ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
☑ | Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ | Smaller reporting company |
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Emerging growth company |
Class A Common Stock par value $0.01 per share |
— | |||||||
Class B Common Stock par value $0.01 per share |
— |
Explanatory Note | ||
Part I—Item 1A. | Risk Factors | |
Part II—Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Part II—Item 8. | Financial Statements and Supplementary Data | |
Part II—Item 9A. | Controls and Procedures | |
Part IV—Item 15. | Exhibits and Financial Statement Schedules |
• |
the credit agreement (the “Tao Senior Credit Agreement”) of Tao Group Intermediate Holdings LLC and Tao Group Operating LLC (“Tao”), |
• |
the secured term loan facility (the “National Properties Term Loan Facility”) of MSG National Properties, LLC (“MSG National Properties”), and |
• |
the senior credit facilities (the “MSGN Credit Agreement” and collectively with the National Properties Term Loan Facility and the Tao Senior Credit Agreement, the “Credit Facilities”) of MSGN Holdings, L.P. (“MSG Networks”). |
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PART I |
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1 |
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PART II |
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33 |
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71 |
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71 |
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PART IV |
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73 |
• | Our operations and operating results have been, and continue to be, materially impacted by the COVID-19 pandemic and actions taken in response by governmental authorities and certain professional sports leagues. |
• | All of our businesses face intense and wide-ranging competition that may have a material negative effect on our business and results of operations. |
• | The success of our Entertainment business depends on the continued popularity of our live productions, particularly the Christmas Spectacular |
• | The Company is moving forward with its MSG Sphere initiative and is building and plans to operate its first state-of-the-art |
• | Our Entertainment business strategy includes the development of new content, productions, attractions and other events which could require us to make considerable investments for which there can be no guarantee of success. |
• | 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. |
• | 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. In addition, a change to or withdrawal of a New York City real estate tax exemption for the Madison Square Garden Complex may have a material negative effect on our business and results of operations. |
• | The success of our MSG Networks business depends on affiliation fees we receive under our affiliation agreements, the loss of which or renewal of which on less favorable terms may have a material negative effect on our business and results of operations. |
• | Given that we depend on a limited number of distributors for a significant portion of our MSG Networks revenues, further industry consolidation could adversely affect our business and results of operations. |
• | We may not be able to adapt to new content distribution platforms and to changes in consumer behavior resulting from emerging technologies, which may have a material negative effect on our business and results of operations. |
• | If the rate of decline in the number of subscribers to traditional MVPDs services increases or these subscribers shift to other services or bundles that do not include the Company’s programming networks, there may be a material negative effect on the Company’s affiliation revenues. |
• | We derive substantial revenues from the sale of advertising time and those revenues are subject to a number of factors, many of which are beyond our control. In addition, our media rights agreements with various professional sports teams have varying durations and terms and we may be unable to renew those agreements on acceptable terms or such rights may be lost for other reasons. |
• | Our business is substantially dependent on the popularity of the NBA and NHL teams whose media rights we control; the actions of the NBA and NHL may have a material negative effect on our MSG Networks business and results of operations. |
• | 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. |
• | 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. |
• | 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. |
• | We do not own all of our venues and our failure to renew our leases on economically attractive terms may have a material negative effect on our business and results of operations. |
• | The geographic concentration of our businesses could subject us to greater risk than our competitors and 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 could be adversely affected by terrorist activity or the threat of terrorist activity, weather and other conditions that discourage congregation at prominent places of public assembly. |
• | 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. |
• | We face continually evolving cybersecurity and similar risks, which could result in loss, disclosure, theft, destruction 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 have substantial indebtedness and are highly leveraged, which could adversely affect our business. |
• | We may require additional financing to fund our planned construction of MSG Sphere in Las Vegas, as well as certain of our obligations, ongoing operations, and capital expenditures, the availability of which is uncertain. |
• | 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 are materially dependent on MSG Sports’ performance under various agreements. |
• | 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 share certain key directors and officers with MSG Sports and/or AMC Networks, which means those officers do not devote their full time and attention to our affairs and the overlap may give rise to conflicts. Our overlapping directors and officers with MSG Sports and/or AMC Networks may result in the diversion of corporate opportunities to MSG Sports 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. |
• | 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; |
• | changes in local regulatory requirements, including restrictions on foreign ownership; |
• | exchange rate fluctuation; |
• | exchange controls, tariffs and other trade barriers; |
• | differing degrees of protection for intellectual property and varying attitudes towards the piracy of intellectual property; |
• | foreign privacy and data protection laws and regulations, such as the E.U. General Data Protection Regulation, and changes in these laws; |
• | the impact of Brexit, which legally took place on January 31, 2020, and the E.U.-U.K. Trade and Cooperation Agreement, which was applied provisionally from January 1, 2021 and entered into force on May 1, 2021; |
• | the instability of foreign economies and governments; |
• | war, acts of terrorism and the outbreak of epidemics or pandemics abroad; |
• | anti-corruption laws and regulations, such as the U.S. 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 |
• | shifting consumer preferences regarding entertainment. |
• | 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; |
• | 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; |
• | certain repurchases of our common shares; |
• | ceasing to actively conduct our business; |
• | amendments to our organizational documents (i) affecting the relative voting rights of our stock or (ii) converting one class of our stock to another; |
• | liquidating or partially liquidating; and |
• | taking any other action that prevents the Entertainment Distribution and certain related transactions from being tax-free. |
• | Class A Common Stock, par value $0.01 per share (“Class A Common Stock”), which is entitled to one vote per share and is entitled collectively to elect 25% of our Board of Directors; and |
• | Class B Common Stock, par value $0.01 per share (“Class B Common Stock”), which is entitled to 10 votes per share and is entitled collectively to elect the remaining 75% of our Board of Directors. |
• | the authorization or issuance of any additional shares of Class B Common Stock; and |
• | 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. |
• | our ability to effectively manage the impacts of the COVID-19 pandemic and the actions taken in response by governmental authorities and certain professional sports leagues, including ensuring compliance with rules and regulations imposed upon our venues as they are permitted to reopen; |
• | risks related to the Merger, as defined herein, with MSG Networks, including, but not limited to: failure to realize the expected benefits of the Merger, business disruption following the Merger and the risk of any litigation relating to the Merger; |
• | the extent to which attendance at our venues following their reopening will be suppressed due to government actions and continuing health concerns by potential attendees; |
• | the impact on the payments we receive under the Arena License Agreements as a result of government-mandated capacity restrictions, league restrictions and/or social-distancing or vaccination requirements at Knicks and Rangers games; |
• | the level of our expenses and our operational cash burn rate, including our corporate expenses as a stand-alone publicly traded company; |
• | our ability to successfully design, construct, finance and operate new entertainment venues in Las Vegas and other markets, and the investments, costs and timing associated with those efforts, including the impact of the temporary suspension of construction and any other construction delays and/or cost overruns; |
• | the level of our revenues, which depends in part on the popularity of the Christmas Spectacular Starring the Radio City Rockettes Christmas Spectacular |
• | the demand for our MSG Networks programming among cable, satellite, telephone and other platforms (“Distributors”) and the subscribers thereto, and our ability to enter into and renew affiliation agreements with Distributors, or to do so on favorable terms, as well as the impact of consolidation among Distributors; |
• | the ability of our Distributors to maintain, or minimize declines in, subscriber levels; |
• | the impact of subscribers selecting Distributors’ packages that do not include our networks or Distributors that do not carry our networks at all; |
• | the security of our MSG Networks program signal and electronic data; |
• | the on-ice and on-court performance of the professional sports teams whose games we broadcast on our networks and host in our venues; |
• | the level of our capital expenditures and other investments; |
• | general economic conditions, especially in the New York City, Las Vegas, Chicago and London metropolitan areas where we have (or plan to have) significant business activities; |
• | the demand for sponsorship arrangements and advertising and viewer ratings for our networks; |
• | competition, for example, from other venues and other sports and entertainment and nightlife options and other regional sports and entertainment networks, including the construction of new competing venues; |
• | the relocation or insolvency of professional sports teams with which we have a media rights agreement; |
• | our ability to maintain, obtain or produce content, together with the cost of such content; |
• | our ability to renew or replace our media rights agreements with professional sports teams through MSG Networks; |
• | changes in laws, guidelines, bulletins, directives, policies and agreements, and regulations under which we operate; |
• | any economic, social or political actions, such as boycotts, protests, work stoppages or campaigns by labor organizations, including the National Basketball Association (“NBA”), National Hockey League (“NHL”), or other work stoppage due to COVID-19 or otherwise; |
• | seasonal fluctuations and other variations in our operating results and cash flow from period to period; |
• | the successful development of new live productions or attractions, 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 MSG Sphere; |
• | business, reputational and litigation risk if there is a security incident resulting in loss, disclosure or misappropriation of stored personal information, disruption of our Networks business or disclosure of confidential information or other breaches of our information security; |
• | activities or other developments (such as pandemics, including the COVID-19 pandemic) that discourage or may discourage congregation at prominent places of public assembly, including our venues; |
• | the continued popularity and success of Tao Group Hospitality 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 Boston Calling Events, LLC (“BCE”) |
• | 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, including the Merger with MSG Networks and our acquisition of Hakkasan through Tao Group Hospitality; |
• | the operating and financial performance of our strategic acquisitions and investments, including those we do not control; |
• | our internal control environment, remediation of the material weakness, and our ability to identify any future material weaknesses; |
• | 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, changes in how those regulations and laws are interpreted, including with respect to the legalization of sports gaming, as well as 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; |
