May 28, 2022

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Make Somone Happy

Madison Square Garden Entertainment Corp. Reports Fiscal 2022 Third Quarter Results

16 min read


Madison Square Garden Entertainment Corp. MSGE (“MSG Entertainment”) today reported financial results for the fiscal third quarter ended March 31, 2022. While the Company completed the acquisition of MSG Networks on July 9, 2021, MSG Networks’ results are included on a combined basis with the Company for all periods presented.

The fiscal 2022 third quarter reflected ongoing momentum in the Company’s live entertainment businesses. Despite the impact of the Omicron variant, which resulted in the postponement of a number of events in the quarter, the Company’s performance venues had a busy concert schedule, while the New York Knicks (“Knicks”) and New York Rangers (“Rangers”) continued their 2021-22 regular seasons at The Garden. Tao Group Hospitality also saw demand improve as the quarter progressed after the Omicron variant impacted its operating momentum early in the fiscal third quarter. Subsequent to the end of the quarter, MSG Networks concluded its full regular season telecast schedules for its five professional sports teams, and with the Rangers currently competing in the first round of the NHL playoffs, is now broadcasting comprehensive coverage of the postseason.

For the fiscal 2022 third quarter, the Company reported revenues of $460.1 million, an increase of $245.8 million as compared with the prior year quarter. In addition, the Company reported operating income of $2.0 million and adjusted operating income of $46.5 million for the fiscal 2022 third quarter, as compared to an operating loss of $38.7 million and adjusted operating income of $20.9 million in the prior year quarter.(1)

Executive Chairman and CEO James L. Dolan said, “We are pleased with the positive momentum we are seeing across our business and are confident that our Company is well positioned to capitalize on the strong demand for live experiences. At the same time, we continue to prepare for the opening of MSG Sphere in Las Vegas in the second half of calendar 2023, which we believe will set the stage for long-term value creation for our shareholders.”

Segment Results for the Three and Nine Months Ended March 31, 2022 and 2021:

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31,

 

Change

 

March 31,

 

Change

$ millions

 

 

2022

 

 

 

2021

 

 

$

 

%

 

 

2022

 

 

 

2021

 

 

$

 

%

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Entertainment

 

$

194.6

 

 

$

31.0

 

 

$

163.6

 

 

NM

 

$

476.4

 

 

$

51.2

 

 

$

425.3

 

 

NM

MSG Networks

 

 

167.6

 

 

 

177.9

 

 

 

(10.3

)

 

(6)%

 

 

469.0

 

 

 

481.5

 

 

 

(12.4

)

 

(3)%

Tao Group Hospitality

 

 

108.6

 

 

 

12.8

 

 

 

95.8

 

 

NM

 

 

345.1

 

 

 

30.5

 

 

 

314.6

 

 

NM

Other(2)

 

 

(10.6

)

 

 

(7.3

)

 

 

(3.3

)

 

(46)%

 

 

(19.5

)

 

 

(9.5

)

 

 

(10.0

)

 

(105)%

Total Revenues

 

$

460.1

 

 

$

214.3

 

 

$

245.8

 

 

115%

 

$

1,271.1

 

 

$

553.6

 

 

$

717.5

 

 

130%

Operating Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Entertainment

 

$

(43.2

)

 

$

(80.1

)

 

$

36.8

 

 

46%

 

$

(168.2

)

 

$

(287.8

)

 

$

119.6

 

 

42%

MSG Networks

 

 

45.9

 

 

 

69.9

 

 

 

(23.9

)

 

(34)%

 

 

104.3

 

 

 

203.5

 

 

 

(99.2

)

 

(49)%

Tao Group Hospitality

 

 

3.0

 

 

 

(9.8

)

 

 

12.8

 

 

NM

 

 

29.8

 

 

 

(32.3

)

 

 

62.1

 

 

NM

Other(2)

 

 

(3.7

)

 

 

(18.7

)

 

 

15.1

 

 

80%

 

 

(11.9

)

 

 

(27.7

)

 

 

15.8

 

 

57%

Total Operating Income (Loss)

 

$

2.0

 

 

$

(38.7

)

 

$

40.8

 

 

NM

 

$

(45.9

)

 

$

(144.2

)

 

$

98.3

 

 

68%

Adjusted Operating Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Entertainment

 

$

(10.7

)

