株探米国株
日本語 英語
エドガーで原本を確認する
NY false 0001952073 0001952073 2023-05-18 2023-05-18

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 18, 2023

 

 

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-41627   92-0318813
(State or other jurisdiction
of incorporation)
 

(Commission

File Number)

  (IRS Employer
Identification No.)

 

2 Penn Plaza, New York, New York   10121
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (212) 465-6000

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading
Symbol(s)

 

Name of each exchange

on which registered

Class A Common Stock   MSGE   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒ On May 18, 2023, Madison Square Garden Entertainment Corp.

 

 

 


Item 2.02

Results of Operations and Financial Condition.

(the “Company”) announced its financial results for its third quarter ended March 31, 2023. A copy of the press release containing the announcement is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, regardless of any general incorporation language in such filings.

 

Item 7.01

Regulation FD Disclosure.

Investor Presentation

On May 18, 2023, the Company also issued an investor presentation. The investor presentation is included as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

The information furnished pursuant to this Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings.

Forward-Looking Statements

This document 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 or events may differ materially from those in the forward-looking statements as a result of various factors, including financial community perceptions of the Company and its business, operations, financial condition and the industries in which it operates 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, except as may be required by law or applicable regulations.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)    Exhibits
99.1    Press Release dated May 18, 2023.
99.2    Investor Presentation dated May 18, 2023
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

(Company)

By:  

/s/ David F. Byrnes

  Name:   David F. Byrnes
  Title:  

Executive Vice President

and Chief Financial Officer

Dated: May 18, 2023

EX-99.1 2 d471010dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

MADISON SQUARE GARDEN ENTERTAINMENT CORP. REPORTS

FISCAL 2023 THIRD QUARTER RESULTS

Spin-off Completed in April Creating Pure-Play Live Entertainment Company

NEW YORK, N.Y., May 18, 2023 - Madison Square Garden Entertainment Corp. (NYSE: MSGE) (“MSG Entertainment”) today reported financial results for the fiscal third quarter ended March 31, 2023. This marks the first quarter that MSG Entertainment is reporting financial results as a standalone company, following its spin-off from Sphere Entertainment Co. (NYSE: SPHR) (“Sphere Entertainment”), which was completed on April 20, 2023.

The Company continues to benefit from robust consumer and corporate demand for live experiences and is on track to host nearly 900 events and more than 5 million guests at its venues in fiscal 2023. This includes a successful run of the Christmas Spectacular production, for which over 930,000 tickets were sold in its first complete run since the 2019 holiday season. The majority of concerts held at the Company’s venues continue to sell out, while in-venue per-capita spending continues to exceed results for the prior year. In addition, suite and sponsorship revenues are on track to exceed pre-pandemic levels as a result of strong new sales and renewal activity coming out of the pandemic.

The Company’s fiscal 2023 and 2022 results are presented in accordance with accounting requirements for the preparation of carve-out financial statements, reflecting the results of the traditional live entertainment businesses previously owned and operated by Sphere Entertainment through its Entertainment business segment. These results do not include all of the expenses that would have been incurred by MSG Entertainment had it been a standalone company for the periods presented.

For the fiscal 2023 third quarter, the Company reported revenues of $201.2 million, an increase of $7.2 million, or 4%, as compared to the prior year quarter. Excluding the impact of the termination of the advertising sales representation agreement with MSG Networks, total revenues would have increased 9% as compared to the prior year period. In addition, the Company reported operating income of $24.7 million, an increase of $8.8 million, or 56%, and adjusted operating income of $38.0 million, an increase of $4.3 million, or 13%, both as compared to the prior year period.(1)

Executive Chairman and CEO James L. Dolan said, “With the completion of our spin-off, MSG Entertainment begins its new chapter as a standalone, pure-play live entertainment company. We remain confident in the strength of our assets and brands and believe that we are well-positioned to create long-term value for shareholders.”

Results for the Three and Nine Months Ended March 31, 2023 and 2022:

 

     Three Months Ended     Nine Months Ended  
     March 31,      Change     March 31,     Change  
$ millions    2023      2022      $      %     2023      2022     $      %  

Revenues

   $ 201.2      $ 194.0      $ 7.2        4   $ 703.6      $ 475.2     $ 228.4        48

Operating Income (Loss)

   $ 24.7      $ 15.8      $ 8.8        56   $ 126.8      $ (0.1   $ 126.9        NM  

Adjusted Operating Income

   $ 38.0      $ 33.7      $ 4.3        13   $ 175.8      $ 60.1     $ 115.7        192

Note: Amounts may not foot due to rounding

 

(1)

See page 3 of this earnings release for the definition of adjusted operating income (loss) included in the discussion of non-GAAP financial measures.

