XML 48 R31.htm IDEA: XBRL DOCUMENT v3.22.2.2
Segment Information
 12 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
Segment Information Segment Information
As of June 30, 2022, the Company was comprised of three reportable segments: Entertainment, MSG Networks, and Tao Group Hospitality. The Company takes into account whether two or more operating segments can be aggregated together as one reportable segment as well as the type of discrete financial information that is available and regularly reviewed by its Chief Operating Decision Maker (“CODM”). 
The Company incurs non-capitalizable content development and technology costs associated with the Company’s MSG Sphere initiative, which are reported in Entertainment. In addition to event-related operating expenses, Entertainment also includes other expenses such as (a) corporate and supporting department operating costs that are attributable to MSG Sphere development and (b) non-event related operating expenses for the Company’s venues, such as (i) rent for the Company’s leased venues, (ii) real estate taxes, (iii) insurance, (iv) utilities, (v) repairs and maintenance, (vi) labor related to the overall management of the venues, and (vii) depreciation and amortization expense related to the Company’s performance venues and certain corporate property, equipment and leasehold improvements. Additionally, the Company does not allocate any purchase accounting adjustments related to business acquisitions to the reporting segments.
The Company evaluates segment performance based on several factors, of which the key financial measure is operating income (loss) before the following adjustments, which is referred to as adjusted operating income (loss), a non-GAAP financial measure:
(i) adjustments to remove the impact of non-cash straight-line leasing revenue associated with the Arena License Agreements with MSG Sports,
(ii) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets,
(iii) amortization for capitalized cloud computing arrangement costs,
(iv) share-based compensation expense,
(v) restructuring charges or credits,
(vi) merger and acquisition-related costs, including litigation expenses,
(vii) gains or losses on sales or dispositions of businesses and associated settlements,
(viii) the impact of purchase accounting adjustments related to business acquisitions, and
(ix) gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan (which was established in November 2021).
The Company believes that given the length of the Arena License Agreements and resulting magnitude of the difference in leasing revenue recognized and cash revenue received, the exclusion of non-cash leasing revenue provides investors with a clearer picture of the Company's operating performance. The Company believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the various operating units of the Company’s business without regard to the settlement of an obligation that is not expected to be made in cash. The Company eliminates merger and acquisition-related costs because the Company does not consider such costs to be indicative of the ongoing operating performance of the Company as they result from an event that is of a non-recurring nature, thereby enhancing comparability. In addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan, which are included for the first time this period, provides investors with a clearer picture of the Company’s operating performance given that, in accordance with GAAP, gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan are recognized in Operating (income) loss whereas gains and losses related to the remeasurement of the assets under the Company’s Executive Deferred Compensation Plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Other income (expense), net, which is not reflected in Operating income (loss).
The Company believes adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of its business segments and the Company on a consolidated basis. Adjusted operating income (loss) and similar measures with similar titles are common performance measures used by investors and analysts to analyze the Company’s performance. The Company uses revenues and adjusted operating income (loss) measures as the most important indicators of its business performance, and evaluates management’s effectiveness with specific reference to these indicators.
Adjusted operating income (loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP. Since adjusted operating income (loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. The Company has presented the components that reconcile operating income (loss), the most directly comparable GAAP financial measure, to adjusted operating income (loss).
Information as to the operations of the Company’s reportable segments is set forth below.
Year Ended June 30, 2022
EntertainmentMSG NetworksTao Group HospitalityPurchase accounting adjustmentsInter-segment eliminationsTotal
Revenues$655,392 $608,155 $484,947 $— $(23,876)$1,724,618 
Direct operating expenses420,305 320,278 264,641 6,099 (2,078)1,009,245 
Selling, general and administrative expenses394,551 147,007 160,991 — (20,753)681,796 
Depreciation and amortization77,177 9,394 26,021 12,037 — 124,629 
Impairment and other (gains) losses, net(245)— (3,969)1,169 — (3,045)
Restructuring charges14,238 452 — — — 14,690 
Operating income (loss)(250,634)131,024 37,263 (19,305)(1,045)(102,697)
Loss in equity method investments(5,027)
Interest income4,210 
Interest expense(27,155)
Loss on extinguishment of debt(35,815)
Other expense, net (a)

(49,448)
Loss from operations before income taxes$(215,932)
Reconciliation of operating loss to adjusted operating loss:
Operating income (loss)$(250,634)$131,024 $37,263 $(19,305)$(1,045)$(102,697)
Add back:
Non-cash portion of arena license fees from MSG Sports(27,754)— — — — (27,754)
Share-based compensation expense47,813 17,092 7,647 — — 72,552 
Depreciation and amortization77,177 9,394 26,021 12,037 — 