• | the impact of sports league rules, regulations and/or agreements and changes thereto; |
• | the substantial amount of debt incurred, and any default, by our subsidiaries under their respective credit facilities; |
• | financial community and rating agency perceptions of our business, operations, financial condition and the industries in which we operate; |
• | the ability of our investees and others to repay loans and advances we have extended to them; |
• | the tax-free treatment of the Entertainment Distribution (as defined below); |
• | our ability to achieve the intended benefits of the Entertainment Distribution and the Merger with MSG Networks; |
• | the performance by MSG Sports of its obligations under various agreements with the Company related to the Entertainment Distribution and ongoing commercial arrangements; |
• | lack of operating history as an operating company and costs associated with being an independent public company; and |
• | the additional factors described under “Part I — Item 1A. Risk Factors” included in this Annual Report on Form 10-K. |
Years Ended June 30, |
Change |
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2021 |
2020 |
Amount |
Percentage |
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Revenues |
$ | 647,510 | $ | 685,797 | $ | (38,287 | ) | (6 | )% | |||||||
Direct operating expenses |
262,859 | 282,837 | (19,978 | ) | (7 | )% | ||||||||||
Selling, general and administrative expenses |
115,339 | 100,829 | 14,510 | 14 | % | |||||||||||
Depreciation and amortization |
7,335 | 7,163 | 172 | 2 | % | |||||||||||
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Operating income (loss) |
$ | 261,977 | $ | 294,968 | $ | (32,991 | ) | (11 | )% |
Years Ended June 30, |
Change |
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2021 |
2020 |
Amount |
Percentage |
|||||||||||||
Operating income |
$ | 261,977 | $ | 294,968 | $ | (32,991 | ) | (11 | )% | |||||||
Share-based compensation |
17,667 | 19,235 | ||||||||||||||
Depreciation and amortization |
7,335 | 7,163 | ||||||||||||||
Adjusted operating income |
$ | 286,979 | $ | 321,366 | $ | (34,387 | ) | (11 | )% |
• | 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 entertainment and performers, 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. |
Years Ended June 30, |
Change (a) |
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2021 |
2020 |
Amount |
Percentage |
|||||||||||||
Revenues |
$ | 180,401 | $ | 762,936 | $ | (582,535 | ) | (76 | )% | |||||||
Direct operating expenses |
171,924 | 508,122 | (336,198 | ) | (66 | )% | ||||||||||
Selling, general and administrative expenses (“SG&A”) |
322,714 | 344,637 | (21,923 | ) | (6 | )% | ||||||||||
Depreciation and amortization |
114,664 | 104,899 | 9,765 | 9 | % | |||||||||||
Impairment for intangibles, long-lived assets, and goodwill |
— | 105,817 | (105,817 | ) | (100 | )% | ||||||||||
Gain on disposal of assets held for sale and associated settlements (b) |
— | (240,783 | ) | 240,783 | 100 | % | ||||||||||
Restructuring charges (b) |
21,299 | — | 21,299 | NM | ||||||||||||
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Operating loss |
(450,200 | ) | (59,756 | ) | (390,444 | ) | NM | |||||||||
Other income (expense): |
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Loss in equity method investments |
(6,858 | ) | (4,433 | ) | (2,425 | ) | (55 | )% | ||||||||
Interest income (expense), net |
1,065 | 17,753 | (16,688 | ) | NM | |||||||||||
Miscellaneous income, net |
51,062 | 38,855 | 12,207 | 31 | % | |||||||||||
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Loss from operations before income taxes |
(404,931 | ) | (7,581 | ) | (397,350 | ) | NM | |||||||||
Income tax benefit (expense) |
9,371 | (5,046 | ) | 14,417 | NM | |||||||||||
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Net loss |
(395,560 | ) | (12,627 | ) | (382,933 | ) | NM | |||||||||
Less: Net loss attributable to redeemable noncontrolling interests |
(16,269 | ) | (30,387 | ) | 14,118 | 46 | % | |||||||||
Less: Net loss attributable to nonredeemable noncontrolling interests |
(2,099 | ) | (1,534 | ) | (565 | ) | (37 | )% | ||||||||
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Net income (loss) attributable to Madison Square Garden Entertainment Corp.’s stockholders |
$ | (377,192 | ) | $ | 19,294 | $ | (396,486 | ) | NM | |||||||
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(a) |
The consolidated statements of operations for Fiscal Year 2021 and the activities from April 18, 2020 to June 30, 2020 included on the statement of operations for Fiscal Year 2020 are presented on a consolidated basis, as the Company became a standalone public company on April 17, 2020. The financial information for the period of July 1, 2019 to April 17, 2020 that is included in the Company’s combined statements of operations for Fiscal Year 2020 was prepared on a standalone basis derived from the consolidated financial statements and accounting records of the Company’s former parent, MSG Sports, and is presented on the basis of carve-out financial statements as the Company was not a standalone public company prior to the Entertainment Distribution. In addition, the Company’s operating results were materially impacted during Fiscal Year 2021 and part of Fiscal Year 2020 by the COVID-19 pandemic and government actions taken in response. See “— Introduction — Business Overview — Impact of the COVID-19 Pandemic on Our Business” for more information. |
(b) |
See “Business Segment Results - Entertainment” for a more detailed discussion of the company’s gain on disposal of assets held for sale and associated settlements and impairment for intangibles, long-lived assets, and goodwill in Fiscal Year 2020. |
Changes attributable to |
Revenues |
Direct operating expenses (b) |
SG&A (c) |
Depreciation and amortization |
Impairment for intangibles, long-lived assets, and goodwill |
Gain on disposal of assets held for sale and associated settlements |
Restructuring charges |
Operating loss |
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Entertainment segment (a) |
$ | (502,927 | ) | $ | (285,554 | ) | $ | (13,338 | ) | $ | (4,147 | ) | $ | — | $ | 240,783 | $ | 21,299 | $ | (461,970 | ) | |||||||||||
Tao Group Hospitality segment (a) |
(80,035 | ) | (50,047 | ) | (9,015 | ) | 799 | (94,946 | ) | — | — | 73,174 | ||||||||||||||||||||
Purchase accounting adjustments |
— | (1,027 | ) | (6 | ) | 13,113 | (10,871 | ) | — | — | (1,209 | ) | ||||||||||||||||||||
Inter-segment eliminations |
427 | 430 | 436 | — | — | — | — | (439 | ) | |||||||||||||||||||||||
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$ | (582,535 | ) | $ | (336,198 | ) | $ | (21,923 | ) | $ | 9,765 | $ | (105,817 | ) | $ | 240,783 | $ | 21,299 | $ | (390,444 | ) | ||||||||||||
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(a) |
See “Business Segment Results” for a more detailed discussion of the operating results of our segments. |
(b) |
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 Sports; |
• |
venue lease, maintenance and other operating expenses, net of recovery charges for venue usage from MSG Sports for hosting the 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. |
(c) |
SG&A 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. |
Tao Group Hospitality Segment |
Purchase accounting adjustments |
Total |
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Intangibles |
$ | — | $ | 3,541 | $ | 3,541 | ||||||
Long-lived assets |
6,363 | 7,330 | 13,693 | |||||||||
Goodwill |
88,583 | — | 88,583 | |||||||||
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$ | 94,946 | $ | 10,871 | $ | 105,817 | |||||||
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Years Ended June 30, |
Change |
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2021 |
2020 |
Amount |
Percentage |
|||||||||||||
Operating loss |
$ | (450,200 | ) | $ | (59,756 | ) | $ | (390,444 | ) | NM | ||||||
Non-cash portion of arena license fees from MSG Sports |
(13,026 | ) | — | |||||||||||||
Share-based compensation |
52,917 | 42,190 | ||||||||||||||
Depreciation and amortization (a) |
114,664 | 104,899 | ||||||||||||||
Restructuring charges |
21,299 | — | ||||||||||||||
Impairment of intangibles, long-lived assets and goodwill |
— | 105,817 | ||||||||||||||
Gain on disposal of assets held for sale and associated settlements |
— | (240,783 | ) | |||||||||||||
Other purchase accounting adjustments |
3,334 | 4,367 | ||||||||||||||
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Adjusted operating loss |
$ | (271,012 | ) | $ | (43,266 | ) | $ | (227,746 | ) | NM | ||||||
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NM | — Percentage is not meaningful |
(a) |
Depreciation and amortization included purchase accounting adjustments of $25,567 and $12,454 for the years ended June 30, 2021 and 2020, respectively. The increase in purchase accounting adjustments related depreciation and amortization for Fiscal Year 2021 include $14,280 of accelerated amortization expense for certain Tao Group Hospitality venue management contracts that were converted to operating leases. |
Increase in adjusted operating loss of the Entertainment segment |
$ | 210,655 | ||
Increase in adjusted operating loss of the Tao Group Hospitality segment |
16,652 | |||
Inter-segment eliminations |
439 | |||
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$ | 227,746 | |||
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Years Ended June 30, |
Change |
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2021 |
2020 |
Amount |
Percentage |
|||||||||||||
Revenues |
$ | 82,281 | $ | 585,208 | $ | (502,927 | ) | (86 | )% | |||||||
Direct operating expenses |
103,089 | 388,643 | (285,554 | ) | (73 | )% | ||||||||||
Selling, general and administrative expenses |
268,705 | 282,043 | (13,338 | ) | (5 | )% | ||||||||||
Depreciation and amortization |
80,142 | 84,289 | (4,147 | ) | (5 | )% | ||||||||||
Restructuring charges |
21,299 | — | 21,299 | NM | ||||||||||||
Gain on disposal of assets held for sale and associated settlements |
— | (240,783 | ) | 240,783 | NM | |||||||||||
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Operating income (loss) |
$ | (390,954 | ) | $ | 71,016 | $ | (461,970 | ) | NM | |||||||
Reconciliation to adjusted operating loss: |
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Non-cash portion of arena license fees from MSG Sports |
(13,026 | ) | — | |||||||||||||
Share-based compensation |
47,633 | 41,227 | ||||||||||||||
Depreciation and amortization |
80,142 | 84,289 | ||||||||||||||
Restructuring charges |
21,299 | — | ||||||||||||||
Gain on disposal of assets held for sale and associated settlements |
— | (240,783 | ) | |||||||||||||
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Adjusted operating loss |
$ | (254,906 | ) | $ | (44,251 | ) | $ | (210,655 | ) | NM | ||||||
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NM | — Percentage is not meaningful |
Decrease in event-related revenues, as discussed below |
$ | (212,899 | ) | |
Decrease in revenues from the Christmas Spectacular COVID-19 pandemic |
(128,488 | ) | ||
Decrease in suite license fee revenues due to the government-mandated closures and restrictions on the use of our venues beginning in March 2020 as a result of the COVID-19 pandemic. |
(85,900 | ) | ||
Decrease in venue-related signage and sponsorship revenues due to the impact of carve-out financial statement assumptions in Fiscal Year 2020 as well as the impact of government-mandated closures and restrictions on the use of our venues beginning in March 2020 as a result of the COVID-19 pandemic |
(65,196 | ) | ||
Absence of revenues from the Forum due to its disposition in May 2020 |
(45,719 | ) | ||
Increase in arena license fees from MSG Sports pursuant to the Arena License Agreements, as discussed below |
21,345 | |||
Increase in revenues from Sponsorship Sales and Service Representation Agreements with MSG Sports, as discussed below |
11,280 | |||
Other net increases |
2,650 | |||
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$ | (502,927 | ) | ||
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Decrease in event-related direct operating expenses from (i) concerts of $85,449 during Fiscal Year 2021 and (ii) other live entertainment and sporting events of $39,057, both due to government-mandated closures and restrictions on the use of our venues beginning in March 2020 as a result of the COVID-19 pandemic |
$ | (124,506 | ) | |
Decrease in direct operating expenses associated with suite license operations primarily due to the impact of lower revenue sharing expenses with MSG Sports corresponding to the lower suite revenue during Fiscal Year 2020 due to government-mandated closures and restrictions on the use of our venues beginning in March 2020 as a result of the COVID-19 pandemic |
(58,096 | ) | ||
Decrease in direct operating expenses associated with venue-related signage and sponsorship primarily due to the impact of lower revenue sharing expense with MSG Sports of $52,052 as a part of carve-out financial assumptions in Fiscal Year 2020. |
(53,392 | ) | ||
Decrease in direct operating expenses associated with the Christmas Spectacular COVID-19 pandemic |
(50,714 | ) | ||
Decrease in direct operating expenses associated with the Forum due to its disposition in May 2020 |
(26,576 | ) | ||
Increase in direct operating expenses associated with hosting the Knicks and the Rangers games, including expenses not reimbursable by MSG Sports pursuant to the Arena License Agreements |
3,118 | |||
Other net increases, primarily due to the absence of venue operating costs carve-out adjustments in Fiscal Year 2020 |
24,612 | |||
|
|
|||
$ | (285,554 | ) | ||
|
|