 

1


Summary of Reported Results of Operations

For the fiscal 2023 third quarter, the Company generated revenues of $201.2 million, an increase of $7.2 million, or 4%, as compared to the prior year period. Revenues related to the Company’s arena license agreements with the New York Knicks (“Knicks”) and New York Rangers (“Rangers”) increased $11.7 million. This included a $10.1 million increase in revenues subject to the sharing of economics with Madison Square Garden Sports Corp. (“MSG Sports”), primarily reflecting higher food, beverage and merchandise sales and higher suite revenues at Knicks and Rangers games. Revenues from the presentation of the Christmas Spectacular production increased $3.5 million, which reflected seven performances during the current year quarter as compared to no performances in the prior year quarter. The increase in revenues was partially offset by a decrease in advertising sales commissions of $9.6 million in the current year period due to the termination of MSG Networks’ advertising sales representation agreement. Excluding the impact of the termination of MSG Networks’ advertising sales representation agreement, total revenues for the fiscal 2023 third quarter would have increased 9% as compared to the prior year period.

Fiscal 2023 third quarter direct operating expenses of $115.1 million increased $5.2 million, or 5%, as compared to the prior year quarter. This was due to higher expenses associated with the sharing of economics with MSG Sports pursuant to the arena license agreements of $4.5 million and an increase in other direct operating expenses associated with the arena license agreements of $3.7 million, partially offset by other net cost decreases.

Fiscal 2023 third quarter selling, general and administrative expenses of $44.1 million decreased $2.9 million, or 6%, as compared with the prior year quarter. This decrease primarily reflects lower employee compensation and related benefits, partially offset by other net cost increases.

Fiscal 2023 third quarter operating income of $24.7 increased by $8.8 million, or 56%, and adjusted operating income of $38.0 million increased by $4.3 million, or 13%, both as compared to the prior year period. The increase in operating income was primarily due to the increase in revenues, lower selling, general and administrative expenses (including share-based compensation) and the impact of lower restructuring charges in the current year period, partially offset by higher direct operating expenses. The increase in adjusted operating income was primarily due to the increase in revenues and, to a lesser extent, lower selling, general and administrative expenses (excluding share-based compensation), partially offset by higher direct operating expenses.

Financial Guidance

As the Company nears the completion of the fiscal year, it is reaffirming its previously issued fiscal 2023 guidance for adjusted operating income, while refining its guidance for revenue and operating income. These fiscal 2023 projections reflect MSG Entertainment as if it had been a standalone, independent entity from the start of the fiscal year (July 1, 2022), including expenses that would have been incurred by the Company had it been a standalone company for the entire fiscal year. The Company now expects the following(2):

 

   

Revenues of $835 million to $845 million.

 

   

Operating income of $85 million to $95 million.

 

   

Adjusted operating income of $145 million to $155 million.

An updated version of the MSG Entertainment investor presentation, which was originally issued in February 2023, is now available at investor.msgentertainment.com.

About Madison Square Garden Entertainment Corp.

Madison Square Garden Entertainment Corp. (MSG Entertainment) is a leader in live entertainment, delivering unforgettable experiences while forging deep connections with diverse and passionate audiences. The Company’s portfolio includes a collection of world-renowned venues – New York’s Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall, and Beacon Theatre; and The Chicago Theatre – that showcase a broad array of sporting events, concerts, family shows, and special events for millions of guests annually. In addition, the Company features the original production, the Christmas Spectacular Starring the Radio City Rockettes, which has been a holiday tradition for 89 years. More information is available at www.msgentertainment.com.

 

(2)

Financial guidance for fiscal year 2023 reflects the impact of the termination of the advertising sales representation agreement with MSG Networks as if it had been terminated at the start of fiscal 2023, the estimated impact of post spin-off intercompany agreements with Sphere Entertainment Co. and a public company overhead structure. See the appendix for a reconciliation from operating income to adjusted operating income.

 

2


Non-GAAP Financial Measures

We define adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) excluding (i) 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) share-based compensation expense or benefit, (iv) restructuring charges or credits, (v) merger and acquisition-related costs, including litigation expenses, (vi) gains or losses on sales or dispositions of businesses and associated settlements, (vii) the impact of purchase accounting adjustments related to business acquisitions, (viii) gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan, and (ix) amortization for capitalized cloud computing arrangement costs. 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 believe that this adjustment is beneficial for other incremental reasons as well. This adjustment provides senior management, investors and analysts with important information regarding a long-term related party agreement with MSG Sports. In addition, this adjustment is included under the Company’s debt covenant compliance calculations and is a component of the performance measures used to evaluate, and compensate, senior management of the Company. 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 eliminate merger and acquisition-related costs, when applicable, 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 executive deferred compensation plan, provides investors with a clearer picture of the Company’s operating performance given that, in accordance with U.S. generally accepted accounting principles (“GAAP”), gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan are recognized in Operating (income) loss whereas gains and losses related to the remeasurement of the assets under the 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).

