Business Wire | Feb 12, 2021 07:30AM EST

Madison Square Garden Entertainment Corp. Reports Fiscal 2021 Second Quarter Results

Feb. 12, 2021

NEW YORK--(BUSINESS WIRE)--Feb. 12, 2021--Madison Square Garden Entertainment Corp. (NYSE: MSGE) ("MSG Entertainment") today reported financial results for the fiscal second quarter ended December 31, 2020.

During the fiscal 2021 second quarter, the Madison Square Garden Arena ("The Garden") began hosting New York Knicks home games without fans in attendance - marking the first events at The Garden since all of the Company's performance venues were closed in March 2020 due to the COVID-19 pandemic. Aside from these games and certain other limited exceptions, the Company's performance venues remained closed during the fiscal 2021 second quarter. In addition, TAO Group Hospitality's venues are either closed or operating with significant restrictions due to regulatory requirements.

Subsequent to the end of the fiscal 2021 second quarter, New York State announced that New York City restaurants can resume indoor dining starting today and New York arenas with capacities of over 10,000 people can re-open beginning February 23, 2021, both with limited capacities.

The COVID-19 pandemic materially impacted the Company's financial results for the fiscal 2021 second quarter as the Company reported revenues of $23.1 million, a decrease of 94% as compared with the prior year quarter.(1)(2) In addition, the Company reported an operating loss of $112.5 million and an adjusted operating loss of $64.0 million for the fiscal 2021 second quarter, as compared to operating income of $69.6 million and adjusted operating income of $108.5 million in the prior year quarter.(3)

Executive Chairman and CEO James L. Dolan said, "We are excited by the start of live entertainment returning to New York, with Governor Cuomo's decision to re-open indoor dining in New York City and arenas across the state, both at limited capacities. We believe this represents another important step on the road to a full and safe re-opening of our venues and a return to normal operations. We know there continues to be significant pent-up demand for live entertainment and we remain confident in the strength of our business and the long-term outlook for our Company."

Segment Results for the Three and Six Months Ended December 31, 2020 and 2019:

Three Months Ended Six Months Ended

December 31, Change December 31, Change

2020 2019 $ % 2020 2019 $ %

Revenues

Entertainment $ 12.7 $ 325.4 $ (312.7 ) (96 ) $ 20.2 $ 445.0 $ (424.8 ) (95 ) % %

Tao Group Hospitality 10.5 69.1 (58.6 ) (85 ) 17.7 127.7 (110.0 ) (86 ) % %

Other^(4) - (0.4 ) 0.4 NM (0.4 ) (0.7 ) 0.3 41 %

Total Revenues $ 23.1 $ 394.1 $ (370.9 ) (94 ) $ 37.5 $ 572.0 $ (534.5 ) (93 ) % %

Operating Income (Loss)

Entertainment $ (97.1 ) $ 67.1 $ (164.2 ) NM $ (207.7 ) $ (0.3 ) $ (207.4 ) NM

Tao Group Hospitality (11.2 ) 7.5 (18.7 ) NM (22.4 ) 10.8 (33.3 ) NM

Other^(4) (4.3 ) (5.0 ) 0.8 16 % (9.0 ) (9.1 ) 0.1 1 %

Total Operating Income $ (112.5 ) $ 69.6 $ (182.1 ) NM $ (239.1 ) $ 1.4 $ (240.6 ) NM(Loss)

Adjusted Operating Income(Loss)

Entertainment $ (55.3 ) $ 98.6 $ (153.9 ) NM $ (113.5 ) $ 63.0 $ (176.6 ) NM

Tao Group Hospitality (8.4 ) 9.9 (18.3 ) NM (17.5 ) 15.5 (33.0 ) NM

Other^(4) (0.3 ) (0.1 ) (0.2 ) (251 ) (0.5 ) (0.2 ) (0.4 ) (250 ) % %

Total Adjusted Operating $ (64.0 ) $ 108.5 $ (172.4 ) NM $ (131.6 ) $ 78.3 $ (210.0 ) NMIncome (Loss)

Note: Does not foot due to rounding(1)

Financial results for the three and six months ended December 31, 2019 are presented in accordance with accounting requirements for the preparation of carve-out financial statements, reflecting the results of the entertainment businesses previously owned and operated by MSG Sports through its MSG Entertainment business segment, as well as the sports bookings business previously owned and operated by MSG Sports through its MSG Sports business segment. These results do not include the impact of intercompany agreements between the Company and MSG Sports, which were effective as of the date of the spin-off (April 17, 2020) and may not reflect the level of expenses that would have been incurred by the Company had it been a stand-alone company for the period presented.