Years Ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
Percentage |
|||||||||||||
Revenues |
$ | 100,166 | $ | 180,201 | $ | (80,035 | ) | (44 | )% | |||||||
Direct operating expenses |
66,591 | 116,638 | (50,047 | ) | (43 | )% | ||||||||||
Selling, general and administrative expenses |
54,034 | 63,049 | (9,015 | ) | (14 | )% | ||||||||||
Depreciation and amortization |
8,955 | 8,156 | 799 | 10 | % | |||||||||||
Impairment for intangibles, long-lived assets, and goodwill |
— | 94,946 | (94,946 | ) | (100 | )% | ||||||||||
|
|
|
|
|
|
|||||||||||
Operating loss |
$ | (29,414 | ) | $ | (102,588 | ) | $ | 73,174 | 71 | % | ||||||
Reconciliation to adjusted operating income (loss): |
||||||||||||||||
Share-based compensation |
5,284 | 963 | ||||||||||||||
Depreciation and amortization |
8,955 | 8,156 | ||||||||||||||
Impairment for intangibles, long-lived assets, and goodwill |
— | 94,946 | ||||||||||||||
|
|
|
|
|||||||||||||
Adjusted operating income (loss) |
$ | (15,175 | ) | $ | 1,477 | $ | (16,652 | ) | NM | |||||||
|
|
|
|
Decrease in revenues due to the closure of certain venues as a result of the COVID-19 pandemic |
$ | (57,874 | ) | |
Decrease in revenues due to capacity restrictions at re-opened venues |
(36,743 | ) | ||
Decrease in revenues associated with the permanent closing of Vandal and Avenue in New York |
(12,619 | ) | ||
Increase in revenues due to the Hakkasan acquisition in April 2021 |
27,604 | |||
Other net decreases |
(403 | ) | ||
|
|
|||
$ | (80,035 | ) | ||
|
|
Decrease in employee compensation and related benefits as a result of (i) a reduction in headcount at re-opened venues, (ii) the elimination of venue line staff and manager positions at closed venues, and (iii) the permanent closure of Vandal and Avenue, all as a result of the COVID-19 pandemic |
$ | (24,916 | ) | |
Decrease in (i) costs of food and beverage, and (ii) costs of venue entertainment, both as a result of the closure of certain venues, capacity restrictions at re-opened venues and the permanent closure of Vandal and Avenue, all due to the COVID-19 pandemic |
(23,370 | ) | ||
Decrease in direct operating expenses associated with rent expense, primarily due to rent concessions received and the permanent closure of Vandal and Avenue |
(7,514 | ) | ||
Increase in direct operating expenses due to the Hakkasan acquisition in April 2021 |
12,278 | |||
Other net decreases, due to lower credit card fees |
(6,525 | ) | ||
|
|
|||
$ | (50,047 | ) | ||
|
|
Years Ended June 30, |
||||||||
|
|
|||||||
2021 |
2020 |
|||||||
|
|
|
|
|||||
Net loss |
$ | (395,560 | ) | $ | (12,627 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities |
132,793 | 122,357 | ||||||
|
|
|
|
|||||
Subtotal |
$ | (262,767 | ) | $ | 109,730 | |||
Changes in working capital assets and liabilities |
8,177 | (11,639 | ) | |||||
|
|
|
|
|||||
Net cash provided by (used in) operating activities |
$ | (254,590 | ) | $ | 98,091 | |||
Net cash used in investing activities |
(119,330 | ) | (391,717 | ) | ||||
Net cash provided by financing activities |
633,333 | 122,938 | ||||||
Effect of exchange rates on cash, cash equivalents and restricted cash |
8,027 | 2,927 | ||||||
|
|
|
|
|||||
Net increase (decrease) in cash, cash equivalents and restricted cash |
$ | 267,440 | $ | (167,761 | ) | |||
|
|
|
|
Payments Due by Period |
||||||||||||||||||||
|
|
|||||||||||||||||||
Total |
Year 1 |
Years 2-3 |
Years 4-5 |
More Than 5 Years |
||||||||||||||||
Leases (a) |
$ | 410,377 | $ | 71,346 | $ | 124,559 | $ | 63,999 | $ | 150,473 | ||||||||||
Debt repayments (b) |
691,137 | 12,750 | 51,137 | 627,250 | — | |||||||||||||||
Other (c) (d) |
120,425 | 120,132 | 236 | 57 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$1,221,939 |
$204,228 |
$175,932 |
$691,306 |
$150,473 |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(a) |
Includes contractually obligated minimum lease payments for operating leases having an initial noncancelable term in excess of one year for the Company’s venues, including the Tao Group Hospitality venues and various corporate offices. These commitments are presented exclusive of the imputed interest used to reflect the payment’s present value. See Note 10 to the consolidated and combined financial statements included in Item 8 of this Annual Report on Form 10-K for more information. Lease liabilities as of June 30, 2021 above did not include $293,458 of lease payments, of which $1,125 is expected to be due in Fiscal Year 2022, for additional lease obligations related to the amendment and extension of the Radio City Music Hall lease agreement in July 2021 and a new lease in Burbank, California for premises that the Company has not taken possession of yet. |
(b) |
See Note 14 to the consolidated and combined financial statements included in Item 8 of this Annual Report on Form 10-K for more information surrounding the principal repayments required under the Tao Senior Secured Credit Facilities and a note with respect to a $637 loan received by BCE from its noncontrolling interest holder that is due in April 2023. |
(c) |
Includes accrued expense of approximately $98,000 associated with the development and construction of MSG Sphere in Las Vegas, all due within Fiscal Year 2022. |
(d) |
Pension obligations have been excluded from the table above as the timing of the future cash payments is uncertain. See Note 14 to the consolidated and combined financial statements included in Item 8 of this Annual Report on Form 10-K for more information on the future funding requirements under our pension obligations. |
Goodwill |
$ | 77,687 | ||
Indefinite-lived intangible assets |
63,801 | |||
Amortizable intangible assets, net of accumulated amortization |
171,451 | |||
Property and equipment, net |
2,148,575 | |||
Right-of-use |
268,568 | |||
|
|
|||
$ | 2,730,082 | |||
|
|
Entertainment |
$ | 74,309 | ||
Tao Group Hospitality |
3,378 | |||
|
|
|||
$ | 77,687 | |||
|
|
• | macroeconomic conditions; |
• | industry and market considerations; |
• | cost factors; |
• | overall financial performance of the reporting unit; |
• | other relevant company-specific factors such as changes in management, strategy or customers; and |
• | relevant reporting unit specific events such as changes in the carrying amount of net assets. |
Trademarks |
$ | 61,881 | ||
Photographic related rights |
1,920 | |||
|
|
|||
$ | 63,801 | |||
|
|
• | cost factors; |
• | financial performance; |
• | legal, regulatory, contractual, business or other factors; |
• | other relevant company-specific factors such as changes in management, strategy or customers; |
• | industry and market considerations; and |
• | macroeconomic conditions. |
Estimated Useful Lives |
Net Carrying Value |
|||||||
Trade names |
2 years to 25 years | $ | 95,395 | |||||
Venue management contracts |
5.67 years to 20 years | 68,182 | ||||||
Non-compete agreements |
5.75 years | 2,087 | ||||||
Festival rights |
15 years | 5,384 | ||||||
Other intangibles |
15 years | 403 | ||||||
|
|
|||||||
$ | 171,451 | |||||||
|
|
Net Periodic Benefit Cost |
Benefit Obligation |
|||||||
Healthcare cost trend rate assumed for next year |
6.50 | % | 6.25 | % | ||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) |
5.00 | % | 5.00 | % | ||||
Year that the rate reaches the ultimate trend rate |
2027 | 2027 |
Page No. |
||||||
The following documents are filed as part of this report: |
||||||
1. | The financial statements as indicated in the index set forth on page |
F- 1 |
||||
2. | Financial statement schedule: |
|||||
Schedule supporting consolidated and combined financial statements: |
||||||
Schedule II — Valuation and Qualifying Accounts |
81 | |||||
Schedules other than that listed above have been omitted, since they are either not applicable, not required or the information is included elsewhere herein. |
||||||
3. | Exhibits: |
(Additions) / Deductions |
||||||||||||||||||||
Balance at Beginning of Period |
Charged to Costs and Expenses |
Charged to Other Accounts |
Deductions |
Balance at End of Period |
||||||||||||||||
Year ended June 30, 2021 |
||||||||||||||||||||
Allowance for doubtful accounts / credit losses |
$ | (9,135 | ) | $ | (468 | ) | $ | — | $ | 4,026 | $ | (5,577 | ) (a) | |||||||
Deferred tax valuation allowance (c) |
(29,952 | ) | (111,297 | ) | (3,929 | ) | — | (145,178 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | (39,087 | ) | $ | (111,765 | ) | $ | (3,929 | ) | $ | 4,026 | $ | (150,755 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Year ended June 30, 2020 |
||||||||||||||||||||
Allowance for doubtful accounts / credit losses |
$ | (1,814 | ) | $ | (9,945 | ) | $ | — | $ | 2,624 | $ | (9,135 | ) | |||||||
Deferred tax valuation allowance (c) |
(113,661 | ) | 14,028 | 69,681 | (b) |
— | (29,952 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | (115,475 | ) | $ | 4,083 | $ | 69,681 | $ | 2,624 | $ | (39,087 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Year ended June 30, 2019 |
||||||||||||||||||||
Allowance for doubtful accounts / credit losses |
$ | (777 | ) | $ | (1,456 | ) | $ | — | $ | 419 | $ | (1,814 | ) | |||||||
Deferred tax valuation allowance (c) |
(130,314 | ) | 2,673 | 13,800 | — | (113,841 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | (131,091 | ) | $ | 1,217 | $ | 13,800 | $ | 419 | $ | (115,655 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
(a) |
Allowance for credit losses as of June 30, 2021 did not include balances associated with the acquisition of Hakkasan in April 2021 in accordance with ASC 805-20-30-4. |
(b) |
Prior to the Entertainment Distribution, the Company’s collections for ticket sales, sponsorships and suite rentals in advance were recorded as deferred revenue and were recognized as revenues when earned for both accounting and tax purposes. The tax recognition on most of these deferred revenues was accelerated to the date of the Entertainment Distribution and is the responsibility of MSG Sports. The Company will not reimburse MSG Sports for such taxes. At the time of the Entertainment Distribution, the Company recorded a deferred tax asset of $57,230 and a corresponding valuation allowance of $57,230 with regard to the deferred revenue acceleration for income tax purposes. |
(c) |
Deferred tax valuation allowance was revised as a result of the capitalization of interest for all periods which increased previously reported deferred tax liabilities and reduced the valuation allowance by $11,714, $676 and $3,048 as of the years ended June 30, 2021, 2020 and 2019, respectively. For a more detailed description of the correction of this accounting error, refer to Note 23 – to the consolidated and combined financial statements of the Company included in Part II-Item 8 of this Form 10-K/A. |
Madison Square Garden Entertainment Corp. | ||||
By: | /s/ DAVID F. BYRNES | |||
Name: | David F. Byrnes | |||
Title: | Executive Vice President and Chief Financial Officer |
Page |
||||
F- 2 |
||||
F- 8 |
||||
F- 10 |
||||
F- 11 |
||||
F- 12 |
||||
F- 14 |
||||
F- 17 |
• | We tested the operating effectiveness of internal controls over the Company’s related party process, including controls over the identification of the Company’s related party relationships and transactions, the authorization and approval of transactions with related parties, the allocation of revenues and operating expenses among related parties, and the accounting for and disclosure of relationships and transactions with related parties in the financial statements; |
• | Inquired with executive officers including the Company’s internal legal counsel, key members of management, and the Audit Committee of the Board of Directors regarding related party transactions; |
• | Read agreements and contracts with and between related parties and, in certain cases third parties, and evaluated whether authorization and approvals were obtained and the terms and other information about transactions are consistent with explanations from inquiries and other audit evidence obtained about the business purpose of the transactions; |
• | With the assistance of our data specialists, we analyzed the general ledger detail to identify potential additional transactions with related parties; |
• | Compared the Company’s reconciliation of applicable accounts to related parties’ records of transactions and balances; |
• | For new or amended revenue arrangements among related parties, evaluated the reasonableness of management’s allocation of the transaction price to each performance obligation identified in the arrangement; |
• | Received confirmations from related parties and, in certain cases third parties, and compared responses to the Company’s records; |
• | Performed the following procedures to identify information related to potential additional transactions between the Company and related parties that may also involve third parties: |
○ |
Read the Company’s minutes from meetings of the Board of Directors and related committees of the Board of Directors; |
○ |
Inspected annual compliance questionnaires completed by the Company’s directors and officers; |
○ |
Read publicly available sources including the Company’s public filings and press releases as well as certain analyst and industry reports; and |
○ |
Listened to or read transcripts of the Company’s quarterly investor relations calls. |
• | We tested the operating effectiveness of internal controls over the valuation of the combined entity, including management’s internal controls over the selection and review of key assumptions used in projected financial information; |
• | We assessed the reasonableness of management’s revenue projections by comparing the projections to historical results and market data; |