 

$

(50.5

)

 

$

39.8

 

 

79%

 

$

(67.1

)

 

$

(163.8

)

 

$

96.7

 

 

59%

MSG Networks

 

 

50.8

 

 

 

76.3

 

 

 

(25.5

)

 

(33)%

 

 

150.5

 

 

 

224.5

 

 

 

(74.0

)

 

(33)%

Tao Group Hospitality

 

 

6.5

 

 

 

(4.6

)

 

 

11.2

 

 

NM

 

 

50.2

 

 

 

(22.2

)

 

 

72.4

 

 

NM

Other(2)

 

 

(0.2

)

 

 

(0.3

)

 

 

0.1

 

 

30%

 

 

(0.7

)

 

 

(0.8

)

 

 

0.1

 

 

10%

Total Adjusted Operating Income

 

$

46.5

 

 

$

20.9

 

 

$

25.6

 

 

122%

 

$

132.8

 

 

$

37.7

 

 

$

95.2

 

 

NM

Note: Does not foot due to rounding
 

(1)

  See page 4 of this earnings release for the definition of adjusted operating income (loss) included in the discussion of non-GAAP financial measures.
 

(2)

  Includes inter-segment eliminations and, for operating income (loss), purchase accounting adjustments.

Entertainment

For the fiscal 2022 third quarter, the Entertainment segment generated revenues of $194.6 million, an increase of $163.6 million as compared with the prior year period. Revenues related to the Company’s arena license agreements with Madison Square Garden Sports Corp. (“MSG Sports”) increased $69.3 million ($18.2 million of which was due to higher arena license fees) due to the Knicks and Rangers playing a combined 38 regular season home games at The Garden without any capacity restrictions in the current year period as compared to the same number of home games with certain capacity restrictions in the prior year period. In addition to the impact from the Knicks and Rangers home games, event-related revenues increased $63.4 million, suite license fee revenues increased $14.7 million and venue-related sponsorship and signage revenues increased $7.8 million, all primarily due to the return of live events at the Company’s performance venues during the current year quarter, as compared to no live events held in the prior year period as a result of the COVID-19 pandemic.

Fiscal 2022 third quarter direct operating expenses of $110.7 million increased $86.0 million, as compared with the prior year quarter. Direct operating expenses associated with revenue or profit sharing under the arena license agreements with MSG Sports increased $36.9 million as a result of the elimination of capacity restrictions that were in place during the prior year period. In addition to the impact from the Knicks and Rangers home games, event-related expenses increased $34.0 million primarily due to the return of live events at the Company’s performance venues during the current year quarter. Direct operating expenses associated with the arena license agreements and venue operating costs also increased $7.6 million and $7.6 million, respectively.

Fiscal 2022 third quarter selling, general and administrative expenses of $94.6 million increased $27.3 million, as compared with the prior year quarter. This increase primarily reflected higher employee compensation and related benefits of $30.6 million (including the impact of severance-related costs attributable to separation agreements in the current year period), and higher professional fees of $2.1 million, inclusive of costs for MSG Sphere development, partially offset by lower expenses related to the Company’s acquisition of MSG Networks of $9.6 million.

Fiscal 2022 third quarter operating loss improved by $36.8 million to a loss of $43.2 million and adjusted operating loss improved by $39.8 million to a loss of $10.7 million, both as compared with the prior year quarter. The improvements in operating loss and adjusted operating loss were primarily due to the increase in revenues, offset by higher direct operating expenses and selling, general and administrative expenses. The improvement in operating loss was also partially offset by the impact of restructuring charges in the current year period.

MSG Networks

For the fiscal 2022 third quarter, the MSG Networks segment generated total revenues of $167.6 million, a decrease of $10.3 million as compared with the prior year period. Affiliation fee revenue decreased $20.6 million, primarily due to the impact of the non-renewal of MSG Networks’ carriage agreement with Comcast as of October 1, 2021 and a decrease in subscribers of approximately 7% (excluding the impact of the non-renewal with Comcast). These decreases were partially offset by the absence of net unfavorable affiliate adjustments of approximately $5.8 million recorded in the prior year quarter and the impact of higher affiliation rates.