(2)

Fiscal 2020 operating results include the results for the Forum which was sold on May 1, 2020.

(3)

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

(4)

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

Entertainment

For the fiscal 2021 second quarter, Entertainment segment revenues of $12.7 million decreased 96%, or $312.7 million, as compared with the prior year quarter, primarily reflecting the impact of the COVID-19 pandemic. This included a decrease in revenues of $122.8 million due to the cancellation of the 2020 run of the Christmas Spectacular Starring the Radio City Rockettes. The continued closure of the Company's venues led to decreases of $102.9 million in event-related revenues, $36.1 million in suite license fee revenues and $26.9 million in venue-related signage and sponsorship revenues. In addition, the prior year quarter included $21.3 million in revenues from the Forum, which was sold in May 2020.

Fiscal 2021 second quarter direct operating expenses of $23.4 million decreased 86%, or $144.8 million, as compared with the prior year quarter, primarily reflecting the impact of the COVID-19 pandemic. The absence of events in the quarter led to decreases of $55.5 million in event-related expenses at the Company's venues, $47.6 million in expenses related to the Christmas Spectacular production, $24.1 million in suite license expenses and $23.6 million in venue-related signage and sponsorship expenses. In addition, the prior year quarter included $11.2 million in direct operating expenses from the Forum. These decreases were partially offset by other net increases of $17.3 million, primarily related to the absence of venue-operating cost carve-out adjustments in the prior year period (see note 1 on previous page).

Fiscal 2021 second quarter selling, general and administrative expenses of $65.7 million decreased 5%, or $3.1 million, as compared with the prior year quarter, primarily due to a $4.6 million decrease in professional fees associated with litigation and MSG Sphere content development, partially offset by an increase of $0.9 million in employee compensation and related benefits.

Fiscal 2021 second quarter operating income decreased $164.2 million to a loss of $97.1 million and adjusted operating income decreased $153.9 million to a loss of $55.3 million, both as compared to the prior year quarter. This primarily reflects the decrease in revenues, partially offset by lower direct operating expenses and, to a lesser extent, lower selling, general and administrative expenses.

Tao Group Hospitality

For the fiscal 2021 second quarter, Tao Group Hospitality segment revenues of $10.5 million decreased 85%, or $58.6 million, as compared to the prior year quarter, primarily reflecting the impact of the COVID-19 pandemic. Capacity restrictions at re-opened entertainment dining and nightlife venues reduced revenues by $34.3 million, while the continued closure of certain venues reduced revenues by $19.7 million.

Fiscal 2021 second quarter direct operating expenses of $11.0 million decreased 73%, or $30.2 million, as compared to the prior year quarter, primarily as a result of the COVID-19 pandemic. Employee compensation and related benefits decreased $12.3 million, primarily due to a reduction in Tao Group Hospitality's venue staff at re-opened venues and the elimination of venue staff at closed venues. The cost of food and beverage and venue entertainment decreased $11.4 million, primarily resulting from the impact of capacity restrictions at re-opened venues and the continued closure of certain venues. In addition, rent expense decreased $2.8 million, which includes the impact of rent concessions received from landlords as a result of the pandemic.

Fiscal 2021 second quarter selling, general and administrative expenses of $9.1 million decreased 49%, or $8.9 million, as compared to the prior year quarter. This primarily reflects a $3.2 million decrease in marketing costs and a $1.9 million decrease in employee compensation and related benefits as well as other net decreases.

Fiscal 2021 second quarter operating income decreased by $18.7 million to a loss of $11.2 million and adjusted operating income decreased by $18.3 million to a loss of $8.4 million, both as compared to the prior year quarter. This primarily reflects the decrease in revenues, partially offset by lower direct operating expenses and, to a lesser extent, lower selling, general and administrative expenses.

Other Matters

In December 2020, the Company announced that it had assumed the role of construction manager for MSG Sphere in Las Vegas and that AECOM had transitioned from general contractor to supporting MSG Sphere with a new services agreement that facilitates AECOM's continued involvement through the project's completion. The Company believes this change will provide it with greater transparency and control over the construction process, while enabling it to continue benefiting from AECOM's expertise.

