accounting adjustments		3,396			4,764

Adjusted operating income	$	67,953		$	100,985

(a)

Operating and balance sheet data beginning in fiscal year 2017 includes results from the acquisition of Tao Group Hospitality operating information from February 1, 2017 to March 26, 2017. Operating and balance sheet data beginning in fiscal year 2018 includes results from the acquisition of Obscura Digital (“Obscura”) since the acquisition date of November 20, 2017. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Business Overview — Factors Affecting Operating Results.” In addition, see “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 2. Summary of Significant Accounting Policies — Business Combinations and Noncontrolling Interests and Note 17. Acquisitions” for more information on our acquisition of Tao Group Hospitality.

(b)

The Company’s operating results for the year ended June 30, 2019 were impacted by the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606. The Company used the modified retrospective method of adoption. Results for reporting periods beginning after July 1, 2018 are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting guidance under ASC Topic 605. See “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 2. Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements” for more information.

(c)

Historical long-term debt presented above is net of debt issuance costs of $935 and $3,144 as of December 31, 2019 and 2018, respectively, and $1,039, $3,613, and $4,567 as of June 30, 2019, 2018 and 2017, respectively. See “Combined Financial Statements as of December 31, 2019 and June 30, 2019 and for the Six Months Ended December 31, 2019 and 2018 — Notes to Combined Financial Statements — Note 10. Credit Facilities” and “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 10. Credit Facilities” for more information. See note c) within the Unaudited Pro Forma Combined Financial Information for further information on pro forma long-term debt.

(d)

Pro forma earnings per share and pro forma weighted-average basic shares outstanding are based on the number of shares of MSG Class A Common Stock and MSG Class B Common Stock outstanding of 23.9 million during the six months ended December 31, 2019 and 23.8 million during the year ended June 30, 2019, respectively. Spinco’s weighted average shares outstanding assumes a distribution ratio of one share of our common stock for each share of MSG Class A Common Stock and MSG Class B Common Stock held on the record date of the Distribution. See note (r) within the Unaudited Pro Forma Combined Financial Information for further information.

(e)	The Company defines adjusted operating income (loss), which is a non-U.S. generally accepted accounting principles (“GAAP”) financial measure, as operating income (loss) before (i) depreciation, amortization and

impairments of property and equipment and intangible assets, (ii) share-based compensation expense or benefit, (iii) restructuring charges or credits, (iv) gains or losses on sales or dispositions of businesses and (v) the impact of purchase accounting adjustments related to business acquisitions. Because it is based upon operating income (loss), adjusted operating income (loss) also excludes interest expense (including cash interest expense) and other non-operating income and expense items. The Company believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the various operating units of the Company’s business without regard to the settlement of an obligation that is not expected to be made in cash.

The Company believes adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of the Company on a combined basis. 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).

(f)

Included within operating income (loss) is $31,981 and $67,963 of pro forma lease revenue related to the Company’s Arena License Agreements with MSG for the six months ended December 31, 2019 and the year ended June 30, 2019. Pursuant to GAAP, recognition of pro forma lease revenue is recorded on a straight-line basis over the term of the lease based upon the value of total future payments under the arrangement. As a result, pro forma lease revenue is comprised of a contractual cash component and a non-cash component for each period presented. Pro forma lease revenue includes (i) $19,570 and $38,000 of revenue collected in cash and (ii) a non-cash component of $12,411 and $29,963 for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively. See note (l) within the Unaudited Pro Forma Combined Financial Information for further information.

(g)	Depreciation and amortization includes purchase accounting adjustments of $5,928 and $15,901 for the six months ended December 31, 2019 and for the year ended June 30, 2019, respectively.

(h)

In addition to giving effect to the Distribution, the pro forma results described herein reflect the probable disposition of the Company’s ownership interest in the Forum in Inglewood, CA. On March 24, 2020, the Company signed a Membership Interest Purchase Agreement contemplating the sale of the Forum and the settlement of related litigation. Pursuant to the Membership Interest Purchase Agreement, the buyer has agreed to pay the Company total cash consideration of $400,000 for the sale of the Forum and the legal settlement, subject to certain adjustments, and the transaction is estimated to result in net proceeds to the Company of approximately $255,874 (which amount remains subject to change). The transaction is subject to customary closing conditions and is expected to close during the second calendar quarter of 2020.

QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION

The following is a brief summary of the terms of the Distribution. Please see “The Distribution” for a more detailed description of the matters described below.

Q:	What is the Distribution?

The Distribution is the method by which MSG will separate the business of our Company from MSG’s other business, creating two separate, publicly-traded companies. In the Distribution, MSG will distribute to its stockholders shares of our Class A Common Stock and Class B Common Stock that it owns. Following the Distribution, we will be a separate company from MSG and MSG will not retain any ownership interest in us. The number of shares of MSG common stock you own will not change as a result of the Distribution.

Q:	What is being distributed in the Distribution?

Approximately 19,461,991 shares of our Class A Common Stock and 4,529,517 shares of our Class B Common Stock will be distributed in the Distribution, based upon the number of shares of MSG Class A Common Stock and MSG Class B Common Stock outstanding on the record date. The shares of our Class A Common Stock and Class B Common Stock to be distributed by MSG will constitute all of the issued and outstanding shares of our Class A Common Stock and Class B Common Stock immediately after the Distribution. For more information on the shares being distributed in the Distribution, see “Description of Capital Stock — Class A Common Stock and Class B Common Stock.”

Q:	Which business and assets will remain with MSG Sports and which business and assets will transfer to the Company?

A:	Following the Distribution, the Company will include:

•

the following venues: The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, the Forum in Inglewood, CA, and The Chicago Theatre;

•

the MSG Sphere under construction in Las Vegas and the MSG Sphere planned to be built in London;

•

the bookings business, including live entertainment bookings, the sports bookings business that was owned and operated by MSG through its MSG Sports business segment, and Arena License Agreements that will require the Knicks and Rangers to play their home games at The Garden;

•

the Christmas Spectacular starring the Radio City Rockettes;

•

majority interests in Tao Group Hospitality, a hospitality group with globally recognized entertainment dining and nightlife brands, and BCE, the entertainment production company that owns and operates the Boston Calling Music Festival; and

•

approximately $1.2 billion in cash.

Following the Distribution, MSG Sports will include:

•

the New York Knicks professional NBA franchise and its development team, the Westchester Knicks;

•

the New York Rangers professional NHL franchise and its development team, the Hartford Wolf Pack;

•

Knicks Gaming, the official NBA 2K esports franchise of the New York Knicks, and a majority interest in Counter Logic Gaming, a leading North American esports organization;

•

MSG’s professional sports team training center in Greenburgh, New York; and

•

approximately $100 million in cash.

Q:	What will I receive in the Distribution?

A:	Holders of MSG Class A Common Stock will receive a distribution of one share of our Class A Common Stock for every one share of MSG Class A Common Stock held by them on the record date, and holders of

MSG Class B Common Stock will receive a distribution of one share of our Class B Common Stock for every one share of MSG Class B Common Stock held by them on the record date. As a result of the Distribution, your proportionate interest in MSG will not change. For a more detailed description, see “The Distribution.”

Q:	What is the record date for the Distribution?

Record ownership will be determined as of the close of business, New York City time, on April 13, 2020, which we refer to as the “record date.” The person in whose name shares of MSG common stock are registered as of the close of business on the record date is the person to whom shares of the Company’s common stock will be issued in the Distribution. As described below, if a record holder of MSG Class A Common Stock sells those shares regular way after the record date and on or prior to the Distribution date, the seller will be obligated to deliver to the purchaser the shares of our common stock that are issued in respect of the transferred MSG Class A Common Stock.

Q:	When will the Distribution occur?

A:	Shares of our Class A Common Stock and Class B Common Stock will be distributed by the transfer and distribution agent, on behalf of MSG, effective at 11:59 p.m., New York City time, on April 17, 2020, which we refer to as the “Distribution date.”

Q:	What will the relationship between MSG and us be following the Distribution?

Following the Distribution, we will be a separate public company and MSG will have no continuing stock ownership interest in us. In connection with the Distribution, we and MSG have entered into a Distribution Agreement and several other agreements for the purpose of accomplishing the Distribution of our common stock to MSG’s common stockholders. These agreements also govern our relationship with MSG subsequent to the Distribution and provide for the allocation of employee benefit, tax and some other liabilities and obligations attributable to periods prior to, at and after the Distribution. These agreements also include arrangements with respect to transition services under the Transition Services Agreement and a number of ongoing commercial relationships. The Distribution Agreement provides that we and MSG will provide each other with appropriate indemnities with respect to liabilities arising out of the business being transferred to us by MSG. In connection with the Distribution, a subsidiary of ours will enter into Arena License Agreements with subsidiaries of MSG that will require two of MSG’s professional sports teams — the Knicks and Rangers — to play their home games at The Garden. See “Certain Relationships and Related Party Transactions — Relationship Between MSG and Us After the Distribution — Arena License Agreements.” We will also be party to other arrangements with MSG and its subsidiaries. See “Certain Relationships and Related Party Transactions.” Following the Distribution, we and MSG will both be controlled by the Dolan Family Group.

Following the Distribution, there will be an overlap between certain officers of the Company and MSG. James L. Dolan will serve as the Executive Chairman and Chief Executive Officer of the Company and as Executive Chairman of MSG. Andrew Lustgarten will serve as the President of the Company and as President and Chief Executive Officer of MSG. In addition, Gregg G. Seibert will serve as a Vice Chairman of the Company and MSG. Furthermore, immediately following the Distribution, 10 of the members of our Board of Directors will also be directors of MSG, including our Executive Chairman and Chief Executive Officer.

See “Certain Relationships and Related Party Transactions — Certain Relationships and Potential Conflicts of Interest” for a discussion of the policy that will be in place for dealing with potential conflicts of interest that may arise from our ongoing relationships with MSG, MSG Networks and AMC Networks.

Q:	What do I have to do to participate in the Distribution?

A:	No action is required on your part. Stockholders of MSG on the record date for the Distribution are not required to pay any cash or deliver any other consideration, including any shares of MSG common stock, for the shares of our common stock distributable to them in the Distribution.

Q:	If I sell, on or before the Distribution date, shares of MSG Class A Common Stock that I held on the record date, am I still entitled to receive shares of Spinco Class A Common Stock distributable with respect to the shares of MSG Class A Common Stock I sold?

It depends on the market in which you sell your shares. Beginning on April 9, 2020 and continuing until the occurrence of the Distribution, MSG expects that the MSG Class A Common Stock will trade in two markets on the NYSE: in the “regular way” market under the symbol “MSG” and in the “ex-distribution” market under the symbol “MSGS WI”. If you own shares of MSG Class A Common Stock on the record date and thereafter sell those shares regular way on or prior to the Distribution date, you will also be selling the shares of our Class A Common Stock that would have been distributed to you in the Distribution with respect to the shares of MSG Class A Common Stock you sell. Conversely, a person who purchases shares of MSG Class A Common Stock after the record date and on or prior to the Distribution date will be entitled to receive from the seller of those shares the shares of our Class A Common Stock issued in the Distribution with respect to the transferred MSG Class A Common Stock.

However, if you own shares of MSG Class A Common Stock on the record date and thereafter sell those shares in the ex-distribution market on or prior to the Distribution date, you will not be selling the shares of our Class A Common Stock that will be distributed to you in the Distribution with respect to the shares of MSG Class A Common Stock you sell. Conversely, a person who purchases shares of MSG Class A Common Stock in the ex-distribution market after the record date and on or prior to the Distribution date will not be entitled to receive from the seller of those shares the shares of our Class A Common Stock issued in the Distribution with respect to the transferred MSG Class A Common Stock.

Q:	How will fractional shares be treated in the Distribution?

If you would be entitled to receive a fractional share of our common stock in the Distribution, you will instead receive a cash payment. See “The Distribution — Manner of Effecting the Distribution” for an explanation of how the cash payments will be determined and “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution” for an explanation of the tax consequences of such cash payments.

Q:	How will MSG distribute shares of Spinco common stock to me?

A:	Holders of shares of MSG Class A Common Stock or MSG Class B Common Stock on the record date will receive shares of the same class of our common stock, in book entry form. See “The Distribution — Manner of Effecting the Distribution” for a more detailed explanation.

Q:	What is the reason for the Distribution?

A:	The potential benefits considered by MSG’s board of directors in making the determination to consummate the Distribution included the following:

•

to provide each of MSG and the Company with increased flexibility to fully pursue and fund its business plan including capital expenditures, investments and acquisitions that would be more difficult to consider or effectuate in the absence of the Distribution. This increased financial flexibility reflects additional aggregate debt capacity and the belief that investors in a company with the mix of assets that each of MSG and the Company will own following the Distribution will be more receptive to strategic initiatives that MSG and the Company may respectively pursue; and

•

to increase the aggregate value of the stock of MSG and the Company above the value that the stock of MSG would have had if it had continued to represent an interest in both the businesses of MSG and the Company, so as to: (i) allow each company to use its stock to pursue and achieve strategic objectives including evaluating and effectuating acquisitions and increasing the long-term attractiveness of equity compensation programs in a significantly more efficient and effective manner with significantly less dilution to existing stockholders; and (ii) allow each company to offer a more focused investment profile to investors.

MSG’s board of directors also considered several factors that might have a negative effect on MSG as a result of the Distribution. MSG’s common stock may come under initial selling pressure as certain MSG stockholders sell their shares because they are not interested in holding an investment in MSG’s remaining business. Moreover, certain factors such as a lack of comparable public companies may limit investors’ ability to appropriately value MSG’s common stock. In addition, the Distribution would separate from MSG the business and assets of the Company, which represent significant value. Because the Company will no longer be part of MSG, the Distribution will also affect the terms upon which MSG can pursue cross-company business transactions and initiatives with the Company. Finally, following the Distribution, MSG and its remaining business will need to absorb certain corporate and administrative costs previously allocated to MSG Entertainment and Corporate and Other.

MSG’s board of directors considered certain aspects of the Distribution that may be adverse to the Company. The Company’s common stock may come under initial selling pressure as certain MSG stockholders sell their shares in the Company because they are not interested in holding an investment in the Company’s business. Moreover, certain factors such as a lack of comparable public companies may limit investors’ ability to appropriately value the Company’s common stock. Because the Company will no longer be part of MSG, the Distribution will also affect the terms upon which the Company can pursue cross-company business transactions and initiatives with MSG’s other business. In addition, after the Distribution, the Company’s results will not reflect the generally more predictable cash flow from the MSG Sports business, which may result in more volatile and less predictable operating results and cash flow for the Company, although this will be partially offset by payments that the Company will receive from MSG under the Arena License Agreements and other commercial arrangements to be entered into between the Company and MSG. As a result of the Distribution, the Company will bear significant incremental costs associated with being a publicly held company and will need to absorb certain corporate and operational support costs previously allocated to MSG. This cost increase will be partially offset by payments that the Company will receive from MSG resulting from the establishment of the Transition Services Agreement, which will be recorded as a reduction of operating expenses. Refer to the “Unaudited Pro Forma Combined Financial Information” section for further details.

Q:	Why did MSG revise its plan for the Distribution?

In June 2018, MSG announced that its board of directors had authorized MSG’s management to explore a possible spin-off that would create a separately-traded public company comprised of its sports businesses, including the New York Knicks and New York Rangers professional sports franchises (the “Sports Spinco”). In connection with the sports spin-off, it was anticipated that the record holders of MSG’s common stock would have received a pro-rata distribution, expected to be equivalent, in the aggregate, to an approximately two-thirds economic interest in Sports Spinco. The remaining common stock, equivalent to an approximately one-third economic interest in Sports Spinco, was to be retained by MSG and used primarily to fund a portion of construction costs of MSG Spheres in Las Vegas and London. In November 2019, MSG’s board of directors reassessed the desirability of the retained interest based on the evolving timeline of the MSG Sphere in London (and related capital needs), MSG’s access to liquidity, greater tax efficiencies and the board of directors’ interest in each stockholder continuing to own their current economic interest in both the entertainment and sports companies. Based on those considerations, MSG’s board of directors authorized MSG’s management to proceed with pursuing the separation of MSG’s sports assets from its entertainment assets in the form of the Distribution without creating a retained interest. MSG

believes that the proposed Distribution of MSG’s entertainment assets will have the benefits described under the question entitled “— What is the reason for the Distribution?” above.

Q:	What are the federal income tax consequences to me of the Distribution?

MSG expects to obtain an opinion from Sullivan & Cromwell LLP substantially to the effect that, among other things, the distribution by MSG of our Class A Common Stock and Class B Common Stock to the holders of MSG Class A Common Stock and MSG Class B Common Stock, respectively (i.e., the Distribution), will qualify as a tax-free distribution under the Code. For U.S. federal income tax purposes, the Distribution is not expected to result in the recognition of gain to MSG with respect to the distribution of our Class A Common Stock or our Class B Common Stock to the MSG stockholders and, except to the extent that you receive cash in lieu of fractional shares of our common stock, you will not recognize income, gain or loss, and no amount will be included in your income upon the receipt of shares of our common stock pursuant to the Distribution. The opinion will not be binding on the IRS or the courts. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.” Certain transactions related to the Distribution that are not addressed by the opinion could result in the recognition of income or gain by MSG. The opinion will rely on factual representations and reasonable assumptions, which, if incorrect or inaccurate, may jeopardize the ability to rely on such opinion.

Q:	Does Spinco intend to pay cash dividends?

A:	No. We do not expect to pay any cash dividends on our common stock in the foreseeable future. All decisions regarding the payment of dividends will be made by our Board of Directors from time to time in accordance with applicable law.

Q:	How will Spinco common stock trade?

Currently, there is no public market for our common stock. Our Class A Common Stock has been approved for listing on NYSE. Our Class A Common Stock will trade under the symbol “MSGE” (and we will change our name to “Madison Square Garden Entertainment Corp.”) and The Madison Square Garden Company will change its symbol on NYSE to “MSGS” (and be renamed “Madison Square Garden Sports Corp.”) in connection with the Distribution. It is anticipated that trading will commence on a when-issued basis prior to the Distribution. On the first trading day following the Distribution date, when-issued trading in respect of our Class A Common Stock will end and regular way trading will begin. Our Class B Common Stock will not be listed on a securities exchange.

Q:	Will the Distribution affect the trading price of my MSG Class A Common Stock?

Yes. After the initial distribution of our Class A Common Stock, the trading price of MSG Class A Common Stock may be lower than the trading price of the MSG Class A Common Stock immediately prior to the Distribution. Moreover, until the market has evaluated the operations of MSG without the operations of the entertainment business that was owned and operated by the MSG Entertainment business segment and the sports bookings business that was owned and operated by MSG through its MSG Sports business segment, the trading price of MSG Class A Common Stock may fluctuate significantly. MSG believes that the separation of the Company from MSG offers its stockholders the greatest long-term value. However, the combined trading prices of MSG Class A Common Stock and Spinco Class A Common Stock after the Distribution may be lower than the trading price of MSG Class A Common Stock prior to the Distribution. See “Risk Factors” beginning on page 28.

Q:	Can MSG decide to cancel the Distribution?

Yes. The occurrence of the Distribution will be subject to certain conditions, including the final approval of the MSG board of directors. The MSG board of directors may, in its sole and absolute discretion, determine to impose or waive conditions to the Distribution or abandon the Distribution. If the MSG board of directors

decides to cancel the Distribution or otherwise materially amend the terms of the Distribution, MSG will notify stockholders of such decision by issuing a press release and/or filing a current report on Form 8-K.

Q:	Do I have appraisal rights?

A:	No. Holders of MSG common stock are not entitled to appraisal rights in connection with the Distribution.

Q:	Who is the transfer and distribution agent for Spinco common stock?

A:	EQ Shareowner Services, P.O. Box 64874, St. Paul, Minnesota 55164-0854. Telephone: 1-800-468-9716 (U.S. toll free) or 651-450-4064 (International). Corporate website: www.shareowneronline.com.

Q:	Where can I get more information?

A:	If you have questions relating to the mechanics of the Distribution of shares of Spinco common stock, you should contact the transfer and distribution agent:

EQ Shareowner Services, P.O. Box 64874, St. Paul, Minnesota 55164-0874. Telephone: 1-800-468-9716 (U.S. toll free) or 651-450-4064 (International). Corporate website: www.shareowneronline.com.

If you have questions relating to the Distribution or Spinco, you should contact:

The Madison Square Garden Company

Investor Relations Department

Two Pennsylvania Plaza

New York, NY 10121

Telephone: 1-212-631-5422

THE DISTRIBUTION

General

MSG will distribute all of the outstanding shares of our Class A Common Stock to the holders of MSG’s Class A Common Stock and all of the outstanding shares of our Class B Common Stock to the holders of MSG Class B Common Stock. We refer to this distribution of securities as the “Distribution.”

In the Distribution, each holder of MSG common stock will receive a distribution of one share of our common stock for every one share of MSG common stock held as of the close of business, New York City time, on April 13, 2020, which will be the record date.

Manner of Effecting the Distribution

The general terms and conditions relating to the Distribution are set forth in the Distribution Agreement between us and MSG. Under the Distribution Agreement, the Distribution will be effective at 11:59 p.m., New York City time, on April 17, 2020. For most MSG stockholders who own MSG common stock in registered form on the record date, our transfer and distribution agent will credit their shares of our common stock to book entry accounts established to hold these shares. Our transfer and distribution agent will send these stockholders a statement reflecting their ownership of our common stock. Book-entry refers to a method of recording stock ownership in our records in which no physical certificates are used. For stockholders who own MSG common stock through a broker or other nominee, their shares of our common stock will be credited to these stockholders’ accounts by the broker or other nominee. As further discussed below, fractional shares will not be distributed. Following the Distribution, stockholders whose shares are held in book entry form may request that their shares of our common stock be transferred to a brokerage or other account at any time, as well as delivery of physical stock certificates for their shares, in each case without charge.

MSG STOCKHOLDERS WILL NOT BE REQUIRED TO PAY FOR SHARES OF OUR COMMON STOCK RECEIVED IN THE DISTRIBUTION, OR TO SURRENDER OR EXCHANGE SHARES OF MSG COMMON STOCK IN ORDER TO RECEIVE OUR COMMON STOCK, OR TO TAKE ANY OTHER ACTION IN CONNECTION WITH THE DISTRIBUTION. NO VOTE OF MSG STOCKHOLDERS IS REQUIRED OR SOUGHT IN CONNECTION WITH THE DISTRIBUTION, AND MSG STOCKHOLDERS HAVE NO APPRAISAL RIGHTS IN CONNECTION WITH THE DISTRIBUTION.

Fractional shares of our common stock will not be issued to MSG stockholders as part of the Distribution or credited to book entry accounts. In lieu of receiving fractional shares, each holder of MSG common stock who would otherwise be entitled to receive a fractional share of our common stock will receive cash for the fractional interest, which generally will be taxable to such holder. An explanation of the tax consequences of the Distribution can be found below in the subsection captioned “— Material U.S. Federal Income Tax Consequences of the Distribution.” The transfer and distribution agent will, as soon as practicable after the Distribution date, aggregate fractional shares of our Class A Common Stock into whole shares and sell them in the open market at the prevailing market prices and distribute the aggregate proceeds, net of brokerage fees, ratably to stockholders otherwise entitled to fractional interests in our Class A Common Stock. Similarly, fractional shares of our Class B Common Stock will be aggregated, converted to Class A Common Stock, and sold in the public market by the transfer and distribution agent. The amount of such payments will depend on the prices at which the aggregated fractional shares are sold by the transfer and distribution agent in the open market shortly after the Distribution date.

See “Executive Compensation — Treatment of Outstanding Awards,” for a discussion of how outstanding MSG options, restricted stock units and performance stock units will be affected by the Distribution.

In order to be entitled to receive shares of our common stock in the Distribution, MSG stockholders must be stockholders of record of MSG common stock at the close of business, New York City time, on the record date, April 13, 2020.

Reasons for the Distribution

MSG’s board of directors has determined that separation of our business from MSG’s other business is in the best interests of MSG and its stockholders. The potential benefits considered by MSG’s board of directors in making the determination to consummate the Distribution included the following:

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Results of the Distribution

After the Distribution, we will be a public company owning and operating the entertainment business currently owned and operated by MSG through its MSG Entertainment business segment as well as the sports

bookings business currently owned and operated by MSG through its MSG Sports business segment. Immediately after the Distribution, we expect to have approximately 650 holders of record of our Class A Common Stock and 17 holders of record of our Class B Common Stock and approximately 19,461,991 shares of Class A Common Stock and 4,529,517 shares of Class B Common Stock outstanding, based on the number of stockholders of record and outstanding shares of MSG common stock on March 30, 2020 and after giving effect to the delivery to stockholders of cash in lieu of fractional shares of our common stock. The actual number of shares to be distributed will be determined on the record date. You can find information regarding options, restricted stock units and performance stock units that will be outstanding after the Distribution in the section captioned, “Executive Compensation — Treatment of Outstanding Awards.” We and MSG will both be controlled by the Dolan Family Group.

In connection with the Distribution, we will enter into Arena License Agreements with MSG that will require two of MSG’s professional sports teams — the Knicks and the Rangers — to continue to play their home games at The Garden and allow us to continue to host their fans in The World’s Most Famous Arena. We have entered or will enter into a number of other agreements with MSG (and certain of its subsidiaries) covering such areas as employee matters, tax, sales and sponsorships and other services.

The Distribution will not affect the number of outstanding shares of MSG common stock or any rights of MSG stockholders.

Material U.S. Federal Income Tax Consequences of the Distribution

The following is a summary of the material U.S. federal income tax consequences of the Distribution to us, MSG and MSG stockholders. This summary is based on the Code, the regulations promulgated under the Code by the Department of the Treasury, and interpretations of such authorities by the courts and the IRS, all as of the date of this information statement and all of which are subject to change at any time, possibly with retroactive effect. This summary is limited to holders of MSG common stock that are U.S. holders, as defined below, that hold their shares of MSG common stock as capital assets, within the meaning of Section 1221 of the Code. Further, this summary does not discuss all tax considerations that may be relevant to holders of MSG common stock in light of their particular circumstances, nor does it address the consequences to holders of MSG common stock subject to special treatment under the U.S. federal income tax laws, such as tax-exempt entities, partnerships (including arrangements treated as partnerships for U.S. federal income tax purposes), persons who acquired such shares of MSG common stock pursuant to the exercise of employee stock options or otherwise as compensation, financial institutions, insurance companies, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, persons liable for the alternative minimum tax, persons who hold their shares of MSG common stock as part of a straddle, hedge, conversion, constructive sale, synthetic security, integrated investment or other risk-reduction transaction for U.S. federal income tax purposes, and persons whose functional currency is not the U.S. dollar. This summary does not address any U.S. federal estate, gift or other non-income tax consequences or any applicable state, local, foreign, or other tax consequences. Each stockholder’s individual circumstances may affect the tax consequences of the Distribution.

For purposes of this summary, a “U.S. holder” is a beneficial owner of MSG common stock that is, for U.S. federal income tax purposes:

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an individual who is a citizen or a resident of the United States;

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a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any state or political subdivision thereof;

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an estate, the income of which is subject to United States federal income taxation regardless of its source; or

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a trust, if (i) a court within the United States is able to exercise primary jurisdiction over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) it has a

valid election in place under applicable U.S. Department of Treasury regulations to be treated as a U.S. person.

A “non-U.S. holder” is a beneficial owner of MSG common stock that is not a U.S. holder for U.S. federal income tax purposes.

If a partnership (including any arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of MSG common stock, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. A partner of a partnership holding shares of MSG common stock should consult its tax advisor regarding the tax consequences of the Distribution.

On the basis of the opinion we expect to receive, and assuming that MSG common stock is a capital asset in the hands of an MSG stockholder on the Distribution date:

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Except for any cash received in lieu of a fractional share of our common stock, an MSG stockholder will not recognize any income, gain or loss as a result of the receipt of our common stock in the Distribution.

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An MSG stockholder’s holding period for our common stock received (including, for this purpose, any fractional share of our common stock for which cash is received) in the Distribution will include the period for which that stockholder’s MSG common stock was held.

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An MSG stockholder’s tax basis for our common stock received in the Distribution will be determined by allocating to that common stock, on the basis of the relative fair market values of MSG common stock and our common stock at the time of the Distribution, a portion of the stockholder’s tax basis in its MSG common stock. An MSG stockholder’s tax basis in its MSG common stock will be decreased by the portion allocated to our common stock. Within a reasonable period of time after the Distribution, MSG will provide its stockholders who receive our common stock pursuant to the Distribution with a worksheet for calculating their tax bases in our common stock and their MSG common stock.

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The receipt of cash in lieu of a fractional share of our common stock generally will be treated as a sale of the fractional share of our common stock, and an MSG stockholder will recognize gain or loss equal to the difference between the amount of cash received and the stockholder’s tax basis in the fractional share of our common stock, as determined above. The gain or loss will be long-term capital gain or loss if the holding period for the fractional share of our common stock, as determined above, is more than one year.

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The Distribution will not be a taxable transaction to us or MSG. However, certain transactions related to the Distribution that are not expected to be addressed by the opinion could result in the recognition of income or gain by MSG.

holder’s pro rata share of MSG’s earnings and profits, then as a non-taxable return of capital to the extent of the holder’s tax basis in its MSG common stock, and thereafter as capital gain with respect to any remaining value.

Even if the Distribution otherwise qualifies for tax-free treatment under the Code, the Distribution may be taxable to MSG and would result in a significant U.S. federal income tax liability to MSG (but not to the MSG stockholders) under Section 355(e) of the Code if the Distribution were deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, stock representing a 50% or greater interest by vote or value, in MSG or us. For this purpose, any acquisitions of MSG’s stock or our stock within the period beginning two years before the Distribution and ending two years after the Distribution are presumed to be part of such a plan, although MSG or we may be able to rebut that presumption. The process for determining whether a prohibited acquisition has occurred under the rules described in this paragraph is complex, inherently factual and subject to interpretation of the facts and circumstances of a particular case. MSG or we might inadvertently cause or permit a prohibited change in the ownership of MSG or us to occur, thereby triggering tax to MSG, which could have a material adverse effect. If such an acquisition of our stock or MSG’s stock triggers the application of Section 355(e) of the Code, MSG would recognize taxable gain equal to the excess of the fair market value of our common stock distributed in the Distribution over MSG’s tax basis therein, but the Distribution would be tax-free to each MSG stockholder. In certain circumstances, under the tax disaffiliation agreement between MSG and us (the “Tax Disaffiliation Agreement”), we would be required to indemnify MSG against certain taxes imposed on MSG if they resulted from certain actions by us after the Distribution. Please see “Certain Relationships and Related Party Transactions — Relationship Between MSG and Us After the Distribution — Tax Disaffiliation Agreement” for a more detailed discussion of the Tax Disaffiliation Agreement between MSG and us.

Payments of cash in lieu of a fractional share of our common stock made in connection with the Distribution may, under certain circumstances, be subject to backup withholding, unless a holder provides proof of an applicable exception or a correct taxpayer identification number, and otherwise complies with the applicable requirements of the backup withholding rules. Any amounts withheld under the backup withholding rules are not additional tax and may be refunded or credited against the holder’s U.S. federal income tax liability, provided that the holder furnishes the required information to the IRS.

U.S. Treasury regulations require certain MSG stockholders with significant ownership in MSG that receive shares of our stock in the Distribution to attach to their U.S. federal income tax return for the year in which such stock is received a detailed statement setting forth such data as may be appropriate to show that the Distribution is tax-free under the Code. Within a reasonable period of time after the Distribution, MSG will provide its stockholders who receive our common stock pursuant to the Distribution with the information necessary to comply with such requirement.

