In connection with Tao Group Hospitality’s branded location expansion plans, Tao Group Sub-Holdings LLC, a subsidiary of Tao Group Hospitality and an indirect subsidiary of the Company, entered into a Transaction Agreement (the “Transaction

Agreement”) on April 27, 2021 (the “Closing Date”), pursuant to which Tao Group Sub-Holdings LLC acquired the business (“Hakkasan”) of Hakkasan USA, Inc., a Delaware corporation (“Hakkasan Parent”). Hakkasan consists of a global collection of hospitality venues including restaurants, bars, lounges, and nightclubs. Its brand portfolio spans four continents and over 20 major cities.

Pursuant to the Transaction Agreement, Hakkasan Parent initially contributed its interest in Hakkasan to Tao Group Sub-Holdings LLC in exchange for approximately 18% of the common equity interests in Tao Group Sub-Holdings LLC. During the first quarter of Fiscal Year 2022, the Company finalized adjustments to closing working capital and net debt against agreed upon targets. As a result, the noncontrolling interest owned by Hakkasan Parent in Tao Group Sub-Holdings LLC was reduced from 18% as initially estimated to approximately 15% as presented below. After the Closing Date and subsequent ownership adjustments, Tao Group Hospitality, which owned all of the issued and outstanding common equity interests in Tao Group Sub-Holdings LLC before the Closing Date, owns approximately 85% of the common equity interests in Tao Group Sub-Holdings LLC.


	Fair Value Recognized as of Acquisition Date		Measurement Period Adjustment (a)		Fair Value Recognized as adjusted
Cash and cash equivalents	$	16,737	$	—	$	16,737




Property and equipment, net	33,393		—		33,393
Right-of-use lease assets	44,818		—		44,818
Amortizable intangible assets, net	47,170		(7,020)		40,150


Other assets	12,641		—		12,641

Accrued expenses and other current liabilities	(15,957)		1,534		(14,423)
Operating lease liabilities	(52,025)		—		(52,025)



Other liabilities	(13,655)		—		(13,655)
Total identifiable net assets acquired	73,122		(5,486)		67,636
Goodwill	3,378		(2,014)		1,364
Redeemable noncontrolling interests	$	(76,500)	$	7,500	$	(69,000)

(a)The noncontrolling interest owned by Hakkasan Parent in TAO Group Sub-Holdings LLC was reduced from approximately 18% as initially estimated to approximately 15%. Such change resulted in a decrease in the Company’s redeemable noncontrolling interest of $7,500, a decrease in Goodwill of $480, and a decrease in amortizable intangibles of $7,020 related to trade names and venue management contracts. Additionally, the Company wrote-off a previously reported accrual of $1,534, which resulted in an additional decrease in Goodwill of $1,534.

Amortizable intangible assets, goodwill, inventory, property and equipment, and redeemable noncontrolling interests that arose from this acquisition were classified within Level III of the fair value hierarchy as they were valued using unobservable inputs, reflecting the Company’s best estimate of what hypothetical market participants would use to determine the value of acquired assets at the reporting date based on the best information available in the circumstances.

The amounts of revenues and net income (primarily excluding the impact of various amortization of purchase price accounting adjustments of $1,070) attributable to Hakkasan since the acquisition date included in the Tao Group Hospitality segment within the Company’s consolidated statement of operations for Fiscal Year 2021 were $27,604 and $2,896, respectively.

Proforma results of operations have not been presented because the effect of the acquisition was not material to the Company’s consolidated statement of operations for Fiscal Year 2021.

For Fiscal Year 2021, the Company’s Tao Group Hospitality segment recognized $3,686 of acquisition-related expenses in connection with the Hakkasan acquisition within selling, general and administrative expenses in the accompanying consolidated statements of operations.

Goodwill recognized in this acquisition is not deductible for income tax purposes. The deferred taxes calculated relied on estimates of tax basis that would be allocable to the Company and reflect management’s best estimates and assumptions.

The Tao Group Hospitality purchase agreement entered into in January 2017 contains a put option to require the Company to purchase the other owners’ equity interests under certain circumstances. The noncontrolling interest combined with the put option is classified as redeemable noncontrolling interest in the consolidated balance sheet, separate from equity. The put option can be settled, at the Company’s option, in cash, debt or shares of the Company’s Class A Common Stock. The ultimate amount paid upon the exercise of the put option will likely be different from the estimated fair value, given the calculation required pursuant to the Tao Group Hospitality operating agreement.

On January 22, 2020, the Company acquired an additional 15% of common equity interest in Tao Group Hospitality from its noncontrolling interest holders through a pre-Entertainment Distribution issuance of 102 shares of MSG Sports Class A common stock. Following this acquisition, the Company owned approximately 78% of common equity interest in Tao Group Hospitality. In connection with the acquisition of the additional 15% of common equity interest in Tao Group Hospitality, the Company recorded a decrease of $37,715 in the carrying value of the redeemable noncontrolling interests and an offset of the same amount in the MSG Sports Corp. Investment in the accompanying consolidated and combined statements of equity and redeemable noncontrolling interests.

In connection with the Entertainment Distribution, the Company entered into amended employment agreements with two noncontrolling interest holders in Fiscal Year 2020, which provided the noncontrolling interest holders put rights exercisable that require the Company to purchase the remaining equity interest. Upon the exercise of the put options by the noncontrolling interest holders, the price to be paid for the redeemable noncontrolling interest is the then-current fair market value of the redeemable noncontrolling interest, subject to a minimum price (“floor”).

In addition, in connection with investor put and call transactions completed at Tao Group Hospitality during Fiscal Year 2022, the Company’s common equity interest in Tao Group Hospitality increased an additional 1%. Following these transactions, the Company owned approximately 79% of common equity interest in Tao Group Holdings LLC, which translates into a 67% indirect controlling interest in Tao Group Sub-Holdings LLC. Tao Group Hospitality’s results will continue to be consolidated in the financial results of the Company.

Prior to May 1, 2020, the Company owned the Forum in Inglewood, CA. On March 24, 2020, the Company entered into a Membership Interest Purchase Agreement (the “MIPA”) pursuant to which the Company agreed to sell the Forum and settle related litigation for cash consideration in the amount of $400,000, subject to regulatory and other customary closing conditions. The transaction subsequently closed on May 1, 2020, resulting in a total gain on sale of $240,783, net of transaction costs of $50,806 during Fiscal Year 2020 of which $140,495 was attributable to the settlement of the related litigation. The transaction cost included a fee of $48,742 to The Azoff Company Holdings (“Azoff Music”), in connection with an agreement made by the Former Parent when the remaining 50% interest of Azoff Music was sold on December 5, 2018.