The Company has assembled a world-class team of construction management professionals who are now directing all aspects of the project. This includes strategic planning, the construction timeline, and management of all subcontractors, as well as oversight of 30 seconded AECOM employees who continue to support key areas of the project.

Current construction work is focused on finishing all superstructure concrete pours, which includes completing stair and elevator cores and the venue's proscenium wall. Steel for the remaining exterior ring beams and inboard decks will then be placed, and the Company anticipates starting to build the steel frame for the venue's roof in the coming months.

As previously disclosed, due to challenges stemming from the COVID-19 pandemic, the company revised its construction schedule for MSG Sphere in Las Vegas, providing for a substantially reduced spend in fiscal 2021 and a lengthened timetable that enables the Company to better preserve cash in the near-term.

MSG Sphere is a complex construction project that has become even more challenging due to the global impact of COVID-19. The Company announced on February 7, 2020 a project cost estimate, inclusive of core technology and soft costs, of approximately $1.66 billion. Relative to this cost estimate, the Company's actual construction costs for MSG Sphere incurred through December 31, 2020 were approximately $645 million. This cost estimate is subject to uncertainty given the complexity of the project, the more than two years remaining until the venue's planned opening and the ongoing impact of the global pandemic. The Company remains committed to bringing MSG Sphere to Las Vegas and expects to open the venue in calendar 2023.

About Madison Square Garden Entertainment Corp.

Madison Square Garden Entertainment Corp. (MSG Entertainment) is a leader in live entertainment experiences. 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, and has announced plans to build a second MSG Sphere in London, pending necessary approvals. 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. Also under the MSG Entertainment umbrella is Tao Group Hospitality, with entertainment dining and nightlife brands including Tao, Marquee, Lavo, Avenue, Beauty & Essex and Cathdrale. 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, and (vi) gains or losses on sales or dispositions of businesses and associated settlements, which is referred to as adjusted operating income (loss), a non-GAAP measure. In addition to excluding the impact of the items discussed above, the impact of purchase accounting adjustments related to business acquisitions is also excluded in evaluating the Company's consolidated adjusted operating income (loss). 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 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 888-421-7163 / Conference ID Number 2326248 Conference call replay number is 855-859-2056 / Conference ID Number 2326248 until February 19, 2021

Note: Does not foot due to rounding Financial results for the three and six months ended December 31, 2019 are presented in accordance with accounting requirements for the preparation of carve-out financial statements, reflecting the results of the entertainment businesses previously owned and operated by MSG Sports through its MSG Entertainment business segment, as well as the sports (1) bookings business previously owned and operated by MSG Sports through its MSG Sports business segment. These results do not include the impact of intercompany agreements between the Company and MSG Sports, which were effective as of the date of the spin-off (April 17, 2020) and may not reflect the level of expenses that would have been incurred by the Company had it been a stand-alone company for the period presented.

(2) Fiscal 2020 operating results include the results for the Forum which was sold on May 1, 2020.

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

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

Entertainment

For the fiscal 2021 second quarter, Entertainment segment revenues of $12.7 million decreased 96%, or $312.7 million, as compared with the prior year quarter, primarily reflecting the impact of the COVID-19 pandemic. This included a decrease in revenues of $122.8 million due to the cancellation of the 2020 run of the Christmas Spectacular Starring the Radio City Rockettes. The continued closure of the Company's venues led to decreases of $102.9 million in event-related revenues, $36.1 million in suite license fee revenues and $26.9 million in venue-related signage and sponsorship revenues. In addition, the prior year quarter included $21.3 million in revenues from the Forum, which was sold in May 2020.

Fiscal 2021 second quarter direct operating expenses of $23.4 million decreased 86%, or $144.8 million, as compared with the prior year quarter, primarily reflecting the impact of the COVID-19 pandemic. The absence of events in the quarter led to decreases of $55.5 million in event-related expenses at the Company's venues, $47.6 million in expenses related to the Christmas Spectacular production, $24.1 million in suite license expenses and $23.6 million in venue-related signage and sponsorship expenses. In addition, the prior year quarter included $11.2 million in direct operating expenses from the Forum. These decreases were partially offset by other net increases of $17.3 million, primarily related to the absence of venue-operating cost carve-out adjustments in the prior year period (see note 1 on previous page).