• | We evaluated whether the revenue projections in the valuation were consistent with projections used by the Company through evidence obtained in other areas of the audit; |
• | With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology and key valuation inputs utilized in the analysis, including the selected discount rate and the long-term growth rate by: |
○ |
Developing a range of independent estimates of the discount rate and long-term growth rate and comparing those to the rates selected by management; |
○ |
Testing the reasonableness of the valuation inputs against observable market data and generally accepted valuation methodologies; and |
○ |
Testing the mathematical accuracy of the calculations. |
MADISON SQUARE GARDEN ENTERTAINMENT CORP. |
||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
(in thousands, except per share data) |
||||||||
June 30, |
||||||||
2021 |
2020 |
|||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
||||||||
Short-term investments |
||||||||
Accounts receivable, net |
||||||||
Net related party receivables |
||||||||
Prepaid expenses |
||||||||
Other current assets |
||||||||
|
|
|
|
|||||
Total current assets |
||||||||
Investments in nonconsolidated affiliates |
||||||||
Property and equipment, net |
||||||||
Right-of-use |
||||||||
Amortizable intangible assets, net |
||||||||
Indefinite-lived intangible assets |
||||||||
Goodwill |
||||||||
Other assets |
||||||||
|
|
|
|
|||||
Total assets |
$ | $ | ||||||
|
|
|
|
MADISON SQUARE GARDEN ENTERTAINMENT CORP. |
||||||||
CONSOLIDATED BALANCE SHEETS (Continued) |
||||||||
(in thousands, except per share data) |
||||||||
June 30, |
||||||||
2021 |
2020 |
|||||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | $ | ||||||
Net related party payables, current |
||||||||
Current portion of long-term debt, net of deferred financing costs |
||||||||
Accrued liabilities: |
||||||||
Employee related costs |
||||||||
Other accrued liabilities |
||||||||
Operating lease liabilities, current |
||||||||
Collections due to promoters |
||||||||
Deferred revenue |
||||||||
Total current liabilities |
||||||||
Long-term debt, net of deferred financing costs |
||||||||
Operating lease liabilities, noncurrent |
||||||||
Defined benefit and other postretirement obligations |
||||||||
Other employee related costs |
||||||||
Collections due to promoters, noncurrent |
||||||||
Deferred tax liabilities, net |
||||||||
Other liabilities |
||||||||
Total liabilities |
||||||||
Commitments and contingencies (see Note 12) |
||||||||
Redeemable noncontrolling interests |
||||||||
Madison Square Garden Entertainment Corp. Stockholders’ Equity: |
||||||||
Class A common stock, par value $ |
||||||||
Class B common stock, par value $ |
||||||||
Preferred stock, par value $ |
||||||||
Additional paid-in capital |
||||||||
Retained earnings (accumulated deficit) |
( |
) | ||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Total Madison Square Garden Entertainment Corp. stockholders’ equity |
||||||||
Nonredeemable noncontrolling interests |
||||||||
Total equity |
||||||||
Total liabilities, redeemable noncontrolling interests and equity |
$ | $ | ||||||
Years Ended June 30, |
||||||||||||
|
|
|||||||||||
2021 |
2020 |
2019 |
||||||||||
Revenues (a) |
$ | $ | $ | |||||||||
Operating expenses: |
||||||||||||
Direct operating expenses (b) |
||||||||||||
Selling, general and administrative expenses (c) |
||||||||||||
Depreciation and amortization |
||||||||||||
Impairment for intangibles, long-lived assets, and goodwill |
||||||||||||
Gain on disposal of assets held for sale and associated settlements |
( |
) | ||||||||||
Restructuring charges |
||||||||||||
|
|
|
|
|
|
|||||||
Operating loss |
( |
) | ( |
) | ( |
) | ||||||
Other income (expense): |
||||||||||||
Earnings (loss) in equity method investments |
( |
) | ( |
) | ||||||||
Interest income (d) |
||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ||||||
Miscellaneous income (expense), net (e) |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|||||||
Loss from operations before income taxes |
( |
) | ( |
) | ( |
) | ||||||
Income tax benefit (expense) |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Net loss |
( |
) | ( |
) | ( |
) | ||||||
Less: Net loss attributable to redeemable noncontrolling interests |
( |
) | ( |
) | ( |
) | ||||||
Less: Net loss attributable to nonredeemable noncontrolling interests |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Net income (loss) attributable to Madison Square Garden Entertainment Corp.’s stockholders |
$ | ( |
) | $ | $ | ( |
) | |||||
|
|
|
|
|
|
|||||||
Basic earnings (loss) per common share attributable to Madison Square Garden Entertainment Corp.’s stockholders (f) |
$ | ( |
) | $ | $ | ( |
) | |||||
Diluted earnings (loss) per common share attributable to Madison Square Garden Entertainment Corp.’s stockholders (f) |
$ | ( |
) | $ | $ | ( |
) | |||||
Weighted-average number of common shares outstanding: |
||||||||||||
Basic (f) |
||||||||||||
Diluted (f) |
(a) |
Includes revenues from related parties of $ |
(b) |
Includes net charges from (to) related parties of $( |
(c) |
Includes net charges to related parties of $( |
(d) |
Interest income includes interest income from nonconsolidated affiliates of $ |
(e) |
Miscellaneous income (expense), net includes charges to related parties of $( |
(f) |
On April 17, 2020 (the “Entertainment Distribution Date”), |
Years Ended June 30, |
||||||||||||||||||||||||
2021 |
2020 |
2019 |
||||||||||||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||
Other comprehensive income (loss), before income taxes: |
||||||||||||||||||||||||
Pension plans and postretirement plan: |
||||||||||||||||||||||||
Net unamortized losses arising during the period |
$ | $ | ( |
) | $ | ( |
) | |||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss: |
||||||||||||||||||||||||
Amortization of net actuarial loss included in net periodic benefit cost |
||||||||||||||||||||||||
Amortization of net prior service credit included in net periodic benefit cost |
( |
) | ( |
) | ||||||||||||||||||||
Curtailments |
||||||||||||||||||||||||
Settlement loss |
( |
) | ( |
) | ||||||||||||||||||||
Cumulative translation adjustments |
( |
) | ( |
) | ||||||||||||||||||||
Other comprehensive income (loss), before income taxes |
( |
) | ( |
) | ||||||||||||||||||||
Income tax expense related to items of other comprehensive income |
||||||||||||||||||||||||
Other comprehensive income (loss), net of income taxes |
( |
) | ( |
) | ||||||||||||||||||||
Comprehensive loss |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Less: Comprehensive loss attributable to redeemable noncontrolling interests |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Less: Comprehensive loss attributable to nonredeemable noncontrolling interests |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Comprehensive income (loss) attributable to Madison Square Garden Entertainment Corp.’s stockholders |
$ | ( |
) | $ | $ | ( |
) | |||||||||||||||||
Years Ended June 30, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Cash flows from operating activities: |
||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||||||
Depreciation and amortization |
||||||||||||
Impairment of intangibles, long-lived assets and goodwill |
||||||||||||
Share-based compensation expense |
||||||||||||
Amortization of deferred financing costs |
||||||||||||
(Earnings) loss in equity method investments, net of income distributions |
( |
) | ||||||||||
Benefit from deferred income taxes |
( |
) | ( |
) | ( |
) | ||||||
Unrealized and realized (gain) loss on equity investment with readily determinable fair value |
( |
) | ( |
) | ||||||||
Provision for doubtful accounts / credit losses |
||||||||||||
Gain on sale of the Forum, excluding associated settlement |
( |
) | ||||||||||
Other non-cash adjustments |
||||||||||||
Change in assets and liabilities, net of acquisitions: |
||||||||||||
Accounts receivable, net |
( |
) | ( |
) | ||||||||
Net related party receivables |
( |
) | ||||||||||
Prepaid expenses and other assets |
( |
) | ( |
) | ( |
) | ||||||
Accounts payable |
( |
) | ( |
) | ( |
) | ||||||
Accrued and other liabilities |
||||||||||||
Collections due to promoters |
( |
) | ( |
) | ||||||||
Deferred revenue |
||||||||||||
Operating lease right-of-use |
||||||||||||
Net cash provided by (used in) operating activities |
$ | ( |
) | $ | $ | |||||||
Cash flows from investing activities: |
||||||||||||
Capital expenditures, net of acquisitions |
( |
) | ( |
) | ( |
) | ||||||
Capitalized interest |
( |
) | ( |
) | ( |
) | ||||||
Purchase of short-term investments |
( |
) | ( |
) | ||||||||
Proceeds from maturity of short-term investment |
||||||||||||
Proceeds from sale of Forum, excluding associated settlement |
||||||||||||
Proceeds from sale of equity securities |
||||||||||||
Investments in nonconsolidated affiliates |
( |
) | ( |
) | ||||||||
Proceeds from sales of nonconsolidated affiliates |
||||||||||||
Loan repayment received from subordinated debt |
||||||||||||
Cash received (paid) for notes receivable |
( |
) | ||||||||||
Other investing activities |
||||||||||||
Net cash used in investing activities |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Years Ended June 30, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Cash flows from financing activities: |
||||||||||||
Proceeds from issuance of term loan, net of issuance discount |
$ | $ | $ | |||||||||
Proceeds from revolving credit facility |
||||||||||||
Taxes paid in lieu of shares issued for equity-based compensation |
( |
) | ||||||||||
Noncontrolling interest holders’ capital contributions |
||||||||||||
Distributions to noncontrolling interest holders |
( |
) | ( |
) | ||||||||
Loans from noncontrolling interest holders |
||||||||||||
Distribution to related parties associated with the settlement of certain share-based awards granted prior to the Entertainment Distribution |
( |
) | ||||||||||
Repayment of revolving credit facility |
( |
) | ||||||||||
Repayment on long-term debt |
( |
) | ( |
) | ( |
) | ||||||
Payments for extinguishment of debt |
( |
) | ||||||||||
Payments for financing costs |
( |
) | ( |
) | ||||||||
Net transfers from Madison Square Garden Sports Corp. and its subsidiaries |
||||||||||||
Net cash provided by (used in) financing activities |
$ | $ | $ | ( |
) | |||||||
Effect of exchange rates on cash, cash equivalents and restricted cash |
||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash |
( |
) | ( |
) | ||||||||
Cash, cash equivalents and restricted cash at beginning of period |
||||||||||||
Cash, cash equivalents and restricted cash at end of period |
$ | $ | $ | |||||||||
Non-cash investing and financing activities: |
||||||||||||
Non-cash redemption of redeemable noncontrolling interests |
$ | $ | $ | |||||||||
Non-cash (contribution) received from noncontrolling interests |
( |
) | ||||||||||
Capital expenditures incurred but not yet paid |
||||||||||||
Tenant improvement paid by landlord |
||||||||||||
Share-based compensation capitalized in property and equipment |
Common Stock Issued |
MSG Sports Corp.’s Investment |
Additional Paid-In Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comprehensive Loss |
Total Madison Square Garden Entertainment Corp. Stockholders’ Equity |
Nonredeemable Noncontrolling Interests |
Total Equity |
Redeemable Noncontrolling Interests |
||||||||||||||||||||||||||||
Balance as of June 30, 2018 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||
Adoption of ASU No. 2016-01 |
— | ( |
) | — | — | — | — | — | — | |||||||||||||||||||||||||||
Adoption of ASC 606 |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Net loss |
— | ( |
) | — | — | — | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Other comprehensive loss |
— | — | — | — | ( |
) | ( |
) | — | ( |
) | — | ||||||||||||||||||||||||
Comprehensive loss |
— | — | — | — | — | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||
Net increase in Madison Square Garden Sports Corp. Investment |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Contributions from noncontrolling interest holders |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Distributions to noncontrolling interest holders |
— | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
Adjustments to noncontrolling interests |
— | — | — | — | ( |
) | — | — | ||||||||||||||||||||||||||||
Balance as of June 30, 2019 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||
Common Stock Issued |
MSG Sports Corp.’s Investment |
Additional Paid-In Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Total Madison Square Garden Entertainment Corp. Stockholders’ Equity |
Nonredeemable Noncontrolling Interests |
Total Equity |
Redeemable Noncontrolling Interests |
||||||||||||||||||||||||||||
Balance as of June 30, 2019 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||
Net loss |
— | ( |
) | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||
Other comprehensive loss |
— | — | — | — | ( |
) | ( |
) | — | ( |
) | — | ||||||||||||||||||||||||
Comprehensive income (loss) |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Accretion of put options |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Tax withholding associated with shares issued for equity-based compensation |
— | — | ( |
) | — | — | ( |
) | — | ( |
) | — | ||||||||||||||||||||||||
Net increase in Madison Square Garden Sports Corp. Investment |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Redeemable noncontrolling interest adjustment to redemption fair value |
— | ( |
) | ( |
) | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||
Adjustments related to the transfer of certain assets and liabilities as a result of the Entertainment Distribution |