We believe adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of the Company on a combined basis. Adjusted operating income (loss) and similar measures with similar titles are common performance measures used by investors and analysts to analyze 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 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 or events may differ materially from those in the forward-looking statements as a result of various factors, including financial community perceptions of the Company and its business, operations, financial condition and the industries in which it operates 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.

 

3


# # #

Contacts:

Ari Danes, CFA

Senior Vice President, Investor Relations, Financial Communications & Treasury

Madison Square Garden Entertainment Corp.

(212) 465-6072

Justin Blaber

Vice President, Financial Communications

Madison Square Garden Entertainment Corp.

(212) 465-6109

Grace Kaminer

Senior Director, Investor Relations & Treasury

Madison Square Garden Entertainment Corp.

(212) 631-5076

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 888-660-6386 / Conference ID Number 8020251

Conference call replay number is 800-770-2030 / Conference ID Number 8020251 until May 25, 2023

 

4


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

 

     Three Months Ended
March 31,
    Nine Months Ended
March 31,
 
     2023     2022     2023     2022  

Revenues

   $ 201,229     $ 193,988     $ 703,561     $ 475,150  

Direct operating expenses

     (115,133     (109,962     (397,398     (292,198

Selling, general and administrative expenses

     (44,122     (47,027     (127,537     (128,725

Depreciation and amortization

     (14,798     (16,007     (46,369     (49,166

(Loss) gains, net on dispositions

     (51     —         4,361       —    

Restructuring charges

     (2,461     (5,171     (9,820     (5,171
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     24,664       15,821       126,798       (110

Interest income

     2,482       1,541       5,804       5,145  

Interest expense

     (13,423     (13,009     (38,055     (39,804

Other income (expense), net

     8,070       (8,495     6,784       (27,742
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations before income taxes

     21,793       (4,142     101,331       (62,511

Income tax expense

     (73     —         (804     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     21,720       (4,142     100,527       (62,511

Less: Net loss attributable to nonredeemable noncontrolling interest

     —         (212     (553     (579
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to MSG Entertainment’s stockholders

   $ 21,720     $ (3,930   $ 101,080     $ (61,932
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted earnings (loss) per common share attributable to the MSG Entertainment’s stockholders(1)

   $ 0.42     $ (0.08   $ 1.95     $ (1.20

 

(1)

On April 20, 2023, 51,768 common shares of MSG Entertainment were outstanding. This share amount is being utilized for the calculation of basic and diluted earnings (loss) per share for both the three and nine months ended March 31, 2023 and 2022 because the Company was not a standalone public company prior to the April 20, 2023 spin-off from Sphere Entertainment Co.

 

5


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

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 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.

 

   

Depreciation and amortization. This adjustment eliminates depreciation and amortization of property and equipment and intangible assets in all periods.

 

   

Share-based compensation. This adjustment eliminates the compensation expense relating to restricted stock units and stock options granted under the Sphere Entertainment Employee Stock Plan, MSG Sports Employee Stock Plan, and Sphere Entertainment Non-Employee Director Plan 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.

 

   

Gains (loss), net on dispositions. This adjustment eliminates non-cash impairment charges and the impact of gains or losses from the disposition of assets or businesses in all periods.

 

   

Amortization for capitalized cloud computing arrangement costs. This adjustment eliminates amortization of capitalized cloud computing arrangement costs.

 

   

Remeasurement of deferred compensation liabilities. This adjustment eliminates the impact of gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan.

 

     Three Months Ended      Nine Months Ended  
     March 31,      March 31,  
     2023      2022      2023      2022  

Operating income (loss)

     24,664        15,821        126,798        (110

Non-cash portion of arena license fees from MSG Sports(1)

     (12,149      (12,073      (25,078      (23,962

Depreciation and amortization

     14,798        16,007        46,369        49,166  

Share-based compensation

     8,014        8,789        21,980        29,868  

Restructuring charges

     2,461        5,171        9,820        5,171  

Loss (gains), net on dispositions

     51        —          (4,361      —    

Amortization for capitalized cloud computing arrangement costs

     65        12        169        12  

Remeasurement of deferred compensation plan liabilities

     126      $ —          132        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted operating income

   $ 38,030      $ 33,727      $ 175,829      $ 60,145  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

This adjustment represents the non-cash portion of operating lease revenue related to the Company’s Arena License Agreements with MSG Sports. Pursuant to GAAP, recognition of operating lease revenue is recorded on a straight-line basis over the term of the agreement based upon the value of total future payments under the arrangement. As a result, operating lease revenue is comprised of a contractual cash component plus or minus a non-cash component for each period presented. Operating income on a GAAP basis includes lease income of (i) $19,014 and $39,234 of revenue collected in cash for the three and nine months ended March 31, 2023, respectively, and $17,543 and $34,836 of revenue collected in cash for the three and nine months ended March 31, 2022, respectively, and (ii) a non-cash portion of $12,149 and $25,078 for the three and nine months ended March 31, 2023, respectively, and $12,073 and $23,962 for the three and nine months ended March 31, 2022, respectively.