The Company has not made a determination as to whether we will be deemed to be a “United States real property holding corporation” (a “USRPHC”), as defined in section 897(c)(2) of the Code. In general, we will be a USRPHC if 50% or more of the fair market value of our assets constitute “United States real property interests” within the meaning of the Code. However, the determination of whether we are a USRPHC turns on the relative fair market value of our United States real property interests and our other assets, and because the USRPHC rules are complex and the determination of whether we are a USRPHC depends on facts and circumstances that may be beyond our control, we can give no assurance as to our USRPHC status after the Distribution.

If we are treated as a USRPHC, certain adverse U.S. federal income tax consequences might apply to non-U.S. holders that hold our Class A Common Stock and Class B Common Stock after the Distribution. Specifically, a non-U.S. holder that holds a class of shares that is traded on an established securities market will be subject to the Foreign Investment in Real Property Tax Act of 1980, as amended (“FIRPTA”) in respect of a sale or disposition of such shares if the holder owned more than 5% of the shares of such class at any time during the shorter of the period that the non-U.S. holder owned such shares or the five-year period ending on the date

when the holder sold or disposed of the shares. We expect that our Class A Common Stock, but not our Class B Common Stock, will be traded on an established securities market after the Distribution, but there can be no assurance that our Class A Common Stock will in fact be traded on an established securities market after the Distribution. A non-U.S. holder that holds our Class B Common Stock will be subject to FIRPTA in respect of a sale or disposition of such stock if on the date the stock was acquired by the holder, it had a fair market value greater than the fair market value on that date of 5% of our Class A Common Stock. If a non-U.S. holder holds our Class B Common Stock, and subsequently acquires additional interests of the same class, then all such interests must be aggregated and valued as of the date of the subsequent acquisition for purposes of the 5% test that is described in the preceding sentence. If tax under FIRPTA applies to the gain on the sale or disposition of shares, non-U.S. holders will be taxed at the normal capital gain rates applicable to U.S. holders, subject to any applicable alternative minimum tax in the case of nonresident alien individuals. For purposes of determining the amount of shares owned by a holder, complex constructive ownership rules apply.

Furthermore, if we are treated as a USRPHC, we could potentially be required to withhold at least 15% of any distribution in excess of our current and accumulated earnings and profits, even if the non-U.S. holder is not liable for U.S. tax on the receipt of that distribution. However, a non-U.S. holder may seek a refund of these amounts from the IRS if the non-U.S. holder’s tax liability with respect to the distribution is less than the amount withheld. Such withholding should generally not be required if a non-U.S. holder would not be taxed under FIRPTA upon a sale or disposition of our shares, as discussed in the previous paragraph.

A beneficial owner of MSG common stock that is a non-U.S. holder should consult its tax advisor as to the particular tax consequences that would be applicable to such holder if we are treated as a USRPHC after the Distribution.

EACH MSG STOCKHOLDER SHOULD CONSULT ITS TAX ADVISOR ABOUT THE PARTICULAR CONSEQUENCES OF THE DISTRIBUTION TO SUCH STOCKHOLDER, INCLUDING THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX LAWS, AND POSSIBLE CHANGES IN TAX LAW THAT MAY AFFECT THE TAX CONSEQUENCES DESCRIBED ABOVE.

Listing and Trading of Our Common Stock

There is not currently a public market for our common stock. Our Class A Common Stock has been approved for listing on NYSE. Our Class A Common Stock will trade under the symbol “MSGE” (and we will change our name to “Madison Square Garden Entertainment Corp.”) and The Madison Square Garden Company will change its symbol on NYSE to “MSGS” (and be renamed “Madison Square Garden Sports Corp.”) in connection with the Distribution. It is anticipated that trading will commence on a when-issued basis prior to the Distribution. On the first trading day following the Distribution date, when-issued trading in our Class A Common Stock will end and regular-way trading will begin. “When-issued trading” refers to trading which occurs before a security is actually issued. These transactions are conditional with settlement to occur if and when the security is actually issued and NYSE determines transactions are to be settled. “Regular way trading” refers to normal trading transactions, which are settled by delivery of the securities against payment on the third business day after the transaction.

We cannot assure you as to the price at which our Class A Common Stock will trade before, on or after the Distribution date. Until our Class A Common Stock is fully distributed and an orderly market develops in our Class A Common Stock, the price at which such stock trades may fluctuate significantly. In addition, the combined trading prices of our Class A Common Stock and MSG Class A Common Stock held by stockholders after the Distribution may be less than, equal to, or greater than the trading price of the MSG Class A Common Stock prior to the Distribution. Our Class B Common Stock will not be listed on a securities exchange or publicly traded.

The shares of our common stock distributed to MSG stockholders will be freely transferable, except for shares received by people who may have a special relationship or affiliation with us or shares subject to

contractual restrictions. People who may be considered our affiliates after the Distribution generally include individuals or entities that control, are controlled by, or are under common control with us. This may include certain of our officers, directors and significant stockholders, including MSG. Persons who are our affiliates will be permitted to sell their shares only pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), or an exemption from the registration requirements of the Securities Act, or in compliance with Rule 144 under the Securities Act. As described under “Shares Eligible for Future Sale — Registration Rights Agreements,” we expect that certain persons will have registration rights with respect to our stock.

Reason for Furnishing this Information Statement

This information statement is being furnished by MSG solely to provide information to stockholders of MSG who will receive shares of our common stock in the Distribution. It is not, and is not to be construed as, an inducement or encouragement to buy or sell any of our securities. We and MSG will not update the information in this information statement except in the normal course of our and MSG’s respective public disclosure obligations and practices.

RISK FACTORS

You should carefully consider the following risk factors and all the other information contained in this information statement in evaluating us and our common stock.

Our Operations and Operating Results Have Been, and Continue to be, Materially Impacted by Coronavirus and Government Actions Taken in Response.

In December 2019, an outbreak of a novel strain of coronavirus, COVID-19, was identified in Wuhan, China, which subsequently spread to other countries, including the United States.

On the date of this information statement, virtually all of our business operations have been suspended and it is not clear when those operations will resume.

As of March 31, 2020, as a result of government mandated assembly limitations and closures, all of our scheduled events at The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, The Chicago Theatre and the Forum are postponed or cancelled through April, and continue to be impacted throughout the month of May. All NBA and NHL games have been suspended. We are not recognizing revenue from those events and it is unclear whether and to what extent those events will be rescheduled. Additionally, public officials have imposed mandates limiting restaurants and bars to only take-out and delivery service and requiring that nightlife venues close in the cities in which Tao Group Hospitality operates. As a result, all Tao Group Hospitality venues in the United States and a majority of Tao Group Hospitality venues outside of the United States are currently closed, which has resulted in the business being materially impacted. It is unclear how long these restrictions will be in effect.

Even if the ban on public assembly and closures are lifted in the near future, concerns about the coronavirus pandemic could deter artists from touring and/or substantially decrease the use of and demand for our venues. It is also possible that continuing concerns could cause professional sports teams in the United States to play games without an audience or deter our employees and vendors from working at our venues. As a result of the government mandates and possibility of continued concerns, we are facing a potentially lengthy period of time in which we are unable to host and book events due to the uncertainty around coronavirus. It is also unclear whether and to what extent coronavirus concerns will impact the use of and/or demand for our entertainment and dining and nightlife venues, and demand for our sponsorship and advertising assets, even after the restrictions are lifted.

The impact of cancelled events, closed venues and reduced attendance, including at our dining and nightlife venues, will substantially decrease our revenues. In all cases, we will not be able to reduce our expenses, many of which are fixed over the near-term, to the same degree as our decline in revenues, which will adversely affect our results of operations and cash flow to a greater extent.

Our business is particularly sensitive to reductions in travel and discretionary consumer spending. We cannot predict the time period over which our business will be impacted by coronavirus. Over the long-term, coronavirus could impede economic activity in impacted regions or globally, causing a global recession, leading to a further decline in discretionary spending on sports and entertainment events and other leisure activities, which could result in long-term effects on our business. For example, Tao Group Hospitality, which has dining and nightlife venues in New York City, Las Vegas, Los Angeles, Chicago, Singapore and Australia, would be adversely affected by a decline in discretionary spending.

Even after our businesses resume operations there can be no assurances that fans attending events at our venues or vendors and employees working at our venues will not contract coronavirus at one of our venues. Any such occurrence could result in litigation, legal and other costs and reputational risk that could materially and adversely impact our business and results of operations.

widespread global effects of COVID-19 have resulted in significant impediments to construction that are beyond our control, including disruptions to our supply chain. As a result, the Company will implement a temporary suspension of construction, with all work ceasing over approximately the next two weeks, and expects to incur some additional expense related to this stopping and starting of construction. At this time, we are unable to determine the full impact of coronavirus-related disruptions, however, they may impact our cost estimates. The Company remains committed to building a state-of-the-art venue in Las Vegas and looks forward to quickly and efficiently resuming construction as soon as practicable. As a result of this delay, we do not expect to achieve our goal of opening the venue in calendar year 2021.

For the reasons set forth above and other reasons that may come to light as the coronavirus outbreak and protective measures expand, we cannot reasonably estimate the impact to our future revenues, results of operations, cash flows or financial condition, but such impacts have been and will continue to be significant and could have a material adverse effect on our business, revenues, results of operations, cash flows and financial condition.

Our Business Faces Intense and Wide-Ranging Competition Which May Have a Material Negative Effect on Our Business and Results of Operations.

Our business competes, in certain respects and to varying degrees, with other leisure-time activities such as television, radio, motion pictures, sporting events and other live performances, restaurants and nightlife venues, the Internet, social media and social networking platforms, and online and mobile services, including sites for online content distribution, video on demand and other alternative sources of entertainment and information, in addition to competing for concerts with other event venues, and other restaurants and nightlife venues, for total entertainment dollars in our marketplace. The success of our business is largely dependent on the continued success of our Christmas Spectacular and the Tao Group Hospitality business, and the availability of, and our venues’ ability to attract, concerts, family shows, sporting events and other events, competition for which is intense, and the ability of acts to attract strong attendance at our venues. For example, The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall and the Beacon Theatre all compete with other entertainment options in the New York City metropolitan area. The Forum and The Chicago Theatre face similar competition from other entertainment options in their respective markets and elsewhere. A new entertainment complex, which will include both a football stadium and a 6,000 seat performing arts venue, is under construction in Inglewood, CA adjacent to the Forum, and is reportedly scheduled to open during the summer of 2020. In addition, the Los Angeles Clippers NBA team has announced plans to open a new multi-purpose, 18,000 to 20,000-seat arena, by 2024, featuring NBA basketball, concerts and other events to be located in Inglewood, CA, approximately one mile from the Forum. A subsidiary of the Company has filed a lawsuit against the City of Inglewood and other defendants contending that, among other claims, the City of Inglewood’s entry into exclusive negotiations with the Los Angeles Clippers, and other actions in support of the proposed arena, breach the development agreement between the City of Inglewood and the Company, and that the Company’s decision to enter into a termination agreement with respect to its lease and option to buy a portion of the property where the proposed arena would be built was procured by fraud and should be rescinded. Such an entertainment complex could, and the Los Angeles Clippers arena would, materially adversely affect the performance and operations of the Forum. As further described under “Business — Pending Sale of the Forum — Membership Interest Purchase Agreement,” the Company has entered into an agreement to sell the Forum and settle the related litigation. The restaurant, nightlife and hospitality industries are intensely competitive with respect to, among other things, service, price, food quality and presentation, location, atmosphere, overall experience, and the nature and condition of the setting. Competitors of Tao Group Hospitality’s business include a large and diverse group of well-recognized upscale restaurants and nightlife venues and brands. Some of our competitors may have a larger network of venues and/or greater financial resources.

Further, in order to maintain the competitive positions of The Garden and our other venues, we must invest on a continuous basis in state-of-the-art technology. In addition, we must maintain a competitive pricing structure for events that may be held in our venues, many of which have alternative venue options available to them in New York and other cities. We also invest a substantial amount in our Christmas Spectacular and in new

productions to continue to attract audiences. We cannot be assured that such investments will generate revenues that are sufficient to justify our investment or even that exceed our expenses. For a discussion of substantial investments in state-of-the-art technology by the Company in connection with the MSG Sphere, see “— We Are Building and Plan to Build and Operate Entertainment Venues in Las Vegas and London and Are Exploring Other Potential Sites. These State-of-the-Art Venues Will Use Cutting-Edge Technologies and Will Require Significant Capital Investment by the Company. There Can Be No Assurance That the MSG Spheres Will Be Successful.”

The Success of Our Business Depends on the Continued Popularity of Our Live Productions, Particularly the Christmas Spectacular, and the Sporting Events We Host at Our Venues, the Decline of Which Could Have a Material Negative Effect on Our Business and Results of Operations.

The financial results of our business are dependent on the popularity of our live productions, particularly the Christmas Spectacular, which represented 12% of our revenues in fiscal year 2019. Should the popularity of the Christmas Spectacular decline, our revenues from ticket sales, and concession and merchandise sales would likely also decline, and we might not be able to replace the lost revenue with revenues from other sources.

As a result of our commercial agreements with MSG, the success of our business is also expected to be impacted in part by the popularity of MSG’s Knicks and Rangers franchises with their fan bases and, in varying degrees, the teams achieving on-court and on-ice success, which can generate fan enthusiasm, resulting in additional suite, sponsorship, food and beverage and merchandise sales during the teams’ regular seasons. Furthermore, success in the regular season may qualify the Knicks and Rangers for participation in post-season playoffs, which provides us with additional revenue by increasing the number of games played by the teams at The Garden and helping improve attendance in subsequent seasons, as well as increasing the popularity of our suites and sponsorships.

We Are Building and Plan to Build and Operate Entertainment Venues in Las Vegas and London and Are Exploring Other Potential Sites. These State-of-the-Art Venues Will Use Cutting-Edge Technologies and Will Require Significant Capital Investment by the Company. There Can Be No Assurance That the MSG Spheres Will Be Successful.

The Company is progressing with its venue strategy to create, build and operate new music and entertainment-focused venues — called MSG Sphere — that will use cutting-edge technologies to create the next generation of immersive experiences. There is no assurance that the MSG Sphere in Las Vegas or London will be successful. We have begun building the first MSG Sphere in Las Vegas. For the MSG Sphere in London, the Company has submitted a planning application to the local planning authority. The planning authority’s process has continued in 2020. We also want to apply our learnings in Las Vegas to our design and construction plans for the MSG Sphere in London. As a result, the timeline for the MSG Sphere in London continues to evolve. We may also continue to explore additional domestic and international markets where these next-generation venues can be successful. While both the Las Vegas and London venues would have a scalable capacity of approximately 17,500 seats, moving forward, our goal is to develop a venue model that will accommodate a wide range of sizes and seating capacities — from large-scale to more intimate — based on the needs of any individual market.

We expect the costs of the MSG Spheres to be substantial. While it is always difficult to provide a definitive construction cost estimate for large-scale construction projects, it is particularly challenging for one as unique as MSG Sphere. In May 2019, the Company’s preliminary cost estimate for MSG Sphere at The Venetian was approximately $1.2 billion. This estimate was based only upon schematic designs for purposes of developing the Company’s budget and financial projections. Our current cost estimate is now based on detailed construction drawings and is approximately $1.66 billion. For more information regarding the costs of MSG Spheres, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — MSG Spheres.”

As the Company moves forward with the planning and construction of these and other major new venues, the Company may face unexpected project delays, costs and other complications. Our agreement with Las Vegas

Sands Corp. (“Sands”) to lease the land where the MSG Sphere in Las Vegas is being constructed requires that we start, and complete, construction within specified time periods. The failure to meet these specified deadlines could result in a termination of the lease. In light of the ambitious and unique design of MSG Sphere, including the use of technologies that have not previously been employed in major entertainment venues, the risk of delays and higher than anticipated costs are elevated. The MSG Sphere in Las Vegas is a complex construction project that relies on subcontractors obtaining components from a variety of sources around the world. The widespread global effects of COVID-19 have resulted in significant impediments to construction that are beyond our control, including disruptions to our supply chain. As a result, the Company will implement a temporary suspension of construction, with all work ceasing over approximately the next two weeks, and expects to incur some additional expense related to this stopping and starting of construction. At this time, we are unable to determine the full impact of coronavirus-related disruptions, however, they may impact our cost estimates. The Company remains committed to building a state-of-the-art venue in Las Vegas and looks forward to quickly and efficiently resuming construction as soon as practicable. As a result of this delay, the Company does not expect to achieve its goal of opening the venue in calendar year 2021.

In connection with the construction of the MSG Sphere venues, the Company will likely need to obtain additional capital beyond what is available from cash-on-hand and cash flows from operations. There is no assurance that we will be able to obtain such capital. The NBA and NHL have imposed restrictions on certain financing transactions that require a secured interest in The Garden.

The MSG Sphere will employ novel and transformative technologies and new applications of existing technologies. As a result, there can be no assurance that the MSG Sphere will achieve the technical, operational and artistic goals the Company is seeking. Any failure to do so could have a material negative effect on our business and results of operations.

While the Company believes that these next-generation venues will enable new experiences and innovative opportunities to engage with audiences, there can be no assurance that customers, artists, promoters, advertisers and marketing partners will embrace this new platform. The substantial cost of building the MSG Spheres in Las Vegas and London may constrain the Company’s ability to undertake other initiatives during the multi-year construction period.

Our Business is Highly Sensitive to Customer Tastes and Depends on Our Ability to Attract Artists and Events.

The success of our business depends in part upon our ability to offer live entertainment that is popular with customers. We contract with promoters and others to provide performers and events at our venues. There may be a limited number of popular artists, groups or events that can attract audiences to our venues, and our business would suffer to the extent that we are unable to continue to attract such artists, groups and events to perform at our venues.

We Depend on Licenses from Third Parties for the Performance of Musical Works at Our Venues, the Loss of Which or Renewal of Which on Less Favorable Terms May Have a Negative Effect on Our Business and Results of Operations.

We are required to obtain public performance licenses from music performing rights organizations, commonly known as “PROs” in connection with the performance of musical works at concerts and certain other live events held at our venues. In exchange for public performance licenses, PROs are paid a per-event royalty, calculated either as a percentage of ticket revenue or a per-ticket amount. The PRO royalty obligation is generally paid by, or charged to, the promoter of the event concerned.

If we are unable to obtain these licenses, or are unable to obtain them on terms consistent with past practice, it may have a negative effect on our business and results of operations. An increase in the royalty rate and/or the revenue base on which the royalty rate is applied could substantially increase the cost of presenting concerts and certain other live events at our venues. If we are no longer able to pass all or a portion of these royalties on to promoters, it may have a negative effect on our business and results of operations.

Our Business Strategy Includes the Development of New Live Productions and the Possible Addition of New Venues, Each of Which Could Require Us to Make Considerable Investments for Which There Can Be No Guarantee of Success.

As part of our business strategy, we intend to develop new productions, attractions and live entertainment events, which may include expansions or enhancements of our existing productions or relationships or the creation of entirely new live productions. Expansion or enhancement of productions and/or the development of new productions, attractions and live entertainment events could require significant upfront investment in sets, staging, creative processes, commissioning and/or licensing of intellectual property, casting and advertising and dislocation of other alternative sources of entertainment that may have played in our venues absent these productions. To the extent that any efforts at expanding or enhancing productions or creating new productions do not result in a viable live show, or to the extent that any such productions do not achieve expected levels of popularity among audiences, we may be subject to a write-down of all or a portion of such investments. In addition, any delay in launching such productions or enhancements could result in the incurrence of operating costs which may not be recouped. For example, in fiscal 2016 and 2017 we wrote off approximately $41.8 million and $33.6 million, respectively, of deferred production costs related to the New York Spectacular Starring the Radio City Rockettes.

The Geographic Concentration of Our Business Could Subject Us to Greater Risk Than Our Competitors and Have a Material Negative Effect on Our Business and Results of Operations.

The Company primarily operates in three markets — New York City, Las Vegas and Los Angeles — and, as a result, is subject to greater degrees of risk than competitors with more operating properties or that operate in more markets. The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall and the Beacon Theatre are all located in New York City and Tao Group Hospitality currently operates 13 venues in New York City, including the food and beverage operations at the Dream Downtown and Dream Midtown hotels and the Moxy Chelsea and Moxy East Village hotels. In addition, Tao Group Hospitality currently operates six venues in Las Vegas, where the Company is constructing its first MSG Sphere. The Forum is located in Inglewood, California, which is adjacent to Los Angeles, where Tao Group Hospitality currently operates five venues. Therefore, the Company is particularly vulnerable to adverse events (including acts of terrorism, natural disasters, epidemics, weather conditions, labor market disruptions and government actions) and economic conditions in New York City, Las Vegas, Los Angeles and surrounding areas. For example, our operations and operating results have been, and continue to be, materially impacted by the coronavirus and government and league actions taken in response. See “— Our Operations and Operating Results Have Been, and Continue to be, Materially Impacted by Coronavirus and Government Actions Taken in Response” and “Management’s Discussion and Analysis — Introduction — Coronavirus Impacts.”

Tao Group Hospitality’s Revenue Growth Depends Upon its Strategy of Adding New Venues and Tao Group Hospitality Plans to Add a Significant Number of New Venues. This Will Require Additional Capital and There Can Be No Guarantee of Success.

Tao Group Hospitality’s ability to increase its revenues depends upon opening new venues. Tao Group Hospitality has plans to open new venues both domestically and internationally. In pursuing its expansion strategy, Tao Group Hospitality faces risks associated with cost overruns and construction delays, obtaining financing and operating in new or existing markets. In addition, Tao Group Hospitality faces the risk that new venues may not be successful and that Tao Group Hospitality may lose all or a part of its investment in such new venues, which could have a material negative effect on our business and results of operations. Tao Group Hospitality has financed its operations under its Senior Credit Agreement, which includes a $25.0 million revolving credit facility. As a result of the government restrictions imposed to address coronavirus concerns by limiting restaurants and bars to only take-out and delivery service and requiring that nightlife venues close, Tao Group Hospitality’s business has been materially impacted. If these restrictions remain in effect for a significant period of time or concerns regarding coronavirus impact the use of and demand for Tao Group Hospitality’s

venues even after the restrictions are lifted, Tao Group Hospitality may not have access to financing for its operations and expansion strategy. Any failure to maintain liquidity to finance its business operations could have a material adverse effect on the business and operations of Tao Group Hospitality.

A Lack of Availability of Suitable Locations for New Tao Group Hospitality Venues or a Decline in the Quality of the Locations of Current Tao Group Hospitality Venues May Have a Material Negative Effect on Our Business and Results of Operations.

The success of the existing Tao Group Hospitality venues depends in large part on their locations. Possible declines in neighborhoods where Tao Group Hospitality venues are located or adverse economic conditions in areas surrounding those neighborhoods could result in reduced sales in those venues. Further, Tao Group Hospitality’s growth strategy is based, in part, on the expansion of Tao Group Hospitality venues into new geographic markets where its business has not previously operated. Desirable locations for new openings or for the relocation of existing venues may not be available at an acceptable cost when Tao Group Hospitality identifies a particular opportunity for a new venue or relocation. In addition, the success of new Tao Group Hospitality venues tends to expand or revive interest in Tao Group Hospitality venues that have been in operation for an extended period of time. Thus, the inability to successfully open new Tao Group Hospitality venues could also negatively impact the existing Tao Group Hospitality business. The occurrence of one or more of these events could have a material negative effect on our business and results of operations.

The Success of Tao Group Hospitality Depends in Part Upon the Continued Retention of Certain Key Personnel.

The success of Tao Group Hospitality depends, in part, on certain key members of its management, including its four original founders. The expertise of Tao Group Hospitality’s senior management team in developing, acquiring, reinventing, integrating and growing businesses, particularly those focused on entertainment and hospitality, has been and will continue to be a significant factor in the growth of Tao Group Hospitality’s business and the ability of Tao Group Hospitality to execute its business strategy. The loss of such key personnel could have a material negative effect on our business and results of operations.

Negative Publicity with Respect to Any of the Existing or Future Tao Group Hospitality Brands Could Reduce Sales at One or More of the Existing or Future Tao Group Hospitality Venues and Make the Tao Group Hospitality Brands Less Valuable, Which Could Have a Material Negative Effect on Our Business and Results of Operations.

The success of Tao Group Hospitality depends upon the reputation and popularity of the Tao Group Hospitality venues and brands. If customers have a poor experience at a restaurant or nightlife venue owned, operated or managed by Tao Group Hospitality, the Tao Group Hospitality venues may experience a decrease in customer traffic. Negative publicity with respect to any of the Tao Group Hospitality brands could adversely affect Tao Group Hospitality. Such publicity could relate to food quality, illness, injury or other health concerns, poor service, negative experiences or other problems and reduce demand in the Tao Group Hospitality business. The risk of negative publicity is exacerbated by the growing influence of social media, which can result in immediate and widespread dissemination of information (which may be false) with limited ability on our part to respond or correct such reports.

Increases in Labor Costs Could Slow the Growth of or Harm Tao Group Hospitality.

Tao Group Hospitality has a substantial number of hourly employees whose compensation may be impacted by increases in government-imposed minimum wage rates. In addition, Tao Group Hospitality employs a substantial number of employees whose income is supplemented through the receipt of gratuities. In certain jurisdictions in which Tao Group Hospitality operates, the minimum hourly wage to which gratuity-eligible employees are entitled under law is lower than the minimum wage required to be paid to other employees, subject to the former’s receipt of sufficient gratuities. The difference between the two minimum rates is referred to as a “tip credit.” Governmental entities, including in New York, Las Vegas and Chicago, have acted to increase minimum wage rates in jurisdictions where Tao Group Hospitality operates or may operate in the future. In addition, governmental entities have acted to eliminate, or considered the elimination of, tip credits in the

application of minimum wage laws. As minimum wage rates increase, or if tip credits are reduced or eliminated, Tao Group Hospitality may need to increase wages paid to a substantial number of employees, which will increase the labor costs of Tao Group Hospitality. In addition, Tao Group Hospitality’s labor costs may increase if certain employees elect to be union represented and to collectively bargain their compensation. Tao Group Hospitality may be unable offset these increased labor costs either through increased prices or changes to its operations, which could have a material negative effect on our business and results of operations.

Our Business Has Been Adversely Impacted and May, in the Future, Be Materially Adversely Impacted by an Economic Downturn and Financial Instability or Changes in Consumer Tastes and Preferences.

Our business depends upon the ability and willingness of consumers and businesses to purchase tickets at our venues, license suites and club memberships at The Garden, spend on food and beverages and merchandise, and drive continued advertising and sponsorship revenues. Further, the restaurant, nightlife and hospitality industries are often affected by changes in consumer tastes, national, regional and local economic conditions, discretionary spending priorities, demographic trends, traffic patterns and the type, number and location of competing businesses. As a result, instability and weakness of the U.S. and global economies and the negative effects on consumers’ and businesses’ discretionary spending may materially negatively affect our business and results of operations.

We Have Incurred Substantial Operating Losses, Negative Adjusted Operating Income and Negative Cash Flow and There is No Assurance We Will Have Operating Income, Positive Adjusted Operating Income or Positive Cash Flow in the Future.

We incurred operating losses of $45.6 million, $31.3 million and $98.4 million in fiscal years 2019, 2018 and 2017, respectively. In addition, we have in prior periods incurred operating losses and negative cash flow and there is no assurance that we will have operating income or positive cash flow in the future. Significant operating losses may limit our ability to raise necessary financing, or to do so on favorable terms, as such losses could be taken into account by potential investors, lenders and the organizations that issue investment ratings on indebtedness. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors Affecting Operating Results.”

Our Operating Results and Cash Flow Can Vary Substantially from Period to Period.

Our operating results and cash flow reflect significant variation from period to period and will continue to do so in the future. Therefore, period-to-period comparisons of our operating results may not necessarily be meaningful and the operating results of one period are not indicative of our financial performance during a full fiscal year. This variability may adversely affect our business, results of operations and financial condition.

Weather or Other Conditions May Impact Events at Our Venues, Which May Have a Material Negative Effect on Our Business and Results of Operations.

Weather or other conditions, including natural disasters, acts of terrorism and similar events, in the New York metropolitan area and other locations in which we own or operate venues may affect patron attendance as well as sales of food and beverages and merchandise, among other things. Weather conditions may also require us to cancel or postpone events. Any of these events may have a material negative effect on our business and results of operations.

Our Business Could Be Adversely Affected by Terrorist Activity or the Threat of Terrorist Activity and Other Developments That Discourage Congregation at Prominent Places of Public Assembly.

The success of our businesses is dependent upon the willingness and ability of patrons to attend events at our venues. The venues we operate, like all prominent places of public assembly, could be the target of terrorist activities, including acts of domestic terrorism, or other actions that discourage attendance. Any such activity at or near one of our venues or other similar venues could result in a material negative effect on our business and

results of operations. In addition, terrorist activity, including acts of domestic terrorism, or other actions that discourage attendance at other locations, or even the threat of such activity, could result in reduced attendance at our venues.

Similarly, a major epidemic or pandemic, or the threat of such an event, could adversely affect attendance at our events and venues by discouraging public assembly at our events and venues.

We May Pursue Acquisitions and Other Strategic Transactions to Complement or Expand Our Business That May Not Be Successful; We Have Significant Investments in Businesses We Do Not Control.

From time to time, we explore opportunities to purchase or invest in other businesses, venues or assets that we believe will complement, enhance or expand our current business or that might otherwise offer us growth opportunities, including opportunities that may differ from the Company’s current business. Any transactions that we are able to identify and complete may involve risks, including the commitment of significant capital, the incurrence of indebtedness, the payment of advances, the diversion of management’s attention and resources, litigation or other claims in connection with acquisitions or against companies we invest in or acquire, our lack of control over certain companies, including joint ventures and other minority investments, the inability to successfully integrate such business into our operations or even if successfully integrated, the risk of not achieving the intended results and the exposure to losses if the underlying transactions or ventures are not successful. We have significant investments in businesses that we account for under the equity method of accounting. These investments have generated operating losses in the past and certain have required additional investments from us in the form of equity or loans. We incurred losses in our equity method investments of approximately $3.8 million and $30.1 million in fiscal years 2018 and 2017, respectively. There can be no assurance that these investments will become profitable individually or in the aggregate or that they will not require material additional funding from us in the future.

We do not control the day-to-day operations of these and certain other investments. We have in the past written down and, to the extent that these investments are not successful in the future, we may write down all or a portion of such investments. Additionally, these businesses are subject to laws, rules and other circumstances, and have risks in their operations, which may be similar to, or different from, those to which we are subject. Any of the foregoing risks could result in a material negative effect on our business and results of operations or adversely impact the value of our investments.

We Do Not Own All of Our Venues and Our Failure to Renew Our Leases or Venue Management Agreements on Economically Attractive Terms May Have a Material Negative Effect on Our Business and Results of Operations; Our Lease on Radio City Music Hall Requires Us to Maintain a Certain Net Worth or Meet Certain Other Requirements.

The lease on Radio City Music Hall expires in 2023. We have the option to renew the lease at fair market value for an additional 10 years by providing two years’ notice prior to the initial expiration date. Similarly, we lease the Beacon Theatre pursuant to a lease that expires in 2026. If we are unable to renew these leases on economically attractive terms, our business could be materially negatively affected. MSG Sports & Entertainment, LLC, the entity that guarantees the Radio City Music Hall lease, is required to maintain a certain net worth or, if such net worth is not maintained, the entity must either post a letter of credit or provide cash collateral. The MSG Sphere in Las Vegas is being constructed on property we lease from Sands under a 50-year lease.