— | — | — | — | — | |||||||||||||||||||||||||||||||
Conversion of Madison Square Garden Sports Corp. Investment |
( |
) | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Distributions to noncontrolling interest holders |
— | — | — | — | — | — | ( |
) | ( |
) | — | |||||||||||||||||||||||||
Noncontrolling interests from acquisition |
— | — | — | — | — | ( |
) | |||||||||||||||||||||||||||||
Contribution from noncontrolling interest holders |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Balance as of June 30, 2020 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||||
Common Stock Issued |
MSG Sports Corp.’s Investment |
Additional Paid-In Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comprehensive Loss |
Total Madison Square Garden Entertainment Corp. Stockholders’ Equity |
Nonredeemable Noncontrolling Interests |
Total Equity |
Redeemable Noncontrolling Interests |
||||||||||||||||||||||||||||
Balance as of June 30, 2020 |
$ |
$ |
— |
$ |
$ |
$ |
( |
) |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Other comprehensive income |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Comprehensive loss |
— | — | — | — | — | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||
Redeemable noncontrolling interests, non-cash acquisition |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Redeemable noncontrolling interest adjustment to redemption fair value |
— | — | ( |
) | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||
Accretion of put options |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Tax withholding associated with shares issued for equity-based compensation |
— | ( |
) | — | — | ( |
) | — | ( |
) | — | |||||||||||||||||||||||||
Distribution to related parties associated with the settlement of certain share-based awards granted prior to the Entertainment Distribution |
— | — | ( |
) | — | — | ( |
) | — | ( |
) | ( |
) | |||||||||||||||||||||||
Adjustment of redeemable noncontrolling interest to redemption value |
— | — | ( |
) | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||||||
Contributions from noncontrolling interest holders |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Balance as of June 30, 2021 |
$ |
$ |
— |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
$ |
||||||||||||||||||||||
• | Level I — Quoted prices for identical instruments in active markets. |
• | Level II — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. |
• | Level III — Instruments whose significant value drivers are unobservable. |
Fair Value (a) |
||||
Cash and cash equivalents |
$ | |||
Property and equipment, net |
||||
Right-of-use |
||||
Amortizable intangible assets, net |
||||
Other assets |
||||
Accrued expenses and other current liabilities |
( |
) | ||
Operating lease liabilities |
( |
) | ||
Other liabilities |
( |
) | ||
Total identifiable net assets acquired |
||||
Goodwill (a) |
||||
Redeemable noncontrolling interests (b) |
$ | ( |
) |
(a) |
Primarily represents expected synergies from combining operations of Hakkasan and Tao Group Hospitality, and is not deductible for income tax purposes. |
(b) |
Hakkasan Parent has the right to put its equity interest in Tao Group Sub-Holdings LLC to Tao Group Hospitality for fair market value (subject to a floor value determined based upon a multiple of trailing EBITDA) beginning in 2026 and each second year thereafter by providing notice during a 30 day window starting June 1, 2025 (and each second June 1 thereafter). Consideration paid upon exercise of the put right shall be, at the option of Tao Group Hospitality, in cash, debt, or stock of the Company or its successor, subject to certain limitations. Additionally, Tao Group Hospitality may elect to satisfy this put obligation through a sale of Tao Group Sub-Holdings or a going public transaction with respect to Tao Group Sub-Holdings. |
Year ended June 30, 2021 |
||||||||||||||||
Entertainment |
Tao Group Hospitality |
Eliminations |
Total |
|||||||||||||
Event-related and entertainment dining and nightlife offerings (a) |
$ | $ | $ | ( |
) | $ | ||||||||||
Sponsorship, signage and suite licenses (b) |
( |
) | ||||||||||||||
Other (c) |
( |
) | ||||||||||||||
Total revenues from contracts with customers |
$ | $ | $ | ( |
) | $ | ||||||||||
Year ended June 30, 2020 |
||||||||||||||||
Entertainment |
Tao Group Hospitality |
Eliminations |
Total |
|||||||||||||
Event-related and entertainment dining and nightlife offerings (a) |
$ | $ | $ | ( |
) | $ | ||||||||||
Sponsorship, signage and suite licenses (b) |
( |
) | ||||||||||||||
Other (c) |
( |
) | ||||||||||||||
Total revenues from contracts with customers |
$ | $ | $ | ( |
) | $ | ||||||||||
Year ended June 30, 2019 |
||||||||||||||||
Entertainment |
Tao Group Hospitality |
Eliminations |
Total |
|||||||||||||
Event-related and entertainment dining and nightlife offerings (a) |
$ | $ | $ | ( |
) | $ | ||||||||||
Sponsorship, signage and suite licenses (b) |
( |
) | ||||||||||||||
Other (c) |
( |
) | ||||||||||||||
Total revenues from contracts with customers |
$ | $ | $ | ( |
) | $ | ||||||||||
(a) |
Consists of (i) ticket sales and other ticket-related revenues, (ii) Tao Group Hospitality’s entertainment dining and nightlife offerings, (iii) venue license fees from third-party promoters, and (iv) food, beverage and merchandise sales. Event-related revenues and entertainment, dining and nightlife offerings are recognized at a point in time. As such, these revenues have been included in the same category in the table above. |
(b) |
See sections “— Contracts with Customers — Arrangements with Multiple Performance Obligations”, “— Contracts with Customers — Principal versus Agent Revenue Recognition” and “— Contracts with Customers — Entertainment Segment” for further details on the pattern of recognition of sponsorship, signage and suite license revenues. |
(c) |
Primarily consists of (i) revenues from sponsorship sales and representation agreements with MSG Sports, (ii) advertising commission revenue from MSG Networks, and (ii) Tao Group Hospitality’s managed venue revenues. |
Year ended June 30, 2021 |
||||||||||||||||
Entertainment (d) |
Tao Group Hospitality |
Eliminations |
Total (d) |
|||||||||||||
Ticketing and venue license fee revenues (a) |
$ | $ | $ | $ | ||||||||||||
Sponsorship and signage, suite, and advertising commission revenues (b) |
( |
) | ||||||||||||||
Revenues from entertainment dining and nightlife offerings (c) |
( |
) | ||||||||||||||
Food, beverage and merchandise revenues |
||||||||||||||||
Other |
||||||||||||||||
Total revenues from contracts with customers |
$ | $ | $ | ( |
) | $ | ||||||||||
Year ended June 30, 2020 |
||||||||||||||||
Entertainment |
Tao Group Hospitality |
Eliminations |
Total |
|||||||||||||
Ticketing and venue license fee revenues (a) |
$ | $ | $ | $ | ||||||||||||
Sponsorship and signage, suite, and advertising commission revenues (b) |
( |
) | ||||||||||||||
Revenues from entertainment dining and nightlife offerings (c) |
( |
) | ||||||||||||||
Food, beverage and merchandise revenues |
||||||||||||||||
Other |
||||||||||||||||
Total revenues from contracts with customers |
$ | $ | $ | ( |
) | $ | ||||||||||
Year ended June 30, 2019 |
||||||||||||||||
Entertainment |
Tao Group Hospitality |
Eliminations |
Total |
|||||||||||||
Ticketing and venue license fee revenues (a) |
$ | $ | $ | $ | ||||||||||||
Sponsorship and signage, suite, and advertising commission revenues (b) |
( |
) | ||||||||||||||
Revenues from entertainment dining and nightlife offerings (c) |
( |
) | ||||||||||||||
Food, beverage and merchandise revenues |
||||||||||||||||
Other |
||||||||||||||||
Total revenues from contracts with customers |
$ | $ | $ | ( |
) | $ | ||||||||||
(a) |
Amounts include ticket sales, including other ticket-related revenue, and venue license fees from the Company’s events such as (i) concerts, (ii) the presentation of the Christmas Spectacular, and (iii) other live entertainment and sporting events. |
(b) |
Beginning in Fiscal Year 2021, Sponsorship and signage, suite, and advertising commission revenues include revenues from sponsorship sales and representation agreements with MSG Sports. |
(c) |
Primarily consist of revenues from (i) entertainment dining and nightlife offerings and (ii) venue management agreements. |
(d) |
In addition to the various types of revenues disclosed above, total revenues of $ |
June 30, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Receivables from contracts with customers, net (a) |
$ | $ | $ | |||||||||
Contract assets, current (b) |
||||||||||||
Deferred revenue, including non-current portion (c) |
(a) |
Receivables from contracts with customers, which are reported in Accounts receivable, net and Net related party receivables in the Company’s consolidated balance sheets, represent the Company’s unconditional rights to consideration under its contracts with customers. As of June 30, 2021, 2020 and 2019. the Company’s receivables from contracts with customers above included $ |
(b) |
Contract assets, which are reported as Other current assets in the Company’s consolidated balance sheets, primarily relate to the Company’s rights to consideration for goods or services transferred to the customer, for which the Company does not have an unconditional right to bill as of the reporting date. Contract assets are transferred to accounts receivable once the Company’s right to consideration becomes unconditional. |
(c) |
Deferred revenue primarily relates to the Company’s receipt of consideration from a customer in advance of the Company’s transfer of goods or services to that customer. Deferred revenue is reduced and the related revenue is recognized once the underlying goods or services are transferred to the customer. Revenue recognized for the year ended June 30, 2021 and relating to the deferred revenue balance as of June 30, 2020 was $ |
Fiscal year ending June 30, 2022 |
$ | |||
Fiscal year ending June 30, 2023 |
||||
Fiscal year ending June 30, 2024 |
||||
Fiscal year ending June 30, 2025 |
||||
Fiscal year ending June 30, 2026 |
||||
Thereafter |
||||
$ | ||||
June 30, 2020 |
$ | |||
Restructuring charges |
||||
Payments |
( |
) | ||
June 30, 2021 |
$ | |||
Years Ended June 30, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Net income (loss) available to Madison Square Garden Entertainment Corp.’s stockholders (numerator): |
||||||||||||
Net income (loss) attributable to Madison Square Garden Entertainment Corp.’s stockholders per statement of operations |
$ | ( |
) | $ | $ | ( |
) | |||||
Adjustment of redeemable noncontrolling interest to redemption value |
( |
) | ||||||||||
Net income (loss) attributable to Madison Square Garden Entertainment Corp.’s stockholders for EPS: |
$ | ( |
) | $ | $ | ( |
) | |||||
Weighted-average shares (denominator): |
||||||||||||
Weighted-average shares for basic EPS (a) |
||||||||||||
Dilutive effect of shares issuable under share-based compensation plans (a) |
||||||||||||
Weighted-average shares for diluted EPS (a) |
||||||||||||
Weighted-average anti-dilutive shares (b) |
||||||||||||
EPS: |
||||||||||||
Basic earnings (loss) per common share attributable to Madison Square Garden Entertainment Corp.’s stockholders |
$ | ) | $ | $ | ( |
) | ||||||
Diluted earnings (loss) per common share attributable to Madison Square Garden Entertainment Corp.’s stockholders |
$ | ( |
) | $ | $ | ( |
) | |||||
(a) |
See the Consolidated and Combined Statements of Operations for how the weighted-average shares were derive d for Fi scal Year 2019 prior to the Entertainment Distribution in Fiscal Year 2020. In addition, weighted-average anti-dilutive shares information for Fiscal Year 2019 was not provided since there was no stock price information and the Company did not have stand-alone restricted stock units and stock options available to compute during that period until the Entertainment Distribution occurred on April 17, 2020. |
(b) |
For Fiscal Year 2021, all restricted stock units and stock options were excluded from the above table because the Company reported a net loss for the periods presented and, therefore, their impact on reported loss per share would have been antidilutive. See Note 16 for further detail. |
As of |
||||||||||||||||
June 30, 2021 |
June 30, 2020 |
June 30, 2019 |
June 30, 2018 |
|||||||||||||
Captions on the consolidated and combined balance sheets: |
||||||||||||||||
Cash and cash equivalents |
$ | $ | $ | $ | ||||||||||||
Restricted cash |
||||||||||||||||
Cash, cash equivalents and restricted cash on the consolidated and combined statements of cash flows |
$ | $ | $ | $ | ||||||||||||
Ownership Percentage |
Investment |
|||||||
June 30, 2021 |
||||||||
Equity method investments: |
||||||||
SACO Technologies Inc. (“SACO”) |
% | $ | ||||||
Others |
||||||||
Equity investments without readily determinable fair values (a) |
||||||||
Total investments in nonconsolidated affiliates |
$ | |||||||
June 30, 2020 |
||||||||
Equity method investments: |
||||||||
SACO |
% | $ | ||||||
Others |
||||||||
Equity investments without readily determinable fair values (a) (b) (c) |
||||||||
Total investments in nonconsolidated affiliates |
$ | |||||||
(a) |
In accordance with the ASC Topic 321, Investments—Equity Securities, the Company applies the measurement alternative to its equity investments without readily determinable fair values. Under the measurement alternative, equity securities without readily determinable fair values are accounted for at cost, adjusted for impairment and changes resulting from observable price fluctuations in orderly transactions for the identical or a similar investment of the same issuer. For Fiscal Year 2021, the Company did not have impairment charges or change in carrying value recorded to its equity securities without readily determinable fair values. For Fiscal Year 2020, the Company recorded an impairment charge of $ |