Fiscal 2021 second quarter selling, general and administrative expenses of $65.7 million decreased 5%, or $3.1 million, as compared with the prior year quarter, primarily due to a $4.6 million decrease in professional fees associated with litigation and MSG Sphere content development, partially offset by an increase of $0.9 million in employee compensation and related benefits.

Fiscal 2021 second quarter operating income decreased $164.2 million to a loss of $97.1 million and adjusted operating income decreased $153.9 million to a loss of $55.3 million, both as compared to the prior year quarter. This primarily reflects the decrease in revenues, partially offset by lower direct operating expenses and, to a lesser extent, lower selling, general and administrative expenses.

Tao Group Hospitality

For the fiscal 2021 second quarter, Tao Group Hospitality segment revenues of $10.5 million decreased 85%, or $58.6 million, as compared to the prior year quarter, primarily reflecting the impact of the COVID-19 pandemic. Capacity restrictions at re-opened entertainment dining and nightlife venues reduced revenues by $34.3 million, while the continued closure of certain venues reduced revenues by $19.7 million.

Fiscal 2021 second quarter direct operating expenses of $11.0 million decreased 73%, or $30.2 million, as compared to the prior year quarter, primarily as a result of the COVID-19 pandemic. Employee compensation and related benefits decreased $12.3 million, primarily due to a reduction in Tao Group Hospitality's venue staff at re-opened venues and the elimination of venue staff at closed venues. The cost of food and beverage and venue entertainment decreased $11.4 million, primarily resulting from the impact of capacity restrictions at re-opened venues and the continued closure of certain venues. In addition, rent expense decreased $2.8 million, which includes the impact of rent concessions received from landlords as a result of the pandemic.

Fiscal 2021 second quarter selling, general and administrative expenses of $9.1 million decreased 49%, or $8.9 million, as compared to the prior year quarter. This primarily reflects a $3.2 million decrease in marketing costs and a $1.9 million decrease in employee compensation and related benefits as well as other net decreases.

Fiscal 2021 second quarter operating income decreased by $18.7 million to a loss of $11.2 million and adjusted operating income decreased by $18.3 million to a loss of $8.4 million, both as compared to the prior year quarter. This primarily reflects the decrease in revenues, partially offset by lower direct operating expenses and, to a lesser extent, lower selling, general and administrative expenses.

Other Matters

In December 2020, the Company announced that it had assumed the role of construction manager for MSG Sphere in Las Vegas and that AECOM had transitioned from general contractor to supporting MSG Sphere with a new services agreement that facilitates AECOM's continued involvement through the project's completion. The Company believes this change will provide it with greater transparency and control over the construction process, while enabling it to continue benefiting from AECOM's expertise.

The Company has assembled a world-class team of construction management professionals who are now directing all aspects of the project. This includes strategic planning, the construction timeline, and management of all subcontractors, as well as oversight of 30 seconded AECOM employees who continue to support key areas of the project.

Current construction work is focused on finishing all superstructure concrete pours, which includes completing stair and elevator cores and the venue's proscenium wall. Steel for the remaining exterior ring beams and inboard decks will then be placed, and the Company anticipates starting to build the steel frame for the venue's roof in the coming months.

As previously disclosed, due to challenges stemming from the COVID-19 pandemic, the company revised its construction schedule for MSG Sphere in Las Vegas, providing for a substantially reduced spend in fiscal 2021 and a lengthened timetable that enables the Company to better preserve cash in the near-term.

MSG Sphere is a complex construction project that has become even more challenging due to the global impact of COVID-19. The Company announced on February 7, 2020 a project cost estimate, inclusive of core technology and soft costs, of approximately $1.66 billion. Relative to this cost estimate, the Company's actual construction costs for MSG Sphere incurred through December 31, 2020 were approximately $645 million. This cost estimate is subject to uncertainty given the complexity of the project, the more than two years remaining until the venue's planned opening and the ongoing impact of the global pandemic. The Company remains committed to bringing MSG Sphere to Las Vegas and expects to open the venue in calendar 2023.

About Madison Square Garden Entertainment Corp.