Tao Group Hospitality operates venues under various agreements that include leases with third parties and management agreements. The long-term success of Tao Group Hospitality will depend in part on the availability of real estate, the ability to lease this real estate and the ability to enter into management agreements. As many of these agreements are with third parties over whom Tao Group Hospitality has little or no control, they may be unable to renew these agreements or enter into new agreements on acceptable terms or at all, and may be unable to obtain favorable agreements with venues. In addition, some of these agreements include conditions that, if not

met, would permit the counterparty to terminate the management agreement under certain circumstances. The ability to renew these agreements and obtain new agreements on favorable terms depends on a number of other factors, many of which are beyond the control of us or Tao Group Hospitality, such as national and local business conditions and competition from other businesses. There can be no assurance that Tao Group Hospitality will be able to renew these agreements on acceptable terms or at all, or that they will be able to obtain attractive agreements with appropriate venues or real estate owners, which could have a material negative effect on our business and results of operations.

We Are Subject to Extensive Governmental Regulation and Our Failure to Comply with These Regulations May Have a Material Negative Effect on Our Business and Results of Operations.

Our business is subject to the general powers of federal, state and local governments, as well as foreign governmental authorities, to deal with matters of health and public safety. We are also subject to the rules, regulations and decisions of the NBA and NHL. As of March 31, 2020, as a result of government mandated assembly limitations and closures, all of our scheduled events at The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, The Chicago Theatre and the Forum are postponed or cancelled through April, and continue to be impacted throughout the month of May. We are not recognizing any revenue from those events and it is unclear whether and to what extent those events will be rescheduled. Additionally, public officials have imposed mandates limiting restaurants and bars to only take-out and delivery service and requiring that nightlife venues close in the cities in which Tao Group Hospitality operates. As a result, all Tao Group Hospitality venues in the United States and a majority of Tao Group Hospitality venues outside of the United States are currently closed, which has resulted in a material impact to the business.

We are unable to predict when we will be permitted or able to resume normal business operations and what the longer term effects, if any, of these events will be. See “— Our Operations and Operating Results Have Been, and Continue to be, Materially Impacted by Coronavirus and Government Actions Taken in Response” and “Management’s Discussion and Analysis — Introduction — Coronavirus Impacts.”

Our operations are subject to federal, state and local laws and regulations.

We hold liquor licenses at each of our venues and are subject to licensing requirements with respect to the sale of alcoholic beverages in the jurisdictions in which we serve those beverages. Failure to receive or retain, or the suspension of, liquor licenses or permits could interrupt or terminate our ability to serve alcoholic beverages at the applicable venue and could have a material negative effect on our business and our results of operations. Additional regulation relating to liquor licenses may limit our activities in the future or significantly increase the cost of compliance, or both. In the jurisdictions in which our venues are located, we are subject to statutes that generally provide that serving alcohol to a visibly intoxicated or minor patron is a violation of the law and may provide for strict liability for certain damages arising out of such violations. Our liability insurance coverage may not be adequate or available to cover any potential liability.

We and our venues are subject to environmental laws and regulations relating to the use, disposal, storage, emission and release of hazardous and non-hazardous substances, as well as zoning and noise level restrictions which may affect, among other things, the operations of our venues. Additionally, certain laws and regulations could hold us strictly, jointly and severally responsible for the remediation of hazardous substance contamination at our facilities or at third-party waste disposal sites, and could hold us responsible for any personal or property damage related to any contamination. Any requirements to dispose of, or remediate, such hazardous or non-hazardous materials and any associated costs and impact on operations of such efforts may be heightened as a result of the purchase, construction or renovation of a venue.

Our venues are subject to zoning and building regulations including permits relating to the operation of The Garden. In addition, The Garden requires a zoning special permit. The original permit was granted by the New York City Planning Commission in 1963 and renewed in July 2013 for 10 years. In connection with the renewal,

certain government officials and special interest groups sought to use the renewal process to pressure us to improve Pennsylvania Station (“Penn Station”) or to relocate The Garden. There can be no assurance regarding the future renewal of the permit or the terms thereof.

We are subject to various data privacy laws in the jurisdictions in which we operate. These include, but are not limited to, the E.U. General Data Protection Regulation and the California Consumer Privacy Act (“CCPA”). These laws obligate us to comply with certain consumer and employee rights concerning data we may collect about these individuals. In addition, some of these laws have only recently become effective and new laws may create additional obligations in the future. Actions required to comply with these rights are complex and violations could expose us to fines and other penalties that may be significant.

Our business is, and may in the future be, subject to a variety of other laws and regulations, including licensing, permitting, and historic designation and similar requirements; working conditions, labor, immigration and employment laws; health, safety and sanitation requirements; and compliance with the Americans with Disabilities Act (and related state and local statutes).

Our failure to comply with applicable governmental laws and regulations, or to maintain necessary permits or licenses, could have a material negative effect on our business and results of operations.

We Face Continually Evolving Cybersecurity and Similar Risks, Which Could Result in Loss, Disclosure or Misappropriation of, or Access to, Our Confidential Information and Cause Disruption of Our Business, Damage to Our Brands and Reputation, Legal Exposure and Financial Losses.

We may collect and store, including by electronic means, certain personal information, including payment card information, that is provided to us through purchases, registration on our websites, or otherwise in communication or interaction with us. These activities require the use of centralized data storage, including through third-party service providers. Data maintained in electronic form is subject to the risk of security incidents, including breach, compromise, intrusion, tampering, theft, misappropriation or other malicious activity. Further, hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of such systems. Our ability to safeguard such personal information and other confidential information, including information regarding the Company and our customers, sponsors, partners and employees, is important to our business. We take these matters seriously and take significant steps to protect our stored information, including the implementation of systems and processes to thwart malicious activity. These protections are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. In addition, in the event of a security incident, changes in legislation may increase the risk of potential litigation. For example, the CCPA, which provides a private right of action (in addition to statutory damages) for California residents whose sensitive personal information is breached as a result of a business’s violation of its duty to reasonably secure such information, took effect on January 1, 2020.

Despite our efforts, the risks of a security incident cannot be entirely eliminated and our information technology and other systems that maintain and transmit consumer, sponsor, partner, Company, employee and other confidential information may be compromised. Such compromise could affect the security of information on our network or that of a third-party service provider, and could result in personal information and/or confidential information being lost, disclosed, accessed or taken without consent. For example, in November 2016, a payment card issue that affected cards used at merchandise and food and beverage locations at several of our New York venues and The Chicago Theatre was identified and addressed with the assistance of security firms. The issue was promptly fixed and enhanced security measures were implemented.

The Company also continues to review and enhance our security measures in light of the constantly evolving techniques used to gain unauthorized access to networks, data, software and systems. The Company may be required to incur significant expenses in order to address any actual or potential security incidents that arise. If we experience a security incident, our ability to conduct business may be interrupted or impaired, we may incur damage to our systems, we may lose profitable opportunities or the value of those opportunities may

be diminished and we may lose revenue as a result of unlicensed use of our intellectual property. Further, a security incident affecting personal or confidential information could subject us to business and litigation risk and damage our reputation, including with customers, sponsors, and partners, which could have a material negative effect on our business and results of operations.

Our Properties Are Subject to, and Benefit from, Certain Easements, the Availability of Which May Not Continue on Terms Favorable to Us or at All.

Our properties are subject to, and benefit from, certain easements. For example, the “breezeway” into the Madison Square Garden Complex from Seventh Avenue in New York City is a significant easement that we share with other property owners. Additionally, our planned MSG Sphere in Las Vegas will have the benefit of easements with respect to the planned pedestrian bridge to the Sands Expo Convention Center. Our ability to continue to utilize these and other easements, including for advertising and promotional purposes, requires us to comply with a number of conditions. Moreover, certain adjoining property owners have easements over our property, which we are required to maintain so long as those property owners meet certain conditions. It is possible that we will be unable to continue to access or maintain any easements on terms favorable to us, or at all, which could have a material negative effect on our business and results of operations.

A Change to or Withdrawal of a New York City Real Estate Tax Exemption May Have a Material Negative Effect on Our Business and Results of Operations.

Many arenas, ballparks and stadiums nationally and in New York City have received significant public support, such as tax exempt financing, other tax benefits, direct subsidies and other contributions, including for public infrastructure critical to the facilities such as parking lots and transit improvements. Our Madison Square Garden Complex benefits from a more limited real estate tax exemption pursuant to an agreement with the City of New York, subject to certain conditions, and legislation enacted by the State of New York in 1982. For fiscal year 2019, the tax exemption was $42.4 million. From time to time there have been calls to repeal or amend the tax exemption. Repeal or amendment would require legislative action by New York State.

As described under “Certain Relationships and Related Party Transactions — Relationship between MSG and Us After the Distribution — Arena License Agreements,” we will enter into Arena License Agreements with subsidiaries of MSG that will require two of MSG’s professional sports teams – the Knicks and Rangers – to play all of their home games at The Garden. Under the Arena License Agreements, which will each have a term of 35 years (unless extended), the Knicks and the Rangers will pay an annual license fee in connection with their use of The Garden. In addition, the Arena License Agreements provide us with additional revenue opportunities. Under the Arena License Agreements, the teams will be responsible for 100% of any real property or similar taxes applicable to The Garden.

If the tax exemption is repealed or the teams are otherwise subject to the property tax due to no fault of the teams, the revenue opportunity that we may generate from team events will be reduced on a percentage basis as set forth in the Arena License Agreements. The value of any such revenue opportunity reduction could be significant but is expected to be substantially less than the property tax to be paid by the teams. There can be no assurance that the tax exemption will not be amended in a manner that imposes property tax or repealed in its entirety, either of which could have a material negative effect on our business and results of operations.

Certain of Our Subsidiaries Have Incurred or May Incur Indebtedness, and the Occurrence of an Event of Default Under Our Subsidiaries’ Credit Facilities Could Substantially Impair the Assets of Those Subsidiaries; Failure of Our Joint Ventures or Other Parties to Perform as Expected, Including the Repayment of Outstanding Loans, Could Have a Negative Effect on Our Business.

Certain of our subsidiaries have incurred or may incur indebtedness, which indebtedness in the case of Tao Group Hospitality is significant relative to the assets of Tao Group Hospitality’s business. The occurrence of an event of default under our subsidiaries’ credit facilities could substantially impair the assets of those subsidiaries and, as a result, have a negative effect on our business and results of operations. In addition, in May 2019 we extended a $49 million subordinated loan to Tao Group Hospitality, of which $44 million remains outstanding.

The occurrence of an event of default under Tao Group Hospitality’s senior credit agreement could lead to an event of default under our subordinated loan to Tao Group Hospitality and could impair our ability to have the Company’s subordinated loan repaid.

In addition, we have made investments in, or otherwise extended loans to, one or more of our joint ventures or other parties and may make additional investments in, or otherwise extend loans to, one or more of such parties in the future. To the extent that such parties do not perform as expected, including with respect to repayment of such loans, it could impair such assets or create losses related to such loans, and, as a result, have a negative effect on our business and results of operations.

We Will Require Financing to Fund Our Ongoing Operations and Capital Expenditures, the Availability of Which Is Highly Uncertain.

The capital and credit markets can experience volatility and disruption. Such markets can exert extreme downward pressure on stock prices and upward pressure on the cost of new debt capital and can severely restrict credit availability for most issuers.

Our business has been characterized by significant expenditures for properties, businesses, renovations and productions. In the future we may engage in transactions that depend on our ability to obtain financing. We may also seek financing to fund our ongoing operations.

Depending upon conditions in the financial markets and/or the Company’s financial performance, we may not be able to raise additional capital on favorable terms, or at all. If we are unable to pursue our current and future spending programs, we may be forced to cancel or scale back those programs. Failure to successfully pursue our capital expenditure and other spending plans could negatively affect our ability to compete effectively and have a material negative effect on our business and results of operations.

In addition, as described above, the NBA and NHL have imposed restrictions on certain financing transactions that require a secured interest in The Garden.

Our Business Is Subject to Seasonal Fluctuations, and Our Operating Results Could Vary Substantially from Period to Period.

Our revenues and expenses have been seasonal and we expect they will continue to be seasonal. For example, 12% of our revenues in fiscal year 2019 were derived from the Christmas Spectacular. Our revenues are highest in the second quarter of our fiscal year when these performances primarily occur. As a result, our business earns a disproportionate amount of its revenue and operating income in the second quarter of each fiscal year. Therefore, our operating results and cash flow reflect significant variation from period to period and will continue to do so in the future. Consequently, period-to-period comparisons of our operating results may not necessarily be meaningful and the operating results of one period are not indicative of our financial performance during a full fiscal year. This variability may adversely affect our business, results of operations and financial condition.

Organized Labor Matters May Have a Material Negative Effect on Our Business and Results of Operations.

Our business is dependent upon the efforts of unionized workers. More than half, or approximately 58%, of our employees are represented by unions. Approximately half of our union employees are subject to collective bargaining agreements (“CBAs”) that have already expired or will expire by June 30, 2020 if not extended. Any labor disputes, such as strikes or lockouts, with the unions with which we have CBAs could have a material negative effect on our business and results of operations (including our ability to produce or present concerts, theatrical productions, sporting events and other events).

Additionally, NBA and NHL players are covered by CBAs. Both leagues have experienced labor difficulties in the past and may have labor issues in the future, such as players’ strikes or management lockouts. If any

Knicks or Rangers home games at The Garden are cancelled because of any such labor difficulties, the loss of revenue from customers who would have attended such games could have a negative impact on our business and results of operations.

The Unavailability of Systems Upon Which We Rely May Have a Material Negative Effect on Our Business and Results of Operations.

We rely upon various internal and third-party software or systems in the operation of our business, including, with respect to ticket sales, credit card processing, email marketing, point of sale transactions, database, inventory, human resource management and financial systems. From time to time, certain of these arrangements may not be covered by long-term agreements. The failure or unavailability of these internal or third-party services or systems, depending upon its severity and duration, could have a material negative effect on our business and results of operations.

We May Become Subject to Infringement or Other Claims Relating to Our Content or Technology.

From time to time, third parties may assert against us alleged intellectual property (e.g., copyright, trademark and patent) or other claims relating to our productions, technologies or other content or material, some of which may be important to our business. In addition, our productions could potentially subject us to claims of defamation or similar types of allegations. Any such claims, regardless of their merit, could cause us to incur significant costs. In addition, if we are unable to continue use of certain intellectual property rights, our business and results of operations could be materially negatively impacted.

There Is the Risk of Personal Injuries and Accidents in Connection with Our Venues, Which Could Subject Us to Personal Injury or Other Claims; We are Subject to the Risk of Adverse Outcomes in Other Types of Litigation.

There are inherent risks associated with producing and hosting events and operating, maintaining or renovating our venues and in operating the restaurant and nightlife venues. As a result, personal injuries, accidents and other incidents have occurred and may occur from time to time, which could subject us to claims and liabilities.

These risks might not be covered by insurance or could involve exposures that exceed the limits of any applicable insurance. Incidents in connection with events at any of our venues could also reduce attendance at our events, and cause a decrease in our revenue and results of operations. We seek to obtain contractual indemnities for events at our venues that we do not promote, and under the Arena License Agreements, MSG and the Company will have reciprocal indemnity obligations to each other in connection with the home games of the Knicks and Rangers held at The Garden. While we also maintain insurance policies that provide coverage for incidents in the ordinary course of business, there can be no assurance that such indemnities or insurance will be adequate at all times and in all circumstances.

From time to time, we become subject to other kinds of litigation. The outcome of litigation is inherently unpredictable. As a result, we could incur liability from litigation which could be material and for which we may have inadequate or no insurance coverage or be subject to other forms of relief which might adversely affect the Company.

We Face Risk from Doing Business Internationally

We have operations and own property outside of the United States. As a result, our business is subject to certain risks inherent in international business, many of which are beyond our control. These risks include:

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laws and policies affecting trade and taxes, including laws and policies relating to currency, the repatriation of funds and withholding taxes, and changes in these laws;

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changes in local regulatory requirements, including restrictions on foreign ownership;

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exchange rate fluctuation;

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exchange controls, tariffs and other trade barriers;

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differing degrees of protection for intellectual property and varying attitudes towards the piracy of intellectual property;

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foreign privacy and data protection laws and regulations, such as the E.U. General Data Protection Regulation, and changes in these laws;

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The impact of Brexit, particularly in the event of the U.K.’s departure from the E.U. without an agreement on terms;

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The instability of foreign economies and governments;

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War and acts of terrorism;

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Anti-corruption laws and regulations such as the Foreign Corrupt Practices Act and the U.K. Bribery Act that impose stringent requirements on how we conduct our foreign operations and changes in these laws and regulations; and

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Shifting consumer preferences regarding entertainment.

Events or developments related to these and other risks associated with international operations could have a material negative effect on our business and results of operations.

Following the Distribution, We Will Be Materially Dependent on MSG’s Performance Under Various Agreements.

We have entered into various agreements with MSG related to the Distribution, including a distribution agreement, a tax disaffiliation agreement, a transition services agreement and an employee matters agreement, and will enter certain other arrangements (including other support services). These agreements include the allocation of employee benefits, taxes and certain other liabilities and obligations attributable to periods prior to, at and after the Distribution. In connection with the Distribution, we will provide MSG with indemnities with respect to liabilities arising out of our business and MSG will provide us with indemnities with respect to liabilities arising out of the business retained by MSG.

We will also enter into various agreements with MSG that will govern our ongoing commercial relationship subsequent to the Distribution, including Arena License Agreements that will require two of MSG’s professional sports teams — the Knicks and the Rangers — to play home games at The Garden, sponsorship agency agreements in connection with the sale of sponsorships and advertising for the Knicks and Rangers, as well as MSG’s other teams, and a trademark license agreement regarding the use of the “MSG” name. These agreements, other than the Arena License Agreements, will each be subject to potential termination by MSG in the event MSG and the Company are no longer affiliates.

The Company will provide to MSG certain business services that were performed by MSG prior to the Distribution, such as information technology, accounts payable, payroll, tax, certain legal functions, human resources, insurance and risk management, government affairs, investor relations, corporate communications, benefit plan administration and reporting, and internal audit functions as well as certain marketing functions. These services include the collection and storage of certain personal information regarding employees and/or customers as well as information regarding the Company, MSG and our sponsors and partners. See also “We Face Continually Evolving Cybersecurity and Similar Risks, Which Could Result in Loss, Disclosure or Misappropriation of, or Access to, Our Confidential Information and Cause Disruption of Our Business, Damage to Our Brands and Reputation, Legal Exposure and Financial Losses.”

The Company and MSG will each rely on the other to perform its obligations under all of these agreements. If MSG were to breach, be unable to satisfy its material obligations under these agreements, including a failure to satisfy its indemnification or other financial obligations, or these agreements otherwise terminate or expire and we do not enter into replacement agreements, we could suffer operational difficulties and/or significant losses.

Because There Has Not Been Any Public Market for Our Common Stock, the Market Price and Trading Volume of Our Common Stock May Be Volatile and You May Not Be Able to Resell Your Shares at or Above the Initial Market Price of Our Stock Following the Distribution.

Prior to the Distribution, there will have been no regular way trading market for our common stock. We cannot predict the extent to which investors’ interest will lead to a liquid trading market or whether the market price of our common stock will be volatile. The market price of our common stock could fluctuate significantly for many reasons, including in response to the risk factors listed in this information statement or for reasons unrelated to our specific performance, such as reports by industry analysts, investor perceptions, or negative developments for our customers, competitors or suppliers, as well as general economic and industry conditions.

The Combined Post-Distribution Value of MSG and Spinco Shares May Not Equal or Exceed the Pre-Distribution Value of MSG Shares.

After the Distribution, MSG Class A Common Stock will continue to be listed and traded on NYSE. We cannot assure you that the combined trading prices of MSG Class A Common Stock and Spinco Class A Common Stock after the Distribution, as adjusted for any changes in the combined capitalization of these companies, will be equal to or greater than the trading price of MSG Class A Common Stock prior to the Distribution. Until the market has fully evaluated the business of MSG without the business of Spinco, the price at which MSG Class A Common Stock trades may fluctuate significantly. Similarly, until the market has fully evaluated the business of Spinco, the price at which shares of Spinco Class A Common Stock trade may fluctuate significantly.

The Distribution Could Result in Significant Tax Liability.

MSG expects to obtain an opinion from Sullivan & Cromwell LLP substantially to the effect that, among other things, the distribution by MSG of our Class A Common Stock and Class B Common Stock to the holders of MSG Class A Common Stock and MSG Class B Common Stock, respectively (i.e., the Distribution), will qualify as a tax-free distribution under the Code. Accordingly, for U.S. federal income tax purposes, the Distribution is not expected to result in the recognition of gain to MSG with respect to the distribution of our Class A Common Stock or our Class B Common Stock to the MSG stockholders and, except to the extent a stockholder receives cash in lieu of fractional shares of our common stock, no income, gain or loss will be recognized by, and no amount will be included in the income of such holder upon the receipt of shares of our common stock pursuant to the Distribution. The opinion will not be binding on the IRS or the courts. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.” Certain transactions related to the Distribution that are not addressed by the opinion could result in the recognition of income or gain by MSG. The opinion will rely on factual representations and reasonable assumptions, which, if incorrect or inaccurate, may jeopardize the ability to rely on such opinion.

If the Distribution does not qualify for tax-free treatment for U.S. federal income tax purposes, then, in general, MSG would recognize taxable gain in an amount equal to the excess of the fair market value of our common stock distributed in the Distribution over MSG’s tax basis therein (i.e., as if it had sold such common stock in a taxable sale for its fair market value). In addition, the receipt by MSG stockholders of common stock of our Company would be a taxable distribution, and each U.S. holder that receives our common stock in the Distribution would be treated as if the U.S. holder had received a distribution equal to the fair market value of our common stock that was distributed to it, which generally would be treated first as a taxable dividend to the extent of such holder’s pro rata share of MSG’s earnings and profits, then as a non-taxable return of capital to the extent of the holder’s tax basis in its MSG common stock, and thereafter as capital gain with respect to any remaining value. It is expected that the amount of any such taxes to MSG stockholders and MSG would be substantial. See “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”

We May Have a Significant Indemnity Obligation to MSG if the Distribution Is Treated as a Taxable Transaction.

We have entered into a Tax Disaffiliation Agreement with MSG, which sets out each party’s rights and obligations with respect to federal, state, local or foreign taxes for periods before and after the Distribution and related matters such as the filing of tax returns and the conduct of IRS and other audits. Pursuant to the Tax Disaffiliation Agreement, we are required to indemnify MSG for losses and taxes of MSG resulting from the

breach of certain covenants and for certain taxable gain recognized by MSG, including as a result of certain acquisitions of our stock or assets. If we are required to indemnify MSG under the circumstances set forth in the Tax Disaffiliation Agreement, we may be subject to substantial liabilities, which could materially adversely affect our financial position.

The Tax Rules Applicable to the Distribution May Restrict Us from Engaging in Certain Corporate Transactions or from Raising Equity Capital Beyond Certain Thresholds for a Period of Time After the Distribution.

To preserve the tax-free treatment of the Distribution to MSG and its stockholders, under the Tax Disaffiliation Agreement with MSG, for the two-year period following the Distribution, we are subject to restrictions with respect to:

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entering into any transaction pursuant to which 50% or more of our shares or assets would be acquired, whether by merger or otherwise, unless certain tests are met;

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issuing equity securities, if any such issuances would, in the aggregate, constitute 50% or more of the voting power or value of our capital stock;

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certain repurchases of our common shares;

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ceasing to actively conduct our business;

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amendments to our organizational documents (i) affecting the relative voting rights of our stock or (ii) converting one class of our stock to another;

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liquidating or partially liquidating; and

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taking any other action that prevents the Distribution and certain related transactions from being tax-free.

These restrictions may limit our ability during such period to pursue strategic transactions of a certain magnitude that involve the issuance or acquisition of our stock or engage in new businesses or other transactions that might increase the value of our business. These restrictions may also limit our ability to raise significant amounts of cash through the issuance of stock, especially if our stock price were to suffer substantial declines, or through the sale of certain of our assets. For more information, see the sections entitled “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution” and “Certain Relationships and Related Party Transactions — Relationship Between MSG and Us After the Distribution — Tax Disaffiliation Agreement.”

Certain Adverse U.S. Federal Income Tax Consequences Might Apply to Non-U.S. Holders That Hold Our Class A Common Stock and Class B Common Stock After the Distribution If We Are Treated as a USRPHC.

The Company has not made a determination as to whether we will be deemed to be a USRPHC, as defined in section 897(c)(2) of the Code. In general, we will be a USRPHC if 50% or more of the fair market value of our assets constitute “United States real property interests” within the meaning of the Code. However, the determination of whether we are a USRPHC turns on the relative fair market value of our United States real property interests and our other assets, and because the USRPHC rules are complex and the determination of whether we are a USRPHC depends on facts and circumstances that may be beyond our control, we can give no assurance as to our USRPHC status after the Distribution. If we are treated as a USRPHC, certain adverse U.S. federal income tax consequences might apply to non-U.S. holders that hold our Class A Common Stock and Class B Common Stock after the Distribution. A beneficial owner of MSG common stock that is a non-U.S. holder should consult its tax advisor as to the particular tax consequences that would be applicable to such holder if we are treated as a USRPHC after the Distribution. For more information, see the section entitled “The Distribution — Material U.S. Federal Income Tax Consequences of the Distribution.”

We Do Not Have an Operating History as a Stand-Alone Public Company.

In the past, our operations have been a part of MSG and MSG provided us with various financial, operational and managerial resources for conducting our business. Following the Distribution, we will maintain our own credit and banking relationships and perform certain of our own financial and operational functions. We cannot assure you that we will be able to successfully put in place the financial, operational and managerial resources necessary to operate as a public company or that we will be able to be profitable doing so.

Our Historical Financial Results and Our Unaudited Pro Forma Combined Financial Statements May Not Be Representative of Our Results as a Separate, Stand-Alone Company.

The historical financial information we have included in this information statement has been derived from the consolidated financial statements and accounting records of MSG and does not necessarily reflect what our financial position, results of operations or cash flows would have been had we been a separate, stand-alone company during the periods presented. Although MSG did account for our business (other than the sports bookings business) as a separate business segment, we were not operated as a separate, stand-alone company for the historical periods presented. The historical costs and expenses reflected in our combined financial statements include an allocation for certain corporate functions historically provided by MSG, including general corporate expenses and employee benefits and incentives. These allocations were based on what we and MSG considered to be reasonable reflections of the historical utilization levels of these services required in support of our business. In addition, following the Distribution, our business will include the results of the sports bookings business that were previously reported as part of MSG’s Sports business segment. The historical information does not necessarily indicate what our results of operations, financial position, cash flows or costs and expenses will be in the future. Our pro forma financial information set forth under “Unaudited Pro Forma Combined Financial Information” reflects changes to our operations as a result of the separation. However, there can be no assurances that this unaudited pro forma combined financial information will appropriately reflect our financial position or results of operations as a separate, stand-alone company.

We May Incur Material Costs and Expenses as a Result of Our Separation from MSG.

We may incur costs and expenses greater than those we currently incur as a result of our separation from MSG. These increased costs and expenses may arise from various factors, including financial reporting and costs associated with complying with federal securities laws (including compliance with the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”)). In addition, we expect to either maintain similar or have increased corporate and administrative costs and expenses to those we incurred while part of MSG, even though following the Distribution we will be a smaller, stand-alone company. We cannot assure you that these costs will not be material to our business.

If, Following the Distribution, We Are Unable to Satisfy the Requirements of Section 404 of the Sarbanes-Oxley Act, or Our Internal Control Over Financial Reporting is Not Effective, the Reliability of Our Financial Statements May Be Questioned and Our Stock Price May Suffer.

Section 404 of the Sarbanes-Oxley Act requires any company subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting. To comply with this statute, we will eventually be required to document and test our internal control procedures, our management will be required to assess and issue a report concerning our internal control over financial reporting, and our independent auditors will be required to issue an opinion on the Company’s internal controls over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act. If our management cannot favorably assess the effectiveness of our internal control over financial reporting or our auditors identify material weaknesses in our internal controls, investor confidence in our financial results may weaken, and our stock price may suffer.

The Reduced Disclosure Requirements Applicable to Us as an “Emerging Growth Company” May Make Our Class A Common Stock Less Attractive to Investors.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may avail ourselves of certain exemptions from various reporting requirements of public companies that are not “emerging growth companies,” including, but not limited to, an exemption from complying with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, and, like smaller reporting companies, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy

statements, and exemptions from the requirement of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may remain an emerging growth company for up to five full fiscal years following the Distribution. We would cease to be an emerging growth company, and, therefore, become ineligible to rely on the above exemptions, if we: (a) have more than $1.07 billion in annual revenue in a fiscal year; (b) issue more than $1 billion of non-convertible debt over a three-year period; or (c) become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) which would generally occur after: (i) we have filed at least one annual report; (ii) we have been a Securities and Exchange Commission (“SEC”) reporting company for at least 12 months; and (iii) the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.

If some investors find our common stock less attractive as a result of the exemptions available to us as an emerging growth company, there may be a less active trading market for our common stock and our value may be more volatile than that of an otherwise comparable company that does not avail itself of the same or similar exemptions.

We Are Controlled by the Dolan Family. As a Result of Their Control, the Dolan Family Has the Ability to Prevent or Cause a Change in Control or Approve, Prevent or Influence Certain Actions by the Company.

We have two classes of common stock:

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Class A Common Stock, par value $0.01 per share, which is entitled to one vote per share and is entitled collectively to elect 25% of our Board of Directors; and

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Class B Common Stock, par value $0.01 per share, which is entitled to 10 votes per share and is entitled collectively to elect the remaining 75% of our Board of Directors.

As of the Distribution date, the Dolan Family Group will collectively own all of our Class B Common Stock, approximately 3.0% of our outstanding Class A Common Stock and approximately 70.8% of the total voting power of all our outstanding common stock. The members of the Dolan Family Group holding Class B Common Stock will execute prior to the Distribution a Stockholders Agreement that will have the effect of causing the voting power of the holders of our Class B Common Stock to be cast as a block with respect to all matters to be voted on by holders of Class B Common Stock. Under the Stockholders Agreement, the shares of Class B Common Stock owned by members of the Dolan Family Group (representing all of the outstanding Class B Common Stock) are to be voted on all matters in accordance with the determination of the Dolan Family Committee (as defined below), except that the decisions of the Dolan Family Committee are non-binding with respect to the Class B Common Stock owned by certain Dolan family trusts that collectively own 40.5% of the outstanding Class B Common Stock (“Excluded Trusts”). The “Dolan Family Committee” will consist of Charles F. Dolan and his six children, James L. Dolan, Thomas C. Dolan, Patrick F. Dolan, Kathleen M. Dolan, Marianne Dolan Weber and Deborah A. Dolan-Sweeney. The Dolan Family Committee generally acts by majority vote, except that approval of a going-private transaction must be approved by a two-thirds vote and approval of a change-in-control transaction must be approved by not less than all but one vote. The voting members of the Dolan Family Committee will be James L. Dolan, Thomas C. Dolan, Kathleen M. Dolan, Deborah A. Dolan-Sweeney and Marianne Dolan Weber, with each member having one vote other than James L. Dolan, who has two votes. Because James L. Dolan has two votes, he will have the ability to block Dolan Family Committee approval of any Company change in control transaction. Shares of Class B Common Stock owned by Excluded Trusts will on all matters be voted on in accordance with the determination of the Excluded Trusts holding a majority of the Class B Common Stock held by all Excluded Trusts, except in the case of a vote on a going-private transaction or a change in control transaction, in which case a vote of trusts holding two-thirds of the Class B Common Stock owned by Excluded Trusts will be required.