(b) |
As of June 30, 2019, the Company’s equity investment in equity without readily determinable fair value included a $ |
(c) |
The following tables summarize the changes in the Company’s equity investments without readily determinable fair values for which the Company has used Level III inputs to determine fair value and a reconciliation to the opening and closing balances as of June 30, 2021, and 2020: |
June 30, |
||||||||
2021 |
2020 |
|||||||
Balance, beginning of period |
$ |
$ |
||||||
Transfer out of Level III to Level I for investment in DraftKings |
( |
) | ||||||
Impairment charge |
( |
) | ||||||
Balance, end of period |
$ |
$ |
||||||
Balance as of June 30, 2021 |
||||||||||||
Equity Investment with Readily Determinable Fair Values |
Units / Shares Held |
Cost Basis |
Carrying value / Fair value |
|||||||||
Townsquare Class A common stock |
$ | $ | ||||||||||
Townsquare Class C common stock |
||||||||||||
DraftKings, common stock |
||||||||||||
Total |
$ | $ | ||||||||||
Balance as of June 30, 2020 |
||||||||||||
Equity Investment with Readily Determinable Fair Value |
Units / Shares Held |
Cost Basis |
Carrying value / fair value |
|||||||||
Townsquare Class A common stock |
$ | $ | ||||||||||
DraftKings, common stock |
||||||||||||
DraftKings, warrant |
||||||||||||
Total |
$ | $ | ||||||||||
June 30, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Unrealized gain (loss) — Townsquare |
$ | $ | ( |
) | $ | ( |
) | |||||
Unrealized gain — DraftKings |
||||||||||||
Realized gain (loss) — DraftKings |
( |
) | ||||||||||
$ | $ | $ | ( |
) | ||||||||
Supplemental information on realized gain (loss): |
||||||||||||
Shares of common stock sold — DraftKings |
||||||||||||
Cash proceeds from common stock sold — DraftKings |
$ | $ | $ |
June 30, |
||||||||||
2021 |
2020 |
Estimated Useful Lives | ||||||||
Land |
$ | $ | ||||||||
Buildings |
Up to 40 years | |||||||||
Equipment |
||||||||||
Aircraft |
||||||||||
Furniture and fixtures |
||||||||||
Leasehold improvements |
Shorter of term of lease or useful life of improvement | |||||||||
Construction in progress (a) |
||||||||||
Less accumulated depreciation and amortization |
( |
) | ( |
) | ||||||
$ | $ | |||||||||
(a) |
Interest is capitalized during the construction period for significant long term construction project s . The Company capitalizes interest within the Entertainment segment in connection with the construction of MSG Sphere in Las Vegas. For the fiscal years ended June 30, 2021 and June 30, 2020, the Company capitalized $ |
Line Item in the Company’s Consolidated Balance Sheet |
June 30, 2021 |
June 30, 2020 |
||||||||
Right-of-use |
||||||||||
Operating leases |
Right-of-use |
$ | $ | |||||||
Lease liabilities: |
||||||||||
Operating leases, current |
Operating lease liabilities, current |
$ | $ | |||||||
Operating leases, noncurrent |
Operating lease liabilities, noncurrent |
|||||||||
Total lease liabilities |
$ | $ | ||||||||
Line Item in the Company’s Consolidated and Combined Statement of Operations |
Years Ended June 30, |
|||||||||
2021 |
2020 |
|||||||||
Operating lease cost |
Direct operating expenses | $ | $ | |||||||
Operating lease cost |
Selling, general and administrative expenses | |||||||||
Short-term lease cost |
Direct operating expenses | |||||||||
Variable lease cost |
Direct operating expenses | |||||||||
Variable lease cost |
Selling, general and administrative expenses | |||||||||
Total lease cost |
$ | $ | ||||||||
Fiscal year ending June 30, 2022 |
$ | |||
Fiscal year ending June 30, 2023 |
||||
Fiscal year ending June 30, 2024 |
||||
Fiscal year ending June 30, 2025 |
||||
Fiscal year ending June 30, 2026 |
||||
Thereafter |
||||
Total lease payments |
||||
Less imputed interest |
||||
Total lease liabilities (a) |
$ | |||
(a) |
Operating lease payments exclude minimum lease payments related to a location associated with the entertainment dining and nightlife offerings as the Company has not yet taken possession of the space. |
Entertainment |
Tao Group Hospitality |
Total |
||||||||||
Balance as of June 30, 2019 |
$ | $ | $ | |||||||||
Allocation to the assets held for sale, subsequently sold (a) |
( |
) | ( |
) | ||||||||
Goodwill impairment (b) |
( |
) | ( |
) | ||||||||
Balance as of June 30, 2020 |
$ | $ | $ | |||||||||
Acquisition of Hakkasan (c) |
||||||||||||
Balance as of June 30, 2021 |
$ | $ | $ | |||||||||
(a) |
In connection with the execution of the MIPA on March 24, 2020, pursuant to which the Company agreed to sell the Forum in Inglewood (see Note 3), the Company allocated $ 350-20-40-1 350-20-40-7. |
(b) |
During the first quarter of Fiscal Year 2020, the Company performed its annual impairment test of goodwill and determined that there were COVID-19 pandemic (see Note 1 — Contracts with Customers Impact of the COVID-19 Pandemic). While the Company concluded that the effects of the COVID-19 pandemic would not more likely than not reduce the fair value of its Entertainment reporting unit below its carrying amount, the Company concluded that a triggering event had occurred for its Tao Group Hospitality reporting unit as of March 31, 2020 and performed an interim impairment test. For the interim impairment test, the Company estimated the fair value of the Tao Group Hospitality reporting unit based on a discounted cash flow model (income approach). This approach relied on numerous assumptions and judgments that were subject to various risks and uncertainties. Principal assumptions utilized, all of which are considered Level III inputs under the fair value hierarchy, include the Company’s estimates of future revenue and terminal growth rates, margin assumptions and the discount rate applied to estimate future cash flows. In the fourth quarter of Fiscal Year 2020, the Company completed an evaluation of the subsequent activity. As a result, the Company recorded a non-cash goodwill impairment charge of $. |
(c) |
The TAO Group’s purchase price allocation for the Hakkasan acquisition is preliminary and could be subject to further revision as additional information related to the fair value of the identifiable net assets and redeemable noncontrolling interests becomes available during the measurement period that concludes in April 2022. Goodwill recognized in this acquisition is not deductible for income tax purposes. See Note 3 for more information on the allocation of the purchase price and goodwill recognized in connection with this acquisition. |
June 30, 2021 |
June 30, 2020 |
|||||||
Trademarks |
||||||||
Photographic related rights |
||||||||
$ | $ | |||||||
June 30, 2021 |
Estimated Useful Lives |
Gross |
Accumulated Amortization |
Net |
||||||||||
Trade names (a) |
$ | $ | ( |
) | $ | |||||||||
Venue management contracts |
( |
) | ||||||||||||
Non-compete agreements |
( |
) | ||||||||||||
Festival rights |
( |
) | ||||||||||||
Other intangibles (c) |
( |
) | ||||||||||||
$ | $ | ( |
) | $ | ||||||||||
June 30, 2020 |
Gross |
Accumulated Amortization |
Net |
|||||||||
Trade names (a) |
$ | $ | ( |
) | $ | |||||||
Venue management contracts (b) |
( |
) | ||||||||||
Non-compete agreements |
( |
) | ||||||||||
Festival rights |
( |
) | ||||||||||
Other intangibles (c) |
( |
) | ||||||||||
$ | $ | ( |
) | $ | ||||||||
(a) |
The increase in trade names of $ non-cash impairment charge of $COVID-19 Pandemic”). |
(b) |
The increase in venue management contracts of $ |
Fiscal year ending June 30, 2022 |
$ | |||
Fiscal year ending June 30, 2023 |
||||
Fiscal year ending June 30, 2024 |
||||
Fiscal year ending June 30, 2025 |
||||
Fiscal year ending June 30, 2026 |
Commitments (a) (b) |
||||||||||||
Debt Repayments (c) |
Other (d) |
Total (e) |
||||||||||
Fiscal year ending June 30, 2022 |
$ | $ | $ | |||||||||
Fiscal year ending June 30, 2023 |
||||||||||||
Fiscal year ending June 30, 2024 |
||||||||||||
Fiscal year ending June 30, 2025 |
||||||||||||
Fiscal year ending June 30, 2026 |
||||||||||||
Thereafter |
||||||||||||
$ | $ | $ | ||||||||||
(a) |
The Company’s material off balance sheet arrangements primarily include (i) MSG Sphere in Las Vegas related commitments of approximately $ |
(b) |
See Note 10 for more information regarding the Company’s contractually obligated minimum lease payments for operating leases having an initial noncancelable term in excess of one year for the Company’s venues, including the Tao Group Hospitality venues and various corporate offices. These commitments are presented exclusive of the imputed interest used to reflect the payment’s present value. In addition, see Note 24 Subsequent Events for a discussion of the amendment and extension of the Radio City Music Hall lease, executed in July 2021. |
(c) |
See Note 14 for more information regarding the principal repayments required under the National Properties Term Loan Facility and the Tao Senior Secured Credit Facilities and a note with respect to a loan of $ |
(d) |
Includes accrued expense of approximately $ |
(e) |
Pension obligations have been excluded from the table above as the timing of the future cash payments is uncertain. See Note 15 for more information on the future funding requirements under our pension obligations. |
Line Item on Consolidated Balance Sheet |
June 30, |
|||||||||
2021 |
2020 |
|||||||||
Assets: |
||||||||||
Money market accounts (a) |
Cash and cash equivalents | $ | $ | |||||||
Time deposits (a) |
Cash and cash equivalents | |||||||||
U.S. treasury bills (a) |
Cash and cash equivalents | |||||||||
Term deposits (b) |
Short-term investments | |||||||||
U.S. treasury bills (b) |
Short-term investments | |||||||||
Notes receivable (b) |
Other current assets | |||||||||
Equity investments with readily determinable fair value (c) |
Other assets | |||||||||
Total assets measured at fair value |
$ | $ | ||||||||
(a) |
The carrying amount of the Company’s cash equivalents in money market accounts, time deposits, and U.S. treasury bills approximate fair value due to their short-term maturities. |
(b) |
As of June 30, 2020, the Company’s short-term investments consisted of investments that (i) had original maturities of greater than three months and (ii) could be converted into cash by the Company within one year. In addition, the Company’s notes receivable were invested with a banking institution as collateral for issuances of letters of credit. The Company’s notes receivable and short-term investments in term deposits were carried at cost, including interest accruals, which approximated fair value and were classified within Level I of the fair value hierarchy. |
(c) |
See Note 7 for more information on the Company’s equity investments with readily determinable fair value in Townsquare and DraftKings. |
June 30, 2021 |
June 30, 2020 |
|||||||||||||||
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
|||||||||||||
Liabilities |
||||||||||||||||
Current and non-current portion of long-term debt under National Properties Term Loan Facility (a) |
$ | $ | $ | $ | ||||||||||||
Current and non-current portion of long-term debt under Tao Credit Facilities (a) |
(a) |
On May 23, 2019, Tao Group Intermediate Holdings LLC and Tao Group Operating LLC entered into a $ |
Tao Term Loan Facility |
National Properties Term Loan Facility |
Total |
||||||||||
Fiscal year ending June 30, 2022 |
$ | $ | $ | |||||||||
Fiscal year ending June 30, 2023 |
||||||||||||
Fiscal year ending June 30, 2024 (a) |
||||||||||||
Fiscal year ending June 30, 2025 |
||||||||||||
Fiscal year ending June 30, 2026 |
||||||||||||
Thereafter |
||||||||||||
$ |
$ |
$ |
||||||||||
(a) |
Repayment balance for the fiscal year ending June 30, 2024 includes the $ |
June 30, 2021 |
June 30, 2020 |
|||||||||||||||||||||||
Principal |
Unamortized Deferred Financing Costs |
Net (a) |
Principal |
Unamortized Deferred Financing Costs |
Net (a) |
|||||||||||||||||||
Current portion |
||||||||||||||||||||||||
National Properties Term Loan Facility |
$ | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||
Tao Term Loan Facility |
( |
) | ( |
) | ||||||||||||||||||||
Current portion of long-term debt, net of deferred financing costs (a) |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
June 30, 2021 |
June 30, 2020 |
|||||||||||||||||||||||
Principal |
Unamortized Deferred Financing Costs |
Net (a) |
Principal |
Unamortized Deferred Financing Costs |
Net (a) |
|||||||||||||||||||
Noncurrent portion |
||||||||||||||||||||||||
National Properties Term Loan Facility (a) |
$ | $ | ( |
) | $ | $ | $ | $ | ||||||||||||||||
Tao Term Loan Facility |
( |
) | ( |
) | ||||||||||||||||||||
Tao Revolving Credit Facility (b) |
||||||||||||||||||||||||
Long-term debt, net of deferred financing costs (a) |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
(a) |
In addition to the outstanding balance associated with the Tao Term Loan Facility, the Tao Revolving Credit Facility and the National Properties Term Loan Facility disclosed above, the Company’ s Long-term debt, net of deferred financing costs in the accompanying consolidated balance sheet of $ |
(b) |
Unamortized deferred financing costs associated with Tao Revolving Credit Facility are presented under the captions Other current assets and Other assets in the accompanying consolidated balance sheets: |
June 30, 2021 |
June 30, 2020 |
|||||||
Other current assets |
$ | $ | ||||||
Other assets |
Interest Payments |
Loan Principal Repayments |
|||||||||||||||||||||||
Years Ended June 30, |
Years Ended June 30, |
|||||||||||||||||||||||
2021 |
2020 |
2019 |
2021 |
2020 |
2019 |
|||||||||||||||||||