Madison Square Garden Entertainment Corp. (MSG Entertainment) is a leader in live entertainment experiences. 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, and has announced plans to build a second MSG Sphere in London, pending necessary approvals. 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. Also under the MSG Entertainment umbrella is Tao Group Hospitality, with entertainment dining and nightlife brands including Tao, Marquee, Lavo, Avenue, Beauty & Essex and Cathdrale. 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, and (vi) gains or losses on sales or dispositions of businesses and associated settlements, which is referred to as adjusted operating income (loss), a non-GAAP measure. In addition to excluding the impact of the items discussed above, the impact of purchase accounting adjustments related to business acquisitions is also excluded in evaluating the Company's consolidated adjusted operating income (loss). 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 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 888-421-7163 / Conference ID Number 2326248 Conference call replay number is 855-859-2056 / Conference ID Number 2326248 until February 19, 2021

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

Three Months Ended Six Months Ended

December 31, December 31,

2020 2019 2020 2019

Revenues $ 23,137 $ 394,072 $ 37,515 $ 572,035

Direct operating 35,464 210,194 69,623 341,716 expenses

Selling, generaland 74,950 86,854 135,275 174,621 administrativeexpenses

Depreciation and 23,875 27,434 50,457 54,254 amortization

Restructuring 1,372 - 21,299 - charges

Operating income (112,524 ) 69,590 (239,139 ) 1,444 (loss)

Other income (expense):

Loss in equitymethod (1,568 ) (1,170 ) (3,264 ) (2,643 ) investments

Interest income 349 6,268 644 13,583

Interest expense (7,675 ) (144 ) (8,084 ) (1,249 )

Miscellaneousincome (loss), (7,362 ) 9,355 26,862 16,386 net

Income (loss)from operations (128,780 ) 83,899 (222,981 ) 27,521 before incometaxes

Income tax (323 ) (1,255 ) (486 ) (1,440 ) expense

Net income (129,103 ) 82,644 (223,467 ) 26,081 (loss)

Less: Net income(loss)attributable to (3,342 ) 885 (7,231 ) 249 redeemablenoncontrollinginterests

Less: Net income(loss)attributable to (902 ) 453 (1,532 ) 493 nonredeemablenoncontrollinginterests

Net income(loss)attributable toMadison Square $ (124,859 ) $ 81,306 $ (214,704 ) $ 25,339 GardenEntertainmentCorp.'sstockholders

Basic anddiluted income(loss) percommon shareattributable to $ (5.17 ) $ 3.39 $ (8.91 ) $ 1.06 Madison SquareGardenEntertainmentCorp.'sstockholders

Basic anddilutedweighted-average 24,146 23,992 24,108 23,992 number of commonsharesoutstanding

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 (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 and 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. * 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 Six Months Ended

December 31, December 31,

2020 2019 2020 2019

Operating income $ (112,524 ) $ 69,590 $ (239,139 ) $ 1,444 (loss)

Non-cash portionof arena license (1,176 ) - (1,176 ) - fees from MSGSports

Share-based 23,562 10,373 35,091 20,458 compensation

Depreciation and 23,875 27,434 50,457 54,254 amortization^(1)

Restructuring 1,372 - 21,299 - charges

Other purchaseaccounting 924 1,068 1,848 2,188 adjustments

Adjusted operating $ (63,967 ) $ 108,465 $ (131,620 ) $ 78,344 income (loss)

_________________(1)Includes depreciation and amortization related to purchase accounting adjustments.

_________________ Includes depreciation and amortization related to purchase accounting(1) adjustments.

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

SEGMENT RESULTS

(Dollars in thousands)

(Unaudited)

BUSINESS SEGMENT RESULTS

Three Months Ended December 31, 2020

Entertainment

Tao Group Hospitality

Other(2)

Total

Revenues

$

12,669

$

10,491

$

(23

)

$

23,137

Direct operating expenses

23,409

10,980

1,075

35,464

Selling, general and administrative expenses

65,730

9,131

89

74,950

Depreciation and amortization

19,246

1,563

3,066

23,875

Restructuring charges

1,372

-

-

1,372

Operating loss

$

(97,088

)

$

(11,183

)

$

(4,253

)

$

(112,524

)

Reconciliation to adjusted operating loss:

Non-cash portion of arena license fees from MSG Sports

(1,176

)

-

-

(1,176

)

Share-based compensation

22,374

1,188

-

23,562

Depreciation and amortization(1)

19,246

1,563

3,990

24,799

Restructuring charges

1,372

-

-

1,372

Adjusted operating loss

$

(55,272

)

$

(8,432

)