 

6


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONDENSED COMBINED BALANCE SHEETS (Unaudited)

(in thousands)

 

     March 31,     June 30,  
     2023     2022  

ASSETS

    

Current Assets:

    

Cash, cash equivalents and restricted cash

   $ 122,981     $ 62,573  

Accounts receivable, net

     130,642       102,501  

Related party receivables, current

     80,463       96,938  

Prepaid expenses and other current assets

     74,289       79,441  
  

 

 

   

 

 

 

Total current assets

     408,375       341,453  

Non-Current Assets:

    

Property and equipment, net

     637,644       696,079  

Right-of-use lease assets

     248,366       271,154  

Goodwill

     69,041       69,041  

Intangible assets, net

     63,801       65,439  

Other non-current assets

     118,506       83,535  
  

 

 

   

 

 

 

Total assets

   $ 1,545,733     $ 1,526,701  
  

 

 

   

 

 

 

LIABILITIES AND DIVISIONAL EQUITY (DEFICIT)

    

Current Liabilities:

    

Accounts payable, accrued and other current liabilities

   $ 199,796     $ 221,961  

Related party payables, current

     42,620       72,683  

Current portion of long-term debt

     16,250       8,762  

Operating lease liabilities, current

     38,298       39,006  

Deferred revenue

     258,132       202,678  
  

 

 

   

 

 

 

Total current liabilities

     555,096       545,090  

Non-Current Liabilities:

    

Long-term debt, net of deferred financing costs

     643,311       654,912  

Operating lease liabilities, non-current

     229,501       254,114  

Deferred tax liabilities, net

     23,377       23,253  

Other non-current liabilities

     50,945       50,921  
  

 

 

   

 

 

 

Total liabilities

     1,502,230       1,528,290  
  

 

 

   

 

 

 

Commitments and contingencies

    

MSG Entertainment Divisional Equity (Deficit):

    

Sphere Entertainment investment

     77,365       33,265  

Accumulated other comprehensive loss

     (33,862     (34,740
  

 

 

   

 

 

 

Total MSG Entertainment divisional equity (deficit)

     43,503       (1,475

Nonredeemable noncontrolling interest

     —         (114
  

 

 

   

 

 

 

Total liabilities and divisional equity (deficit)

   $ 1,545,733     $ 1,526,701  
  

 

 

   

 

 

 

 

7


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

SELECTED CASH FLOW INFORMATION

(Dollars in thousands)

(Unaudited)

 

     Nine Months Ended  
     March 31,  
     2023     2022  

Net cash provided by operating activities

   $ 132,341     $ 60,338  

Net cash provided by (used in) investing activities

     13,261       (13,060

Net cash used in financing activities

     (85,194     (150,035
  

 

 

   

 

 

 

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

     60,408       (102,757

Cash, cash equivalents and restricted cash, beginning of period

     62,573       318,069  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, end of period

   $ 122,981     $ 215,312  
  

 

 

   

 

 

 

 

8


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

APPENDIX

FISCAL 2023 FINANCIAL GUIDANCE

ADJUSTMENTS TO RECONCILE OPERATING INCOME TO

ADJUSTED OPERATING INCOME

($ in millions)

 

     Fiscal Year 2023(1)

Operating income

   $85 - $95

Non-cash portion of arena license fees from MSG Sports

   (27)

Depreciation and amortization

   58

Share-based compensation

   22

Restructuring charges

   10

Gains, net on dispositions

   (4)

Amortization for capitalized cloud computing costs

   1
  

 

Adjusted operating income

   $145 - $155
  

 

 

(1)

Financial guidance for fiscal year 2023 reflects MSG Entertainment as if it had been a standalone, independent entity from the start of the fiscal year (July 1, 2022), including the impact of the termination of the advertising sales representation agreement with MSG Networks as if it had been terminated at the start of fiscal 2023, the estimated impact of post spin-off intercompany agreements with Sphere Entertainment Co. and a public company overhead structure.