The Dolan Family Group is able to prevent a change in control of our Company and no person interested in acquiring us will be able to do so without obtaining the consent of the Dolan Family Group. The Dolan Family Group, by virtue of its stock ownership, has the power to elect all of our directors subject to election by holders of Class B Common Stock, and is able collectively to control stockholder decisions on matters on which holders

of all classes of our common stock vote together as a single class. These matters could include the amendment of some provisions of our certificate of incorporation and the approval of fundamental corporate transactions.

In addition, the affirmative vote or consent of the holders of at least 66²/₃% of the outstanding shares of the Class B Common Stock, voting separately as a class, is required to approve:

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the authorization or issuance of any additional shares of Class B Common Stock, and

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any amendment, alteration or repeal of any of the provisions of our certificate of incorporation that adversely affects the powers, preferences or rights of the Class B Common Stock.

As a result, the Dolan Family Group has the power to prevent such issuance or amendment.

The members of the Dolan Family Group will enter into an agreement with the Company in which they agree that, during the 12-month period beginning on the Distribution date, the Dolan Family Group must obtain the prior approval of a majority of the Company’s Independent Directors prior to acquiring common stock of the Company through a tender offer that results in members of the Dolan Family Group owning more than 50% of the total number of outstanding shares of common stock of the Company. For purposes of this agreement, the term “Independent Directors” means the directors of the Company who have been determined by our Board of Directors to be independent directors for purposes of NYSE corporate governance standards.

Following the Distribution, the Company and MSG will still be controlled by the Dolan Family Group. The Dolan Family Group also controls MSG Networks and AMC Networks.

We Have Elected to Be a “Controlled Company” for NYSE Purposes Which Allows Us Not to Comply with Certain of the Corporate Governance Rules of NYSE.

We have been informed that, prior to the Distribution, the members of the Dolan Family Group will enter into a Stockholders Agreement relating, among other things, to the voting of their shares of our Class B Common Stock. As a result, following the Distribution, we will be a “controlled company” under the corporate governance rules of NYSE. As a controlled company, we will have the right to elect not to comply with the corporate governance rules of NYSE requiring: (i) a majority of independent directors on our Board of Directors; (ii) an independent corporate governance and nominating committee; and (iii) an independent compensation committee. Our Board of Directors has elected for the Company to be treated as a “controlled company” under NYSE corporate governance rules and not to comply with the NYSE requirement for a majority-independent board of directors and for an independent corporate governance and nominating committee because of our status as a controlled company. Nevertheless, we expect our Board of Directors to elect to comply with the NYSE requirement for an independent compensation committee.

Future Stock Sales, Including as a Result of the Exercise of Registration Rights by Certain of Our Stockholders, Could Adversely Affect the Trading Price of Our Class A Common Stock.

All of the shares of Class A Common Stock will be freely tradable without restriction or further registration under the Securities Act unless the shares are owned by our “affiliates” as that term is defined in the rules under the Securities Act. Shares held by “affiliates” may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 which is summarized under “Shares Eligible for Future Sale.” Further, we plan to file a registration statement to cover the shares issued under our equity-based benefit plans.

As described under “Shares Eligible for Future Sale — Registration Rights Agreements,” certain parties have registration rights covering a portion of our shares.

We expect to enter into registration rights agreements with Charles F. Dolan, certain Dolan family interests and the Dolan Family Foundation that provide them with “demand” and “piggyback” registration rights with

respect to approximately 5.0 million shares of Class A Common Stock, including shares issuable upon conversion of shares of Class B Common Stock.

Sales of a substantial number of shares of Class A Common Stock could adversely affect the market price of the Class A Common Stock and could impair our future ability to raise capital through an offering of our equity securities.

We Will Share Certain Key Directors and Officers with MSG, MSG Networks and/or AMC Networks, Which Means Those Officers Will Not Devote Their Full Time and Attention to Our Affairs and the Overlap May Give Rise to Conflicts.

Following the Distribution, there will be an overlap between certain key directors and officers of the Company, MSG and MSG Networks. James L. Dolan will serve as the Executive Chairman and Chief Executive Officer of the Company and as the Executive Chairman of both MSG and MSG Networks. Andrew Lustgarten will serve as the President of the Company and as President and Chief Executive Officer of MSG. As a result, following the Distribution, not all of our executive officers will be devoting their full time and attention to the Company’s affairs. In addition, Gregg G. Seibert will serve as a Vice Chairman of the Company, MSG, MSG Networks and AMC Networks. Furthermore, immediately following the Distribution, 10 members of our Board of Directors will also be directors of MSG, nine will serve as directors of MSG Networks and seven will serve as directors of AMC Networks. The Overlap Persons may have actual or apparent conflicts of interest with respect to matters involving or affecting each company. For example, there will be the potential for a conflict of interest when we on the one hand, and MSG, MSG Networks, and/or AMC Networks and their respective subsidiaries and successors on the other hand, look at certain acquisitions and other corporate opportunities that may be suitable for more than one of the companies. Also, conflicts may arise if there are issues or disputes under the commercial arrangements that will exist between an Other Entity and us. In addition, after the Distribution, certain of our directors and officers will continue to own stock and/or stock options or other equity awards of an Other Entity. These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for our Company and an Other Entity. See “Certain Relationships and Related Party Transactions — Certain Relationships and Potential Conflicts of Interest” for a discussion of certain procedures we will institute to help ameliorate such potential conflicts that may arise.

Our Overlapping Directors and Officers with MSG, MSG Networks and/or AMC Networks May Result in the Diversion of Corporate Opportunities to MSG, MSG Networks and/or AMC Networks and Other Conflicts and Provisions in Our Amended and Restated Certificate of Incorporation May Provide Us No Remedy in That Circumstance.

The Company’s amended and restated certificate of incorporation will acknowledge that directors and officers of the Company may also be serving as directors, officers, employees or agents of an Other Entity, and that the Company may engage in material business transactions with such Other Entities. The Company will renounce its rights to certain business opportunities and the Company’s amended and restated certificate of incorporation will provide that no Overlap Person will be liable to the Company or its stockholders for breach of any fiduciary duty that would otherwise occur by reason of the fact that any such individual directs a corporate opportunity (other than certain limited types of opportunities set forth in our amended and restated certificate of incorporation) to one or more of the Other Entities instead of the Company, or does not refer or communicate information regarding such corporate opportunities to the Company. These provisions in our amended and restated certificate of incorporation will also expressly validate certain contracts, agreements, arrangements and transactions (and amendments, modifications or terminations thereof) between the Company and the Other Entities and, to the fullest extent permitted by law, provide that the actions of the Overlap Person in connection therewith are not breaches of fiduciary duties owed to the Company, any of its subsidiaries or their respective stockholders. See “Description of Capital Stock — Certain Corporate Opportunities and Conflicts.”

BUSINESS

We are a Delaware corporation with our principal executive offices at Two Pennsylvania Plaza, New York, NY, 10121. Our telephone number is +1 (212) 465-6000. Spinco is a holding company and conducts substantially all of its operations through its subsidiaries.

Spinco was incorporated on November 21, 2019 and is a direct, wholly owned subsidiary of MSG. MSG’s board of directors approved the Distribution on March 31, 2020. Prior to the Distribution, the Company will acquire the subsidiaries of MSG that own, directly and indirectly, the subsidiaries, businesses and other assets described in this information statement. Where we describe in this information statement our business activities, we do so as if these transfers have already occurred.

General

The Company is a leader in live experiences comprised of iconic venues; marquee entertainment content; popular dining and nightlife offerings; and a premier music festival that, together, entertain approximately 12 million guests a year. Utilizing our powerful brands and live entertainment expertise, the Company delivers unique experiences that set the standard for excellence and innovation while forging deep connections with diverse and passionate audiences. The Company’s portfolio of venues includes: The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, the Forum in Inglewood, CA and The Chicago Theatre. In addition, the Company is constructing a state-of-the-art venue, MSG Sphere, in Las Vegas and plans to build a second MSG Sphere in London. The Company also includes the original production, the Christmas Spectacular, as well as BCE, the entertainment production company that owns and operates the Boston Calling Music Festival, and Tao Group Hospitality, a hospitality group with globally recognized entertainment dining and nightlife brands.

Coronavirus Impacts

Our operations and operating results have been, and continue to be, materially impacted by the coronavirus and government actions taken in response. On the date of this information statement, virtually all of our business operations are shut down and it is not clear when those operations will resume.

Our Strengths

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Strong and growing presence in major live entertainment markets through:

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A portfolio of world-renowned venues;

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Marquee live entertainment brands and content; and

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Many of the most recognized brands in entertainment dining and nightlife.

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Deep industry relationships that drive top-tier performers and a wide variety of events to the Company’s venues;

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Proven track record of delivering significant value for partners through innovative sponsorships and premium hospitality;

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Reputation for world-class customer experience driven by decades of expertise in marketing, ticket sales and venue operations;

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Expertise in utilizing data to drive decisions to maximize revenue and the guest experience;

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Established history of successfully planning and executing comprehensive venue design and construction projects;

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Long-term agreements to host home games at The Garden for two of the most recognized franchises in professional sports — the NBA’s New York Knicks (the “Knicks”) and the NHL’s New York Rangers (the “Rangers”); and

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Strong and seasoned management team.

Our Strategy

Key components of our strategy include:

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In addition to our existing venues, in February 2018, the Company unveiled its vision for MSG Sphere, new state-of-the-art venues that we believe will change entertainment by pioneering the next generation of immersive experiences. The Company is constructing its first MSG Sphere venue in Las Vegas — one of the world’s most important entertainment destinations. The Company has also purchased land in Stratford, London, which we expect will become home to the second MSG Sphere.

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amenities, we continue to explore new ways to utilize technology to improve the customer experience and create communities around our live events. From the way our customers buy their food and beverage; to how we market and process their tickets; to the content we provide them to enhance their entertainment experience, we strive to give our customers the best experience in the industry. For example, we survey thousands of guests annually across our venues to collect data on how we can better optimize their experience. Our commitment to exceptional service and innovation will be elevated even further with the introduction of MSG Sphere — a venue that is being built, from the ground up, to deliver an entirely new guest experience through the use of advanced, cutting-edge architectural, visual and audio technologies that will create a fully immersive and customized entertainment experience. See “— Our Business — Our Performance Venues — MSG Sphere” for a description of the key design features of MSG Sphere that we believe will deliver this entirely new guest experience.

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Another part of our “artist first” approach is how we use our diverse collection of venues. With seating capacities and configurations that range from 2,800 to 21,000, our venue pipeline enables us to shepherd an artist through their growth and development, helping us to cultivate and develop deeper industry relationships. Examples of this include Trevor Noah, whose history with us includes a succession of sold-out shows — first at the Beacon Theatre in 2016, followed by Radio City in 2018, and ultimately, at Madison Square Garden in 2019. And Brandi Carlile, who, after playing the Beacon Theatre, The Chicago Theatre and Radio City throughout her career, headlined The Garden in September 2019. Our portfolio of venues also enables us to work with artists across multiple markets, further strengthening our partnerships as well as our opportunities for more extensive engagements. In 2018, we announced a dual-city, multi-year booking agreement with the Tedeschi Trucks Band that includes the band performing multi-shows annually through 2022 at both the Beacon Theatre and Chicago Theatre.

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Selectively expanding our performance venues in key music and entertainment markets. We believe our proven ability to deliver entertainment-focused venues, coupled with our unique capabilities, technologies and “artist first” approach, can deliver a differentiated experience for artists, fans and partners. In February 2018, we unveiled our vision for MSG Sphere, along with our plans to construct these state-of-the-art venues in Las Vegas and London. MSG Sphere venues will utilize advanced, cutting-edge technologies to create an entirely new platform that is expected to redefine how immersion and storytelling come together in entertainment experiences. Because of the transformative nature of these venues, we believe there will be other markets — both domestic and international — where MSG Sphere can be successful. The design of MSG Sphere will be flexible to accommodate a wide range of sizes and capacities — from large-scale to smaller and more intimate — based on the needs of the individual market. Controlling and booking a network of world-class venues provides the Company with a number of avenues for potential growth, including driving increased bookings and greater marketing and sponsorship opportunities. As we explore selectively extending the MSG Sphere network, we will be open to multiple types of transaction structures, including owned, operated, managed, licensed and joint ventures. As we work with various companies to develop the technologies

needed for MSG Sphere venues, we are focused on obtaining appropriate strategic rights with respect to intellectual property.

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An innovative approach to marketing and sales. Our Company possesses powerful and attractive assets able to deliver significant exposure for marketing partners who share our vision of creating brand new experiences and innovative opportunities to engage with audiences. We also benefit from being part of a broader entertainment and sports offering as a result of our various agreements with MSG and MSG Networks, under which the Company will offer an integrated approach to marketing partnerships and corporate hospitality solutions to drive sponsorship, signage and suite sales.

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Understanding our customers. We continue to forge deep direct-to-consumer relationships with customers and fans, with a focus on understanding how consumers interact with every aspect of the Company. A key component of this strategy is our large and growing proprietary database of millions of customers, which drives revenue and engagement across our events, benefiting the Company through ticket sales and sponsorship activation. This database provides us with an opportunity to tailor offerings and cross-promote our products and services, introducing customers to our wide range of assets and brands.

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catalogue of unique and compelling material that can be used across MSG Sphere venues. This will range from original attractions, purpose-built for MSG Sphere, to the establishment of a dynamic library of content that can be used by artists or third parties who want to bring their experiences to life — whether for concerts, residencies or corporate events. The Company’s creation of new proprietary content will also include exploring opportunities for our world-renowned entertainment brand — the Radio City Rockettes.

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Our Business

Our Company delivers unforgettable live experiences — all in extraordinary settings that span some of the country’s largest entertainment markets. This creates a significant demand for an association with our brands by a wide selection of artists, sporting events, premier companies and the public. And with a foundation of iconic venues, our Company has a proven ability to leverage the strength of our industry relationships, marketing assets, customer database and live event expertise to create compelling performance, promotion and distribution opportunities for artists, events and productions.

Specifically, our Company produces, presents and hosts a variety of live entertainment events, such as concerts, sporting events, family shows, performing arts events, special events and wholly owned productions. In addition, the Company hosts two of the most recognized franchises in professional sports — the NBA’s New York Knicks and the NHL’s New York Rangers. These live events are held at the Company’s venues, which are: The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, the Forum and The Chicago Theatre. With seating capacities and configurations that range from 2,800 to 21,000, our diverse collection of venues enables us to showcase a plethora of acts and events that cover a wide spectrum of genres, to significantly varied audiences. The Company is also expanding its portfolio of venues with the construction of a new venue in Las Vegas, MSG Sphere at The Venetian, and has plans to build an MSG Sphere venue in London, which is still subject to approvals.

Our productions include the beloved holiday show, the Christmas Spectacular — created for Radio City Music Hall and featuring the world-famous Radio City Rockettes.

In addition, the Company has a controlling interest in BCE, the entertainment production company that owns and operates the Boston Calling Music Festival, and Tao Group Hospitality, a hospitality group with globally recognized entertainment dining and nightlife brands.

Our Bookings Business

Live Entertainment

Our Company is an established industry leader that books a wide variety of live entertainment events in our venues, which perennially include some of the biggest names in music and entertainment. Over the last several years, our venues have been key destinations for artists such as the Eagles, U2, Pearl Jam, Foo Fighters,

Paul McCartney, Drake, Bruno Mars, Justin Bieber, Dead and Company, Madonna, Mumford & Sons, Phish, Fleetwood Mac, Adele, Eric Clapton, Bruce Springsteen, Rihanna, Justin Timberlake, P!nk, Kanye West, Stevie Wonder, Ariana Grande and Dave Chappelle.

In addition, we have successfully developed new ways to increase the utilization of our venues, while creating unique experiences for artists and fans with our various residencies — including The Garden’s first music franchise: Billy Joel at The Garden. As part of this extraordinary residency, Billy Joel has appeared monthly at MSG since January 2014, for a total of 73 shows, bringing his overall performances at The World’s Most Famous Arena to 119 overall (through February 2020). In 2016, the Company launched its second residency, as legendary New Yorker and comedian Jerry Seinfeld began a successful two-year run at the Beacon Theatre, with all 36 performances — which concluded in December 2017 — selling out. In 2019, Seinfeld resumed his successful residency, which now includes 76 total performances (through February 2020). That was also the year that kicked off a new multi-year, dual-city residency with Tedeschi Trucks Band at both the Beacon Theatre and The Chicago Theatre — the first residency to span two cities.

Our venues also attract family shows and theatrical productions, which this past year included: PAW Patrol Live!, Sesame Street Live!, Cirque du Soleil’s Twas’ the Night Before . . ., The Lightning Thief: The Percy Jackson Musical, and Pride & Joy: The Marvin Gaye Musical. In addition, we frequently serve as the backdrop for high-profile special events, such as the 60th Annual Grammy Awards, which returned to The Garden for the first time in 15 years in 2018. Other significant events that have taken place at our venues include the Tony Awards, America’s Got Talent, the final season premiere of HBO’s Game of Thrones and the MTV Video Music Awards. We have also hosted appearances by luminaries such as His Holiness Pope Francis, His Holiness the Dalai Lama and the Prime Minister of India, Narendra Modi; along with graduations, television upfronts, product launches and film premieres.

Although we primarily license our venues to third-party promoters for a fee, we also promote or co-promote shows where we have economic risk relating to the event. The Company currently does not promote or co-promote events outside of our venues.

Sports

MSG’s professional sports teams, the Knicks and Rangers, are two of the most storied franchises in sports, with passionate, multi-generational fanbases. In connection with the Distribution, we will enter into long-term Arena License Agreements with MSG that will require the Knicks and the Rangers to continue to play their home games at The Garden, which will allow us to continue to host their long-time fans in The World’s Most Famous Arena.

Our Company also promotes, produces and/or presents a broad array of other live sporting events, including professional boxing, college basketball, college hockey, professional bull riding, mixed martial arts, esports and college wrestling. Many of these events are among the most popular in our history and are perennial highlights on our annual calendar, as well as some of The Garden’s longest-running associations.

Professional boxing has had a long history with The Garden. The Arena famously hosted Muhammad Ali and Joe Frazier’s 1971 “Fight of the Century,” considered among the greatest sporting events in modern history, as well as numerous other boxing greats, including: Joe Louis, Rocky Marciano, Sugar Ray Robinson, Willie Pep, Emile Griffith, George Foreman, Roberto Duran, Oscar De La Hoya, Sugar Ray Leonard, Lennox Lewis, Roy Jones, Jr., Mike Tyson, Evander Holyfield, Miguel Cotto and Wladimir Klitschko. The Garden has recently hosted the World Heavyweight Championship, as well as several marquee matchups featuring the world’s top fighters, including the New York debut of international superstar Canelo Alvarez.

In recent years, the Company has also expanded its presence in mixed martial arts. In June 2016, the Forum hosted its first-ever Ultimate Fighting Championship (“UFC”) event with UFC 199. Since the return of professional mixed martial arts in New York State in 2016, The Garden has annually hosted UFC events,

including in November 2019 a highly anticipated card featuring Jorge Masvidal and Nate Diaz. Bellator MMA has also hosted internationally broadcasted events at both The Garden and the Forum, including, most recently, Bellator 238 at the Forum in January 2020. The Professional Fighters League has also held events at Hulu Theater at Madison Square Garden, including its inaugural World Championships.

College sports have been a mainstay at The Garden for decades, with college basketball celebrating 85 years at The World’s Most Famous Arena during the 2018-19 season. In addition to St. John’s University calling The Garden its “home away from home,” this past year The Garden played host to the highly anticipated Big East Tournament, as well as the annual Jimmy V Classic and the 2K Empire Classic. Additionally, The Garden continues to build its college hockey tradition, with a popular biennial event featuring Cornell University vs. Boston University, as well as visits from such top national teams such as Boston College, North Dakota, Harvard, Michigan and Minnesota.

Other recent world-class sporting events have included the NBA All-Star Game in 2015, and the NCAA Division I Men’s Basketball East Regional Finals, which The Garden hosted in 2014 and 2017, and will again in March 2020.

Our Productions

One of the Company’s core properties, the Christmas Spectacular — created for Radio City Music Hall and featuring the world-famous Rockettes — has been performed at Radio City Music Hall for 87 years. This cherished production has become an annual tradition for many, creating a holiday touchstone that generations of fans want to return to time and again. The show’s enduring popularity is driven by the awe-inspiring performance of the beloved Rockettes, as well as by festive holiday scenes, cherished traditional elements and state-of-the-art special effects. In recent years, the show has also incorporated several new technology enhancements, including an all-new groundbreaking finale scene, “Christmas Lights.” Additionally, large-scale digital projections have been added to enhance both the finale and classic numbers throughout the show, creating an immersive environment that extends beyond the stage onto all eight of Radio City’s proscenium arches. During the 2019 holiday season, the Christmas Spectacular once again sold more than one million tickets.

We acquired the rights to the Christmas Spectacular in 1997, and those rights are separate from, and do not depend on the continuation of, our lease of Radio City Music Hall. We also hold rights to the Rockettes brand in the same manner.

The Company believes it has a significant and unique asset in the Rockettes and continues to strengthen and broaden the Rockettes brand by targeting the most prominent and effective vehicles that elevate their visibility and underscore their reputation as beloved American cultural icons. The Rockettes have appeared or performed at high-profile events, including Presidential Inaugurations, the Macy’s Thanksgiving Day Parade, Macy’s 4th of July Fireworks event, the New Year’s Eve Times Square Ball Drop, the Tony Awards, and television shows (America’s Got Talent, Project Runway, The Today Show, Live with Kelly and Ryan and The Tonight Show with Jimmy Fallon), among many others. We continue to pursue opportunities to generate greater brand awareness, including television and public appearances and dance education offerings. In addition, we are also exploring future shows that incorporate new styles of dance and serve as a complement to the long-running Christmas Spectacular.

Our Entertainment Dining and Nightlife Offerings

The Company owns a controlling interest in Tao Group Hospitality, which strengthens the Company’s portfolio of live offerings with a complementary, hospitality group with widely recognized brands that include: Tao, Marquee, Lavo, Avenue, Beauty & Essex and Cathédrale. Since 2000, Tao Group Hospitality has been creating some of the most innovative premium experiences in the entertainment dining and hospitality industry. Today, Tao Group Hospitality operates 30 venues — 13 venues in New York City, six venues in Las Vegas, five

venues in Los Angeles, one venue in Chicago, four venues in Singapore and one venue in Sydney, Australia — and is actively developing opportunities to expand on their success with new venues. Since September 2018, Tao Group Hospitality has opened TAO Chicago, along with new entertainment dining and nightlife venues as part of the Moxy Chelsea and Moxy East Village hotels in New York City. Tao Group Hospitality also debuted three new venues in Singapore — Marquee, Avenue and KOMA.

Essentially all of the venues have either long-term leases or long-term management agreements, with some having options to extend the term for multiple years.

Our Festival Offering

The Company owns a controlling interest in BCE, the entertainment production company known for successfully creating and operating New England’s premier music festival — Boston Calling, which last year celebrated its 10th edition. The 2019 three-day festival took place over Memorial Day weekend at the Harvard Athletic Complex and featured more than 50 performances from a diverse array of musicians, bands and comedians, including headliners Twenty One Pilots, Tame Impala and Travis Scott. BCE is now gearing up for its 2020 festival, which includes headliners the Foo Fighters, Rage Against the Machine and Red Hot Chili Peppers.

Our Performance Venues

The Company operates a mix of iconic performance venues that continue to build on their historic prominence as destinations for unforgettable experiences and events. Individually, these venues are each premier showplaces, with a passionate and loyal following of fans, performers and events. Taken together, we believe they represent an outstanding, unmatched collection of venues.

We own or operate under long-term leases a total of six venues in New York City, Chicago and Inglewood, CA. Our New York City venues are the Madison Square Garden Complex (which includes both The Garden and Hulu Theater at Madison Square Garden), Radio City Music Hall and the Beacon Theatre. Our portfolio of venues also includes the Forum in Inglewood, CA and The Chicago Theatre. The Company is also currently building a new venue in Las Vegas, MSG Sphere at The Venetian, and has plans to build an MSG Sphere venue in London, once we have received all necessary approvals and have further advanced our design for the venue, which will also incorporate learnings from our MSG Sphere in Las Vegas.

The Garden

The Garden has been a celebrated center of New York life since it first opened its doors in 1879. Over its 140-year history, there have been four Garden buildings, each known for showcasing the best of the era’s live sports and entertainment offerings. We believe that The Garden has come to epitomize the power and passion of live sports and entertainment to people around the world, with an appearance at The Garden often representing a pinnacle of an athlete’s or performer’s career. Known as “The World’s Most Famous Arena,” The Garden has been the site of some of the most memorable events in sports and entertainment, and, together with Hulu Theater at Madison Square Garden, has hosted hundreds of events and millions of visitors this past year. In 2009, Billboard magazine ranked The Garden the number-one venue of the decade in its respective class based upon gross ticket sales, and for the past two years Billboard has awarded The Garden “Top Arena” in its annual Live Music Awards. Music industry subscribers to the trade magazine Pollstar have voted The Garden “Arena of the Year” 23 times since the inception of the awards in 1989. The Garden is the highest-grossing entertainment venue of its size in the world based on Billboard magazine’s 2019 year-end rankings.

Over the Garden’s history, it has been the setting for countless “big events,” inspired performances and one-of-a-kind moments that have helped define sports, entertainment and culture. Highlights include: “The Fight of the Century” between Muhammad Ali and Joe Frazier in 1971; the 1970 Knicks’ NBA Championship; the Rangers’ 1994 Stanley Cup Championship; three Democratic National Conventions and one Republican National

Convention; Marilyn Monroe’s famous birthday serenade to President John F. Kennedy; Frank Sinatra’s “Main Event” concert in 1974; the only U.S. concerts from the reunited Cream; the 25th Anniversary Rock and Roll Hall of Fame concerts; the 60th Annual Grammy Awards; and Billy Joel’s record-breaking 119 total performances at The Garden (through February 2020). In September 2015, His Holiness Pope Francis celebrated Mass at The Garden as part of his successful U.S. visit, which marked the first time a current pope has visited The Garden since Pope John Paul II in 1979. The Garden has also hosted four prominent benefit concerts, which galvanized the public to respond to national and global crises, including the first of its kind, “The Concert for Bangladesh” in 1972, as well as “The Concert for New York City,” following the events of 9/11; “From the Big Apple to the Big Easy,” held after Hurricane Katrina in 2005; and “12-12-12, The Concert for Sandy Relief” in 2012. Through the Arena License Agreements, The Garden will continue to be home to two of MSG’s professional sports franchises — the Knicks and Rangers.

The current Madison Square Garden Complex, located between 31st and 33rd streets and Seventh and Eighth avenues on Manhattan’s West Side, opened on February 11, 1968 with a salute to the United Service Organizations hosted by Bob Hope and Bing Crosby. From a structural standpoint, the construction of the current Garden was considered an engineering wonder for its time, including its famous circular shape and unique, cable-supported ceiling, which contributes to its intimate feel. It was the first large structure built over an active railroad track. The builder, R.E. McKee, had a national reputation and was later recognized as a “Master Builder” by the construction industry. Architect Charles Luckman had one of the largest firms in the country and designed such buildings as the Prudential Tower in Boston, NASA’s flight center in Houston and the Forum in Inglewood, CA.

Following a three-year, top-to-bottom transformation, in October 2013, the Garden was fully transformed, featuring improved sightlines; additional entertainment and dining options; new concourses; upgraded hospitality areas; new technology; unique historic exhibits; and a completely transformed interior, where the intimacy of the arena bowl and The Garden’s world-famous ceiling were maintained. Focused on the total fan experience, the transformation was designed to benefit everyone in attendance, whether first-time visitors, season ticket subscribers, athletes, artists, suite holders or marketing partners. The Garden’s transformation ensured that attending an event at “The World’s Most Famous Arena” remained unlike anywhere else.

We own the Madison Square Garden Complex, the platform on which it is built and development rights (including air rights) above our property. Madison Square Garden sits atop Penn Station, a major commuter hub in Manhattan, which is owned by the National Railroad Passenger Corporation (Amtrak). While the development rights we own would permit us to expand in the future, any such use of development rights would require various approvals from the City of New York. The Garden seats up to approximately 21,000 spectators for entertainment and sporting events and, along with Hulu Theater at Madison Square Garden, contains approximately 1,100,000 square feet of floor space over 11 levels.

Hulu Theater at Madison Square Garden

Hulu Theater at Madison Square Garden, which has approximately 5,600 seats, opened as part of the fourth Madison Square Garden Complex in 1968, with seven nights of performances by Judy Garland. Since then, some of the biggest names in live entertainment have played the theater, including: The Who, Bob Dylan, Diana Ross, Elton John, James Taylor, Mary J Blige, Pentatonix, John Legend, Ellie Goulding, Chris Rock, Neil Young, Bill Maher, Radiohead, Jerry Seinfeld and Van Morrison. Hulu Theater at Madison Square Garden has also hosted boxing events and the NBA Draft, upfronts, product launches, award shows, and other special events such as Wheel of Fortune and audition shows for America’s Got Talent, as well as a variety of theatrical productions and family shows, including Cirque du Soleil’s ’Twas the Night Before…, A Christmas Story, Elf The Musical, Paw Patrol Live!, and Sesame Street Live!. Our Company has a multi-faceted marketing partnership with Hulu, a leading premium streaming service, that includes exclusive naming rights. Hulu Theater at Madison Square Garden is the tenth highest-grossing entertainment venue of its size in the world, based on Billboard magazine’s 2019 year-end rankings.

Radio City Music Hall

Radio City Music Hall has a rich history as a national theatrical and cultural mecca since it was first built by theatrical impresario S.L. “Roxy” Rothafel in 1932. Known as “The Showplace of the Nation,” it was the first building in the Rockefeller Center complex and, at the time, the largest indoor theater in the world. Radio City Music Hall, a venue with approximately 6,000 seats, hosts concerts, family shows and special events, and is home to the Christmas Spectacular. See “— Our Business — Our Productions.” Over its history, entertainers who have graced the Great Stage include: Aretha Franklin, Lady Gaga, Brian Wilson, Harry Styles, Bastille, John Mulaney, Mariah Carey, Nine Inch Nails, Christina Aguilera, Britney Spears, Tony Bennett, Billie Eilish, Sebastian Maniscalco, Dave Chappelle and Yes. In 2009, Billboard magazine ranked Radio City Music Hall the number-one venue of the decade in its respective class based upon gross ticket sales. Radio City Music Hall is the highest-grossing entertainment venue of its size in the world, based on Billboard magazine’s 2019 year-end rankings.

In 1978, Radio City Music Hall was designated a New York City landmark by the NYC Landmarks Preservation Commission and a national landmark on the National Register of Historic Places. We acquired the lease in 1997, and in 1999, performed a complete restoration that returned the legendary theater to its original grandeur. The acclaimed restoration touched all aspects of the venue, including burnishing the ceilings of Radio City Music Hall with 720,000 sheets of gold and aluminum leaf, replacing the existing stage curtain with a new 112-foot wide golden silk curtain, and cleaning the three-story tall mural “The Fountain of Youth,” by Ezra Winter, which looms above the grand staircase. State-of-the-art sound systems, lighting and HDTV capabilities were also installed.

We lease Radio City Music Hall, located at Sixth Avenue and 50th Street in Manhattan, pursuant to a long-term lease agreement. The lease on Radio City Music Hall expires in 2023. We have the option to renew the lease for an additional 10 years by providing two years’ notice prior to the initial expiration date.