Fiscal 2022 third quarter advertising revenue increased $9.9 million, as compared with the prior year period, primarily reflecting the impact of higher per-game advertising sales from the telecast of live professional sports programming and, to a lesser extent, an increase in advertising sales related to the Company’s non-ratings based advertising initiatives. These increases were partially offset by the impact of fewer live professional sports telecasts as compared with the prior year period.

Fiscal 2022 third quarter direct operating expenses of $87.2 million increased $12.8 million, as compared with the prior year quarter, primarily due to higher rights fees expense of $9.9 million and, to a lesser extent, an increase in other programming and production-related costs of $2.8 million. The increase in rights fees expense was primarily due to the impact of lower media rights fees in the prior year period as a result of fewer NBA and NHL games made available for exclusive broadcast by MSG Networks during the NBA and NHL’s shortened 2020-2021 regular seasons and annual contractual rate increases. These increases were partially offset by the impact of the compressed timing of the shortened 2020-21 NBA and NHL regular seasons.

Fiscal 2022 third quarter selling, general and administrative expenses of $32.2 million increased $0.5 million, as compared with the prior year quarter. The increase primarily reflects higher advertising sales commissions of approximately $3.0 million, which are eliminated in consolidation, offset by lower employee compensation and related benefits of approximately $2.3 million, as well as other net decreases.

Fiscal 2022 third quarter operating income of $45.9 million decreased $23.9 million and adjusted operating income of $50.8 million decreased $25.5 million, both as compared with the prior year quarter. The decreases in operating income and adjusted operating income were primarily due to the increase in direct operating expenses and the decrease in revenues.

Tao Group Hospitality

For the fiscal 2022 third quarter, the Tao Group Hospitality segment generated revenues of $108.6 million as compared with $12.8 million in the prior year period. Tao Group Hospitality acquired Hakkasan Group on April 27, 2021 and, as a result, revenues in the current year quarter reflect $47.2 million from Hakkasan Group. The portfolio of venues operated by Tao Group Hospitality prior to the acquisition of Hakkasan Group (which the Company refers to as the “legacy venues”) generated $61.4 million in revenues in the current year quarter as compared with $12.8 million in the prior year period, which primarily reflects the easing of government-mandated capacity restrictions, with Tao Group Hospitality now operating without capacity restrictions in domestic and key international markets.

Fiscal 2022 third quarter direct operating expenses of $63.8 million increased $53.3 million, as compared with the prior year quarter. The current year quarter included $25.4 million in direct operating expenses from Hakkasan Group. In addition, employee compensation and related benefits at legacy venues increased $12.6 million, primarily reflecting a staffing increase following the easing of government-mandated capacity restrictions, while the cost of food, beverage and venue entertainment at legacy venues increased $11.3 million. Rent expense increased $2.7 million, primarily due to rent concessions in the prior year period resulting from the COVID-19 pandemic.

Fiscal 2022 third quarter selling, general and administrative expenses of $40.4 million increased $29.4 million as compared with the prior year quarter. This primarily reflects $14.3 million in selling, general and administrative expenses from Hakkasan Group; a $6.2 million increase in employee compensation and related benefits; a $5.6 million increase in restaurant expenses, as well as supplies, utilities, general liability insurance, pre-opening expenses and repairs and maintenance; and a $2.6 million increase in marketing; partially offset by a $2.3 million decrease in professional fees primarily related to the acquisition of Hakkasan Group.

Fiscal 2022 third quarter operating income increased by $12.8 million to $3.0 million while adjusted operating income increased by $11.2 million to $6.5 million, both as compared with the prior year quarter. The increases in operating income and adjusted operating income were primarily due to the increase in revenues, partially offset by the increase in direct operating expenses and, to a lesser extent, the increase in selling, general and administrative expenses.

About Madison Square Garden Entertainment Corp.

Madison Square Garden Entertainment Corp. (MSG Entertainment) is a leader in live entertainment. The Company presents or hosts a broad array of events in its diverse collection of venues: New York’s Madison Square Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall and Beacon Theatre; and The Chicago Theatre. MSG Entertainment is also building a new state-of-the-art venue in Las Vegas, MSG Sphere at The Venetian. In addition, the Company features the original production – the Christmas Spectacular Starring the Radio City Rockettes – and through Boston Calling Events, produces the Boston Calling Music Festival. The Company’s two regional sports and entertainment networks, MSG Network and MSG+, deliver a wide range of live sports content and other programming. Also under the MSG Entertainment umbrella is Tao Group Hospitality, with entertainment dining and nightlife brands including: Tao, Marquee, Lavo, Beauty & Essex, Cathédrale, Hakkasan and Omnia. More information is available at www.msgentertainment.com.