 

9

EX-99.2 3 d471010dex992.htm EX-99.2 EX-99.2

Exhibit 99.2 MAY 2023


SAFE HARBOUR Madison Square Garden Entertainment Corp. (the Company ) has filed with the Securities and Exchange Commission an Information Statement dated April 3, 2023 (the “Information Statement”) in connection with its spin -off from Sphere Entertainment Co. (“Sphere Entertainment”), which was completed in April 2023. The Information Statement contains extensive disclosure about the Company and its business, including selected historical and pro forma financial information and risk factors that an investor should consider before deciding whether to invest in securities of the Company. This presentation may contain statements that constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, certain expectations, goals, projections, and benefits. Words or phrases “expects,” “anticipates,” “believes,” “estimates,” “may,” “will,” “should,” “could,” “potential,” “continue,” “intends,” “plans,” and similar words and terms used in the discussion of future operating and future financial performance identify forward looking statements. Investors are cautioned that any such forward looking statements are not guarantees of future performance or results and are subject to known and unknown risks, uncertainties and other factors. Actual results, developments or events may differ materially from those in the forward looking statements as a result of v arious factors, including, but not limited to, the performance of the Company and its business and operations, its financial condition, factors affecting the industries in which it operates and the factors described in the Information Statement, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein. Forward looking statements speak only as of the date they are made. The Company disclaims any obligation to update or revise any forward -looking statements contained herein, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or for any other reason, except to the extent required by law. Investors should not place undue reliance on such forward-looking statements and should not regard the inclusion of such statements as representations by the Company that its plans and objectives will be achieved or realized. Investors are further advised to consult any further disclosures by the Company in its subsequent filings with the Securities and Exchange Commission. 2


NON-GAAP FINANCIAL MEASURES We define adjusted operating income (loss) (“AOI”), which is a non-GAAP financial measure, as operating income (loss) excluding (i) the impact of non- cash straight-line leasing revenue associated w ith the Arena License Agreements w ith Madison Square Garden Sports Corp. ( MSG Sports ), (ii) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets, (iii) share -based compensation expense, (iv ) restructuring charges or credits, (v) merger and acquisition-related costs, including litigation expenses, (vi) gains or losses on sales or dispositions of businesses and associated settlements, (v ii) the impact of purchase accounting adjustments related to business acquisitions, (v iii) gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan, and (ix) amortization for capitalized clo ud computing arrangement costs. 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. M anagement believes that this adjustment is beneficial for other incremental reasons as w ell. This adjustment provides senior management, investors and analysts w ith important information regarding a long-term related party agreement w ith MSG Sports. I n addition, this adjustment is included under the Company's debt covenant compliance calculation and is a component of the performance measures used to ev aluate, and compensate senior management of the Company. We believe that the exclusion of share -based compensation expense or benefit allows investors to better track the performance of our business without regard to the settlement of an obligation that is not expected to be made in cash. We elimin ate merger and acquisition-related costs, when applicable, because the Company does not consider such costs to be indicative of the ongoing ope rating performance of the Company as they result from an ev ent that is of a non-recurring nature, thereby enhancing comparability. I n addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan, provides investors with a clearer picture of the Company's operating performance given that, in accordance w ith GAAP, gains and losses related to the r emeasurement of liabilities under the executive deferred compensation plan are recognized in Operating (income) loss w hereas gains and losses related to the remeasurement of the assets under the 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, w hich is not reflected in Operating income (loss). We believe AOI is an appropriate measure for evaluating the operating performance of the Company on a combined basis. AOI and similar measures w ith similar titles are common performance measures used by inv estors and analysts to analyze our performance. Internally, we use revenues and AOI as the most important indicators of our business performance, and evaluate management’s effectiveness w ith specific reference to these indicators. AOI should be v iewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from oper ating activities, and other measures of performance and/or liquidity presented in accordance w ith U .S. generally accepted accounting principles (“GAAP”). Since AOI is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures w ith simila r titles used by other companies. For a reconciliation from Operating I ncome (U .S. GAAP Basis) to AOI please refer to the appendix w ithin this prese ntation. 3


LEGENDARY ICONIC COMPELLING OPPORTUNITIES BRANDS VENUES 4


OVERVIEW OF MSG ENTERTAINMENT SPIN-OFF ◼ On April 20, 2023, MSG Entertainment (NYSE: MSGE) was spun-off by Sphere Entertainment Co. (1) ◼ ~67% of shares were distributed to shareholders, while 33% were retained by the former parent ◼ Spin-off created a pure-play live entertainment company, poised to benefit from strong demand for shared experiences 1 SPHERE ENTERTAINMENT CO. WILL BE REQU IRED BY APPLICABLE TAX RU LES TO DISPOSE OF THE RETAINED INTEREST WITHIN A FIXED PERIOD O F TIM E, WHICH M AY 5 OCCU R THROU GH A SERIES OF STEPS INCLUDING SALES, EXCHANGE OFFERS, PRO RATA DISTRIBU TIONS OR REPAYM ENT OF DELAYED DRAW TERM LO AN WITH THE COMPANY


KEY INVESTMENT HIGHLIGHTS ENDURING PROFITABLE WORLD-CLASS POPULARITY OF BUSINESS ENTERTAINMENT POISED FOR CHRISTMAS VENUES SPECTACULAR GROWTH SUBSTANTIAL POTENTIAL FOR PRESENCE IN OPPORTUNISTIC NEW YORK MARKET RETURN OF CAPITAL 6