Beacon Theatre

In November 2006, we entered into a long-term lease agreement to operate the legendary Beacon Theatre, a venue with approximately 2,800 seats, which sits on the corner of Broadway and 74th Street in Manhattan. The Beacon Theatre was conceived by S. L. “Roxy” Rothafel and is considered the “older sister” to Radio City Music Hall. Designed by Chicago architect Walter Ahlschlager, the Beacon Theatre opened in 1929 as a forum for vaudeville acts, musical productions, drama, opera and movies. The Beacon Theatre was designated a New York City landmark by the NYC Landmarks Preservation Commission in 1979 and a national landmark on the National Register of Historic Places in 1982. Over its history, the Beacon Theatre has been a venerable rock and roll room for some of the greatest names in music, including: Steely Dan, Coldplay, Alice Cooper, Dave Matthews Band, Crosby Stills & Nash, Elton John, John Fogerty, Hozier, Tom Petty and the Heartbreakers, Tedeschi Trucks Band, Eddie Vedder and Bob Dylan, as well as The Allman Brothers Band, which played their 238th show at the Beacon Theatre in October 2014, marking their final concert as a band. The venue has also hosted special events, such as film premieres for the Tribeca Film Festival and comedy events, including our Jerry Seinfeld residency, along with numerous luminaries such as His Holiness the Dalai Lama in 2009 and 2013, and President Bill Clinton in 2006, when the Rolling Stones played a private concert in honor of his 60th birthday.

In August 2008, the Beacon Theatre was closed for a seven-month restoration project to return the theater to its original 1929 grandeur. The restoration of the Beacon Theatre focused on all historic, interior public spaces of the building, backstage and back-of-house areas, and was based on extensive historic research, as well as detailed, on-site examination of original, decorative painting techniques that had been covered by decades-old layers of paint. The Beacon Theatre has won several architectural awards recognizing its outstanding restoration. The widely acclaimed, comprehensive restoration was similar to our restoration of Radio City Music Hall, and reflects our commitment to New York City. The Beacon Theatre is the sixth-highest-grossing entertainment venue of its size in the world, based on Billboard magazine’s 2019 year-end rankings.

Our lease on the Beacon Theatre expires in 2026.

The Forum

In June 2012, we added a West Coast home with the purchase of the Forum in Inglewood, CA, which serves the Greater Los Angeles area. Following an extensive reinvention of the historic venue, on January 15, 2014, the Forum re-opened with the first of six concerts by the legendary Eagles and is once again a thriving destination for both artists and music fans.

The Forum is the only arena-sized venue in the country dedicated to music and entertainment. Architecturally, the interior of the bowl has been completely modernized and features superior acoustics, along with flexible seating that ranges from 7,000 seats to 17,600 seats. Fans seated on the floor have access to one of the largest general admission floors in the country, with approximately 8,000 square feet of event level hospitality offerings. The Forum also offers exclusive spaces for VIP customers, including the historic Forum Club, and, for artists, delivers a first-class experience that includes nine, star-caliber dressing rooms with high-end amenities. Among the key features that were resurrected in an effort to replicate the original design is the exterior color of the venue, which was returned to the 1960’s “California sunset red,” and is now known as “Forum Red.” Other outdoor features include the addition of a distinct and iconic Forum marquee and a 40,000-square-foot terrace that surrounds the perimeter of the building, which serves as a premier pre-show hospitality space.

The original Forum was designed by renowned architect Charles Luckman, who also designed The Garden that opened in 1968. The historic West Coast venue, which opened in 1967, has played host to some of the greatest musical performers of all time, including The Rolling Stones, The Jackson 5, Bob Dylan, Led Zeppelin, Madonna, Van Halen, Coldplay, Prince and many others. In addition, the Forum was home to the Los Angeles Lakers and Los Angeles Kings until 1999.

Since re-opening in 2014, the Forum has received several architectural awards recognizing its outstanding restoration. The venue’s impressive lineup of entertainers since the restoration has included: the Eagles, Justin Timberlake, U2, Drake, Kanye West, Eric Clapton, Guns N’ Roses, Stevie Wonder, Aerosmith, Steely Dan, Fleetwood Mac, Jennifer Lopez, KISS, Mumford & Sons, Foo Fighters, The Weeknd, P!nk and Rihanna as well as His Holiness the Dalai Lama. The Forum has also hosted a number of special events such as the MTV Video Music Awards and Nickelodeon’s Kids’ Choice Awards, as well as select sporting events, including Championship Boxing and mixed martial arts. The Forum is the third highest-grossing entertainment venue of its size in the world, based on Billboard magazine’s 2019 year-end rankings.

As further described under “Business — Pending Sale of the Forum — Membership Interest Purchase Agreement,” on March 24, 2020 the Company entered into a Membership Interest Purchase Agreement contemplating the sale of the Forum and the settlement of related litigation described under “Risk Factors — Our Business Faces Intense and Wide-Ranging Competition Which May Have a Material Negative Effect on Our Business and Results of Operations.” Pursuant to the Membership Interest Purchase Agreement, the buyer has agreed to pay the Company total cash consideration of $400 million for the sale of the Forum and the legal settlement, subject to certain adjustments, and the transaction is estimated to result in net proceeds to the Company of approximately $256 million (which amount remains subject to change). The transaction is subject to customary closing conditions and is expected to close during the second calendar quarter of 2020.

The Chicago Theatre

In October 2007, to provide us with an anchor for content and distribution in a key market in the Midwest, we purchased the legendary Chicago Theatre, a venue with approximately 3,600 seats. The Chicago Theatre, which features its famous six-story-high “C-H-I-C-A-G-O” marquee, was built in 1921 and designed in the French Baroque style by architects Cornelius W. Rapp and George L. Rapp. It is the oldest surviving example of this architectural style in Chicago today, and was designated a Chicago landmark building in 1983.

The Chicago Theatre has become a highly attractive destination for concerts, comedy shows and other live events, hosting a wide range of entertainers, including: Bob Dylan, Mumford & Sons, David Byrne, Neil Young, Janelle Monae, Jerry Seinfeld, Janet Jackson, Bob Weir, Jim Gaffigan, Conan O’Brien, Amy Schumer and Steely Dan. The venue has also hosted theatrical tours such as Cirque du Soleil’s ’Twas the Night Before…, A Christmas Story, The Wizard of Oz, Paw Patrol Live! and Dr. Seuss’ How The Grinch Stole Christmas! The Musical. The Chicago Theatre is the third highest-grossing entertainment venue of its size in the world, based on Billboard magazine’s 2019 year-end rankings.

MSG Sphere

The Company is progressing with its plans to create the “venue of the future” with MSG Sphere, which will utilize cutting-edge technologies to create the next-generation of immersive experiences. Key design features of MSG Sphere are expected to include:

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A fully programmable LED exterior and an interior bowl that features the world’s largest and highest resolution LED screen known today — more than 160,000 square feet of display surface;

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An advanced acoustics system featuring beamforming technology that will deliver crystal-clear audio;

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An infrasound haptic system that will use deep vibrations so guests can “feel” the experience;

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A custom video system capable of capturing, curating and distributing both today’s and tomorrow’s content; and

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An advanced architecture for connectivity that will enable a broader range of content, greater interaction among guests and more immersive entertainment experiences.

These technologies will come together to create a powerful platform, which we believe will make MSG Sphere the venue of choice for a wide variety of content — including attractions, concerts, residencies, corporate events, product launches and select sporting events.

The Company will build its first MSG Sphere in Las Vegas on land leased from Las Vegas Sands Corp. (“Sands”), which is adjacent to The Venetian Resort. The Company has begun construction on the approximately 17,500-seat venue.

Sands agreed to provide us with $75 million to help fund the construction costs, including the cost of a pedestrian bridge that links MSG Sphere to the Sands Expo Convention Center. Through December 31, 2019, Sands paid us $37.5 million of the amount for construction costs. Sands will receive priority access to purchase tickets to events at the venue for inclusion in hotel packages or other uses, as well as certain rent-free use of the venue to support its Sands Expo Convention Center business. The ground lease has no fixed rent; however, if certain return objectives are achieved, Sands will receive 25% of the after-tax cash flow in excess of such objectives. The lease is for a term of 50 years.

In February 2018, we announced the purchase of land in Stratford, London, which we expect will become home to a future MSG Sphere. We currently expect that MSG Sphere in London will be substantially similar to MSG Sphere in Las Vegas, including having approximately the same seating capacity. The Company submitted a planning application to the local planning authority in March 2019 and the planning application process has continued in 2020. The Company is using this time to continue building on its design and construction learnings in Las Vegas, which it will leverage in London. As we work through this planning application and design process, we expect our timeline will evolve and, therefore, we do not have a target opening date at this time.

With respect to the MSG Sphere in Las Vegas, the widespread global effects of COVID-19 have resulted in significant impediments to construction that are beyond our control, including disruptions to our supply chain. As a result, the Company will implement a temporary suspension of construction, with all work ceasing over

approximately the next two weeks. The Company remains committed to building a state-of-the-art venue in Las Vegas and looks forward to quickly and efficiently resuming construction as soon as practicable. As a result of this delay, we do not expect to achieve our goal of opening the venue in calendar year 2021. We continue to monitor the progress of both London and Las Vegas.

Because of the transformative nature of these venues, we believe there could be other markets — both domestic and international — where MSG Sphere can be successful. The design of MSG Sphere will be flexible to accommodate a wide range of sizes and capacities — from large-scale to smaller and more intimate — based on the needs of any individual market. As we explore selectively extending the MSG Sphere network, we will be open to multiple types of transaction structures, including owned, operated, managed, licensed and joint ventures.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — MSG Spheres.”

Pending Sale of Forum — Membership Interest Purchase Agreement

On March 24, 2020, MSG, through three of its wholly-owned subsidiaries, all of which will be subsidiaries of the Company at the time of the Distribution, MSG National Properties, LLC (the “Seller”), MSG Sports & Entertainment, LLC (“Seller Parent”), and MSG Forum, LLC (“MSG Forum”) entered into a Membership Interest Purchase Agreement (the “MIPA”) with CAPSS LLC (the “Buyer”) and Polpat LLC (“Buyer Parent”). Pursuant to the MIPA, (i) the Seller has agreed to sell 100% of the membership interests of MSG Forum to the Buyer, (ii) MSG Forum, Seller Parent, the Buyer and certain other parties have agreed to mutually release all claims and counterclaims related to the litigations (as defined below) and (iii) the Buyer has agreed to pay the Seller cash consideration, to be deposited in escrow, of $400 million, subject to certain adjustments. Pursuant to the MIPA, the Buyer has agreed to pay the Company cash consideration of $400 million for the sale of the Forum and the legal settlement, subject to certain adjustments, and the transaction is estimated to result in net proceeds to the Company of approximately $256 million (which amount remains subject to change).

We currently expect the transaction to close during the second calendar quarter of 2020. The closing of the transaction is subject to, among other things, (i) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) the execution of the settlement and mutual release agreement by MSG Forum, Seller Parent, the Buyer and certain other parties providing for a mutual release of all claims and counterclaims at issue in the previously disclosed Company subsidiary lawsuit against the City of Inglewood and other defendants, including the Buyer, related to the planned new Los Angeles Clippers arena project of the Buyer (the “Buyer Project”), as well as other related litigations (collectively, the “litigations”), and (iii) certain other customary conditions, including relating to the parties’ representations and warranties in the MIPA and the performance of their respective obligations. The closing of the transaction is not conditioned on the receipt of any third party consents or financing. There is no assurance that the Seller will complete the sale of MSG Forum on the terms provided for in the MIPA, or at all.

The MIPA contains customary representations and warranties made by each of the Seller, Seller Parent, MSG Forum, the Buyer and Buyer Parent. The MIPA also contains customary pre-closing covenants, including covenants, among others, (i) by MSG Forum to operate its businesses in the ordinary course consistent with past practice, subject to actions MSG Forum reasonably believes are necessary or appropriate to respond to the COVID-19 virus, (ii) by MSG Forum and the Buyer to cause the existing stays of the litigations to be extended to a date that is after May 29, 2020 (the “Outside Closing Date”), (iii) by the Seller, Seller Parent and MSG Forum to refrain from taking specified actions, including from taking any actions in opposition to the Buyer Project, (iv) by Buyer Parent to maintain certain levels of net worth and unencumbered assets, and (v) by each party to use reasonable best efforts to obtain antitrust clearance and to cause the conditions to the MIPA to be satisfied. If the MIPA is terminated prior to closing, the covenant restricting Seller, Seller Parent and MSG Forum from opposing the Buyer Project terminates simultaneously therewith.

The MIPA contains customary termination rights, including, among others and subject to certain exceptions, (i) for either the Buyer or the Seller, if the transaction is not consummated by the Outside Closing Date, as such date may be extended by an additional 60 days under certain circumstances or by mutual agreement of the Buyer and the Seller and (ii) for the Buyer, in connection with the breach of certain specified default provisions (the “specified default provisions”) prior to the closing of the transaction, which prohibit the Seller and Seller Parent (and MSG Forum prior to closing) from taking specified actions to oppose the Buyer Project. The MIPA provides that, in connection with the termination of the MIPA under specified circumstances, the Seller may be entitled to retain approximately $40 million in cash from the purchase price deposited into escrow by the Buyer.

The MIPA also provides that, in connection with a breach of the specified default provisions after the closing of the transaction, the Seller and Seller Parent, jointly and severally, may be required to pay the Buyer $100 million.

The MIPA has been filed as an exhibit to the registration statement, of which this information statement forms a part, that we have filed with the SEC, and the foregoing summary of such agreement is qualified in its entirety by reference to such agreement.

Other Investments

Our Company explores investment opportunities that strengthen its existing position within the entertainment landscape and/or allow us to exploit our assets and core competencies for growth.

The Company owns a 30% interest in SACO, a global provider of high-performance LED video lighting and media solutions. The Company is utilizing SACO as a preferred display technology provider for MSG Spheres and is benefitting from agreed-upon commercial terms. In addition, the Company also has other investments in various entertainment companies and related technologies, accounted for either under the equity method or at fair value.

Garden of Dreams Foundation

Our Company has a close association with the Garden of Dreams Foundation (the “Foundation”), a non-profit charity that is dedicated to bringing life-changing opportunities to young people in need. The Foundation provides young people in our communities with access to educational and skills opportunities; mentoring programs; and memorable experiences that enhance their lives, help shape their futures and create lasting joy. Since its inception in 2006, the Foundation has impacted more than 375,000 young people and their families. We participate in many of the hundreds of events and programs the Foundation hosts each year, notably the annual Garden of Dreams Talent Show, which features children from Garden of Dreams’ 30 partner organizations and takes place on the Great Stage at Radio City Music Hall; the Adopt-a-Family program, which provides gifts and resources to families in need; the “Make A Dream Come True Program,” where children enjoy unforgettable experiences with celebrities and at events; special behind-the-scenes experiences at concerts and family shows; and, unveiling ceremonies for the Foundation’s special projects. This has included the refurbishment of gymnasiums and pediatric areas at local hospitals, and the construction of new dance and music studios.

Regulation

Our business is subject to the general powers of federal, state and local governments, as well as foreign governmental authorities, to deal with matters of health and public safety. As of March 31, 2020, as a result of government mandated assembly limitations and closures, all of our scheduled events at The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, The Chicago Theatre and the Forum are postponed or cancelled through April, and continue to be impacted throughout the month of May. We are not recognizing any revenue from those events and it is unclear whether and to what extent those events will

be rescheduled. Additionally, public officials have imposed mandates limiting restaurants and bars to only take-out and delivery service and requiring that nightlife venues close in the cities in which Tao Group Hospitality operates. As a result, all Tao Group Hospitality venues in the United States and a majority of Tao Hospitality Group venues outside of the United States are currently closed, which has resulted in the business being materially impacted. It is unclear how long these restrictions will be in effect. We are unable to predict when we will be permitted or able to resume normal business operations and what the longer-term effects, if any, of these events will be. See “Risk Factors — Our Operations and Operating Results Have Been, and Continue to be, Materially Impacted by Coronavirus and Government Actions Taken in Response” and “Management’s Discussion and Analysis — Introduction — Coronavirus Impacts.”

Our business is subject to legislation governing the sale and resale of tickets and consumer protection statutes generally.

Our venues, like all public spaces, are subject to building and health codes and fire regulations imposed by the state and local governments in the jurisdictions in which they are located. Our venues are also subject to zoning and outdoor advertising regulations, and, with respect to Radio City Music Hall and the Beacon Theatre, landmark regulations which restrict us from making certain modifications to our facilities as of right or from operating certain types of businesses. Our venues also require a number of licenses to operate, including occupancy permits, exhibition licenses, food and beverage permits, liquor licenses and other authorizations and, with respect to The Garden, a zoning special permit granted by the New York City Planning Commission. In the jurisdictions in which these venues are located, the operator is subject to statutes that generally provide that serving alcohol to a visibly intoxicated or minor guest is a violation of the law and may provide for strict liability for certain damages arising out of such violations. In addition, our venues are subject to the federal Americans with Disabilities Act (and related state and local statutes), which requires us to maintain certain accessibility features at each of our facilities. We and our venues themselves are also subject to environmental laws and regulations. See “Risk Factors — We Are Subject to Extensive Governmental Regulation and Our Failure to Comply with These Regulations May Have a Material Negative Effect on Our Business and Results of Operations.”

Our business is also subject to certain regulations applicable to our Internet websites and mobile applications. We maintain various websites and mobile applications that provide information and content regarding our business, offer merchandise and tickets for sale, make available sweepstakes and/or contests and offer hospitality services. The operation of these websites and applications may be subject to a range of federal, state and local laws such as privacy and protection of personal information, accessibility for persons with disabilities and consumer protection regulations. In addition, to the extent any of our websites collect information from children under 13 years of age or are intended primarily for children under 13 years of age, we must comply with certain limits on commercial matter.

Our business is also subject to regulation regarding working conditions and minimum wage requirements. See “Risk Factors — Increases in Labor Costs Could Slow the Growth of or Harm Tao Group Hospitality.”

Our international operations are subject to laws and regulations of the countries in which they operate, as well as international bodies, such as the European Union. We are subject to laws and regulations relating to, among other things, foreign privacy and data protection, such as the E.U. General Data Protection Regulation, currency and repatriation of funds, anti-bribery, anti-money laundering and anti-corruption, such as the Foreign Corrupt Practices Act and the U.K. Bribery Act. These laws and regulations apply to the activities of the Company and, in some cases, to individual directors, officers and employees of the Company and agents acting on our behalf. Certain of these laws impose stringent requirements on how we can conduct our foreign operations and could place restrictions on our business and partnering activities.

Competition

Our business competes, in certain respects and to varying degrees, with other live performances, sporting events, movies, home entertainment (including the Internet and online services, social media and social networking platforms, television, video and gaming devices), restaurants and nightlife venues, and the large number of other entertainment and public attraction options available to members of the public. Our businesses typically represent alternative uses for the public’s entertainment dollars. The primary geographic area in which we operate, New York City, is among the most competitive entertainment markets in the world, with the world’s largest live theater industry and extensive performing arts venues, 12 major professional sports teams, thousands of restaurants and nightlife venues, numerous museums, galleries and other attractions, and numerous movie theaters available to the public. We also have significant operations in Los Angeles and Las Vegas. Our venues and live offerings outside of New York City similarly compete with other entertainment, dining and nightlife options in their respective markets and elsewhere. We compete with these other entertainment options on the basis of the quality of our productions, the public’s interest in our content, the price of our tickets, the quality, location and atmosphere, including the nature and condition of the setting, of our venues, our service, the price, quality and presentation of our food and the overall experience we provide.

We compete for bookings with a large number of other venues both in the cities in which our venues are located and in alternative locations capable of booking the same productions and events. Generally, we compete for bookings on the basis of the size, quality, expense and nature of the venue required for the booking. Some of our competitors may have a larger network of venues and/or greater financial resources.

In addition to competition for bookings and ticket sales, we also compete to varying degrees with other productions and sporting events for advertising and sponsorship dollars.

Employees

As of June 30, 2019, we had approximately 2,300 full-time union and non-union employees and 9,000 part-time union and non-union employees. Approximately 58% of our employees were represented by unions as of June 30, 2019. Approximately 14% of such union employees are subject to CBAs that were expired as of June 30, 2019 and approximately 37% of such employees are subject to CBAs that will expire by June 30, 2020 if they are not extended prior thereto. Labor relations can be volatile, though our current relationships with our unions taken as a whole are positive. We have from time to time faced labor action or had to make contingency plans because of threatened or potential labor actions.

As of March 31, 2020, we had approximately 1,600 full-time union and non-union employees and 7,900 part-time union and non-union employees. The decrease in the number of employees as compared to June 30, 2019 is primarily due to the furlough of employees of Tao Group Hospitality as a result of the suspension of Tao Group Hospitality’s business because of coronavirus.

Properties

We own the Madison Square Garden Complex, which includes The Garden (with a maximum capacity of approximately 21,000 seats) and Hulu Theater at Madison Square Garden (approximately 5,600 seats) in New York City, comprising approximately 1,100,000 square feet; The Chicago Theatre (approximately 3,600 seats) in Chicago comprising approximately 72,600 square feet; and the Forum (approximately 17,600 seats) in Inglewood, CA comprising approximately 307,000 square feet.

Significant properties that are leased in New York City include approximately 324,000 square feet housing Madison Square Garden’s administrative and executive offices, approximately 577,000 square feet comprising Radio City Music Hall (approximately 6,000 seats) and approximately 57,000 square feet comprising the Beacon Theatre (approximately 2,800 seats). We also lease storage space in various other locations. For more information on our venues, see “Business — Our Business — Our Performance Venues.”

We also lease property in Las Vegas, Nevada and Paddington, London and own property in Stratford, London on which we intend to construct new venues — known as “MSG Sphere.” See “Business — Our Business — Our Performance Venues — MSG Sphere.”

Our Madison Square Garden Complex is subject to and benefits from various easements, including over the “breezeway” into Madison Square Garden from Seventh Avenue in New York City (which we share with other property owners). Additionally, our planned MSG Sphere in Las Vegas will have the benefit of easements with respect to the planned pedestrian bridge to the Sands Expo Convention Center. Our ability to continue to utilize these and other easements requires us to comply with certain conditions. Moreover, certain adjoining property owners have easements over our property, which we are required to maintain so long as those property owners meet certain conditions.

In addition, Tao Group Hospitality is engaged in the management and operation of restaurants, nightlife and hospitality venues in New York City, Las Vegas, Los Angeles, Chicago, Singapore and Australia, of which 14 venues are leased properties. The size of the Tao Group Hospitality’s leased venues ranges from approximately 5,400 to 34,000 square feet and totals approximately 206,000 square feet. Tao Group Hospitality also manages 16 venues (including one venue located in Australia and four venues located in Singapore) that are not owned or leased properties.

Legal Proceedings

The Company is a defendant in various lawsuits. Although the outcome of these lawsuits cannot be predicted with certainty, management of the Company does not believe that resolution of these lawsuits will have a material adverse effect on the Company.

On March 29, 2019, a purported stockholder of MSG filed a complaint in the Court of Chancery of the State of Delaware, derivatively on behalf of MSG, against certain directors of MSG who are members of the Dolan Family Group and against the directors of MSG who are members of the compensation committee of MSG’s board of directors (collectively, the “Director Defendants”). MSG is also named as a nominal defendant in the complaint. The complaint alleges that the Director Defendants breached their fiduciary duties to MSG’s stockholders in approving the compensation packages for James L. Dolan in his capacity as the Executive Chairman and Chief Executive Officer of MSG. The complaint seeks monetary damages in an unspecified amount from the Director Defendants in favor of MSG; rescission of Mr. Dolan’s employment agreements; restitution and disgorgement by Mr. Dolan in respect of his compensation; and costs and disbursements for the plaintiff. On June 5, 2019, the board of directors of MSG formed a Special Litigation Committee to investigate the claims made by the plaintiff and to determine MSG’s response thereto. The litigation has been stayed while the Special Litigation Committee’s work is ongoing.

Financial Information About Geographic Areas

Substantially all of the Company’s revenues and a significant majority of assets are attributed to or located in the United States and are primarily concentrated in the New York City metropolitan area. Tao Group Hospitality, in which the Company has a controlling interest, operates globally with locations in New York City, Las Vegas, Los Angeles, Chicago, Singapore and Sydney, Australia.

Emerging Growth Company Status

We are an “emerging growth company,” as defined in the JOBS Act and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” These exemptions generally include, but are not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Although we are still evaluating the JOBS Act, we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us as long as we qualify as an emerging growth company, except that we have irrevocably elected not to take advantage of the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act.

We will, in general, remain as an emerging growth company for up to five full fiscal years following the Distribution. We would cease to be an emerging growth company and, therefore, become ineligible to rely on the above exemptions, if we:

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have more than $1.07 billion in annual revenue in a fiscal year;

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issue more than $1 billion of non-convertible debt during the preceding three-year period; or

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become a “large accelerated filer” as defined in Exchange Act Rule 12b-2, which would occur after: (i) we have filed at least one annual report pursuant to the Exchange Act; (ii) we have been an SEC-reporting company for at least 12 months; and (iii) the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.

DIVIDEND POLICY

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

The following unaudited pro forma combined balance sheet as of December 31, 2019 and the unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and the year ended June 30, 2019 have been derived from the historical annual and interim combined financial statements of MSG Entertainment Spinco, Inc. (“Spinco” or the “Company”), including the unaudited combined balance sheet as of December 31, 2019, the unaudited combined statement of operations for the six months ended December 31, 2019, and the audited combined statement of operations for the year ended June 30, 2019, included elsewhere in this information statement. The unaudited pro forma combined financial statements presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical annual and interim combined financial statements and corresponding notes thereto included elsewhere in this information statement. The unaudited pro forma combined financial statements reflect certain known impacts as a result of the Distribution to separate the Company from MSG, as well as the impact of the probable disposition of the Company’s ownership interest in the Forum a Company-owned venue in Inglewood, California (the “Forum”). The pro forma adjustments give effect to amounts that are directly attributable to the transactions described below, factually supportable, and with respect to the unaudited pro forma combined statements of operations, expected to have a continuing impact on the Company. The unaudited pro forma condensed combined balance sheet as of December 31, 2019, and the unaudited pro forma condensed combined statements of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively, are presented herein. The unaudited pro forma condensed combined balance sheet has been prepared giving effect to the Distribution as if this transaction had occurred as of December 31, 2019. The unaudited pro forma condensed combined statements of operations have been prepared giving effect to the Distribution as if this transaction had occurred on July 1, 2018. The unaudited pro forma combined financial information also reflects certain assumptions that we believe are reasonable given the information currently available.

In connection with the Distribution, the Company will acquire the subsidiaries, businesses and other assets owned by MSG, directly or indirectly, that own and operate (i) the entertainment business currently owned and operated by MSG through its MSG Entertainment business segment and (ii) the sports bookings business currently owned and operated by MSG through its MSG Sports business segment, as described in this information statement. These transfers to the Company by MSG are treated as a contribution to our capital at MSG’s historical cost.

We expect to experience changes in our ongoing cost structure when we become an independent, publicly-traded company. Our historical combined financial statements include allocations of certain corporate expenses from MSG, including certain public company costs incurred as a combined entity, of $61.8 million for the six months ended December 31, 2019 and $115.4 million for the year ended June 30, 2019, respectively. Following the Distribution, the Company will bear substantially all corporate overhead and support costs, including amounts previously allocated to MSG. The Company will continue to provide support services to MSG pursuant to the Transition Services Agreement (“TSA”). Payments received by MSG for transition services provided will be presented as a reduction of direct operating expense. Refer to note (m) for further details related to the pro forma impact of these adjustments. We believe these costs will not be representative of the future costs we will incur as an independent public company. As such, we estimate incremental public costs ranging between $2 million and $4 million on an annual basis. This range is based on subjective estimates and assumptions therefore, we have not adjusted the accompanying unaudited pro forma combined statements of operations for these estimated costs.

As discussed above, the costs to operate our business as an independent public entity are expected to vary from the historical allocations, including corporate and administrative charges from MSG for the six months ended December 31, 2019 and for the year ended June 30, 2019 reflected in the accompanying historical annual

and interim combined financial statements included elsewhere within this information statement. Such costs principally relate to areas that include, but are not limited to:

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corporate personnel overhead expenses as a result of the Company operating on a stand-alone basis, as well as costs related to the TSA with MSG;

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professional fees associated with external audits, tax, legal and other services;

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anticipated executive compensation costs related to existing and new executive management and excluding future share-based compensation expense;

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costs relating to board of directors’ fees; and

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stock market listing fees, investor relations costs and fees for preparing and distributing periodic filings with the SEC.

Costs related to the separation of approximately $4.8 million have been incurred by MSG for the six months ended December 31, 2019. No costs related to the separation were incurred for the year ended June 30, 2019. These costs include accounting, legal and consulting fees. MSG has assumed all of these costs to date and it will be responsible for all similar costs prior to the separation of the Company from MSG. Therefore, in the historical and unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, no transaction costs incurred by MSG were allocated to the Company or otherwise reflected in our financial results. Similarly, no adjustment related to separation costs has been made to the unaudited pro forma combined balance sheet as of December 31, 2019.

In addition to the Distribution, the Company decided to divest its ownership interest in the Forum and settle certain litigation among the parties to that sale. On March 24, 2020, the Company signed a Membership Interest Purchase Agreement contemplating the sale of the Forum and the settlement of certain related litigation. Pursuant to the Membership Interest Purchase Agreement, the buyer has agreed to pay the Company total cash consideration of $400 million, subject to certain adjustments, and the transaction is estimated to result in net proceeds to the Company of approximately $256 million (which amount remains subject to change). The transaction is subject to customary closing conditions and is expected to close during the second calendar quarter of 2020. The Forum meets the definition of a business under SEC Regulation S-X Rule 11-01(d)-1 and Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 — Business Combinations. In addition, this probable disposition was determined to be significant under SEC Regulation S-X Rule 1-02(w), and the closing of this transaction has been deemed probable by management. This probable disposition does not represent a strategic shift with a major effect on the Company’s operations, and as such, has not been reflected as a discontinued operation under FASB ASC 205-20 — Discontinued Operations. As such, the Company has reflected adjustments related to this probable disposition in the unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively, as well as the unaudited pro forma combined balance sheet as of December 31, 2019.

In preparing the pro forma combined financial statements, we did not include adjustments for the following items:

Certain amounts that we collect for sponsorships, suite rentals and events in advance are recorded as deferred revenue and are recognized as revenues when earned for both accounting and tax purposes. In connection with the reorganization transactions related to the Distribution, the tax recognition for certain of these deferred revenues will be accelerated to the date of the Distribution, rather than recognized over the course of the year ended June 30, 2020. Assuming the Distribution occurred on December 31, 2019, the estimated tax on the acceleration of such deferred revenue is approximately $20 million. Such tax will be the responsibility of MSG and not the Company. The Company will not reimburse MSG for such taxes. This one-time benefit will not recur in the future.

The Company’s historical combined financial statements reflect net operating loss (“NOL”) carryforwards calculated on a separate return basis. These NOL carryforwards were calculated as if the Company operated as a

separate stand-alone entity for the periods presented in the historical annual and interim combined financial statements of the Company included elsewhere in this information statement. Because the proposed transaction involves a spin-off of the Company, these NOLs do not carry over to the Company in connection with the reorganization transactions related to the Distribution. In general, the resulting incremental tax benefit or expense associated with pro forma adjustments will be offset by a corresponding increase or decrease in the valuation allowance.