Non-GAAP Financial Measures

We define adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) before (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 other intangible assets, (iii) amortization for capitalized cloud computing arrangement costs, (iv) share-based compensation expense or benefit, (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, and (viii) the impact of purchase accounting adjustments related to business acquisitions. We believe that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the various operating units of our business without regard to the settlement of an obligation that is not expected to be made in cash. We believe 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. We eliminate 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.

We believe adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of our 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 our performance. Internally, we use revenues and adjusted operating income (loss) as the most important indicators of our business performance, and evaluate 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 U.S. generally accepted accounting principles (“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. For a reconciliation of operating income (loss) to adjusted operating income (loss), please see page 6 of this release.

Forward-Looking Statements

This press release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results, developments and events may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the Company and its business, operations, financial condition and the industries in which it operates, the impact of the COVID-19 pandemic and the factors described in the Company’s filings with the Securities and Exchange Commission, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein. The Company disclaims any obligation to update any forward-looking statements contained herein.

Conference Call Information:

The conference call will be Webcast live today at 10:00 a.m. ET at investor.msgentertainment.com

Conference call dial-in number is 833-420-0364 / Conference ID Number 4864015

Conference call replay number is 855-859-2056 / Conference ID Number 4864015 until May 16, 2022

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31,

 

March 31,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues

 

$

460,127

 

 

$

214,318

 

 

$

1,271,076

 

 

$

553,616

 

Direct operating expenses

 

 

262,476

 

 

 

110,022

 

 

 

724,495

 

 

 

301,750

 

Selling, general and administrative expenses

 

 

157,598

 

 

 

103,425

 

 

 

494,714

 

 

 

281,100

 

Depreciation and amortization

 

 

28,639

 

 

 

39,611

 

 

 

88,602

 

 

 

93,698

 

Impairment and other (gains) losses, net

 

 

(5,319

)

 

 

 

 

 

(5,480

)

 

 

 

Restructuring charges

 

 

14,690

 

 

 

 

 

 

14,690

 

 

 

21,299

 

Operating income (loss)

 

 

2,043

 

 

 

(38,740

)

 

 

(45,945

)

 

 

(144,231

)

Other income (expense):

 

 

 

 

 

 

 

 

Loss in equity method investments

 

 

(1,528

)

 

 

(2,314

)

 

 

(4,509

)

 

 

(5,578

)

Interest income

 

 

774

 

 

 

792

 

 

 

2,322

 

 

 

2,401

 

Interest expense

 

 

(5,831

)

 

 

(6,503

)

 

 

(23,246

)

 

 

(17,038

)

Miscellaneous income (expense), net

 

 

(8,449

)

 

 

27,483

 

 

 

(28,096

)

 

 

53,932

 

Loss from operations before income taxes

 

 

(12,991

)

 

 

(19,282

)

 

 

(99,474

)

 

 

(110,514

)

Income tax benefit (expense)

 

 

(6,315

)

 

 

(6,556

)

 

 

8,532

 

 

 

(15,715

)

Net loss

 

 

(19,306

)

 

 

(25,838

)

 

 

(90,942

)

 

 

(126,229

)

Less: Net income (loss) attributable to redeemable noncontrolling interests

 

 

(442

)

 

 

(6,860

)

 

 

4,412

 

 

 

(14,091

)

Less: Net loss attributable to nonredeemable noncontrolling interests

 

 

(1,373

)

 

 

(718

)

 

 

(902

)

 

 

(2,250

)

Net loss attributable to Madison Square Garden Entertainment Corp.’s stockholders

 

$

(17,491

)

 

$

(18,260

)

 

$

(94,452

)

 

$

(109,888

)

Basic and diluted loss per common share attributable to Madison Square Garden Entertainment Corp.’s stockholders

 

$

(0.51

)

 

$

(0.79

)

 

$

(2.76

)

 

$

(3.48

)

Basic and diluted weighted-average number of common shares outstanding

 

 

34,320

 

 

 

34,060

 

 

 

34,230

 

 

 

34,083

 

_________________
 

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.

ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS) TO

ADJUSTED OPERATING INCOME (LOSS)

(Unaudited)

The following is a description of the adjustments to operating income (loss) in arriving at adjusted operating income (loss) as described in this earnings release:

  • Non-cash portion of arena license fees from MSG Sports. This adjustment removes the impact of non-cash straight-line leasing revenue associated with the arena license agreements with MSG Sports.
  • Share-based compensation. This adjustment eliminates the compensation expense relating to restricted stock units and stock options granted under the MSG Entertainment Employee Stock Plan, MSG Sports Employee Stock Plan, MSG Networks Employee Stock Plan, as amended and assumed by MSG Entertainment, MSG Entertainment Non-Employee Director Plan and MSG Networks Non-Employee Director Plan in all periods.
  • Depreciation and amortization. This adjustment eliminates depreciation and amortization of property and equipment and intangible assets in all periods.
  • Amortization for capitalized cloud computing arrangement costs. This adjustment eliminates amortization of capitalized cloud computing arrangement costs.
  • Merger and acquisition related costs. This adjustment eliminates costs related to mergers and acquisitions, including litigation expenses, in all periods.
  • Impairment and other (gains) loss, net. This adjustment eliminates non-cash impairment charges and the impact of gains or losses from the disposition of assets or businesses in all periods.
  • Restructuring charges. This adjustment eliminates costs related to termination benefits provided to employees as part of the Company’s full-time workforce reductions.
  • Purchase accounting adjustments. This adjustment eliminates the impact of various purchase accounting adjustments related to business acquisitions, primarily favorable / unfavorable lease agreements of the acquiree.

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31,

 

March 31,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Operating income (loss)

 

$

2,043

 

 

$

(38,740

)

 

$

(45,945

)

 

$

(144,231

)

Non-cash portion of arena license fees from MSG Sports

 

 

(12,073

)

 

 

(7,564

)

 

 

(23,962

)

 

 

(8,740

)

Share-based compensation

 

 

14,033

 

 

 

11,437

 

 

 

57,732

 

 

 

57,421

 

Depreciation and amortization(1)

 

 

28,639

 

 

 

39,611

 

 

 

88,602

 

 

 

93,698

 

Amortization for capitalized cloud computing costs

 

 

81

 

 

 

 

 

 

176

 

 

 

 

Merger and acquisition related costs

 

 

2,760

 

 

 

15,269

 

 

 

42,283

 

 

 

15,481

 

Impairment and other (gains) losses, net

 

 

(5,319

)

 

 

 

 

 

(5,480

)

 

 

 

Restructuring charges

 

 

14,690

 

 

 

 

 

 

14,690

 

 

 

21,299

 

Other purchase accounting adjustments

 

 

1,622

 

 

 

887

 

 

 

4,745

 

 

 

2,735

 

Adjusted operating income

 

$

46,476

 

 

$

20,900

 

 

$

132,841

 

 

$

37,663

 

_________________
 

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.

(1)

Includes depreciation and amortization related to purchase accounting adjustments.

SEGMENT RESULTS

(Dollars in thousands)

(Unaudited)

 

BUSINESS SEGMENT RESULTS

 

 

 

Three Months Ended March 31, 2022

 

 

Entertainment

 

Networks

 

Tao Group

Hospitality

 

Other(2)

 

Total

Revenues

 

$

194,585

 

 

$

167,569

 

$

108,572

 

 

$

(10,599

)

 

$

460,127

 

Direct operating expenses

 

 

110,688

 

 

 

87,174

 

 

63,783

 

 

 

831

 

 

 

262,476

 

Selling, general and administrative expenses

 

 

94,603

 

 

 

32,237

 

 

40,376

 

 

 

(9,618

)

 

 

157,598

 

Depreciation and amortization

 

 

18,522

 

 

 

1,764

 

 

6,490

 

 

 

1,863

 

 

 

28,639

 

Impairment and other (gains) loss, net

 

 

(245

)

 

 

 

 

(5,074

)

 

 

 

 

 

(5,319

)

Restructuring charges

 

 

14,238

 

 

 

452

 

 

 

 

 

 

 

 

14,690

 

Operating income (loss)

 

$

(43,221

)

 

$

45,942

 

$

2,997

 

 

$

(3,675

)