OUR PORTFOLIO 7


5 ICONIC VENUES ~900 LIVE EVENTS ACROSS NEW YORK AND CHICAGO PROJECTED IN FISCAL 2023 5+ MILLION GUESTS PROJECTED IN FISCAL 2023 35 YEAR DEALS 89 YEARS TO HOST HOME GAMES FOR OF THE CHRISTMAS SPECTACULAR NEW YORK KNICKS & RANGERS STARRING THE RADIO CITY ROCKETTES 8


MADISON SQUARE GARDEN “The World’s Most Famous Arena” 1 #1 grossing v enue of its size in the world ~21,000 seat capacity 1 BILLBOARD M AGAZ INE AS OF YEAR END 2022 9


THE THEATER RADIO CITY MUSIC HALL 1 AT MADISON SQUARE GARDEN #3 grossing v enue of its size in the world Intimate env ironment in central New York City location New York City and national landmark ~5,600 seat capacity ~6,000 seat capacity 1 BILLBOARD M AGAZ INE AS OF YEAR END 2022 10


BEACON THEATRE THE CHICAGO THEATRE 1 1 Top 10 grossing v enue of its size in the world #5 grossing v enue of its size in the world Iconic rock and roll landmark v enue Chicago landmark ~2,800 seat capacity ~3,600 seat capacity 1 BILLBOARD M AGAZ INE AS OF YEAR END 2022 11


CHRISTMAS SPECTACULAR STARRING THE RADIO CITY ROCKETTES Own the Radio City Rockettes and Christmas Spectacular brands 1 Av eraging 1 million or more people annually 1 AVERAGE ANNU AL VISITATION FROM FISCAL YEAR 2011-2020 AND 2023. FISCAL YEAR 2021 CHRISTMAS SPECTACULAR WAS CANCELLED DU E TO IM PACT OF COVID-19 AND FISCAL YEAR 2021 PRODU CTION RU N ENDED EARLY DU E TO OM ICRON COVID -19 VARIANT 12


VALUABLE REAL ESTATE HOLDINGS O U R V E N U E S VENUE MARKET SIZE NEW YORK CITY ~1.1M SQ. FT. BUILDING NEW YORK CITY PART OF THE GARDEN CHICAGO ~73K SQ. FT. BUILDING VENUE MARKET SIZE EXPIRATION 1 NEW YORK CITY ~577K SQ. FT. BUILDING 2038 2 NEW YORK CITY ~57K SQ. FT. BUILDING 2036 1 RADIO CITY M U SIC HALL’S LEASE EXPIRES IN 2038 WITH AN OPTION TO RENEW FOR AN ADDITIONAL TEN YEARS 13 2 BEACON THEATRE’S LEASE EXPIRES IN 2036 WITH AN OPTION TO RENEW FOR AN ADDITIONAL TEN YEARS LEASED OWNED


OUR BUSINESS 14


SUBSTANTIAL PRESENCE IN NEW YORK CITY METRO AREA T H E E N T E R T A I N M E N T A N D F I N A N C I A L C A P I T A L O F T H E W O R L D 23 MILLION+ 65 MILLION+ 1 POPULATION ANNUAL TOURISTS 2 PRE-PANDEMIC HOME TO GREATEST # RANKED #1 OF 210 4 3 OF FORTUNE 500 COMPANIES DESIGNATED MARKET AREAS 5 #1 CONCERT AND ENTERTAINMENT MARKET IN THE WORLD 1 U NITED STATES CENSUS BU REAU 2 2019 NEW YORK CITY TRAVEL & TOU RISM REPORT 3 FORTU NE 500 COM PANIES BY REGION REPORT 2022 4 TRACKED BY NIELSEN RESEARCH 5 15 2023 POLLSTAR CONCERT M ARKET RANKINGS (AS OF DECEM BER 2022)


ESTABLISHED LEADER IN LIVE U N I Q U E A P P R O A C H D R I V E S B O O K I N G S U C C E S S OPPORTUNITIES UNMATCHED EXPERIENCES • Grow per-event revenue and • World-class facilities and operations profitability • Lev eraging innov ative technology • Drive repeat visitation ARTIST-FIRST APPROACH • Talent-friendly v enues and serv ice • Increase venue utilization • Exclusive recurring programming • Exploring new ev ent types ESTABLISHED RELATIONSHIPS • Deep and div erse industry connections • Improve revenue and engagement across assets • Promoter agnostic • Large and growing proprietary • Enable tailored offerings and cross-promotion customer database 16