The Company expects to enter into two delayed draw term loan facilities with MSG on or prior to the date of the Distribution. Two of MSG’s subsidiaries, MSG NYK Holdings, LLC and MSG NYR Holdings, LLC will be able to draw up to $110,000 and $90,000, respectively (the “Delayed Draw Term Loans”) for general corporate purposes for a period of 18 months following the effective date of the facilities. Each Delayed Draw Term Loan will bear interest at a rate equal to LIBOR plus 2.00%, or at the option of MSG, a base rate plus 1.00%. MSG’s ability to draw down on the Delayed Draw Term Loans will be subject to certain conditions, including (i) that it has less than $50,000 of liquidity on the date a borrowing is requested, and (ii) MSG shall have used commercially reasonable efforts to obtain additional liquidity from other financing sources. If MSG draws down on one or both Delayed Draw Term Loans, the outstanding principal balance of each term loan will be due, together with any unpaid interest thereon, 18 months following the Distribution. The Delayed Draw Term Loans are pre-payable at any time without penalty and will also include certain mandatory prepayments, along with commitment reductions. There are no financial covenants associated with the Delayed Draw Term Loans.

The Company does not expect MSG to draw on the Delayed Draw Term Loans prior to or following the completion of the Distribution; however, if MSG were to do so, the Company’s cash balance would decrease up to $200,000 and it would recognize a corresponding loan receivable from MSG. In addition, future periods would reflect an interest receivable from MSG and the related interest income. If the full capacity of the Delayed Draw Term Loans was utilized as of the assumed transaction date of July 1, 2018, the Company would have recorded approximately $2,800 and $5,700 of interest income for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively, in its unaudited pro forma combined statements of operations. The amounts of deferred financing costs attributable to the Delayed Draw Term Loans have not yet been determined. As MSG is not currently expected to exercise its right to utilize the Delayed Draw Term Loans, management has not adjusted the unaudited pro forma combined financial information herein as such amounts do not yet meet the factually supportable criterion of SEC Regulation S-X Article 11.

The adjustments made in preparing the pro forma combined financial statements related to the Distribution included the following:

In connection with the Distribution, Spinco and MSG will enter into Sponsorship Sales and Service Representation Agreements with the New York Knickerbockers (“Knicks”) of the National Basketball Association (“NBA”) and the New York Rangers (“Rangers”) of the National Hockey League (“NHL”). Such agreements will provide Spinco with the exclusive right and obligation, for a commission, to sell MSG’s sponsorships for an initial stated term of 10 years. These agreements will be subject to certain termination rights, including: (i) MSG and Spinco’s right to terminate if Spinco and MSG are no longer affiliates and (ii) MSG’s right to terminate if certain sales thresholds are not met and Spinco fails to pay MSG the shortfall. Additionally, MSG’s advertising sales personnel will become employees of Spinco. Revenues and expenses related to the operations that will transfer to Spinco were reflected in the Company’s historical annual combined financial statements. The pro forma adjustments included herein reflect the impact of these agreements. Refer to notes (g) and (h) for further details regarding the pro forma impact of these agreements.

The Company’s historical combined financial statements reflect expenses associated with the ownership, maintenance and operation of The Madison Square Garden Arena (“The Garden”), which both the Company and MSG use in their operations. Historically, the Company did not charge rent expense to MSG for use of The Garden. However, an allocation of venue usage charges from the Company to MSG for hosting its professional sports franchises’ home games at The Garden (i.e., the Knicks of the NBA and the Rangers of the NHL) was

recorded in the Company’s historical annual and interim combined financial statements. In connection with the Distribution, the Company will enter into the Arena License Agreements with the Knicks and Rangers (see “Certain Relationships and Related Party Transactions — Relationship between MSG and Us After the Distribution — Arena License Agreements”). Following the Distribution, the Arena License Agreements will require the Knicks and Rangers to pay venue usage fees to Spinco that exceed amounts historically allocated to MSG in the Company’s annual and interim combined financial statements. This resulted in pro forma adjustments to the unaudited pro forma combined statements of operations. Refer to note (l) of the unaudited pro forma combined financial statements for further details.

In addition, the Arena License Agreements will impact the manner in which the Company recognizes revenue in future periods. The impacted revenue streams are listed below and pro forma adjustments are described in more detail in the notes to the unaudited pro forma combined financial statements:

•

Venue signage and sponsorship revenue — notes (g) and (h);

•

In-venue sales of merchandise and sports league merchandise revenue — note (i);

•

In-venue food and beverage sales — note (j); and

•

Suite license and single event revenue — note (k).

These unaudited pro forma combined financial statements also reflect other adjustments that, in the opinion of management, are necessary to present fairly the pro forma combined results of operations and combined financial position of the Company as of and for the periods indicated. The unaudited pro forma combined financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what our financial condition or results of operations would have been had the Company operated historically as a company independent of MSG, or if the Distribution had occurred on the dates indicated. The unaudited pro forma combined financial information also should not be considered representative of our future combined financial condition or combined results of operations.

ENTERTAINMENT BUSINESS

OF THE MADISON SQUARE GARDEN COMPANY

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

As of December 31, 2019 (in thousands)


	Historical Spinco (a)			Pro Forma Adjustments			Notes	Spinco Distribution - Subtotal			Pro Forma Adjustments for Probable Disposition (s)			Pro Forma Combined
ASSETS
Current Assets:
Cash and cash equivalents	$	997,677		$	471,505		(b),(c),(d)	$	1,469,182		$	255,874		$	1,725,056
Restricted cash		17,898							17,898						17,898
Short-term investments		113,020							113,020						113,020
Accounts receivable, net		90,497							90,497						90,497
Net related party receivables		1,853			838		(e)		2,691						2,691
Prepaid expenses		32,982							32,982			(277	)		32,705
Other current assets		44,284			(3,291	)	(b),(c)		40,993			(338	)		40,655

Total current assets		1,298,211			469,052				1,767,263			255,259			2,022,522
Investments and loans to nonconsolidated affiliates		63,241							63,241						63,241
Property and equipment, net		1,535,179							1,535,179			(106,325	)		1,428,854
Right-of-use lease assets		240,728							240,728						240,728
Amortizable intangible assets, net		162,498							162,498						162,498
Indefinite-lived intangible assets		65,421			(1,080	)	(b)		64,341						64,341
Goodwill		165,558							165,558			(3,850	)		161,708
Other assets		49,157							49,157						49,157

Total assets	$	3,579,993		$	467,972			$	4,047,965		$	145,084		$	4,193,049

LIABILITIES, REDEEMABLE NONCONTROLLING
INTERESTS AND STOCKHOLDERS’ / DIVISIONAL EQUITY
Current Liabilities:
Accounts payable	$	40,703		$				$	40,703		$	(6,053	)	$	34,650
Net related party payables		28,530							28,530						28,530
Current portion of long-term debt, net of deferred financing costs		4,792							4,792						4,792
Accrued liabilities:
Employee related costs		62,530			(9,958	)	(b)		52,572			(206	)		52,366
Other accrued liabilities		107,170							107,170			(11,545	)		95,625
Operating lease liabilities, current		50,829							50,829						50,829
Collections due to promoters		60,815							60,815			(29,012	)		31,803
Deferred revenue		186,438			(10,168	)	(b)		176,270			(15,963	)		160,307

Total current liabilities		541,807			(20,126	)			521,681			(62,779	)		458,902
Long-term debt, net of deferred financing costs		31,160			222,000		(c)		253,160						253,160
Operating lease liabilities, noncurrent		189,127							189,127						189,127
Defined benefit and other postretirement obligations		33,255			(7,192	)	(b)		26,063						26,063
Other employee related costs		17,270			(1,942	)	(b)		15,328						15,328
Deferred tax liabilities, net		23,488			(185	)	(q)		23,303						23,303
Other liabilities		54,971							54,971			(1,962	)		53,009

Total Liabilities		891,078			192,555				1,083,633			(64,741	)		1,018,892

Redeemable noncontrolling interests		66,223							66,223						66,223
Equity
MSG Investment		2,638,955			(2,638,955	)	(f)		—						—
Common stock - Class A		—			193,570		(f)		193,570						193,570
Common stock - Class B		—			45,300		(f)		45,300						45,300
Additional paid-in capital		—			2,675,502		(b),(d),(e),(f),(q)		2,675,502						2,675,502
Retained earnings		—							—			209,825			209,825
Accumulated other comprehensive loss		(33,070	)						(33,070	)					(33,070	)

Total Company divisional / stockholders’ equity		2,605,885			275,417				2,881,302			209,825			3,091,127
Nonredeemable noncontrolling interests		16,807							16,807						16,807

Total divisional / stockholders’ equity		2,622,692			275,417				2,898,109			209,825			3,107,934

Total liabilities, redeemable noncontrolling interests and divisional / stockholders’ equity	$	3,579,993		$	467,972			$	4,047,965		$	145,084		$	4,193,049


		71

ENTERTAINMENT BUSINESS

OF THE MADISON SQUARE GARDEN COMPANY

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the Six Months Ended December 31, 2019

(in thousands, except per share data)


	Historical Spinco (a)			Pro Forma Adjustments			Notes	Spinco Distribution - Subtotal			Pro Forma Adjustments for Probable Disposition (s)			Pro Forma Combined
Revenues	$	567,177		$	1,935		(g),(i),(j),(k)	$	569,112		$	(33,393	)	$	535,719
Lease Revenues					33,421		(l),(n)		33,421						33,421
Operating expenses:							(g),(h),(i),(j),
Direct operating expenses		339,773			13,937		(k),(l),(m),(o)		353,710			(13,251	)		340,459
Selling, general and administrative expenses		173,784			20,425		(g),(m),(n),(p)		194,209			(14,060	)		180,149
Depreciation and amortization		54,075							54,075			(3,475	)		50,600

Operating income (loss)		(455	)		994				539			(2,607	)		(2,068	)

Other income (expense):
Loss in equity method investments		(2,643	)						(2,643	)					(2,643	)
Interest income		13,583							13,583						13,583
Interest expense		(1,249	)		(3,701	)	(c)		(4,950	)					(4,950	)
Miscellaneous expense, net		14,488							14,488						14,488

Income from operations before income taxes		23,724			(2,707	)			21,017			(2,607	)		18,410
Income tax expense		(1,440	)				(q)		(1,440	)					(1,440	)

Net income		22,284			(2,707	)			19,577			(2,607	)		16,970
Less: Net loss attributable to redeemable noncontrolling interests		(1,404	)						(1,404	)					(1,404	)
Less: Net loss attributable to nonredeemable noncontrolling interests		(157	)						(157	)					(157	)

Net income (loss) attributable to the Company	$	23,845		$	(2,707	)		$	21,138		$	(2,607	)	$	18,531

Pro forma earnings per share							(r)
Basic								$	0.89					$	0.78
Diluted									0.88						0.77
Pro forma weighted-average common shares outstanding:							(r)
Basic									23,870						23,870
Diluted									23,977						23,977


		72

ENTERTAINMENT BUSINESS

OF THE MADISON SQUARE GARDEN COMPANY

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the Year Ended June 30, 2019

(in thousands, except per share data)


	Historical Spinco (a)			Pro Forma Adjustments			Notes	Spinco Distribution - Subtotal			Pro Forma Adjustments for Probable Disposition (s)			Pro Forma Combined
Revenues	$	1,048,909		$	(3,824	)	(g),(i),(j),(k)	$	1,045,085		$	(71,257	)	$	973,828
Lease Revenues					70,798		(l),(n)		70,798						70,798
Operating expenses:
							(g),(h),(i),(j),
Direct operating expenses		670,641			18,830		(k),(l),(m),(o)		689,471			(32,404	)		657,067
Selling, general and administrative expenses		314,522			43,511		(g),(m),(n),(p)		358,033			(28,915	)		329,118
Depreciation and amortization		109,343							109,343			(7,515	)		101,828

Operating loss		(45,597	)		4,633				(40,964	)		(2,423	)		(43,387	)

Other income (expense):
Earnings in equity method investments		7,062							7,062						7,062
Interest income		30,163							30,163						30,163
Interest expense		(15,262	)		(7,385	)	(c)		(22,647	)					(22,647	)
Miscellaneous expense, net		(6,061	)						(6,061	)					(6,061	)

Loss from operations before income taxes		(29,695	)		(2,752	)			(32,447	)		(2,423	)		(34,870	)
Income tax benefit (expense)		(443	)		185		(q)		(258	)					(258	)

Net loss		(30,138	)		(2,567	)			(32,705	)		(2,423	)		(35,128	)
Less: Net loss attributable to redeemable noncontrolling interests		(7,299	)						(7,299	)					(7,299	)
Less: Net loss attributable to nonredeemable noncontrolling interests		(4,945	)						(4,945	)					(4,945	)

Net loss attributable to the Company	$	(17,894	)	$	(2,567	)		$	(20,461	)	$	(2,423	)	$	(22,884	)

Pro forma loss per share
Basic and Diluted							(r)	$	(0.86	)				$	(0.96	)
Pro forma weighted-average common shares outstanding:
Basic and Diluted							(r)		23,767						23,767


		73

ENTERTAINMENT BUSINESS

OF THE MADISON SQUARE GARDEN COMPANY

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

All amounts included in the following Notes to Unaudited Pro Forma Combined Financial Statements are presented in thousands, except per share data or as otherwise noted.

a)	Represents Spinco’s unaudited combined balance sheet as of December 31, 2019, unaudited combined statement of operations for the six months ended December 31, 2019 and audited combined statement of operations for the year ended June 30, 2019.

b)	Adjustments reflect assets and liabilities attributed to Spinco in the historical combined balance sheet as of December 31, 2019 that will not be transferred from MSG to Spinco in connection with the Distribution. Refer to the below table for further details on specific adjustments:


Unaudited Pro Forma Combined Balance Sheet Line Item	Amount		Description
Cash and cash equivalents	$	50,000	Cash and cash equivalents that will be transferred to MSG
Other current assets		3,786	Contract asset
Indefinite-lived intangible assets		1,080	Photographic rights transferred to MSG
Employee related costs		9,958	Current portion of pension plans and postretirement plan obligations and employee compensation liability for employees that will remain at MSG
Deferred revenue		10,168	Current portion of deferred revenue
Defined benefit and other postretirement obligations		7,192	Noncurrent portion of pension plans and postretirement plan obligations for employees that will remain at MSG
Other employee related costs		1,942	Noncurrent portion of employee compensation liability for employees that will remain at MSG

Refer to Note 11. Pension Plans and Other Postretirement Benefit Plan of our annual historical audited combined financial statements for further discussion of our pension liabilities.

As a result of a new contractual agreement between the Company and MSG to be entered into at the time of the Distribution related to photographic rights, photographic rights for certain images will be retained by MSG.

Refer to Note 1. Basis of Presentation of our annual historical audited combined financial statements for further discussion of the Company’s attribution of assets and liabilities.

Refer to Note 3. Revenue Recognition of our annual historical audited combined financial statements for further discussion of the Company’s contract balances.

The following table summarizes the pro forma adjustments related to the new long-term financing arrangements (the “New Debt”) for the unaudited pro forma condensed combined balance sheet as of December 31, 2019. After the completion of the Distribution, the Company expects to incur $400,000 of New Debt which is expected to be comprised of a term loan of $225,000 and a revolving credit facility with $175,000 of borrowing capacity, the latter of which is not expected to be drawn upon immediately following the Distribution. The New Debt is expected to have a term of 5 years for both the term loan and the revolving credit facility. Borrowings under both the term loan and revolving credit facility are expected to bear interest at a floating rate of LIBOR plus a margin of 1.75% per annum, based on current market rates. The Company estimates payment of $3,000 of deferred financing costs, which are reflected as a direct deduction from the fact amount of the New Debt. Additionally, the revolving credit facility is expected to require the Company to pay an annual commitment fee of 0.25% in respect of the average daily unused commitments.


	Cash and cash equivalents			Other current assets		Long-term debt, net of current portion
Issuance of New Debt term loan	$	225,000		$	0	$	225,000
Deferred financing costs and annual commitment fees incurred in connection with the New Debt	$	(3,495	)	$	495	$	(3,000	)

Adjustments to interest expense of $3,701 and $7,385 included in the unaudited pro forma condensed combined statement of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively, reflect the issuance of the term loan and additional interest from the amortization of debt issuance costs and commitment fees. As the New Debt is based on LIBOR, this may cause the interest rate applied in the unaudited pro forma condensed combined statements of operations to vary, depending on fluctuations in market interest rates. A 0.125% change in the interest rate will result in an increase or a decrease in interest expense of $143 and $286 for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively.

In connection with the Distribution, subsidiaries of MSG will draw $350,000 from their existing revolving credit facilities, distribute that amount to MSG, after which MSG will contribute $300,000 to Spinco. An adjustment of $300,000 was recorded to reflect the cash contribution from MSG in the pro forma combined balance sheet as of December 31, 2019.

Adjustment reflects the effect of the Employee Matters Agreement, which entitles the Company to receive reimbursement for services provided to MSG prior to the Distribution. An adjustment of $838 was recorded to recognize a Net receivable balance from MSG to the Company in the unaudited pro forma combined balance sheet as of December 31, 2019.

Adjustment reflects the pro forma recapitalization of our equity. As of the Distribution date, MSG’s net investment in the Company will be distributed to MSG’s stockholders through the distribution of all of Spinco’s common stock. The par value of Spinco’s stock was recognized as a component of common stock, with the remaining balance recorded as additional paid-in capital in the unaudited pro forma combined balance sheet as of December 31, 2019.

Common stock reflects approximately 19.4 million shares of Class A Common Stock, par value $0.01 per share, and approximately 4.5 million shares of Class B Common Stock, par value $0.01 per share. The number of shares of common stock assumes each MSG Class A and Class B common stockholder will receive one SpinCo Class A or Class B common share for each MSG Class A or Class B common share held on the record date for the Distribution. This adjustment is based on MSG’s December 31, 2019 issued and outstanding Class A and Class B common shares, although the actual number of shares issued will not be known until the record date for the Distribution.

The adjustment to additional paid-in capital of $2,400,085 represents MSG’s contribution of the assets, liabilities and businesses described in this information statement to Spinco valued at MSG’s historical cost. Additionally, the adjustments to additional paid-in capital include assets and liabilities transferred between MSG and Spinco, the cash contribution from MSG and the effect of the Employee Matters Agreement (refer to notes (b), (d) and (e), respectively).

Reflects a portion of the impact of the Arena License Agreements, which will require the Company to recognize venue signage and sponsorship revenue generated from the sale of MSG specific sponsorship assets on a net basis. Such amounts were historically recognized on a gross basis. Adjustments of $20,651 and $51,711 were recorded to reduce revenue and reduce direct operating expenses in the unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and year ended June 30, 2019, respectively.

The Company will also be entitled to a commission related to the sale of MSG teams’ sponsorship assets, which resulted in adjustments of $3,155 and $7,802 to increase revenues in the unaudited pro forma combined statement of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively. Additionally, adjustments of $2,577 and $5,052 to increase selling, general and

administrative expenses were recorded in the unaudited pro forma combined statement of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively. Adjustments to increase selling, general and administrative expense resulted from the reversal of overhead costs historically allocated to MSG, net of Spinco’s right to cost recovery from MSG pursuant to the Sponsorship Sales and Representation Agreement.

Represents a portion of the impact of the Sponsorship Sales and Representation Agreement and Arena License Agreements. Prior to the Distribution, revenue generated from the sale of venue signage and sponsorship assets that were not specific to the MSG teams or Spinco was recognized on a gross basis. Prior to the Distribution, revenue sharing expenses attributable to MSG were allocated proportionally and recognized as a component of direct operating expenses.

Following the Distribution, such amounts will continue to be recorded on a gross basis. However, per the Arena License Agreements the Company will be required to pay 48% of such revenues to MSG in future periods. Adjustments of $3,951 and $9,427 to reduce direct operating expenses were recognized in the unaudited pro forma combined statement of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively. Such amounts continue to be presented as direct operating expense.

Prior to the Distribution, MSG and the Company each recorded revenue generated from merchandise sales for their respective events on a gross basis. As a result of the Arena License Agreements, the Company will receive 30% of revenues, net of taxes and credit card fees, from the sale of MSG teams merchandise sold at the Arena. Adjustments of $1,459 and $2,771 to increase revenues were recorded in the unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively.

The Arena License Agreements also require the Company to incur certain day-of-game expenses that were historically incurred by MSG. Adjustments of $745 and $1,426 to increase direct operating expenses were recorded in the unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively.

As a result of the Arena License Agreements, the Company will recognize revenue generated from in-venue food and beverages sales at MSG events on a gross basis, along with the related direct operating expense. The agreement requires the Company to pay 50% of the net profits generated from in-venue food and beverage sales at MSG events to MSG. Adjustments of $15,971 to increase revenue and $13,099 to increase direct operating expenses were recorded in the unaudited pro forma combined statement of operations for the six months ended December 31, 2019, to reflect the impact of these new contractual agreements. In addition, adjustments of $32,737 to increase revenue and $26,446 to increase direct operating expenses were recorded for the year ended June 30, 2019, to reflect the impact of these new contractual agreements.

Prior to the Distribution, suite and club license revenue was recorded on a gross basis as the Company is the principal in such transactions and controls the related goods or services until transfer to the customer. MSG’s share of the Company’s suite and club license revenue was recognized as a component of direct operating expenses.

As a result of the Arena License Agreements, MSG’s share of suite and club license revenue decreased to 67.5% for certain hospitality offerings. As such, adjustments of $325 and $731 were recorded to reduce directing operating expenses in the unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and year ended June 30, 2019, respectively.

The Arena License Agreements also entitle the Company to a commission of up to 25% related to the sale of team only and single event suites. Adjustments of $2,001 and $4,577 to increase revenues were recorded in the unaudited pro forma combined statements of operations for six months ended December 31, 2019 and the year ended June 30, 2019, respectively. Additionally, adjustments of $1,600 and $3,662 were recorded to increase direct operating expenses in the unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively to reflect the impact of the Arena License Agreements which now requires the Company to record expenses related to team only and single event suites on a gross basis.

The Company’s historical combined financial statements reflect expenses associated with the ownership, maintenance and operation of The Garden, which both the Company and MSG use in their operations. 46% of MSG’s historical depreciation expense and other operating costs related to the ownership and operation of The Garden were allocated to MSG based on proportional event count and revenue. The Company historically recognized such amounts allocated to MSG as a reduction of direct operating expense in its historical combined financial statements.

The Arena License Agreements will require MSG to pay a license fee to the Company in exchange for the right to use The Garden. The term of each Arena License Agreement is 35 years and each Arena License Agreement requires MSG to pay the Company base rent subject to an annual 3% escalator. The Company will recognize lease revenue on a straight-line basis over the 35-year term based upon the value of total future payments under the Arena License Agreements.

The adjustments described in the table below were recorded in the unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively, to reflect the impact of the Arena License Agreements.


	For the six months ended December 31, 2019		For the year ended June 30, 2019
Increase in lease revenue	$	31,981	$	67,963
Increase in direct operating expense	$	22,104	$	47,093

Pursuant to GAAP, recognition of lease revenue is recorded on a straight-line basis over the term of the lease based upon the value of total future payments under the arrangement. As a result, lease revenue is comprised of a contractual cash component and a non-cash component for each period presented. Lease revenue includes (i) $19,570 and $38,000 of revenue collected in cash and (ii) a non-cash component of $12,411 and $29,963 for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively.

Reflects the impact of the TSA, which resulted in incremental corporate and administrative costs not included in the Company’s historical audited combined financial statements. The adjustment was derived by comparing contractual payments required by the TSA to amounts historically allocated to MSG in the Company’s historical combined financial statements. Adjustments of $736 to increase direct operating expenses and $16,472 to increase selling, general and administrative expenses were recorded in the unaudited pro forma combined statements of operations for the six months ended December 31, 2019. In addition, adjustments of $947 to increase direct operating expenses and $24,036 to increase selling, general and administrative expenses were recorded in the unaudited pro forma combined statements of operations for the year ended June 30, 2019.

n)	Reflects the impact of the Sublease Agreement that will be entered into between the Company and MSG at the time of the Distribution.

The Company historically allocated costs to MSG in connection with MSG’s use of shared corporate office space, resulting in a reduction in selling, general and administrative expense. As a result of the Sublease Agreement, the Company will begin recognizing sublease income from MSG. An adjustment in the amount of $5,759 and $11,131 to increase selling, general and administrative expense for the six months ended December 31, 2019 and for the year ended June 30, 2019, respectively, was recorded in the unaudited pro forma combined statements of operations. Additionally, an adjustment to increase lease revenue from MSG in the amount of $1,440 for the six months ended December 31, 2019 and $2,835 for the year ended June 30, 2019, respectively, was recorded in the unaudited pro forma combined statements of operations.

Reflects the impact of the Group Ticket Sales Representation Agreement, pursuant to which the Company will appoint MSG as its sales and service representative to sell group tickets related to Company events in exchange for a commission. Adjustments of $580 and $1,125 were recorded based on tickets sold during the period to increase direct operating expenses in the unaudited combined statements of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively.

p)	Reflects the impact of new compensation agreements between certain shared executives and the Company and MSG. These adjustments relate primarily to increases in salary and bonus, and the modification of one executive’s retirement eligible date to coincide with the date of the Distribution.

To reflect the impact of these agreements, adjustments to decrease selling, general and administrative expenses by $4,383 were recorded for the six months ended December 31, 2019, to reflect the impact of these new contractual agreements. In addition, an adjustment of $3,292 was recorded to increase selling, general and administrative expenses for the year ended June 30, 2019, to reflect the impact of these new contractual agreements.

The income tax effects of pro forma adjustments are recorded at the applicable statutory tax rate of 31.8% for both the six months ended December 31, 2019 and the year ended June 30, 2019, net of adjustments to the Company’s valuation allowance. This resulted in an overall tax impact of $185 for the year ended June 30, 2019 on the unaudited pro forma combined statement of operations.

This adjustment of $185 represents a change in the allocation of the deferred tax balance related to indefinite lived intangible assets on the unaudited pro forma combined balance sheet. This adjustment also reflects $19,654 related to the deferred tax asset recognized for the Company’s deferred revenues that will be recognized with a corresponding and offsetting adjustment to the valuation allowance by MSG for tax purposes. Refer to note (b) above for further details regarding the Company’s deferred revenues at the time of the Distribution.

Pro forma earnings per share and pro forma weighted-average basic shares outstanding are based on the number of shares of MSG Class A Common Stock and MSG Class B Common Stock outstanding of 23.9 million during the six months ended December 31, 2019 and 23.8 million during the year ended June 30, 2019, respectively. Spinco’s weighted average shares outstanding assumes a distribution ratio of 1 share of our common stock for each share of MSG Class A Common Stock and MSG Class B Common Stock held on the record date for the Distribution.

Pro forma diluted weighted-average shares outstanding reflect potential dilution from the issuance of Spinco common shares from MSG equity plans, giving effect to the distribution ratio and conversion of certain MSG equity awards into Spinco equity awards. Potentially dilutive shares for the year ended June 30, 2019 are excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. While the actual impact on a go-forward basis will depend on various factors, including employees who may change employment from one company to another, we believe the estimate provided yields a reasonable approximation of the dilutive impact of MSG equity plans. We expect that the actual amounts will differ from these estimates.

Reflects the probable disposition of the Forum. Each of the line items in the table below represents direct assets or liabilities of the Forum, except for goodwill, which was allocated to the Forum on a relative fair value basis in accordance with U.S. GAAP. Accordingly, the following amounts, which represent the carrying value of the assets and liabilities to be disposed, have been removed from the unaudited pro forma combined balance sheet as of December 31, 2019:


Unaudited Pro Forma Combined Balance Sheet Line Item	Amount
Prepaid expenses	$	277
Other current assets		338
Property and equipment, net		106,325
Goodwill (a)		3,850
Accounts payable		6,053
Employee related costs		206
Other accrued liabilities		11,545
Collections due to promoters		29,012
Deferred revenue		15,963
Other liabilities		1,962

(a)

The pro forma adjustment for goodwill relates to the relative fair value allocation of goodwill to the Forum disposed business and is preliminary in nature. The Company’s preliminary analysis indicates that the Forum represents approximately 5% of the total fair value of the Company’s Entertainment reporting unit, which has been based upon the Forum’s projected adjusted operating income as compared to the projected adjusted operating income of the Entertainment reporting unit as a whole. The final determination of goodwill allocated to the Forum will be determined based on a relative fair value basis on the date of disposition, which could be materially different than the estimate included herein.

The following table reflects the estimated after-tax cash proceeds as well as a listing of expected customary closing adjustments from the probable disposition of the Forum:


Estimated gross cash proceeds (a)	$	400,000
Less: estimated transaction costs, certain closing adjustments, and other fees (b)		(57,000)
Less: estimated income tax payable on sale (c)		(23,000)

Total estimated after-tax cash proceeds before working capital and other liabilities adjustments (a)		320,000

Add: Prepaid expenses		277
Add: Other current assets		338
Less: Accounts payable		(6,053)
Less: Employee related costs		(206)
Less: Other accrued liabilities		(11,545)
Less: Collections due to promoters		(29,012)
Less: Deferred revenue		(15,963)
Less: Other liabilities		(1,962)

Total working capital and other liabilities adjustments		(64,126)

Total estimated after-tax cash proceeds	$	255,874

(a)

The Company expects that there will be customary closing adjustments related to the actual assets transferred and pre-closing liabilities related to the Forum that are reflected herein which will result in changes to the final balances transferred to the buyers of the Forum. As a result of the final balance transfers, there will be changes to the final cash settlement amount at the disposition date when compared to the $255,874 disclosed herein, which was based in part on net asset values as of December 31, 2019.

(b)

In September 2013, the Company acquired a 50% interest in the Azoff Company, which owned and operated businesses in the entertainment industry and focused on music management, performance rights, strategic marketing and venue management consulting services. The Company sold its interest in the Azoff Company on December 5, 2018. In connection with the sale, the Azoff Company obtained the right to participate in the proceeds of a sale of the Forum above a specified amount if certain conditions are met. Accordingly, given that the probable disposition meets those conditions, the Company’s estimate of cash proceeds includes an adjustment to reduce the gross cash proceeds from the sale of the Forum by $48,000, reflecting an estimate of the amount payable to the Azoff Company.

(c)

The estimate of net cash proceeds includes an estimate of income taxes of $23,000, which would be payable in connection with the closing of the probable disposition. For purposes of the Company’s unaudited pro forma combined financial statements, it has been assumed that net operating loss (“NOL”) carryforwards are available to offset any gain on the sale of the Forum as if it occurred on December 31, 2019. Accordingly, the gain has been fully offset by NOLs for purposes of these

unaudited combined pro forma financial statements and any estimated tax expense associated with the pre-tax gain would be fully offset by a reduction in the valuation allowance for the utilization of NOLs.

The unaudited pro forma combined balance sheet includes an adjustment to retained earnings of $209,825 related to the sale of the Forum in accordance with SEC Regulation S-X Article 11. Adjustments related to the gain on the sale of the Forum were excluded from the unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and the fiscal year ended June 30, 2019 as the probable disposition and use of the proceeds do not have a continuing impact on the Company’s operations. The gain on sale for the probable disposition of the Forum assuming the Company completed the disposition as of December 31, 2019 is as follows:


Pre-tax estimated cash proceeds including working capital and other liabilities adjustments	$	278,874
Less: Net assets disposed		(46,049)

Pre-tax gain on sale		232,825
Less: Cash tax payable upon disposal		(23,000)

Pro forma adjustment to retained earnings	$	209,825

The gain on sale reflects proceeds related to (i) the sale of the Forum and (ii) the settlement of certain related litigation, both of which are components of other income (expense). The gain on sale, based on the December 31, 2019 balance sheet, will likely be different from the actual gain on sale that would be realized at the closing of the probable disposition because of the differences in the carrying values of assets and liabilities at closing date, including the potential for an adjustment for working capital and other liabilities described above, the estimation of transaction costs, and the final determination of the components of proceeds attributable to the sale of the Forum and settlement of the litigation.