$

(263

)

$

(63,967

)

Three Months Ended December 31, 2019

Entertainment

Tao Group Hospitality

Other(2)

Total

Revenues

$

325,370

$

69,104

$

(402

)

$

394,072

Direct operating expenses

168,241

41,159

794

210,194

Selling, general and administrative expenses

68,869

18,038

(53

)

86,854

Depreciation and amortization

21,128

2,411

3,895

27,434

Operating income (loss)

$

67,132

$

7,496

$

(5,038

)

$

69,590

Reconciliation to adjusted operating income (loss):

Share-based compensation

10,373

-

-

10,373

Depreciation and amortization(1)

21,128

2,411

4,963

28,502

Adjusted operating income (loss)

$

98,633

$

9,907

$

(75

)

$

108,465

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

SEGMENT RESULTS

(Dollars in thousands)

(Unaudited)

BUSINESSSEGMENT RESULTS

Three Months Ended December 31, 2020

Entertainment Tao Group Other^(2) Total Hospitality

Revenues $ 12,669 $ 10,491 $ (23 ) $ 23,137

Directoperating 23,409 10,980 1,075 35,464 expenses

Selling,general and 65,730 9,131 89 74,950 administrativeexpenses

Depreciationand 19,246 1,563 3,066 23,875 amortization

Restructuring 1,372 - - 1,372 charges

Operating loss $ (97,088 ) $ (11,183 ) $ (4,253 ) $ (112,524 )

Reconciliationto adjusted operating loss:

Non-cashportion ofarena license (1,176 ) - - (1,176 ) fees from MSGSports

Share-based 22,374 1,188 - 23,562 compensation

Depreciationand 19,246 1,563 3,990 24,799 amortization^(1)

Restructuring 1,372 - - 1,372 charges

Adjusted $ (55,272 ) $ (8,432 ) $ (263 ) $ (63,967 ) operating loss



Three Months Ended December 31, 2019

Entertainment Tao Group Other^(2) Total Hospitality

Revenues $ 325,370 $ 69,104 $ (402 ) $ 394,072

Directoperating 168,241 41,159 794 210,194 expenses

Selling,general and 68,869 18,038 (53 ) 86,854 administrativeexpenses

Depreciationand 21,128 2,411 3,895 27,434 amortization

Operating $ 67,132 $ 7,496 $ (5,038 ) $ 69,590 income (loss)

Reconciliationto adjusted operatingincome (loss):

Share-based 10,373 - - 10,373 compensation

Depreciationand 21,128 2,411 4,963 28,502 amortization^(1)

Adjustedoperating $ 98,633 $ 9,907 $ (75 ) $ 108,465 income (loss)

_________________(1)

Depreciation and amortization includes other purchase accounting adjustments of $924 and $1,068 for the three months ended December 31, 2020 and 2019 respectively.

(2)

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

_________________ Depreciation and amortization includes other purchase accounting(1) adjustments of $924 and $1,068 for the three months ended December 31, 2020 and 2019 respectively.

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

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

SEGMENT RESULTS (Continued)

(Dollars in thousands)

(Unaudited)

Six Months Ended December 31, 2020

Entertainment

Tao Group Hospitality

Other(2)

Total

Revenues

$

20,224

$

17,712

$

(421

)

$

37,515

Direct operating expenses

47,024

20,808

1,791

69,623

Selling, general and administrative expenses

118,380

16,734

161

135,275

Depreciation and amortization

41,260

2,609

6,588

50,457

Restructuring charges

21,299

-

-

21,299

Operating loss

$

(207,739

)

$

(22,439

)

$

(8,961

)

$

(239,139

)

Reconciliation to adjusted operating loss:

Non-cash portion of arena license fees from MSG Sports

(1,176

)

-

-

(1,176

)

Share-based compensation

32,807

2,284

-

35,091

Depreciation and amortization(1)

41,260

2,609

8,436

52,305

Restructuring charges

21,299

-

-

21,299

Adjusted operating loss

$

(113,549

)

$

(17,546

)

$

(525

)

$

(131,620

)

Six Months Ended December 31, 2019

Entertainment

Tao Group Hospitality

Other(2)

Total

Revenues

$

445,022

$

127,721

$

(708

)

$

572,035

Direct operating expenses

263,201

76,826

1,689

341,716

Selling, general and administrative expenses

139,218

35,462

(59

)