THE ENDURING POPULARITY OF THE CHRISTMAS SPECTACULAR 8 9 Y E A R S O F N E W Y O R K ’ S C H E R I S H E D H O L I D A Y T R A D I T I O N PAID ATTENDANCE TOTAL REVENUE IN MILLIONS $ IN MILLIONS $132 $130 $128 1.1 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 $114 1.0 0.9 $109 $102 $101 $95 $93 $90 $84 $82 $56 0.4 1 1 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY22 FY23 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY22 FY23 1 1 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Number of Shows 204 212 215 209 210 205 204 197 200 210 199 0 101 181 1 FY 2020 PRODU CTION CANCELLED DU E TO THE IM PACT OF COVID -19 AND FY 2021 PRODU CTION RUN ENDED EARLY DU E TO OM ICRON COVID -19 VARIANT 17


VALUABLE LONG-TERM ARENA LICENSE AGREEMENTS WITH MSG SPORTS M A D I S O N S Q U A R E G A R D E N S E R V E S A S H O M E T O M A R Q U E E S P O R T S F R A N C H I S E S A R E N A L I C E N S E F E E C A S H P A Y M E N T S $ I N M I L L I O N S FY55E $107M Knicks Rangers ORIGINAL NBA “ORIGINAL SIX T E A M N H L T E A M 3 5 Y E A R D E A L S S T A R T I N G I N F Y 2 0 2 1 FY23E $42M 88 PRE / REGULAR 3% ANNUAL 1 SEASON GAMES ESCALATORS ARENA LICENSE AGREEMENTS INCLUDE ADDITIONAL REVENUE AND PROFIT-SHARING BETWEEN THE COMPANY AND MSG SPORTS 1 FOR ARENA LICENSE FEES U NDER THE ARENA LICENSE AGREEM ENTS WITH M SG SPORTS 18 2 PAYM ENTS U NDER THE ARENA LICENSE AGREEM ENTS WERE M ATERIALLY IMPACTED IN FISCAL YEAR 2021 AS A RESU LT OF THE COVID -19 PANDEM IC


STRONG MARKETING PARTNERSHIP TRACK RECORD S P O N S O R S H I P R E L A T I O N S H I P S D E L I V E R C O M P E L L I N G V A L U E INNOVATIVE MARKETING PARTNERSHIP OFFERINGS • Sought-after entertainment brands • Significant exposure in NYC • Cross-selling opportunities with MSG Sports VALUABLE MULTI-YEAR PARTNERSHIPS • Signature and Marquee partners represent majority of sponsorship revenue ATTRACTIVE GROWTH OPPORTUNITIES • Utilizing integrated approach to renew existing partners • Targeting emerging and underpenetrated v erticals • Selectively expanding reach through outdoor signage 19


EXCEPTIONAL HOSPITALITY OFFERINGS D E L I V E R I N G F I R S T - C L A S S E X P E R I E N C E S 21 58 WIDE ARRAY OF PREMIUM PRODUCTS EVENT LEVEL LEXUS LEVEL SUITES SUITES • Ov er 100 premium hospitality offerings • Range of exclusive private spaces, first-class amenities and premier seating locations PRIME POSITIONING IN NEW YORK CITY • Primarily licensed to corporate customers 18 CAESARS • Multi-year agreements for v ast majority of suites SPORTSBOOK INFOSYS LEVEL SUITES LOUNGE • Partnership with MSG Sports offers access to premium liv e sporting ev ents POISED FOR GROWTH • Strength of product and content offerings bolsters ongoing renewal and new sales activity • Plan to explore enhancing and expanding offerings, THE SUITE creating new monetization opportunities HUB LOFT SIXTEEN 20


FINANCIAL OVERVIEW 21


FISCAL 2023 FINANCIAL GUIDANCE P R O F I T A B L E B U S I N E S S W I T H D I V E R S I F I E D R E V E N U E M I X FY23 PROJECTED REVENUE MIX 1 FISCAL 2023 REVENUE SPONSORSHIP, 3 SIGNAGE, & SUITES $835M-$845M 30% 1 OPERATING INCOME MSG SPORTS 4 $85M-$95M AGREEMENTS 15% BOOKINGS 2 BUSINESS 1 CHRISTMAS ADJUSTED OPERATING INCOME 40% 5 SPECTACULAR $145M-$155M 15% NOTE: M REPRSENTS DOLLARS IN M ILLIONS 1 FINANCIAL GU IDANCE FOR FY23 PRESENTS THE COMPANY AS A STANDALONE, INDEPENDENT ENTITY AS OF JU LY 1, 2022, AND REFLECTS THE IM P ACT OF THE TERM INATION OF THE ADVERTISING SALES REPRESENTATION AGREEMENT WITH M SG NETWORKS AS IF IT HAD BEEN TERM INATED AT THE START OF FISCAL 2023, THE ESTIM ATED IM PACT OF POST-SPIN-OFF INTERCOMPANY AGREEEMENTS WITH SPHERE ENTERTAI NM ENT CO. AND A PU BLI C COM PANY OVERHEAD S TRUCTURE. PLEAS E REFER TO S LIDE NU MBER 3 FOR OU R DIS CU SSION ON NON-GAAP FINANCI AL M EASU RES AND THE APPENDIX FOR A 2 RECONCILIATION FROM OPERATING INCOME (U .S. GAAP BASIS) TO AOI INCLU DES TICKETING, VENU E LICENSE FEE, FOOD, BEVERAGE AND M ERCHANDISE REVENUES FOR ALL EVENTS EXCLU DING THE 3 4 CHRISTMAS SPECTACU LAR AND KNICKS AND RANGERS GAM ES INCLUDES ALL SPONSORSHIP, SIGNAGE AND SU ITES REVENUES FOR ALL EVENTS INCLU DES ARENA LICENSE FEES, FOOD, BEVERAGE AND 5 M ERCHANDI SE REVENUES FROM THE ARENA LI CENSE AGREEM ENTS WI TH M SG SPORTS EXCLU DES SPONSORSHIP REVENU E 22