The adjustments recorded in the unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and the year ended June 30, 2019, respectively, reflect the removal of the historical direct revenues and expenses of the Forum.


	For the six months ended December 31, 2019		For the year ended June 30, 2019
Revenues	$	33,393	$	71,257
Direct operating expenses		13,251		32,404
Selling, general and administrative expenses		14,060		28,915
Depreciation and amortization		3,475		7,515

Lastly, in conjunction with the disposition, the Company will enter into a Transition Services Agreement with the buyer for various administrative services. The term of this arrangement will last between one and three months and as the fees the Company will receive under this arrangement are immaterial, no adjustments were recorded to the unaudited pro forma combined statements of operations for this agreement. Additionally, no transaction costs related to the sale of the Forum were incurred during the six months ended December 31, 2019 or the year ended June 30, 2019. As such, adjustments related to transaction costs were excluded from the unaudited pro forma combined statements of operations for the six months ended December 31, 2019 and the year ended June 30, 2019 as they do not have a continuing impact on the Company’s operations.

SELECTED FINANCIAL DATA

The operating and balance sheet data included in the following selected financial data table have been derived from the combined financial statements as of December 31, 2019 and June 30, 2019 and for the six months ended December 31, 2019 and 2018 and the combined financial statements as of June 30, 2019, 2018 and 2017 and for the three years ended June 30, 2019, 2018 and 2017 of Spinco. The financial information presented below does not necessarily reflect what our results of operations and financial position would have been if we had operated as a separate publicly-traded entity during those periods. The selected financial data presented below should be read in conjunction with the combined financial statements included elsewhere in this information statement and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


	Six Months Ended December 31,						Years Ended June 30,
	2019			2018			2019			2018			2017
	(in thousands)
Operating Data ^(a), (b):
Revenues	$	567,177		$	582,366		$	1,048,909		$	988,990		$	711,022

Net income (loss)		22,284			48,811			(30,138	)		1,887			(112,611	)
Less: Net loss attributable to redeemable noncontrolling interests		(1,404	)		(3,655	)		(7,299	)		(628	)		(4,370	)
Less: Net income (loss) attributable to nonredeemable noncontrolling interests		(157	)		(2,441	)		(4,945	)		(4,383	)		304

Net income (loss) attributable to the Company	$	23,845		$	54,907		$	(17,894	)	$	6,898		$	(108,545	)

Balance Sheet Data *^(a)*:
Total assets	$	3,579,993		$	3,325,651		$	3,315,759		$	3,287,771		$	3,271,497
Long-term debt (including current portion), net of deferred financing costs ^(c)		35,952			102,846			54,598			105,700			105,433
Total company divisional equity		2,605,885			2,572,299			2,572,048			2,478,113			2,442,418

(a)

Operating and balance sheet data beginning in fiscal year 2017 includes results from the acquisition of Tao Group Hospitality operating information from February 1, 2017 to March 26, 2017. Operating and balance sheet data beginning in fiscal year 2018 includes results from the acquisition of Obscura since the acquisition date of November 20, 2017. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Business Overview — Factors Affecting Results of Operations.” In addition, see “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 2. Summary of Significant Accounting Policies — Business Combinations and Noncontrolling Interests” and Note 17. Acquisitions for more information on our acquisition of Tao Group Hospitality.

(b)

The Company’s operating results for the year ended June 30, 2019 were impacted by the adoption of FASB ASC Topic 606. The Company used the modified retrospective method of adoption. Results for reporting periods beginning after July 1, 2018 are presented under ASC Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting guidance under ASC Topic 605. See “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 2. Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements” for more information.

(c)

Long-term debt presented above is net of debt issuance costs of $935 and $3,144 as of December 31, 2019 and 2018, respectively, and $1,039, $3,613, and $4,567 as of June 30, 2019, 2018 and 2017, respectively. See “Combined Financial Statements as of December 31, 2019 and June 30, 2019 and for the Six Months Ended December 31, 2019 and 2018 — Notes to Combined Financial Statements — Note 10. Credit Facilities” and “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 10. Credit Facilities” for more information.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 Spinco, including our potential spin-off from MSG, the timing and costs of new venue construction, increased investment in personnel, content and technology for the MSG Spheres, and the winding down of Obscura’s third-party production business. 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:

•

our ability to effectively manage the impacts of the coronavirus and the government mandated suspension of our business operations;

•

our ability to successfully consummate the contemplated sale of the Forum and the settlement of related litigation;

•

our ability to successfully design, construct, finance and operate new venues in Las Vegas, London and other markets, and the investments, costs and timing associated with those efforts, including the impact of any unexpected construction delays and/or cost overruns;

•

the level of our revenues, which depends in part on the popularity of the Christmas Spectacular and other entertainment and sports events which are presented in our venues;

•

the level of our capital expenditures and other investments;

•

general economic conditions, especially in the New York City, Los Angeles, Las Vegas and London metropolitan areas where we have business activities;

•

the demand for sponsorship arrangements and for advertising;

•

competition, for example, from other venues and other sports and entertainment options, including the construction of new competing venues;

•

changes in laws, guidelines, bulletins, directives, policies and agreements or regulations under which we operate;

•

any economic actions, such as boycotts, protests, work stoppages or campaigns by labor organizations;

•

seasonal fluctuations and other variations in our operating results and cash flow from period to period;

•

the level of our expenses, including our corporate expenses as a stand-alone publicly-traded company;

•

the successful development of new live productions, enhancements or changes to existing productions and the investments associated with such development, enhancements, or changes, as well as investment in personnel, content and technology for the MSG Spheres;

•

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 our venues;

•

the continued popularity and success of the Tao Group Holdings LLC (“Tao Group Hospitality”) entertainment dining and nightlife venues, as well as its existing brands, and the ability to successfully open and operate new entertainment dining and nightlife venues;

•

the ability of BCE to attract attendees and performers to its festival;

•

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, new venues or new businesses into our operations;

•

the operating and financial performance of our strategic acquisitions and investments, including those we do not control;

•

the costs associated with, and the outcome of, litigation and other proceedings to the extent uninsured, including litigation or other claims against companies we invest in or acquire;

•

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 and the ability to maintain necessary permits or licenses;

•

the impact of any government plans to redesign New York City’s Pennsylvania Station;

•

a default by our subsidiaries under their respective credit facilities;

•

financial community and rating agency perceptions of our business, operations, financial condition and the industry in which we operate;

•

the ability of our investees and others to repay loans and advances we have extended to them;

•

our status as an emerging growth company;

•

the tax-free treatment of the Distribution;

•

lack of operating history as an operating company and costs associated with being an independent public company;

•

failure of the Company or MSG to satisfy its obligations under transition services agreements or other agreements entered into in connection with the Distribution; and

•

the additional factors described under “Risk Factors” in this information statement.

We disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securities laws.

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 combined interim financial statements and footnotes thereto and audited combined annual financial statements and footnotes thereto included elsewhere in this information statement to help provide an understanding of our financial condition, changes in financial condition and results of operations. The information included in this MD&A should also be read in conjunction with the financial data set forth under “Selected Financial Data” and the pro forma combined financial information set forth under “Unaudited Pro Forma Combined Financial Information.”

Our MD&A is organized as follows:

Proposed Distribution and Basis of Presentation. This section provides a general description of the proposed spin-off that would separate our business from the other businesses of The Madison Square Garden Company.

Business Overview. This section provides a general description of our business, as well as other matters that we believe are important in understanding our results of operations and financial condition and in anticipating future trends.

Combined Results of Operations. This section provides an analysis of our results of operations for the six months ended December 31, 2019 and 2018 and the years ended June 30, 2019, 2018 and 2017.

Liquidity and Capital Resources. This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the six months ended December 31, 2019 and 2018 and the years ended June 30, 2019, 2018 and 2017, as well as certain contractual obligations and off-balance sheet arrangements that existed at June 30, 2019.

Seasonality of Our Business. This section discusses the seasonal performance of our Christmas Spectacular production and Tao Group Hospitality.

Recently Issued Accounting Pronouncements and Critical Accounting Policies. This section includes a discussion of accounting policies considered to be important to our financial condition and results of operations and which require significant judgment and estimates on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are discussed in the notes to our audited combined annual financial statements included elsewhere in this information statement. See “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 2. Summary of Significant Accounting Policies” and “—Note 3. Revenue Recognition” for discussion of revenue recognition in connection with the adoption of ASC Topic 606, Revenue from Contracts with Customers, in fiscal year 2019. In addition, see “Combined Financial Statements as of December 31, 2019 (Unaudited) and June 30, 2019 and for the six months ended December 31, 2019 and 2018 (Unaudited) — Notes to Combined Financial Statements — Note 2. Accounting Policies” and “— Note 6. Leases” for discussion of leases in connection with the adoption of ASC Topic 842, Leases in fiscal year 2020.

Coronavirus Impacts

Our operating results have been, and continue to be, materially impacted by the coronavirus and government and league actions taken in response (“COVID Effects”). On the date of this information statement, virtually all of our business operations have been suspended and it is not clear when those operations will resume.

As of March 31, 2020, as a result of government mandated assembly limitations and closures, all of our scheduled events at The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, The Chicago Theatre and the Forum are postponed or cancelled through April, and continue to be impacted throughout the month of May. We are not recognizing revenue from those events and it is unclear whether and to what extent those events will be rescheduled. Additionally, public officials have imposed mandates limiting restaurants and bars to only take-out and delivery service and requiring that nightlife venues close in the cities in which Tao Group Hospitality operates. As a result, all Tao Group Hospitality venues in the United States and a majority of Tao Group Hospitality venues outside of the United States are currently closed, which has resulted in the business being materially impacted. The NBA and the NHL have also announced that all NBA and NHL games were suspended. It is unclear how long these restrictions will be in effect.

Revenue Impacts

The COVID Effects have adversely impacted our revenues. The most significant impacts are as follows:

•

As a result of government mandates on assembly limitation and other mandated closures, all of our scheduled events at The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, The Chicago Theatre and the Forum are postponed or cancelled through April, and continue to be impacted throughout the month of May. We have not received revenue from those events and it is unclear whether and to what extent those events will be rescheduled.

•

The NBA and NHL have postponed their seasons, which means all Knicks and Rangers games are currently suspended. Following the completion of the spin-off, MSG Entertainment and MSG will be parties to Arena License Agreements pursuant to which MSG will make payments to MSG Entertainment for use of The Garden. Absent the current suspension of our ability to operate The Garden, these payments would have been approximately $0.9 million per month for the remainder of our 2020 fiscal year and were anticipated to be approximately $39.1 million for our 2021 fiscal year.

Rent actually received will be reduced from these amounts for so long as the NBA and NHL seasons are delayed or cancelled. As a result of the suspension of our business due to coronavirus, however, rent payments due under the Arena License Agreements are not required to be made during the suspension of our ability to operate at The Garden as a result of the force majeure provisions in the agreements. Even if our operation of The Garden and the NBA and NHL seasons were to resume during the coronavirus outbreak, or thereafter, if capacity at The Garden is limited to 1,000 or fewer attendees, amounts payable under the Arena License Agreements would be reduced by 80%. If our operation of The Garden resumes, future rent payments due under the Arena License Agreements will be payable even if the NBA or NHL seasons do not resume simultaneously or at all. See “Certain Relationships and Related Party Transactions —Relationship between MSG and Us After the Distribution — Arena License Agreements” for more detail.

•

During the suspensions of events at our venues, we are not realizing revenue from sponsorships, suite licenses and in-venue advertising and if the events are not rescheduled, this revenue will not be made up. Additionally, we may need to provide rebates or credits to our sponsors, suite holders and advertisers depending on the duration and outcome of the suspension of our business.

•

As a result of the government imposed mandates limiting restaurants and bars to only take-out and delivery service and requiring that nightlife venues close, our Tao Group Hospitality dining and nightlife business has suspended all operations in the United States and a majority of its operations outside of the United States and is not receiving any revenue.

•

The 2020 Boston Calling music festival has been cancelled, which may result in reduced revenues.

Expense Impacts

We have the ability to reduce our operating expenses as a result of the COVID Effects, but those expense reduction opportunities will not fully offset revenue losses. The principal expense opportunities are noted below:

•

We will not incur any direct event expenses at any of our performance venues during the period our business operations are suspended. We will continue to incur various venue expenses (including for security and maintenance) and other labor related expense even though games and events are not played.

•

We will reduce the amount we spend on advertising and promotion for suspended and cancelled games and events.

•

We will reduce certain direct operating and SG&A expenses at our Tao Group Hospitality business, but base rent payments and corporate overhead in most cases will still be required despite the government imposed limitations.

In light of the suspension of our operations, we have already reduced SG&A and discretionary expenses and are working to identify additional areas for expense reductions.

Capital Expenditures

We are building the MSG Sphere in Las Vegas. This is a complex construction project with cutting-edge technology that relies on subcontractors obtaining components from a variety of sources around the world. The widespread global effects of COVID-19 have resulted in significant impediments to construction that are beyond our control, including disruptions to our supply chain. As a result, the Company will implement a temporary suspension of construction, with all work ceasing over approximately the next two weeks, and expects to incur some additional expense related to this stopping and starting of construction. At this time, we are unable to determine the full impact of coronavirus-related disruptions, however they may impact our cost estimates. The Company remains committed to building a state-of-the-art venue in Las Vegas and looks forward to quickly and efficiently resuming construction as soon as practicable. As a result of this delay we do not expect to achieve our goal of opening the venue in calendar year 2021.

Spin-off

Following the completion of the spin-off, MSG Entertainment and MSG will be parties to Arena License Agreements pursuant to which MSG will make payments to MSG Entertainment for use of The Garden. Absent the current suspension of our ability to operate The Garden, these payments would have been approximately $0.9 million per month for the remainder of our 2020 fiscal year and were anticipated to be approximately $39.1 million for our 2021 fiscal year. Rent actually received will be reduced from these amounts for so long as the NBA and NHL seasons are delayed or cancelled. As a result of the suspension of our business due to coronavirus, however, rent payments due under the Arena License Agreements are not required to be made during the suspension of our ability to operate at The Garden as a result of the force majeure provisions in the agreements. Even if our operation of The Garden and the NBA and NHL seasons were to resume during the coronavirus outbreak, or thereafter, if capacity at The Garden is limited to 1,000 or fewer attendees, amounts payable under the Arena License Agreements would be reduced by 80%. If our operation of The Garden resumes, future rent payments under the Arena License Agreements will be payable even if the NBA or NHL seasons do not resume simultaneously or at all. See “Certain Relationships and Related Party Transactions —Relationship between MSG and Us After the Distribution — Arena License Agreements” for more detail.

Proposed Distribution and Basis of Presentation

At a meeting on November 7, 2019, the board of directors of The Madison Square Garden Company (together with its subsidiaries, “MSG”) authorized MSG’s management to proceed with pursuing the separation of the MSG entertainment business (including sports bookings) from its sports businesses. On November 21, 2019, the newly formed registrant, MSG Entertainment Spinco, Inc. (together with its subsidiaries, “Spinco” or the “Company”), was incorporated in the State of Delaware. The spin-off is expected to be completed through a tax-free pro rata distribution of all the common stock of Spinco (the “Distribution”) to MSG stockholders.

Completion of the transaction is subject to various conditions, including final approval by the board of directors of MSG, approvals from the National Basketball Association and National Hockey League, receipt of a tax opinion from counsel and the effectiveness of the registration statement with the Securities and Exchange Commission (“SEC”). References to “Spinco” or the “Company” include the subsidiaries of MSG that will be subsidiaries of Spinco at the time of the Distribution.

The combined financial statements of the Company (the “combined financial statements”) were prepared on a stand-alone basis derived from the consolidated financial statements and accounting records of MSG. These financial statements reflect the combined historical results of operations, financial position and cash flows of the Company in accordance with GAAP and SEC Staff Accounting Bulletin Topic 1-B, Allocation of Expenses and Related Disclosure in Financial Statements of Subsidiaries, Divisions or Lesser Business Components of Another Entity. References to U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) are to the FASB Accounting Standards Codification, also referred to as the “Codification” or “ASC.”

Historically, separate financial statements have not been prepared for the Company, and it has not operated as a stand-alone business from MSG. The combined financial statements include certain assets and liabilities that have historically been held by MSG or by other MSG subsidiaries but are specifically identifiable or otherwise attributable to the Company. All significant intercompany transactions and balances between MSG and the Company have been included as components of MSG investment in the combined financial statements, as they are to be considered effectively settled upon effectiveness of the Distribution. The combined financial statements are presented as if the Spinco businesses had been combined for all periods presented. The assets and liabilities in the combined financial statements have been reflected on a historical cost basis, as immediately prior to the Distribution all of the assets and liabilities presented are wholly-owned by MSG and are being transferred to the Company at carry-over basis.

The combined statements of operations include allocations for certain support functions that are provided on a centralized basis and not historically recorded at the business unit level by MSG, such as expenses related to

executive management, finance, legal, human resources, government affairs, information technology, and venue operations, among others. As part of the Distribution, certain corporate and operational support functions are being transferred to Spinco and therefore, charges were reflected in order to properly burden all business units comprising MSG’s historical operations. These expenses have been allocated to MSG on the basis of direct usage when identifiable, with the remainder allocated on a pro-rata basis of combined revenues, headcount or other measures of Spinco or MSG, which is recorded as a reduction of either direct operating expenses or selling, general & administrative expense. In addition, certain of Spinco’s revenue contracts with its customers contain performance obligations that are fulfilled by both Spinco and MSG for suite license, sponsorship and venue signage arrangements. Revenue sharing expenses attributable to MSG have primarily been recorded on the basis of specific identification where possible, with the remainder allocated proportionately as a component of direct operating expenses within the combined statements of operations. See “Combined Financial Statements as of December 31, 2019 (Unaudited) and June 30, 2019 and for the Six Months Ended December 31, 2019 and 2018 (Unaudited) — Notes to Combined Financial Statements — Note 3. Revenue Recognition” and “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 3. Revenue Recognition” for additional information.

Management believes the assumptions underlying the combined financial statements, including the assumptions regarding allocating general corporate expenses, are reasonable. Nevertheless, the combined financial statements may not include all of the actual expenses that would have been incurred by the Company and may not reflect its combined results of operations, financial position and cash flows had it been a stand-alone company during the periods presented. Actual costs that would have been incurred if the Company had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. The Company is unable to quantify the amounts that it would have recorded during the historical periods on a stand-alone basis as it is not practicable to do so. See “Unaudited Pro Forma Combined Financial Information — Notes to Unaudited Pro Forma Combined Financial Statements” and “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 2. Summary of Significant Accounting Policies” for additional information.

Business Overview

The Company is a leader in live experiences comprised of iconic venues; marquee entertainment content; popular dining and nightlife offerings; and a premier music festival that, together, entertain approximately 12 million guests a year. Utilizing our powerful brands and live entertainment expertise, the Company delivers unique experiences that set the standard for excellence and innovation while forging deep connections with diverse and passionate audiences. The Company’s portfolio of venues includes: The Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, the Forum in Inglewood, CA and The Chicago Theatre. In addition, the Company is constructing a state-of-the-art venue, MSG Sphere, in Las Vegas and plans to build a second MSG Sphere in London. The Company also includes the original production, the Christmas Spectacular, as well as BCE, the entertainment production company that owns and operates the Boston Calling Music Festival, and Tao Group Hospitality, a hospitality group with globally recognized entertainment dining and nightlife brands.

The Company operates and reports financial information as one reportable segment. Substantially all of the Company’s revenues and assets are attributed to or located in the United States and are primarily concentrated in the New York City metropolitan area.

Revenue Sources

We earn revenue from several primary sources: ticket sales to our audiences for live events that we produce or promote/co-promote, license fees for our venues paid by third-party promoters in connection with events that we do not produce or promote/co-promote, facility and ticketing fees, concessions, sponsorships and signage, suite license fees at The Garden, merchandising and tours at certain of our venues. The amount of revenue and

expense we record for a given event depends to a significant extent on whether we are promoting or co-promoting the event or are licensing our venue to a third-party. In addition, a significant component of our revenues are generated by Tao Group Hospitality through entertainment dining and nightlife offerings, which primarily consist of food and beverage sales and venue management fees.

Ticket Sales and Suite Licenses

For our productions and events in our venues that we promote, we recognize revenues from the sale of tickets to our audiences. We sell tickets to the public through our box office, via our websites and ticketing agencies and through group sales. The amount of revenue we earn from ticket sales depends on the number of shows and the mix of events that we promote, the capacity of the venue used, the extent to which we can sell to fully utilize the capacity and our ticket prices. During fiscal year 2017, we implemented significant changes to how we sell Christmas Spectacular tickets. By eliminating block sales to third-party brokers, we brought a significant number of tickets back in-house, which created the opportunity for more customers to buy tickets to the production directly from us.

The Garden has 21 Event Level suites, 58 Lexus Madison Level suites, and 18 Signature Level suites. Suite licenses at The Garden are generally sold to corporate customers pursuant to multi-year licenses. Under standard suite licenses, the licensees pay an annual license fee, which varies depending on the location of the suite. The license fee includes, for each seat in the suite, tickets for events at The Garden for which tickets are sold to the general public, subject to certain exceptions. In addition, suite holders separately pay for food and beverage service in their suites at The Garden.

Revenue for the Company’s suite license arrangements is recorded on a gross basis, as the Company is the principal in such transactions and controls the related goods or services until transfer to the customer. MSG’s share of the Company’s suite license revenue is recognized in the combined statements of operations as a component of direct operating expenses. The revenue sharing expense allocation between the Company and MSG for suite licenses at The Garden prior to the Distribution is 67.5% to MSG. This allocation may change after the Distribution. See “Unaudited Pro Forma Combined Financial Information — Notes to Unaudited Pro Forma Combined Financial Statements” for additional information.

Venue License Fees

For events held at our venues that we do not produce, promote or co-promote, we typically earn revenue from venue license fees charged to the third-party promoter of the event. The amount of license fees we charge varies by venue, as well as by the size of the production and the number of days utilized, among other factors. Our fees typically include both the cost of renting space in our venues and costs for providing event staff, such as front-of-house and back-of-house staff, including stagehands, electricians, laborers, box office staff, ushers and security as well as production services such as staging, lighting and sound.

Facility and Ticketing Fees

For all public and ticketed events held in our venues, we also earn additional revenues on substantially all tickets sold, whether we promote/co-promote the event or license the venue to a third-party. These revenues are earned in the form of certain fees and assessments, including the facility fee we charge, and vary by venue.

Concessions

We sell food and beverages during substantially all events held at our venues. In addition to concession-style sales of food and beverages, which represent the majority of our concession revenues, we also generate revenue from catering for our suites at The Garden. In connection with the Distribution, the Company and MSG will enter into Arena License Agreements related to the use of The Garden by MSG, under which the Company will share revenues and the related expenses with MSG associated with sales of food and beverages during Knicks and Rangers games at The Garden. See “Unaudited Pro Forma Combined Financial Information — Notes to Unaudited Pro Forma Combined Financial Statements” for additional information.

Merchandise

We earn revenues from the sale of merchandise relating to our proprietary productions and other events that take place at our venues. The majority of our merchandise revenues are generated through on-site sales during performances of our productions and other events. We also generate revenues from the sales of our Christmas Spectacular merchandise, such as ornaments and apparel, through traditional retail channels. Typically, revenues from our merchandise sales at our non-proprietary events relate to sales of merchandise provided by the artist, the producer or promoter of the event and are generally subject to a revenue sharing arrangement. In connection with the Distribution, the Company and MSG will enter into Arena License Agreements related to the use of The Garden by MSG, under which the Company will have the rights and obligations to sell, for a commission, Knicks and Rangers merchandise at The Garden. See “Unaudited Pro Forma Combined Financial Information — Notes to Unaudited Pro Forma Combined Financial Statements” for additional information.

Venue Signage and Sponsorship

We earn revenues through the sale of signage space and sponsorship rights in connection with our venues, productions and other events. Signage revenues generally involve the sale of advertising space at The Garden during events and otherwise in our venues.

Sponsorship rights may require us to use the name, logos and other trademarks of sponsors in our advertising and in promotions for our venues, productions and other events. Sponsorship arrangements may be exclusive within a particular sponsorship category or non-exclusive and generally permit a sponsor to use the name, logos and other trademarks of our productions, events and venues in connection with their own advertising and in promotions in our venues or in the community.

For sponsorship agreements entered into by the Company or that have performance obligations satisfied solely by the Company, revenue is generally recorded on a gross basis as the Company is the principal in such arrangements and controls the related goods or services until transfer to the customer. MSG’s share of the Company’s sponsorship and signage revenue is recognized in the combined statements of operations as a component of direct operating expenses. The revenue sharing expense has been specifically identified where possible, with the remainder allocated proportionally based upon revenue. This allocation may change after the Distribution. See “Unaudited Pro Forma Combined Financial Information — Notes to Unaudited Pro Forma Combined Financial Statements” for additional information.

In connection with the Distribution, the Company and MSG will enter into Arena License Agreements related to the use of The Garden by MSG, under which the Company will share certain sponsorship and signage revenues with MSG. Under these agreements MSG will also have the rights to its teams’ sponsorship and signage revenue that is specific to Knicks and Rangers events. In addition, in connection with the Distribution, the Company and MSG will enter into sponsorship sales representation agreements, under which the Company will have the right and obligation to sell and service sponsorships for the Knicks and Rangers, in exchange for a fee. See “Unaudited Pro Forma Combined Financial Information — Notes to Unaudited Pro Forma Combined Financial Statements” for additional information.

Advertising Sales (“Ad Sales”) Commission

The Company and MSG Networks are parties to an advertising sales representation agreement. Pursuant to the agreement, we have the exclusive right and obligation to sell advertising availabilities of MSG Networks. We are entitled to and earn commission revenue on such sales. The expense associated with advertising personnel, which was transferred from MSG Networks in connection with this advertising sales representation agreement, is recognized in selling, general and administrative expenses.

Entertainment Dining and Nightlife Offerings

We earn revenues from entertainment dining and nightlife offerings through our operations of Tao Group Hospitality’s restaurants and nightlife and hospitality venues. These revenues primarily consist of food and

beverage sales and banquet hosting services at Tao Group Hospitality leased restaurants and nightclubs. In addition, we earn fees from our real estate partners for operating certain of our restaurants and nightclubs.

Expenses

Our principal expenses are payments made to performers of our productions, staging costs and day-of-event costs associated with events, and advertising costs.

We record actual expenses associated with the ownership, lease, maintenance and operation of our venues.

Performer Payments

Our productions are performed by talented actors, dancers, singers, musicians and entertainers. In order to attract and retain this talent, we are required to pay our performers an amount that is commensurate with both their abilities and the demand for their services from other entertainment companies. Our productions typically feature ensemble casts (such as the Rockettes), where most of our performers are paid based on a standard “scale,” pursuant to collective bargaining agreements (“CBAs”) we negotiate with the performers’ unions. Certain performers, however, have individually negotiated contracts.

Staging Costs

Staging costs for our proprietary events as well as other events that we promote include the costs of sets, lighting, display technologies, special effects, sound and all of the other technical aspects involved in presenting a live event. These costs vary substantially depending on the nature of the particular show, but tend to be highest for large-scale theatrical productions, such as the Christmas Spectacular. For concerts we promote, the performer usually provides a fully-produced show. Along with performer salaries, the staging costs associated with a given production are an important factor in the determination of ticket prices.

Day-of-Event Costs

For days on which we stage our productions, promote an event or provide one of our venues to a third-party promoter under a license fee arrangement, the event is charged the variable costs associated with such event, including box office staff, stagehands, ticket takers, ushers, security, and other similar expenses. In situations where we provide our venues to a third-party promoter under a license fee arrangement, day-of-event costs are typically included in the license fees charged to the promoter.

Venue Usage

The Company’s combined financial statements include expenses associated with the ownership, maintenance and operation of The Garden, which the Company and MSG use in their respective operations. Historically, the Company did not charge rent expense to MSG for use of The Garden. However, for purposes of the Company’s combined financial statements, a portion of the historical depreciation expense as well as other non-event related venue operations costs have been allocated to MSG, in order to properly burden all business units comprising MSG’s historical operations related to use of The Garden. This allocation was based on event count and revenue, which the Company’s management believes is a reasonable allocation methodology. This allocation is reported as a reduction of direct operating expense in the combined statements of operations. See “— Combined Results of Operations — Comparison of the Six Months Ended December 31, 2019 versus the Six Months Ended December 31, 2018 — Direct operating expenses” and “— Combined Results of Operations — Comparison of the Year Ended June 30, 2019 versus the Year Ended June 30, 2018 — Direct operating expense” for more information.

In connection with the Distribution, the Company and MSG will enter into Arena License Agreements related to the use of The Garden by MSG. See “Unaudited Pro Forma Combined Financial Information — Notes to Unaudited Pro Forma Combined Financial Statements” for additional information.

Revenue Sharing Expenses

As discussed above, MSG’s share of the Company’s suites licenses, venue signage and sponsorship revenue has been reflected within direct operating expense as revenue sharing expenses. Such amounts were either specifically identified where possible or allocated proportionally.

Marketing and Advertising Costs

We incur significant costs promoting our productions and other events through various advertising campaigns, including advertising on outdoor platforms and in newspapers, on television and radio, and on social and digital platforms. In light of the intense competition for live events, such expenditures are a necessity to drive interest in our productions and encourage members of the public to purchase tickets to our shows.

Entertainment Dining and Nightlife Offerings Costs

Through our ownership in the operations of the Tao Group Hospitality restaurants and nightlife and hospitality venues, we incur costs for providing food and beverage as well as banquet hosting services to our customers. Our dining and nightlife offering costs primarily include the following:

•

labor costs, consisting of restaurant management salaries, hourly staff payroll and other payroll-related items, including taxes and fringe benefits;

•

food and beverage costs;

•

operating costs, consisting of maintenance, utilities, bank and credit card charges, and any other restaurant-level expenses; and

•

occupancy costs, consisting of both fixed and variable portions of rent, common area maintenance charges, insurance premiums and taxes.

Other Expenses

Selling, general and administrative expenses primarily consist of administrative costs, including compensation, professional fees, as well as sales and marketing costs, including non-event related advertising expenses. Selling, general and administrative expenses also include corporate overhead costs, as well as costs associated with the development of MSG Sphere, including technology and content development costs.

Factors Affecting Operating Results

General

Our operating results are largely dependent on our ability to attract concerts and other events to our venues, as well as the continuing popularity of the Christmas Spectacular at Radio City Music Hall. The Company’s operating loss for the year ended June 30, 2017 included a $33,629 write-off of deferred production costs related to the New York Spectacular Starring the Radio City Rockettes (“New York Spectacular”).

Our future performance is dependent in part on general economic conditions and the effect of these conditions on our customers. Weak economic conditions may lead to lower demand for our entertainment and nightlife offerings, suite licenses and tickets to our live productions and other events, which would also negatively affect concession and merchandise sales, as well as lower levels of sponsorship and venue signage. These conditions may also affect the number of concerts and other events that take place in the future. An economic downturn would adversely affect our business and results of operations.

The Company continues to explore additional opportunities to expand our presence in the entertainment industry. Any new investment may not initially contribute to operating income, but is intended to become operationally profitable over time. Our results will also be affected by investments in, and the success of, new productions.