 

$

2,043

 

Reconciliation to adjusted operating income (loss):

 

 

 

 

 

 

 

 

 

 

Non-cash portion of arena license fees from MSG Sports

 

 

(12,073

)

 

 

 

 

 

 

 

 

 

 

(12,073

)

Share-based compensation

 

 

10,399

 

 

 

1,758

 

 

1,876

 

 

 

 

 

 

14,033

 

Depreciation and amortization(1)

 

 

18,522

 

 

 

1,764

 

 

6,490

 

 

 

3,485

 

 

 

30,261

 

Amortization for capitalized cloud computing costs

 

 

38

 

 

 

43

 

 

 

 

 

 

 

 

81

 

Merger and acquisition related costs

 

 

1,647

 

 

 

866

 

 

247

 

 

 

 

 

 

2,760

 

Impairment and other (gains) losses, net

 

 

(245

)

 

 

 

 

(5,074

)

 

 

 

 

 

(5,319

)

Restructuring charges

 

 

14,238

 

 

 

452

 

 

 

 

 

 

 

 

14,690

 

Adjusted operating income (loss)

 

$

(10,695

)

 

$

50,825

 

$

6,536

 

 

$

(190

)

 

$

46,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2021

 

 

Entertainment

 

Networks

 

Tao Group

Hospitality

 

Other(2)

 

Total

Revenues

 

$

30,957

 

 

$

177,853

 

$

12,790

 

 

$

(7,282

)

 

$

214,318

 

Direct operating expenses

 

 

24,644

 

 

 

74,392

 

 

10,480

 

 

 

506

 

 

 

110,022

 

Selling, general and administrative expenses

 

 

67,286

 

 

 

31,743

 

 

11,025

 

 

 

(6,629

)

 

 

103,425

 

Depreciation and amortization

 

 

19,081

 

 

 

1,833

 

 

1,130

 

 

 

17,567

 

 

 

39,611

 

Operating income (loss)

 

$

(80,054

)

 

$

69,885

 

$

(9,845

)

 

$

(18,726

)

 

$

(38,740

)

Reconciliation to adjusted operating income (loss):

 

 

 

 

 

 

 

 

 

 

Non-cash portion of arena license fees from MSG Sports

 

 

(7,564

)

 

 

 

 

 

 

 

 

 

 

(7,564

)

Share-based compensation

 

 

6,799

 

 

 

3,324

 

 

1,314

 

 

 

 

 

 

11,437

 

Depreciation and amortization(1)

 

 

19,081

 

 

 

1,833

 

 

1,130

 

 

 

18,454

 

 

 

40,498

 

Merger and acquisition related costs

 

 

11,267

 

 

 

1,238

 

 

2,764

 

 

 

 

 

 

15,269

 

Adjusted operating income (loss)

 

$

(50,471

)

 

$

76,280

 

$

(4,637

)

 

$

(272

)

 

$

20,900

 

_________________
 

(1)

 

Depreciation and amortization includes other purchase accounting adjustments of $1,622 and $887 for the three months ended March 31, 2022 and 2021, respectively.

(2)

 

Includes inter-segment eliminations and, for operating income (loss), purchase accounting adjustments.

SEGMENT RESULTS (continued)

(Dollars in thousands)

(Unaudited)

 

 

 

Nine Months Ended March 31, 2022

 

 

Entertainment

 

MSG Networks

 

Tao Group Hospitality

 

Other(2)

 

Total

Revenues

 

$

476,434

 

 

$

469,023

 

$

345,122

 

 

$

(19,503

)

 

$

1,271,076

 

Direct operating expenses

 

 

294,333

 

 

 

241,521

 

 

185,756

 

 

 

2,885

 

 

 

724,495

 

Selling, general and administrative expenses

 

 

279,081

 

 

 

117,404

 

 

115,155

 

 

 

(16,926

)

 

 

494,714

 

Depreciation and amortization

 

 

57,202

 

 

 

5,317

 

 

19,111

 

 

 

6,972

 

 

 

88,602

 

Impairment and other (gains) loss, net

 

 

(245

)

 

 

 

 

(4,699

)

 

 

(536

)

 

 

(5,480

)

Restructuring charges

 

 

14,238

 

 

 

452

 

 

 

 

 

 

 

 

14,690

 

Operating income (loss)