BALANCE SHEET SNAPSHOT P O T E N T I A L F O R O P P O R T U N I S T I C R E T U R N O F C A P I T A L CAPITAL ALLOCATION PRIORITIES • Focus on debt paydown and opportunistic return of 3 TOTAL DEBT OUTSTANDING $673M capital to shareholders • $250M share repurchase program authorized 4 CASH AND CASH EQUIVALENTS $113M WELL POSITIONED FOR CASH GENERATION 1 NET DEBT $560M • FY2023 AOI Guidance $145M-$155M • Capital expenditure plans primarily 2 NET DEBT LEVERAGE 3.6x – 3.9x maintenance-related • Minimal cash taxpayer through FY2026 NOTE: M REPRSENTS DOLLARS IN M ILLIONS 1 FINANCIAL GU IDANCE FOR FY23 PRESENTS THE COMPANY AS A STANDALONE, INDEPENDENT ENTITY AS OF JU LY 1, 2022, AND REFLECTS THE IM P ACT OF THE TERM INATION OF THE ADVERTISING SALES REPRESENTATION AGREEMENT WITH M SG NETWORKS AS IF IT HAD BEEN TERM INATED AT THE START OF FISCAL 2023, THE ESTIM ATED IM PACT OF POS T-SPIN-OFF INTERCOMPANY AGREEEMENTS WI TH SPHERE ENTERTAINMENT CO. AND A PU BLIC COM PANY OVERHEAD STRU CTURE. PLEASE REFER TO SLIDE NU MBER 3 FOR OU R DISCUSSION ON NON -GAAP FINANCIAL M EASU RES AND THE APPENDIX FOR 2 A RECONCILIATION FROM OPERATING INCOME (U .S. GAAP BASIS) TO AOI RENOVATIONS OF THE GARDEN, BEACON THEATRE, AND RADIO CITY M U SIC HALL WERE COM PLETED IN 2013, 2009, AND 3 4 23 1999, RESPECTIVELY TOTAL DEBT OU TS TANDING AT TIM E OF S PIN-OFF 4/20/23 S TARTI NG CAS H AND CAS H EQU I VALENTS AT TI M E OF S PI N-OFF 4/20/23


APPENDIX 24


APPENDIX F Y 2 0 2 3 R E C O N C I L I A T I O N O F O P E R A T I N G I N C O M E T O A D J U S T E D O P E R A T I N G I N C O M E PROJECTED FY2023 OPERATING INCOME (U.S.GAAP) $85M-$95M Non-cash portion of Arena License fees from MSGS $(27)M Depreciation and Amortization $58M Share-based compensation $22M Restructuring charges $10M Gains, net on dispositions $(4)M Amortization for capitalized cloud computing costs $1M PROJECTED FY2023 ADJUSTED OPERATING INCOME $145M-$155M NOTE: M REPRSENTS DOLLARS IN M ILLIONS 1 FINANCIAL GU IDANCE FOR FY23 PRESENTS THE COMPANY AS A STANDALONE, INDEPENDENT ENTITY AS OF JU LY 1, 2022, AND REFLECTS THE IM P ACT OF THE TERM INATION OF THE ADVERTISING SALES REPRESENTATION AGREEMENT WITH M SG NETWORKS AS IF IT HAD BEEN TERM INATED AT THE START OF FISCAL 2023, THE ESTIM ATED IM PACT OF POS T-SPIN-OFF INTERCOMPANY AGREEEMENTS WI TH SPHERE ENTERTAINMENT CO. AND A PU BLIC COM PANY OVERHEAD STRU CTURE. PLEASE REFER TO SLIDE NU MBER 3 FOR OU R DISCUSSION ON NON -GAAP FINANCIAL M EASU RES. 25


26