National Properties Term Loan Facility |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Tao Senior Credit Agreement |
||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Pension Plans |
Postretirement Plan |
|||||||||||||||
June 30, |
June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Change in benefit obligation: |
||||||||||||||||
Benefit obligation at beginning of period |
$ | $ | $ | $ | ||||||||||||
Service cost |
||||||||||||||||
Interest cost |
||||||||||||||||
Actuarial loss (gain) |
( |
) | ||||||||||||||
Benefits paid |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Curtailments |
( |
) | ||||||||||||||
Plan settlements paid |
( |
) | ( |
) | ||||||||||||
Other |
( |
) | ( |
) | ( |
) | ||||||||||
Transfer of liabilities (a) |
( |
) | ||||||||||||||
Benefit obligation at end of period |
||||||||||||||||
Change in plan assets: |
||||||||||||||||
Fair value of plan assets at beginning of period |
||||||||||||||||
Actual return on plan assets |
||||||||||||||||
Employer contributions |
||||||||||||||||
Benefits paid |
( |
) | ( |
) | ||||||||||||
Plan settlements paid |
( |
) | ||||||||||||||
Fair value of plan assets at end of period |
||||||||||||||||
Funded status at end of period |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
(a) |
Represents the benefit obligation related to the MSG Sports Non-Qualified Plans as of April 17, 2020, the date of the Entertainment Distribution. |
Pension Plans |
Postretirement Plan |
|||||||||||||||
June 30, |
June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Current liabilities (included in accrued employee related costs) |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Non-current liabilities (included in defined benefit and other postretirement obligations) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||
Pension Plans |
Postretirement Plan |
|||||||||||||||
June 30, |
June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Actuarial loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
Pension Plans |
Postretirement Plan |
|||||||||||||||||||||||
Years Ended June 30, |
Years Ended June 30, |
|||||||||||||||||||||||
2021 |
2020 |
2019 |
2021 |
2020 |
2019 |
|||||||||||||||||||
Service cost |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Interest cost |
||||||||||||||||||||||||
Expected return on plan assets |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Recognized actuarial loss |
||||||||||||||||||||||||
Amortization of unrecognized prior service cost (credit) |
( |
) | ||||||||||||||||||||||
Settlement loss recognized (a) |
||||||||||||||||||||||||
Other |
( |
) | ||||||||||||||||||||||
Net periodic benefit cost |
$ | $ | $ | $ | $ | $ | ( |
) | ||||||||||||||||
Contributory charge to Madison Square Garden Sports Corp. for participation in the Shared Plans and all allocation of costs related to the corporate employees |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Net periodic benefit cost reported in the consolidated and combined statements of operations |
$ | $ | $ | $ | $ | $ | ( |
) | ||||||||||||||||
(a) |
For Fiscal Year 2021, Fiscal Year 2020 and Fiscal Year 2019, lump-sum payments totaling $non-qualified excess cash balance plan, triggering the recognition of settlement losses in accordance with ASC Topic 715. Due to these pension settlements, the Company was required to remeasure its pension plan liability as of June 30, 2021 and 2020 and for Fiscal Year 2021, Fiscal Year 2020 and Fiscal Year 2019, respectively. Discount rates used for the projected benefit obligation and interest cost were |
Pension Plans |
Postretirement Plan |
|||||||||||||||||||||||
Years Ended June 30, |
Years Ended June 30, |
|||||||||||||||||||||||
2021 |
2020 |
2019 |
2021 |
2020 |
2019 |
|||||||||||||||||||
Actuarial gain (loss), net |
$ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||
Recognized actuarial loss |
||||||||||||||||||||||||
Recognized prior service credit |
( |
) | ||||||||||||||||||||||
Curtailments |
||||||||||||||||||||||||
Settlement loss recognized |
||||||||||||||||||||||||
Total recognized in other comprehensive income (loss) |
$ | ( |
) | $ | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||||||
Pension Plans |
Postretirement Plan |
|||||||||||||||
June 30, |
June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Discount rate |
% | % | % | % | ||||||||||||
Interest crediting rate |
% | % | n/a | n/a | ||||||||||||
Healthcare cost trend rate assumed for next year |
n/a | n/a | % | % | ||||||||||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) |
n/a | n/a | % | % | ||||||||||||
Year that the rate reaches the ultimate trend rate |
n/a | n/a |
Pension Plans |
Postretirement Plan |
|||||||||||||||||||||||
Years Ended June 30, |
Years Ended June 30, |
|||||||||||||||||||||||
2021 |
2020 |
2019 |
2021 |
2020 |
2019 |
|||||||||||||||||||
Discount rate—projected benefit obligation |
% | % | % | % | % | % | ||||||||||||||||||
Discount rate—service cost |
% | % | % | % | % | % | ||||||||||||||||||
Discount rate—interest cost |
% | % | % | % | % | % | ||||||||||||||||||
Expected long-term return on plan assets |
% | % | % | n/a | n/a | n/a | ||||||||||||||||||
Interest crediting rate |
% | % | % | n/a | n/a | n/a | ||||||||||||||||||
Healthcare cost trend rate assumed for next year |
n/a | n/a | n/a | % | % | % | ||||||||||||||||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) |
n/a | n/a | n/a | % | % | % | ||||||||||||||||||
Year that the rate reaches the ultimate trend rate |
n/a | n/a | n/a |
June 30, |
||||||||
Asset Classes (a) : |
2021 |
2020 |
||||||
Fixed income securities |
% | % | ||||||
Cash equivalents |
% | % | ||||||
(a) |
The Company’s target allocation for pension plan assets is |
Fair Value Hierarchy |
June 30, |
|||||||||||
2021 |
2020 |
|||||||||||
Fixed income securities: |
||||||||||||
U.S. Treasury securities (a) |
I | $ | $ | |||||||||
U.S. corporate bonds (b) |
II | |||||||||||
Foreign issues (c) |
II | |||||||||||
Municipal bonds (d) |
II | |||||||||||
Money market accounts (e) |
I | |||||||||||
Common collective trust (f) |
II | |||||||||||
Total investments measured at fair value |
$ | $ | ||||||||||
(a) |
U.S. Treasury Securities are classified within Level I of the fair value hierarchy as they are valued using observable inputs that reflect quoted prices for identical assets in active markets. |
(b) |
U.S. corporate bonds are classified within Level II of the fair value hierarchy as they are valued using quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active and evaluations based on various market and industry inputs. |
(c) |
Foreign issued corporate bonds are classified within Level II of the fair value hierarchy as they are valued at a price that is based on a compilation of primarily observable market information or a broker quote in a non-active over-the-counter |
(d) |
Municipal bonds are classified within Level II of the fair value hierarchy as they are valued at a price that is based on a compilation of primarily observable market information or a broker quote in a non-active over-the-counter |
(e) |
Money market fund is classified within Level I of the fair value hierarchy as they are valued using observable inputs that reflect quoted prices for identical assets in active markets. |
(f) |
Common collective trust (CCT) is classified within Level II of the fair value hierarchy at its net asset value (NAV) as reported by the Trustee. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities. The CCT publishes its daily NAV and uses such value as the basis for current transactions. |
Pension Plans |
Postretirement Plan |
|||||||
Fiscal year ending June 30, 2022 |
$ | $ | ||||||
Fiscal year ending June 30, 2023 |
||||||||
Fiscal year ending June 30, 2024 |
||||||||
Fiscal year ending June 30, 2025 |
||||||||
Fiscal year ending June 30, 2026 |
||||||||
Fiscal years ending June 30, 2027 – 2031 |
• | Assets contributed to a multiemployer defined benefit pension plan by one employer may be used to provide benefits to employees of other participating employers. |
• | If a participating employer stops contributing to a multiemployer defined benefit pension plan, the unfunded obligations of the plan may be borne by the remaining participating employers. |
• | If the Company chooses to stop participating in some of these multiemployer defined benefit pension plans, the Company may be required to pay those plans an amount based on the Company’s proportion of the underfunded status of the plan, referred to as a withdrawal liability. However, cessation of participation in a multiemployer defined benefit pension plan and subsequent payment of any withdrawal liability is subject to the collective bargaining process. |
PPA Zone Status |
Company Contributions |
|||||||||||||||||||||||||||||||||||||||
As of June 30, |
Years Ended June 30, |
|||||||||||||||||||||||||||||||||||||||
Plan Name |
EIN |
Pension Plan Number |
2021 |
2020 |
FIP/RP Status Pending / Implemented |
2021 |
2020 |
2019 |
Surcharge Imposed |
Expiration Date of CBA |
||||||||||||||||||||||||||||||
Pension Fund of Local No. 1 of I.A.T.S.E. |
|
n as of |
|
|
n as of |
|
o | $ | $ | $ | o | |||||||||||||||||||||||||||||
All Other Multiemployer Defined Benefit Pension Plans |
||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Fund Name |
Exceeded 5 Percent of Total Contributions |
Year Contributions to Plan Exceeded 5 Percent of Total Contributions (As of Plan’s Year-End) | ||
Pension Fund of Local No. 1 of I.A.T.S.E |
True | December 31, 2019, 2018 and 2017 | ||
32BJ/Broadway League Pension Fund |
True | December 31, 2019, 2018 and 2017 | ||
Treasurers and Ticket Sellers Local 751 Pension Fund |
True | August 31, 2020, 2019 and 2018 |
Years Ended June 30, |
||||||||||||
2021 (b) |
2020 |
2019 |
||||||||||
Nonperformance and performance based RSUs |
$ | $ | $ | |||||||||
Stock options (c) |
||||||||||||
Total share-based compensation expense (a) |
$ | $ | $ | |||||||||
(a) |
The share-based compensation expense reported above includes expense associated with MSG Sports’ RSUs and stock options granted to the Company’s employees prior to the Entertainment Distribution. |
(b) |
The Company recorded previously unrecognized share-based compensation expense of $ |
(c) |
Included $ |
Number of |
Weighted- Average Fair Value Per Share At Date of Grant |
|||||||||||
Nonperformance Based Vesting RSUs (In Thousands) |
Performance Based Vesting RSUs (In Thousands) |
|||||||||||
Unvested award balance as of June 30, 2020 |
$ | |||||||||||
Granted |
$ | |||||||||||
Vested |
( |
) | ( |
) | $ | |||||||
Forfeited |
( |
) | ( |
) | $ | |||||||
Cancelled |
( |
) | $ | |||||||||
Unvested award balance as of June 30, 2021 |
$ | |||||||||||
Number of Time Vesting Options (In Thousands) |
Weighted- Average Exercise Price Per Share |
Weighted-Average Remaining Contractual Term (In Years) |
Aggregate Intrinsic Value |
|||||||||||||
Balance as of June 30, 2020 |
$ | |||||||||||||||
Cancelled |
( |
) | $ | |||||||||||||
Balance as of June 30, 2021 |
$ | $ | ||||||||||||||
Exercisable as of June 30, 2021 |
$ | $ |
Pension Plans and Postretirement Plan |
Cumulative Translation Adjustments |
Accumulated Other Comprehensive Loss |
||||||||||
Balance as of June 30, 2020 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Other comprehensive income (loss): |
||||||||||||
Other comprehensive loss before reclassifications |
||||||||||||
Amounts reclassified from accumulated other comprehensive loss (a) |
( |
) | ( |
) | ||||||||
Other comprehensive income (loss), total |
( |
) | ||||||||||
Balance as of June 30, 2021 |
$ | ( |
) | $ | $ | ( |
) | |||||
Pension Plans and Postretirement Plan |
Cumulative Translation Adjustments |
Accumulated Other Comprehensive Loss |
||||||||||
Balance as of June 30, 2019 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Other comprehensive income (loss): |
||||||||||||
Other comprehensive loss before reclassifications |
( |
) | ( |
) | ( |
) | ||||||
Amounts reclassified from accumulated other comprehensive loss (a) |
||||||||||||
Other comprehensive income (loss), total |
( |
) | ( |
) | ||||||||
Adjustment related to the transfer of Pension Plans and Postretirement Plan liabilities as a result of the Entertainment Distribution |
||||||||||||
Balance as of June 30, 2020 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Pension Plans and Postretirement Plan |
Cumulative Translation Adjustments |
Unrealized Gain (Loss) on Available-for-sale Securities (b) |
Accumulated Other Comprehensive Loss |
|||||||||||||
Balance as of June 30, 2018 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Reclassification of unrealized loss on available-for sale securities |
||||||||||||||||
Other comprehensive loss: |
||||||||||||||||
Other comprehensive loss before reclassifications |
( |
) | ( |
) | ( |
) | ||||||||||
Amounts reclassified from accumulated other comprehensive loss (a) |
|
|
||||||||||||||
Other comprehensive loss, total |
( |
) | ( |
) | ( |
) | ||||||||||
Balance as of June 30, 2019 |
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||
(a) |
Amounts reclassified from accumulated other comprehensive loss represent the amortization of net actuarial loss and net unrecognized prior service credit included in net periodic benefit cost, which is reflected under Miscellaneous income (expense), net in the accompanying consolidated and combined statements of operations (see Note 15). |
(b) |
As of July 1, 2018, upon adoption of ASU No. 2016-01, the Company recorded a transition adjustment to reclassify accumulated other comprehensive loss associated with its investment in Townsquare in the amount of $pre-tax ($ |
Years Ended June 30, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Current expense (benefit): |