Adoption of ASC Topic 606, Revenue From Contracts With Customers

The Company’s combined operating results for the year ended June 30, 2019 were impacted by the adoption of ASC Topic 606. As a result, the Company’s revenues were lower by $23,860 and direct operating expenses were lower by $26,239 for the year ended June 30, 2019, primarily due to the application of principal versus agent revenue recognition on event-related revenues from food, beverage and merchandise activities and accounts for its performance obligations of multi-year sponsorship agreements and suite license arrangements as a series.

Prior year period results have not been adjusted to reflect the adoption of ASC Topic 606 and, therefore, the Company’s operating results for the year ended June 30, 2019 are not directly comparable to results for the year ended June 30, 2018.

See “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 2. Summary of Significant Accounting Policies — Recently Adopted Accounting Pronouncements and Note 3. Revenue Recognition” for further discussion of the adoption of ASC Topic 606.

Renewal of a Ticketing Agreement

The Company’s combined operating results for the year ended June 30, 2019 were impacted by the recognition of revenue for events that took place during the prior year due to the renewal of the agreement with the Company’s ticketing platform provider during fiscal year 2019. The impact on the Company’s combined revenues, operating income and adjusted operating income for the year ended June 30, 2019 from the events held in the prior year as a result of the ticketing agreement renewal was $2,493.

Acquisitions

Tao Group Hospitality’s Operating Results

The Company completed the Tao Group Hospitality acquisition on January 31, 2017. Tao Group Hospitality’s financial statements are not available within the time constraints the Company requires to ensure the financial accuracy of the operating results. Therefore, the Company records Tao Group Hospitality’s operating results in its combined statements of operations on a three-month lag basis. As a result, Tao Group Hospitality’s related operating results for the year ended June 30, 2019 are for the period from April 2, 2018 to March 31, 2019. Tao Group Hospitality’s related operating results for the year ended June 30, 2018 are for the period from March 27, 2017 to April 1, 2018. Tao Group Hospitality’s related operating results for the year ended June 30, 2017 are for the period from February 1, 2017 to March 26, 2017. In addition, Tao Group Hospitality’s related operating results for the six months ended December 31, 2019 and 2018 are for the periods from April 1, 2019 to September 29, 2019 and from April 2, 2018 to September 30, 2018, respectively.

Obscura’s Operating Results

The results of operations of the Company for the year ended June 30, 2018 include Obscura’s results of operations from the date of acquisition, which was November 20, 2017. The Company’s results for the year ended June 30, 2017 do not include any of Obscura’s operating results.

Purchase Accounting Adjustments

In connection with the acquisitions in the fiscal years 2018 and 2017, the Company recorded certain fair value adjustments related to acquired assets and liabilities in accordance with ASC Topic 805, Business Combinations. For the Company’s acquisitions, the Company recognized fair value adjustments primarily for (i) recognition of intangible assets such as trade names, venue management contracts, favorable leases, and festival rights, (ii) step-up of property and equipment, (iii) step-up of inventory, (iv) unfavorable lease obligation,

and (v) goodwill. The aforementioned fair value adjustments, except for goodwill, will be expensed as incremental non-cash expenses in the Company’s combined statements of operations based on their estimated useful lives (“Purchase Accounting Adjustments”).

Investments in Nonconsolidated Affiliates

In July 2018, the Company acquired a 30% interest in SACO, a global provider of high-performance LED video lighting and media solutions for a total consideration of approximately $47,244. The Company is utilizing SACO as a preferred display technology provider for MSG Spheres and is benefiting from agreed-upon commercial terms.

In addition, the Company also has other investments in various sports and entertainment companies and related technologies, accounted for either under the equity method or at fair value. See “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 5. Investments and Loans to Nonconsolidated Affiliates” and “Combined Financial Statements as of December 31, 2019 (Unaudited) and June 30, 2019 and for the six months ended December 31, 2019 and 2018 (Unaudited) — Notes to Combined Financial Statements — Note 5. Investments and Loans to Nonconsolidated Affiliates” for more information on our investments in nonconsolidated affiliates.

Combined Results of Operations

Comparison of the Six Months Ended December 31, 2019 versus the Six Months Ended December 31, 2018

The table below sets forth, for the periods presented, certain historical financial information.


	Six Months Ended
	December 31,						Change
	2019			2018			Amount			Percentage
Revenues	$	567,177		$	582,366		$	(15,189	)		(3	)%
Direct operating expenses		339,773			348,539			(8,766	)		(3	)%
Selling, general and administrative expenses		173,784			147,879			25,905			18	%
Depreciation and amortization		54,075			54,838			(763	)		(1	)%

Operating income (loss)		(455	)		31,110			(31,565	)		NM
Other income (expense):
Earnings (loss) in equity method investments		(2,643	)		20,012			(22,655	)		NM
Interest income, net		12,334			7,204			5,130			71	%
Miscellaneous income (expense), net		14,488			(8,731	)		23,219			NM

Income from operations before income taxes		23,724			49,595			(25,871	)		(52	)%
Income tax expense		(1,440	)		(784	)		(656	)		(84	)%

Net income		22,284			48,811			(26,527	)		(54	)%
Less: Net loss attributable to redeemable noncontrolling interests		(1,404	)		(3,655	)		2,251			62	%
Less: Net loss attributable to nonredeemable noncontrolling interests		(157	)		(2,441	)		2,284			94	%

Net income attributable to the Company	$	23,845		$	54,907		$	(31,062	)		(57	)%

NM — Percentage is not meaningful

Revenues

Revenues for the six months ended December 31, 2019 decreased $15,189, or 3%, to $567,177 as compared to the prior year period. The net decrease was attributable to the following:


Decrease in revenues from Obscura due to the decision to wind down its third-party production business to focus on the development of MSG Sphere	$	(8,129	)
Decrease in event-related revenues from concerts due to lower per-event revenues, partially offset by additional events held at the Company’s venues		(4,906	)
Decrease in venue-related signage and sponsorship revenues due to lower sales of existing sponsorship and signage inventory		(4,753	)
Decrease in event-related revenues from other live sporting events primarily due to fewer events partially offset by higher per-event revenue		(3,500	)
Decrease in revenues associated with the expiration of the Wang Theatre booking agreement in February 2019		(3,251	)
Increase in revenues associated with entertainment dining and nightlife offerings primarily due to the impact of new venues, partially offset by lower revenues at other venues, including closing one venue in New York in January 2019 ^(a)		6,540
Increase in event-related revenues from other live entertainment events		1,821
Increase in revenues from the presentation of the Christmas Spectacular		1,769
Other net decreases		(780	)

	$	(15,189	)

(a)

Tao Group Hospitality’s operating results are recorded in the Company’s combined statements of operations on a three-month lag basis. See “Combined Financial Statements as of December 31, 2019 (Unaudited) and June 30, 2019 and for the Six Months Ended December 31, 2019 and 2018 (Unaudited) — Notes to Combined Financial Statements — Note 2. Accounting Policies” for further discussion of Tao Group Hospitality’s consolidation.

The increase in event-related revenues from other live entertainment events was primarily due to higher per-event revenue from a theatrical production at the Hulu Theater at Madison Square Garden and The Chicago Theatre partially offset by the impact of a large-scale special event held at Radio City Music Hall during the prior year period. The Company did not have a comparable special event in the current year period.

The increase in revenues from the presentation of the Christmas Spectacular, as compared to the prior year period, was primarily due to the following:

•

higher per-show ticket-related revenue from higher average ticket prices, an increase in average per-show paid attendance, and higher ticket-related fees in the current year period; and

•

higher merchandise revenue due to recording certain merchandise sales on a gross basis (as principal) as a result of transitioning those operations in-house in the current year period that were outsourced in the prior year period.

The increase in per-show ticket-related revenue and merchandise revenue discussed above were partially offset by the impact on ticket-related revenue due to fewer scheduled performances in the current year period as compared to the prior year period. The Company had 199 scheduled Christmas Spectacular performances in this year’s holiday season, of which 186 took place in the second quarter of fiscal year 2020, as compared to 210 scheduled performances in the prior year’s holiday season, of which 197 took place in the second quarter of fiscal year 2019. For this year’s holiday season, more than one million tickets were sold, representing a low-single-digit percentage decrease as compared to the prior year period.

Direct operating expenses

Direct operating expenses for the six months ended December 31, 2019 decreased $8,766, or 3%, to $339,773 as compared to the prior year period. The net decrease is attributable to the following:


Decrease in direct operating expenses associated with Obscura due to the decision to wind down its third-party production business to focus on the development of MSG Sphere	$	(6,492	)
Decrease in direct operating expenses associated with the venue-related signage and sponsorship primarily due to lower revenue sharing expenses associated with venue-related signage and sponsorship revenues decreases		(3,672	)
Decrease in direct operating expenses associated with the expiration of the Wang Theatre booking agreement in February 2019		(1,694	)
Decrease in event-related expenses associated with live sporting events primarily due to fewer events partially offset by higher per-event expenses		(1,666	)
Decrease in event-related direct operating expenses associated with other live entertainment events		(1,269	)
Increase in venue operating costs, net of recovery charges from MSG		3,231
Increase in direct operating expenses associated with entertainment dining and nightlife offerings primarily due to costs associated with a new venue which opened in September 2018, partially offset by lower food and beverage costs and employee compensation and related benefits, as well as the absence of costs related to one venue in New York which closed in January 2019		2,453
Other net increases		343

	$	(8,766	)

The decrease in event-related direct operating expenses from other live entertainment events was due to the impact of a large-scale special event held at Radio City Music Hall during the prior year period. The Company did not have a comparable special event in the current year period. The decrease was partially offset by higher per-event expenses from a theatrical production at the Hulu Theater at Madison Square Garden and The Chicago Theatre.

The increase in venue operating costs, net reflects higher labor costs and higher repair and maintenance costs at the Company’s venues, and to a lesser extent, lower recovery charges for venue usage from MSG for hosting the professional sports franchises’ home games of the Knicks and Rangers at The Garden in the current year period as compared to the prior year period.

Selling, general and administrative expenses

Selling, general and administrative expenses for the six months ended December 31, 2019 increased $25,905, or 18%, to $173,784 as compared to the prior year period primarily due to (i) higher expenses related to the Company’s MSG Sphere initiative of $18,642, which include increases in personnel, content development and technology costs, (ii) an increase in employee compensation and related benefits of $8,816, and (iii) higher professional fees of $4,786. The increase was partially offset by (i) lower selling, general and administrative expenses associated with Obscura of $5,129 due to the Company’s decision to wind down Obscura’s third-party production business to focus on the development of MSG Sphere, and (ii) the absence of venue pre-opening costs of $3,738 associated with entertainment dining and nightlife offerings that were recorded in the prior year period.

In connection with its MSG Sphere initiative, the Company expects to continue increasing its investment in personnel, content and technology. Based on the timing of these efforts, the Company expects higher expenses for the remaining periods in fiscal year 2020.

Depreciation and amortization

Depreciation and amortization for the six months ended December 31, 2019 decreased $763, or 1%, to $54,075 as compared to the prior year period. The decrease was primarily due to certain assets and purchase

accounting adjustments being fully depreciated and amortized, partially offset by depreciation and amortization related to a new entertainment dining and nightlife venue and equipment associated with the development of MSG Sphere initiative in the current year period.

Operating income (loss)

Operating loss for the six months ended December 31, 2019 was $455 as compared to an operating income of $31,110 in the prior year period due to higher selling, general and administrative expenses and lower revenues slightly offset by a decrease in direct operating expenses and lower depreciation and amortization, as discussed above.

Earnings (loss) in equity method investments

Loss in equity method investments for the six months ended December 31, 2019 was $2,643 as compared to earnings of $20,012 in the prior year period. The decrease was due to the absence of equity earnings from AMSGE and Tribeca Enterprises as the Company sold these investments in December 2018 and August 2019, respectively. For the six months ended December 31, 2018, the Company reported net earnings in equity method investments of $10,658 and $21,986, respectively, from those investments.

Interest income, net

Net interest income for the six months ended December 31, 2019 increased $5,130, or 71%, to $12,334 as compared to the prior year period primarily due to lower interest expense associated with the Tao Group Hospitality, as a result of the refinancing of its credit facility in May 2019, which resulted in a reduction of the outstanding balance payable to the third parties by entering into an intercompany subordinated credit agreement with the Company, as well as lower variable interest rates under the Tao Senior Credit Agreement in the current year period as compared to the previous credit facility in the prior year period. See “Combined Financial Statements as of December 31, 2019 (Unaudited) and June 30, 2019 and for the Six Months Ended December 31, 2019 and 2018 (Unaudited) — Notes to Combined Financial Statements — Note 10. Credit Facilities” for further details of the Tao Senior Credit Agreement.

Miscellaneous income (expense), net

Net miscellaneous income for the six months ended December 31, 2019 increased $23,219 to $14,488 as compared to a net miscellaneous expense of $8,731 in the prior year period. The increase was primarily due to the unrealized gain of $14,725 related to the Company’s investment in Townsquare in the current year period as compared to an unrealized loss of $7,667 in the prior year period.

Income taxes

See “Combined Financial Statements as of December 31, 2019 (Unaudited) and June 30, 2019 and for the Six Months Ended December 31, 2019 and 2018 (Unaudited) — Notes to Combined Financial Statements — Note 14. Income Taxes” for discussions of the Company’s income taxes.

Adjusted operating income

The following is a reconciliation of operating income (loss) to adjusted operating income:


	Six Months Ended
	December 31,					Change
	2019			2018		Amount			Percentage
Operating income (loss)	$	(455	)	$	31,110	$	(31,565	)		NM
Share-based compensation		20,458			19,203
Depreciation and amortization ^(a)		54,075			54,838
Other purchase accounting adjustments		3,396			2,648

Adjusted operating income	$	77,474		$	107,799	$	(30,325	)		(28	)%

NM — Percentage is not meaningful

(a)

Depreciation and amortization includes purchase accounting adjustments of $5,928 and $8,371 for the six months ended December 31, 2019 and 2018, respectively.

Adjusted operating income for the six months ended December 31, 2019 decreased $30,325, or 28%, to $77,474 as compared to the prior year period. The decrease in adjusted operating income was lower than the decrease in operating income primarily due to higher share-based compensation of $1,255 and other purchase accounting adjustments of $748, partially offset by lower depreciation and amortization of $763.

Net loss attributable to redeemable and nonredeemable noncontrolling interests

For the six months ended December 31, 2019, the Company recorded $1,404 of net loss attributable to redeemable noncontrolling interests, including proportional share of expenses related to purchase accounting adjustments (“PPA Expenses”) of $3,290, and $157 of net loss attributable to nonredeemable noncontrolling interests, including $114 of PPA Expenses, as compared to $3,655 of net loss attributable to redeemable noncontrolling interests, including $3,904 of PPA Expenses, and $2,441 of net loss attributable to nonredeemable noncontrolling interests, including $174 of PPA Expenses, for the six months ended December 31, 2018.

These amounts represent the share of net loss from the Company’s investments in Tao Group Hospitality and BCE that are not attributable to the Company.

Comparison of the Year Ended June 30, 2019 versus the Year Ended June 30, 2018

Results of Operations

The table below sets forth, for the periods presented, certain historical financial information.


	Years Ended June 30,						Change
	2019			2018			Amount			Percentage
Revenues	$	1,048,909		$	988,990		$	59,919			6	%
Direct operating expenses		670,641			635,218			35,423			6	%
Selling, general and administrative expenses		314,522			272,996			41,526			15	%
Depreciation and amortization		109,343			112,058			(2,715	)		(2	)%

Operating loss		(45,597	)		(31,282	)		(14,315	)		(46	)%
Other income (expense):
Earnings (loss) in equity method investments		7,062			(3,758	)		10,820			NM
Interest income, net		14,901			9,198			5,703			62	%
Miscellaneous expenses, net		(6,061	)		(3,101	)		(2,960	)		(95	)%

Loss from operations before income taxes		(29,695	)		(28,943	)		(752	)		(3	)%
Income tax benefit (expense)		(443	)		30,830			(31,273	)		NM

Net income (loss)		(30,138	)		1,887			(32,025	)		NM
Less: Net loss attributable to redeemable noncontrolling interests		(7,299	)		(628	)		(6,671	)		NM
Less: Net loss attributable to nonredeemable noncontrolling interests		(4,945	)		(4,383	)		(562	)		(13	)%

Net income (loss) attributable to the Company	$	(17,894	)	$	6,898		$	(24,792	)		NM

NM — Percentage is not meaningful

The results of operations for the year ended June 30, 2018 include Obscura’s results of operations associated with its third-party production business from the date of acquisition, which was November 20, 2017. The current year results include activities from Obscura for a full fiscal year as compared to approximately seven months (from November 20, 2017 to June 30, 2018) in fiscal year 2018. In fiscal year 2019, the Company made a decision to wind down Obscura’s third-party production business to focus those resources on MSG Sphere development.

Revenues

Revenues for the year ended June 30, 2019 increased $59,919, or 6%, to $1,048,909 as compared to the prior year. The net increase is attributable to the following:


Increase in event-related revenues from concerts	$	19,966
Increase in event-related revenues from live sporting events		16,172
Increase in revenues from the presentation of the Christmas Spectacular		14,797
Increase in revenues associated with entertainment dining and nightlife offerings		10,837
Increase in venue-related signage and sponsorship revenues		8,069
Increase in revenues from Obscura		5,311
Increase in suite license fee revenues		4,019
Increase in ad sales commission		1,912
Decrease in event-related revenues from other live entertainment events		(16,899	)
Decrease in BCE event-related revenues		(3,255	)
Other net decreases		(1,010	)

	$	59,919

The increase in event-related revenues from concerts was primarily due to additional events and higher per event revenue during the current year, and to a lesser extent, the impact from the recognition during the current year of $1,278 of revenue associated with events that took place in prior year as a result of the ticketing agreement renewal. The increase was partially offset by the impact of the new revenue recognition standard in the current year.

The increase in event-related revenues from live sporting events was due to higher per event revenue, slightly offset by fewer events during the current year as compared to the prior year.

The increase in revenues from the presentation of the Christmas Spectacular was primarily due to (i) higher ticket-related revenue mainly as a result of higher average ticket prices, (ii) an increase in paid attendance in the current year as compared to the prior year, and (iii) the recognition during the current year of $880 of revenue associated with performances that took place in prior year as a result of the ticketing agreement renewal. The Company had 210 performances of the production in fiscal year 2019, as compared to 200 performances in fiscal year 2018 due to an extension of the show’s run announced in December 2018. For fiscal year 2019, more than one million tickets were sold, representing a mid-single-digit percentage increase as compared to the prior year.

The increase in revenues associated with entertainment dining and nightlife offerings was primarily due to the impact of the opening of a new venue, partially offset by (i) the impact of the current year containing 52 weeks of operations as compared to 53 weeks during the prior year, due to the timing of the retail calendar, (ii) closing of one venue, and (iii) other decreases. Tao Group Hospitality’s operating results are recorded in the Company’s combined statements of operations on a three-month lag basis. As a result, Tao Group Hospitality’s related revenues for fiscal year 2019 are for the period from April 2, 2018 to March 31, 2019, as compared to Tao Group Hospitality’s related revenues for fiscal year 2018, which are for the period from March 27, 2017 to April 1, 2018.

The increase in venue-related signage and sponsorship revenues was due to increased sales of existing sponsorship and signage inventory.

Revenues from Obscura are included as a result of its acquisition by the Company on November 20, 2017. The current year results include revenues from Obscura for a full fiscal year as compared to approximately seven months (from November 20, 2017 to June 30, 2018) in fiscal year 2018. Revenues from Obscura are principally related to its third-party production business.

The increase in suite license fee revenues was due to rate increases and, to a lesser extent, the impact of the new revenue recognition standard in the current year. The increase was partially offset by lower sales of suite products.

The increase in ad sales commissions was due to increased sales in advertising availabilities of MSG Networks.

The decrease in event-related revenues from other live entertainment events was primarily due to (i) the impact of a large-scale special event series held at The Garden and Hulu Theater at Madison Square Garden during the prior year, (ii) lower per event revenue during the current year as compared to the prior year and, to a lesser extent, (iii) the impact of the new revenue recognition standard in the current year. The decrease was slightly offset by additional events held at the Company’s venues during the current year as compared to the prior year.

The decrease in BCE event-related revenues was primarily due to lower ticket-related revenues from the Boston Calling Music Festival.

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Direct operating expenses

Direct operating expenses primarily include:

•

event costs related to the presentation, production and marketing of our events;

•

revenue sharing expenses associated with the venue-related signage, sponsorship and suite license fee revenues that are attributable to MSG;

•

venue lease, maintenance and other operating expenses, net of recovery charges for venue usage from MSG for hosting the professional sports franchises’ home games of the Knicks and Rangers at The Garden;

•

the cost of concessions, merchandise and food and beverage sold at our venues; and

•

restaurant operating expenses, inclusive of labor costs.

Direct operating expenses for the year ended June 30, 2019 increased $35,423, or 6%, to $670,641 as compared to the prior year. The net increase is attributable to the following:


Increase in direct operating expenses associated with entertainment dining and nightlife offerings	$	16,246
Increase in event-related expenses associated with live sporting events		10,501
Increase in direct operating expenses associated with Obscura		5,871
Increase in direct operating expenses associated with the presentation of the Christmas Spectacular		5,187
Increase in direct operating expenses associated with suite licenses		3,405
Increase in venue operating costs, net of recovery charges from MSG		2,192
Increase in direct operating expenses associated with the venue-related signage and sponsorship		2,063
Increase in direct operating expenses associated with the Company’s exploration of a new theatrical production		1,485
Decrease in event-related direct operating expenses associated with other live entertainment events		(9,757	)
Decrease in BCE event-related direct operating expenses		(1,914	)
Decrease in event-related direct operating expenses associated with concerts		(978	)
Other net increases		1,122

	$	35,423

The increase in direct operating expenses associated with entertainment dining and nightlife offerings was primarily due to the costs associated with the opening of a new venue inclusive of increases in (i) employee compensation and related benefits, (ii) costs of food and beverage, and (iii) performer costs.

The increase in event-related expenses associated with live sporting events was due to higher per event expenses, slightly offset by fewer events during the current year as compared to the prior year.

Direct operating expenses from Obscura are included as a result of its acquisition by the Company on November 20, 2017. The current year results include direct operating expenses from Obscura for a full fiscal year as compared to approximately seven months (from November 20, 2017 to June 30, 2018) in fiscal year 2018. Direct operating expenses from Obscura are principally related to third-party production business.

The increase in direct operating expenses associated with the presentation of the Christmas Spectacular was primarily due to (i) higher labor costs, (ii) higher costs associated with more performances in the current year, (iii) costs related to show enhancements, and (iv) higher marketing expenses during the current year as compared to the prior year. The Company had 210 performances of the production in fiscal year 2019, as compared to 200 performances in fiscal year 2018 due to an extension of the show’s run announced in December 2018.

The increase in direct operating expenses associated with suite licenses was primarily due to higher revenue sharing expenses associated with suite license fee revenues increases.

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The increase in venue operating costs, net was primarily due to lower recovery charges for venue usage from MSG for hosting the professional sports franchises’ home games of the Knicks and Rangers at The Garden in the current year as compared to the prior year.

The increase in direct operating expenses associated with the venue-related signage and sponsorship was primarily due to increased sales of existing sponsorship inventory.

The decrease in event-related direct operating expenses associated with other live entertainment events was primarily due to (i) the impact of a large-scale special event series held at The Garden and Hulu Theater at Madison Square Garden during the prior year, (ii) the impact of the new revenue recognition standard in the current year, and (iii) to a lesser extent, lower per event expenses during the current year as compared to the prior year. The decrease was slightly offset by additional events held at the Company’s venues during the current year as compared to the prior year.

The decrease in BCE event-related direct operating expenses was due to lower costs related to the Boston Calling Music Festival in the current year as compared to the prior year.

The decrease in event-related direct operating expenses associated with concerts was primarily due to the impact of the new revenue recognition standard in the current year. The decrease was largely offset by additional events held at the Company’s venues and higher per event expenses during the current year as compared to the prior year.

Selling, general and administrative expenses

Selling, general and administrative expenses primarily consist of administrative costs, including compensation, professional fees, sales and marketing costs, including non-event related advertising expenses, and business development costs, as well as costs associated with the development of MSG Sphere, including technology and content development costs.

Selling, general and administrative expenses for the year ended June 30, 2019 increased $41,526, or 15%, to $314,522 as compared to the prior year mainly due to (i) higher employee compensation and related benefits, excluding share-based compensation, of $10,166, which reflects an 11% increase as compared to the prior year, (ii) an increase in share-based compensation of $6,603, mainly attributable to new awards granted in fiscal year 2019, (iii) higher professional fees of $11,986, (iv) the inclusion of Obscura’s selling, general and administrative costs of $4,381 related to its third-party production business for a full fiscal year as compared to approximately seven months (from November 20, 2017 to June 30, 2018) in fiscal year 2018, and (v) venue pre-opening costs of $3,113 associated with entertainment dining and nightlife offerings primarily for non-cash deferred rent expense.

Depreciation and amortization

Depreciation and amortization for the year ended June 30, 2019 decreased $2,715, or 2%, to $109,343 as compared to the prior year primarily due to certain assets being fully depreciated and amortized.

Operating loss

Operating loss for the year ended June 30, 2019 increased $14,315, or 46%, to $45,597 as compared to the prior year. The increase was primarily due to increases in selling, general and administrative expenses and direct operating expenses, partially offset by higher revenues and, to a lesser extent, lower depreciation and amortization, as discussed above.

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Earnings (loss) in equity method investments

Earnings in equity method investments for the year ended June 30, 2019 were $7,062 as compared to a loss of $3,758 in the prior year. The year-over-year improvement is primarily due to (i) the improvement in the net earnings of $10,480 attributable to the Company’s investees as compared to the prior year and (ii) gains of approximately $9,000 related to the sale of the Company’s interest in Azoff MSG Entertainment LLC (“AMSGE”) during the current year as well as the sale of an AMSGE investment during the current year prior to the Company’s sale of its interest in AMSGE. The increase was partially offset by an impairment charge of $8,113 recorded for the Company’s investment in Tribeca Enterprises LLC (“Tribeca Enterprises”) and the amortization of basis difference of $3,348 attributable to intangible assets for the new investment in the current year. The Company sold its interest in Tribeca Enterprises, including the outstanding loan and payments-in-kind (“PIK”) interest, effective August 5, 2019. See “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 5. Investments and Loans to Nonconsolidated Affiliates” for further discussion of an impairment charge recorded for the Company’s investment in Tribeca Enterprises.

Interest income, net

Net interest income for the year ended June 30, 2019 increased $5,703, or 62%, to $14,901 as compared to the prior year primarily due to higher interest income earned by the Company as a result of higher interest rates. The increase was partially offset by higher interest expense incurred under the Tao Senior Credit Agreement and 2017 Tao Credit Agreement. See “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 10. Credit Facilities” for further discussion of the Tao Senior Credit Agreement entered in May 2019.

Miscellaneous expenses, net

Miscellaneous expenses, net for the year ended June 30, 2019 increased by $2,960, or 95% primarily due to a loss of $3,977 recorded on the extinguishment of debt in connection with the 2017 Tao Credit Agreement in the fourth quarter of fiscal year 2019.

Income taxes

On December 22, 2017, the enactment of the Tax Cuts and Jobs Act (“TCJA”) significantly changed U.S. tax law and included a reduction in the corporate federal income tax rate from 35% to 21% effective January 1, 2018. Since the Company did not have any current federal tax expense for the year ended June 30, 2018, the federal rate of 21% was used for the entire year.

The income tax expense or benefit has been determined on a stand-alone basis as if the Company filed separate income tax returns for the periods presented. Although deferred tax assets have been recognized for net operating loss (“NOLs”) carry forwards and tax credits in accordance with the separate return method, such NOLs and credits will not carry over with the Company in connection with the Distribution.

Income tax expense for the year ended June 30, 2019 of $443 differs from income tax benefits derived from applying the statutory federal rate of 21% to pretax loss primarily due to a decrease in valuation allowance of $71, tax expense of $7,655 relating to nondeductible officers’ compensation, tax expense of $2,571 relating to noncontrolling interests, state income tax expense of $951, partially offset by excess tax benefit of $3,376 related to share-based payments awards.

Income tax benefit for the year ended June 30, 2018 of $30,830 differs from the income tax benefit derived from applying the statutory federal rate of 21% to pretax loss primarily as a result of a deferred income tax benefit of $32,347 related to the remeasurement of deferred tax assets and liabilities under provisions contained

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in the new tax legislation, of which (i) $33,852 was due to the reduction of net deferred tax assets in connection with the lower federal income tax rate of 21%, and (ii) $66,199 was due to a reduction in the valuation allowance attributable to the new rules, which provide that future federal NOLs have an unlimited carry-forward period. These rules on future federal NOLs allow the Company to recognize a portion of its unrecognized deferred tax assets for future deductible items. Partially offsetting this tax benefit was an increase in the valuation allowance of $7,494 related to current year changes in deferred assets and liabilities.

See “Combined Financial Statements as of June 30, 2019 and 2018 and for the Three Years Ended June 30, 2019, 2018 and 2017 — Notes to Combined Financial Statements — Note 15. Income Taxes” for further details on the components of income tax and a reconciliation of the statutory federal rate to the effective tax rate.

Adjusted operating income

The Company evaluates performance based on several factors, of which the key financial measure is the operating income (loss) before (i) depreciation, amortization and impairments of property and equipment and intangible assets, (ii) share-based compensation expense or benefit, (iii) restructuring charges or credits, and (iv) gains or losses on sales or dispositions of businesses, which is referred to as adjusted operating income (loss), a non-GAAP measure. In addition to excluding the impact of items discussed above, the impact of purchase accounting adjustments related to business acquisitions is also excluded in evaluating the Company’s combined adjusted operating income (loss). The Company has presented the components that reconcile operating income (loss) to adjusted operating income (loss).

The following is a reconciliation of operating loss to adjusted operating income:


	Years Ended June 30,						Change
	2019			2018			Amount			Percentage
Operating loss	$	(45,597	)	$	(31,282	)	$	(14,315	)		(46	)%
Share-based compensation		35,401			27,286
Depreciation and amortization ^(a)		109,343			112,058
Other purchase accounting adjustments ^(b)		4,764			4,768

Adjusted operating income	$	103,911		$	112,830		$	(8,919	)		(8	)%

(a)	Depreciation and amortization included purchase accounting adjustments of $15,901 and $15,188 for the years ended June 30, 2019 and 2018, respectively.

(b)	Other purchase accounting adjustments for the years ended June 30, 2019 and 2018 primarily included the amortization of favorable leases in connection with the Tao Group Hospitality acquisition.

Adjusted operating income for the year ended June 30, 2019 decreased $8,919, or 8%, to $103,911 as compared to the prior year. The decrease was lower than the increase in operating loss primarily due to higher share-based compensation expense, partially offset by lower depreciation and amortization.

Net loss attributable to redeemable and nonredeemable noncontrolling interests

For the year ended June 30, 2019, the Company recorded a net loss attributable to redeemable noncontrolling interests of $7,299 and a net loss attributable to nonredeemable noncontrolling interests of $4,945 as compared to $628 of net loss attributable to redeemable noncontrolling interests and $4,383 of net loss attributable to nonredeemable noncontrolling interests for the year ended June 30, 2018. These amounts represent the share of net loss of Tao Group Hospitality and BCE that are not attributable to the Company. In addition, the net loss attributable to redeemable and nonredeemable noncontrolling interests includes a proportional share of expenses related to purchase accounting adjustments.

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Comparison of the Year Ended June 30, 2018 versus the Year Ended June 30, 2017

Results of Operations

The table below sets forth, for the periods presented, certain historical financial information.

Years Ended June 30,