 

$

(168,175

)

 

$

104,329

 

$

29,799

 

 

$

(11,898

)

 

$

(45,945

)

Reconciliation to adjusted operating income (loss):

 

 

 

 

 

 

 

 

 

 

Non-cash portion of arena license fees from MSG Sports

 

 

(23,962

)

 

 

 

 

 

 

 

 

 

 

(23,962

)

Share-based compensation

 

 

36,697

 

 

 

15,290

 

 

5,745

 

 

 

 

 

 

57,732

 

Depreciation and amortization(1)

 

 

57,202

 

 

 

5,317

 

 

19,111

 

 

 

11,717

 

 

 

93,347

 

Amortization for capitalized cloud computing costs

 

 

45

 

 

 

131

 

 

 

 

 

 

 

 

176

 

Merger and acquisition related costs

 

 

17,095

 

 

 

24,941

 

 

247

 

 

 

 

 

 

42,283

 

Impairment and other (gains) losses, net

 

 

(245

)

 

 

 

 

(4,699

)

 

 

(536

)

 

 

(5,480

)

Restructuring charges

 

 

14,238

 

 

 

452

 

 

 

 

 

 

 

 

14,690

 

Adjusted operating income (loss)

 

$

(67,105

)

 

$

150,460

 

$

50,203

 

 

$

(717

)

 

$

132,841

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended March 31, 2021

 

 

Entertainment

 

MSG Networks

 

Tao Group Hospitality

 

Other(2)

 

Total

Revenues

 

$

51,181

 

 

$

481,455

 

$

30,502

 

 

$

(9,522

)

 

$

553,616

 

Direct operating expenses

 

 

71,668

 

 

 

196,497

 

 

31,288

 

 

 

2,297

 

 

 

301,750

 

Selling, general and administrative expenses

 

 

185,666

 

 

 

75,962

 

 

27,759

 

 

 

(8,287

)

 

 

281,100

 

Depreciation and amortization

 

 

60,341

 

 

 

5,463

 

 

3,739

 

 

 

24,155

 

 

 

93,698

 

Restructuring charges

 

 

21,299

 

 

 

 

 

 

 

 

 

 

 

21,299

 

Operating income (loss)

 

$

(287,793

)

 

$

203,533

 

$

(32,284

)

 

$

(27,687

)

 

$

(144,231

)

Reconciliation to adjusted operating income (loss):

 

 

 

 

 

 

 

 

 

 

Non-cash portion of arena license fees from MSG Sports

 

 

(8,740

)

 

 

 

 

 

 

 

 

 

 

(8,740

)

Share-based compensation

 

 

39,606

 

 

 

14,217

 

 

3,598

 

 

 

 

 

 

57,421

 

Depreciation and amortization(1)

 

 

60,341

 

 

 

5,463

 

 

3,739

 

 

 

26,890

 

 

 

96,433

 

Merger and acquisition related costs

 

 

11,479

 

 

 

1,238

 

 

2,764

 

 

 

 

 

 

15,481

 

Restructuring charges

 

 

21,299

 

 

 

 

 

 

 

 

 

 

 

21,299

 

Adjusted operating income (loss)

 

$

(163,808

)

 

$

224,451

 

$

(22,183

)

 

$

(797

)

 

$

37,663

 

_________________

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.

(1)

Depreciation and amortization includes other purchase accounting adjustments of $4,745 and $2,735 for the nine months ended March 31, 2022 and 2021, respectively.

(2)

Includes inter-segment eliminations and, for operating income (loss), purchase accounting adjustments.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

     

 

 

March 31,

2022

 

June 30,

2021

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

999,063

 

 

$

1,516,992

 

Restricted cash

 

 

21,690

 

 

 

22,984

 

Accounts receivable, net

 

 

250,853

 

 

 

184,613

 

Net related party receivables

 

 

58,835

 

 

 

31,916

 

Prepaid income taxes

 

 

3,705

 

 

 

12,772

 

Prepaid expenses

 

 

77,257

 

 

 

67,445

 

Other current assets

 

 

46,771

 

 

 

36,014

 

Total current assets

 

 

1,458,174

 

 

 

1,872,736

 

Investments in nonconsolidated affiliates

 

 

44,697

 

 

 

49,221

 

Property and equipment, net

 

 

2,707,193

 

 

 

2,156,292

 

Right-of-use lease assets

 

 

462,479

 

 

 

280,579

 

Amortizable intangible assets, net

 

 

177,069

 

 

 

198,274

 

Indefinite-lived intangible assets

 

 

63,801

 

 

 

63,801

 

Goodwill

 

 

500,181

 

 

 

502,195

 

Other assets

 

 

166,825

 

 

 

166,781

 

Total assets

 

$

5,580,419

 

 

$

5,289,879

 
_________________
 

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.