||||||||||||
Federal |
$ | ( |
) | $ | $ | |||||||
State and other |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
( |
||||||||||||
|
|
|
|
|
|
|||||||
Deferred expense (benefit): |
||||||||||||
Federal |
( |
) | ( |
) | ( |
) | ||||||
State and other |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
( |
( |
( |
||||||||||
|
|
|
|
|
|
|||||||
Income tax expense (benefit) |
$ | ( |
) | $ | $ | |||||||
|
|
|
|
|
|
Years Ended June 30, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Federal tax expense (benefit) at statutory federal rate |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
State income taxes, net of federal benefit |
( |
) | ||||||||||
Change in the estimated applicable tax rate used to determine deferred taxes |
( |
) | ( |
) | ||||||||
Nondeductible transaction costs |
||||||||||||
Federal tax credits |
( |
) | ( |
) | ||||||||
GAAP income of consolidated partnership attributable to non-controlling interest |
||||||||||||
Tax effect of indefinite intangible amortization |
||||||||||||
Change in valuation allowance |
( |
) | ( |
) | ||||||||
Nondeductible officers’ compensation (a) |
||||||||||||
Nondeductible expenses |
||||||||||||
Excess tax benefit related to shared based-payments awards |
( |
) | ( |
) | ( |
) | ||||||
Other |
||||||||||||
|
|
|
|
|
|
|||||||
Income tax expense (benefit) |
$ | ( |
) | $ | $ | |||||||
|
|
|
|
|
|
(a) |
The Tax Cuts and Jobs Act, enacted on December 22, 2017, included changes to Internal Revenue Code Section 162(m), including elimination of the exception for qualified performance-based compensation over the $1,000 annual limit. Accordingly, effective January 1, 2018, all compensation for certain officers in excess of $1,000 is generally nondeductible. |
June 30, |
||||||||
2021 |
2020 |
|||||||
Deferred tax asset: |
||||||||
Net operating loss (“NOL”) carryforwards |
$ | $ | ||||||
Tax credit carryforwards |
||||||||
Accrued employee benefits |
||||||||
Restricted stock units and stock options |
||||||||
Deferred revenue |
||||||||
Right-of-use |
||||||||
Investments |
||||||||
Other |
||||||||
Total deferred tax assets |
$ | $ | ||||||
Less valuation allowance |
( |
) | ( |
) | ||||
Net deferred tax assets |
$ | $ | ||||||
Deferred tax liabilities: |
||||||||
Intangible and other assets |
$ | ( |
) | $ | ( |
) | ||
Property and equipment |
( |
) | ( |
) | ||||
Prepaid expenses |
( |
) | ( |
) | ||||
Capitalized interest related to MSG Sphere |
( |
) | ( |
) | ||||
Other |
( |
) | ||||||
Total deferred tax liabilities |
$ | ( |
) | $ | ( |
) | ||
Net deferred tax liability |
$ | ( |
) | $ | ( |
) | ||
• | Sponsorship sales and service representation agreements pursuant to which the Company has the exclusive right and obligation to sell MSG Sports’ sponsorships for an initial stated term of |
• | A team sponsorship allocation agreement with MSG Sports, pursuant to which MSG Sports continues receiving an allocation of sponsorship and signage revenues associated with the sponsorship agreements that existed at the Entertainment Distribution Date; |
• | Arena License Agreements pursuant to which the Company (i) provides MSG Sports the right to use The Garden for games of the Knicks and Rangers for a |
• | A transition services agreement (the “TSA”) pursuant to which the Company provides certain corporate and other transition services to MSG Sports, such as information technology, accounting, 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, in exchange for service fees. MSG Sports also provides certain transition services to the Company, in exchange for service fees. |
• | A sublease agreement, pursuant to which the Company subleases office space to MSG Sports; |
• | A group ticket sales representation agreement, pursuant to which the Company appointed MSG Sports as its sales and service representative to sell group ticket packages related Company events in exchange for a commission; |
• | A single night rental commission agreement, pursuant to which MSG Sports may, from time to time, sell (or make referrals for sales of) licenses for the use of suites at The Garden for individual Company events in exchange for a commission; |
• | Aircraft time sharing agreements (discussed below); and; |
• | Other agreements with MSG Sports entered into in connection with the Entertainment Distribution such as a distribution agreement, a tax disaffiliation agreement, an employee matters agreement, a trademark license agreement and certain other arrangements. |
Years Ended June 30, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Revenues |
$ | $ | $ | |||||||||
Operating expenses (credits): |
||||||||||||
Revenue sharing expenses |
$ | $ | $ | |||||||||
Allocation of charges for venue usage to MSG Sports |
( |
) | ( |
) | ||||||||
Reimbursement under Arena License Arrangement |
( |
) | ||||||||||
Corporate general and administrative — credits with MSG Sports |
( |
) | ( |
) | ( |
) | ||||||
Corporate general and administrative — credits with MSG Networks |
( |
) | ( |
) | ( |
) | ||||||
Consulting fees |
||||||||||||
Advertising expenses |
||||||||||||
Other operating expenses (credits), net |
( |
) |
Year ended June 30, 2021 |
||||||||||||||||||||||||
Entertainment |
Tao Group Hospitality |
Purchase accounting adjustments |
Inter- segment eliminations |
Total |
||||||||||||||||||||
Revenues |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Direct operating expenses |
( |
) | ||||||||||||||||||||||
Selling, general and administrative expenses |
( |
) | ||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||||
Restructuring charges |
||||||||||||||||||||||||
Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
Loss in equity method investments |
( |
) | ||||||||||||||||||||||
Interest income |
||||||||||||||||||||||||
Interest expense |
( |
) | ||||||||||||||||||||||
Miscellaneous income, net |
(a) |
|||||||||||||||||||||||
Loss from operations before income taxes |
$ | ( |
) | |||||||||||||||||||||
Reconciliation of operating loss to adjusted operating loss: |
||||||||||||||||||||||||
Operating loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||
Add back: |
||||||||||||||||||||||||
Non-cash portion of arena license fees from MSG Sports |
( |
) | ( |
) | ||||||||||||||||||||
Share-based compensation expense |
||||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||||
Restructuring charges |
||||||||||||||||||||||||
Other purchase accounting adjustments |
||||||||||||||||||||||||
Adjusted operating loss |
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | |||||||||||
Other information: |
||||||||||||||||||||||||
Capital expenditures |
(b) |
$ | $ | $ | $ | $ |
Year ended June 30, 2020 |
||||||||||||||||||||||||
Entertainment |
Tao Group Hospitality |
Purchase accounting adjustments |
Inter- segment eliminations |
Total |
||||||||||||||||||||
Revenues |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Direct operating expenses |
( |
) | ||||||||||||||||||||||
Selling, general and administrative expenses |
( |
) | ||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||||
Impairment for intangibles, long-lived assets, and goodwill |
||||||||||||||||||||||||
Gain on disposal of assets held for sale |
( |
) | ( |
) | ||||||||||||||||||||
Operating income (loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Loss in equity method investments |
( |
) | ||||||||||||||||||||||
Interest income |
||||||||||||||||||||||||
Interest expense |
( |
) | ||||||||||||||||||||||
Miscellaneous income, net |
(a) |
|||||||||||||||||||||||
Loss from operations before income taxes |
$ | ( |
) | |||||||||||||||||||||
Reconciliation of operating income (loss) to adjusted operating income (loss): |
||||||||||||||||||||||||
Operating income (loss) |
$ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||
Add back: |
||||||||||||||||||||||||
Share-based compensation expense |
||||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||||
Impairment for intangibles, long-lived assets, and goodwill |
||||||||||||||||||||||||
Gain on disposal of assets held for sale |
( |
) | ( |
) | ||||||||||||||||||||
Other purchase accounting adjustments |
||||||||||||||||||||||||
Adjusted operating income (loss) |
$ | ( |
) | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||
Other information: |
||||||||||||||||||||||||
Capital expenditures |
(b) |
$ | $ | $ | $ | $ |
Year ended June 30, 2019 |
||||||||||||||||||||||||
Entertainment |
Tao Group Hospitality |
Purchase accounting adjustments |
Inter- segment eliminations |
Total |
||||||||||||||||||||
Revenues |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Direct operating expenses |
( |
) | ||||||||||||||||||||||
Selling, general and administrative expenses |
( |
) | ||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating income (loss) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Equity in earnings of equity method investments |
||||||||||||||||||||||||
Interest income |
||||||||||||||||||||||||
Interest expense |
( |
) | ||||||||||||||||||||||
Miscellaneous expense, net |
(a) |
( |
) | |||||||||||||||||||||
|
|
|||||||||||||||||||||||
Loss from operations before income taxes |
$ | ( |
) | |||||||||||||||||||||
|
|
|||||||||||||||||||||||
Reconciliation of operating income (loss) to adjusted operating income (loss): |
|
|||||||||||||||||||||||
Operating income (loss) |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||
Add back: |
||||||||||||||||||||||||
Share-based compensation expense |
||||||||||||||||||||||||
Depreciation and amortization |
||||||||||||||||||||||||
Other purchase accounting adjustments |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Adjusted operating income (loss) |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Other information: |
||||||||||||||||||||||||
Capital expenditures |
(b) |
$ | $ | $ | $ | $ |
(a) |
Miscellaneous income (expense), net includes the following |
Years Ended June 30, |
||||||||||||
2021 |
2020 |
2019 |
||||||||||
Realized and unrealized gain (loss) on equity investments with readily determinable fair value, see Note 8 for further detail. |
$ | $ | $ | ( |
) | |||||||
Non-service cost components of net periodic pension and postretirement benefit costs |
( |
) | ( |
) | ( |
) | ||||||
Dividend income from equity investments |
||||||||||||
Loss on extinguishment of debt associated with Tao Group Hospitality |
( |
) | ||||||||||
Measurement alternative adjustments for equity investments without readily determinable fair value |
( |
) | ||||||||||
Others, net, primarily reflects the impact of Tao Group Hospitality three-month lag elimination in Fiscal Year 2020. |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
$ |
$ |
$ |
( |
) | ||||||||
|
|
|
|
|
|
(b) |
The Entertainment segment includes capital expenditures |
As of June 30, 2021 |
As of June 30, 2020 |
|||||||||||||||||||||||
As Previously Issued |
Adjustment |
As Revised |
As Previously Issued |
Adjustment |
As Revised |
|||||||||||||||||||
Property and equipment, net |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Total assets |
||||||||||||||||||||||||
Additional paid-in capital |
||||||||||||||||||||||||
Retained earnings (accumulated deficit) |
( |
) | ( |
) | ||||||||||||||||||||
Total Madison Square Garden Entertainment Corp. stockholders’ equity |
||||||||||||||||||||||||
Total equity |
||||||||||||||||||||||||
Total liabilities, redeemable noncontrollinginterests and equity |
Year ended June 30, 2021 |
Year ended June 30, 2020 |
Year ended June 30, 2019 |
||||||||||||||||||||||||||||||||||
As Previously Issued |
Adjustment |
As Revised |
As Previously Issued |
Adjustment |
As Revised |
As Previously Issued |
Adjustment |
As Revised |
||||||||||||||||||||||||||||
Interest expense |
$ |
( |
) | $ |
$ |
( |
) | $ |
( |
) | $ |
$ |
( |
) | $ |
( |
) | $ |
$ |
( |
) | |||||||||||||||
Loss from operations before income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
Net income (loss) attributable to Madison Square Garden Entertainment Corp.’s stockholders |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
Basic earnings (loss) per common share attributable to Madison Square Garden Entertainment Corp.’s stockholders |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
Diluted earnings (loss) per common share attributable to Madison Square Garden Entertainment Corp.’s stockholders |
( |
) | ( |
) | ( |
) | ( |
) |
Year ended June 30, 2021 |
Year ended June 30, 2020 |
Year ended June 30, 2019 |
||||||||||||||||||||||||||||||||||
As Previously Issued |
Adjustment |
As Revised |
As Previously Issued |
Adjustment |
As Revised |
As Previously Issued |
Adjustment |
As Revised |
||||||||||||||||||||||||||||
Net loss |
$ |
( |
) | $ |
$ |
( |
) | $ |
( |
) | $ |
$ |
( |
) | $ |
( |
) | $ |
$ |
( |
) | |||||||||||||||
Comprehensive loss |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
Comprehensive income (loss) attributable to Madison Square Garden Entertainment Corp.’s stockholders |
( |
) | ( |
) | ( |
) | ( |
) |
Year ended June 30, 2021 |
Year e nded June 30, 2020 |
Year e nded June 30, 2019 |
||||||||||||||||||||||||||||||||||
As Previously Issued |
Adjustment |
As Revised |
As Previously Issued |
Adjustment |
As Revised |
As Previously Issued |
Adjustment |
As Revised |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Net loss |
$ |
( |
) | $ |
$ |
( |
) | $ |
( |
) | $ |
$ |
( |
) | $ |
( |
) | $ |
$ |
( |
) | |||||||||||||||
Net cash provided by (used in) operating activities |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||
Capitalized interest |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
Net cash used in in v esting activities |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) |