124,629 
Restructuring charges14,238 452 — — — 14,690 
Impairment and other (gains) losses, net(245)— (3,969)1,169 — (3,045)
Merger and acquisition related costs20,834 27,683 247 — — 48,764 
Amortization for capitalized cloud computing costs95 176 — — — 271 
Other purchase accounting adjustments— — — 6,099 — 6,099 
Remeasurement of deferred compensation plan liabilities46 — — — — 46 
Adjusted operating income (loss)$(118,430)$185,821 $67,209 $— $(1,045)$133,555 
Other information:
Capital expenditures

$732,891 $3,673 $23,309 $— $— $759,873 
Year Ended June 30, 2021
EntertainmentMSG NetworksTao Group HospitalityPurchase accounting adjustmentsInter-segment eliminationsTotal
Revenues$82,281 $647,510 $100,166 $— $(15,744)$814,213 
Direct operating expenses103,089 262,859 66,591 3,334 (1,090)434,783 
Selling, general and administrative expenses
268,705 115,339 54,034 — (13,723)424,355 
Depreciation and amortization
80,142 7,335 8,955 25,567 — 121,999 
Restructuring charges21,299 — — — — 21,299 
Operating income (loss)
(390,954)261,977 (29,414)(28,901)(931)(188,223)
Loss in equity method investments(6,858)
Interest income
3,222 
Interest expense
(20,423)
Other income, net (a)
51,488 
Loss from operations before income taxes$(160,794)
Reconciliation of operating income (loss) to adjusted operating income (loss):
Operating income (loss)
$(390,954)$261,977 $(29,414)$(28,901)$(931)$(188,223)
Add back:
Non-cash portion of arena license fees from MSG Sports(13,026)— — — — (13,026)
Share-based compensation expense
47,633 17,667 5,284 — — 70,584 
Depreciation and amortization
80,142 7,335 8,955 25,567 — 121,999 
Restructuring charges21,299 — — — — 21,299 
Merger and acquisition related costs16,080 4,502 3,638 — — 24,220 
Other purchase accounting adjustments
— — — 3,334 — 3,334 
Adjusted operating income (loss)$(238,826)$291,481 $(11,537)$— $(931)$40,187 
Other information:
Capital expenditures

$448,962 $3,853 $3,192 $— $— $456,007 
Year Ended June 30, 2020
EntertainmentMSG NetworksTao Group HospitalityPurchase accounting adjustmentsInter-segment eliminationsTotal
Revenues$585,208 $685,797 $180,201 $— $(15,188)$1,436,018 
Direct operating expenses388,643 282,837 116,638 4,361 (1,980)$790,499 
Selling, general and administrative expenses
282,043 100,829 63,049 6 (12,716)$433,211 
Depreciation and amortization
84,289 7,163 8,156 12,454 — $112,062 
Impairment for intangibles, long-lived assets, and goodwill— — 94,946 10,871 — $105,817 
Gain on disposal of assets held for sale(240,783)— — — — $(240,783)
Operating income (loss)
71,016 294,968 (102,588)(27,692)(492)235,212 
Loss in equity method investments(4,433)
Interest income
22,227 
Interest expense
(36,564)
Other income, net (a)

35,061 
Income from operations before income taxes$251,503 
Reconciliation of operating income (loss) to adjusted operating income (loss):
Operating income (loss)
$71,016 $294,968 $(102,588)$(27,692)$(492)$235,212 
Add back:
Share-based compensation expense
41,227 19,235 963 — — 61,425 
Depreciation and amortization84,289 7,163 8,156 12,454 — 112,062 
Impairment for intangibles, long-lived assets, and goodwill— — 94,946 10,871 — 105,817 
Gain on disposal of assets held for sale(240,783)— — — — (240,783)
Other purchase accounting adjustments— — — 4,367 — 4,367 
Adjusted operating income (loss)$(44,251)$321,366 $1,477 $— $(492)$278,100 
Other information:
Capital expenditures

$448,944 $2,814 $3,482 $— $— $455,240 
_________________
(a)Other income (expense), net includes the following:
Years Ended June 30,
202220212020
Realized and unrealized gain (loss) on equity investments with readily determinable fair value, see Note 9 for further detail
$(49,842)$51,178 $37,628 
Non-service cost components of net periodic pension and postretirement benefit costs, see Note 16 for further detail
3 (1,090)(2,269)
Dividend income from equity investments
— — 722 
Debt financing costs— — (2,764)
Measurement alternative adjustments for equity investments without readily determinable fair value
— — (532)
Others, net, primarily reflects the impact of Tao Group Hospitality three-month lag elimination in Fiscal Year 2020391 1,400 2,276 
$(49,448)$51,488 $35,061 

Substantially all revenues and assets of the Company’s reportable segments are attributed to or located in the United States. A majority of the Company’s revenues and assets are concentrated in the New York City metropolitan area.