CONSOLIDATED BALANCE SHEETS (continued)

(In thousands, except per share data)

(Unaudited)

 

 

 

March 31,

2022

 

June 30,

2021

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

 

 

 

 

Current Liabilities:

 

 

 

 

Accounts payable

 

$

40,380

 

 

$

26,644

 

Net related party payables, current

 

 

76,075

 

 

 

23,173

 

Current portion of long-term debt, net of deferred financing costs

 

 

65,989

 

 

 

53,973

 

Income taxes payable

 

 

 

 

 

2,527

 

Accrued liabilities:

 

 

 

 

Employee related costs

 

 

95,185

 

 

 

91,853

 

Other accrued liabilities

 

 

310,030

 

 

 

210,749

 

Operating lease liabilities, current

 

 

67,012

 

 

 

73,423

 

Collections due to promoters

 

 

46,744

 

 

 

37,877

 

Deferred revenue

 

 

263,494

 

 

 

209,651

 

Total current liabilities

 

 

964,909

 

 

 

729,870

 

Long-term debt, net of deferred financing costs

 

 

1,584,072

 

 

 

1,650,628

 

Operating lease liabilities, noncurrent

 

 

440,319

 

 

 

233,556

 

Defined benefit and other postretirement obligations

 

 

51,424

 

 

 

54,179

 

Other employee related costs

 

 

18,059

 

 

 

21,193

 

Collections due to promoters, noncurrent

 

 

 

 

 

6,625

 

Deferred tax liabilities, net

 

 

185,481

 

 

 

200,325

 

Other liabilities

 

 

76,755

 

 

 

75,263

 

Total liabilities

 

 

3,321,019

 

 

 

2,971,639

 

Redeemable noncontrolling interests

 

 

137,778

 

 

 

137,834

 

Madison Square Garden Entertainment Corp. Stockholders’ Equity:

 

 

 

 

Class A Common stock, par value $0.01, 120,000 shares authorized; 27,341 and 27,093 shares outstanding as of March 31, 2022 and June 30, 2021, respectively

 

 

273

 

 

 

271

 

Class B Common stock, par value $0.01, 30,000 shares authorized; 6,867 shares outstanding as of March 31, 2022 and June 30, 2021

 

 

69

 

 

 

69

 

Preferred stock, par value $0.01, 15,000 shares authorized; none outstanding as of March 31, 2022 and June 30, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

2,334,271

 

 

 

2,294,775

 

Accumulated deficit

 

 

(190,793

)

 

 

(96,341

)

Accumulated other comprehensive loss

 

 

(37,010

)

 

 

(30,272

)

Total Madison Square Garden Entertainment Corp. stockholders’ equity

 

 

2,106,810

 

 

 

2,168,502

 

Nonredeemable noncontrolling interests

 

 

14,812

 

 

 

11,904

 

Total equity

 

 

2,121,622

 

 

 

2,180,406

 

Total liabilities, redeemable noncontrolling interests and equity

 

$

5,580,419

 

 

$

5,289,879

_________________
 

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.

SELECTED CASH FLOW INFORMATION

(Dollars in thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

 

March 31,

 

 

 

2022

 

 

 

2021

 

Net cash provided by (used in) operating activities

 

$

106,201

 

 

$

(114,116

)

Net cash (used in) provided by investing activities

 

 

(547,926

)

 

 

21,834

Net cash (used in) provided by financing activities

 

 

(77,520

)

 

 

589,598

 

Effect of exchange rates on cash, cash equivalents and restricted cash

 

 

22

 

 

 

7,918

 

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

(519,223

)

 

 

505,234

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

1,539,976

 

 

 

1,121,141

 

Cash, cash equivalents and restricted cash at end of period

 

$

1,020,753

 

 

$

1,626,375

 

_________________
 

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.



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