174,621

Depreciation and amortization

42,915

4,590

6,749

54,254

Operating income (loss)

$

(312

)

$

10,843

$

(9,087

)

$

1,444

Reconciliation to adjusted operating income (loss):

Share-based compensation

20,430

28

-

20,458

Depreciation and amortization(1)

42,915

4,590

8,937

56,442

Adjusted operating income (loss)

$

63,033

$

15,461

$

(150

)

$

78,344

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

SEGMENT RESULTS (Continued)

(Dollars in thousands)

(Unaudited)

Six Months Ended December 31, 2020

Entertainment Tao Group Other^(2) Total Hospitality

Revenues $ 20,224 $ 17,712 $ (421 ) $ 37,515

Direct operating 47,024 20,808 1,791 69,623 expenses

Selling, general andadministrative 118,380 16,734 161 135,275 expenses

Depreciation and 41,260 2,609 6,588 50,457 amortization

Restructuring charges 21,299 - - 21,299

Operating loss $ (207,739 ) $ (22,439 ) $ (8,961 ) $ (239,139 )

Reconciliation toadjusted operating loss:

Non-cash portion ofarena license fees (1,176 ) - - (1,176 )from MSG Sports

Share-based 32,807 2,284 - 35,091 compensation

Depreciation and 41,260 2,609 8,436 52,305 amortization^(1)

Restructuring charges 21,299 - - 21,299

Adjusted operating $ (113,549 ) $ (17,546 ) $ (525 ) $ (131,620 )loss



Six Months Ended December 31, 2019

Entertainment Tao Group Other^(2) Total Hospitality

Revenues $ 445,022 $ 127,721 $ (708 ) $ 572,035

Direct operating 263,201 76,826 1,689 341,716 expenses

Selling, general andadministrative 139,218 35,462 (59 ) 174,621 expenses

Depreciation and 42,915 4,590 6,749 54,254 amortization

Operating income $ (312 ) $ 10,843 $ (9,087 ) $ 1,444 (loss)

Reconciliation toadjusted operating income (loss):

Share-based 20,430 28 - 20,458 compensation

Depreciation and 42,915 4,590 8,937 56,442 amortization^(1)

Adjusted operating $ 63,033 $ 15,461 $ (150 ) $ 78,344income (loss)

_________________(1)

Depreciation and amortization includes other purchase accounting adjustments of $1,848 and $2,188 for the six months ended December 31, 2020 and 2019, respectively.

(2)

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

_________________ Depreciation and amortization includes other purchase accounting(1) adjustments of $1,848 and $2,188 for the six months ended December 31, 2020 and 2019, respectively.

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

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands)

December 31,2020

June 30,2020

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

1,451,352

$

906,555

Restricted cash

26,207

17,749

Short-term investments

-

337,192

Accounts receivable, net

73,711

57,184

Net related party receivables

31,170

23,062

Prepaid expenses

56,066

62,127

Other current assets

23,787

22,633

Total current assets

1,662,293

1,426,502

Investments in nonconsolidated affiliates

49,626

52,622

Property and equipment, net

1,837,072

1,646,115

Right-of-use lease assets

198,464

220,328

Amortizable intangible assets, net

144,658

150,426

Indefinite-lived intangible assets

63,801

63,801

Goodwill

74,309

74,309

Other assets

91,616

85,103

Total assets

$

4,121,839

$

3,719,206

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands)

December 31, June 30, 2020 2020

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents $ 1,451,352 $ 906,555

Restricted cash 26,207 17,749

Short-term investments - 337,192

Accounts receivable, net 73,711 57,184

Net related party receivables 31,170 23,062

Prepaid expenses 56,066 62,127

Other current assets 23,787 22,633

Total current assets 1,662,293 1,426,502

Investments in nonconsolidated affiliates 49,626 52,622

Property and equipment, net 1,837,072 1,646,115

Right-of-use lease assets 198,464 220,328

Amortizable intangible assets, net 144,658 150,426

Indefinite-lived intangible assets 63,801 63,801

Goodwill 74,309 74,309

Other assets 91,616 85,103

Total assets $ 4,121,839 $ 3,719,206

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS (continued)

(In thousands, except per share data)

December 31,2020

June 30,2020

(Unaudited)

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Current Liabilities:

Accounts payable

$

4,952

$

17,258

Net related party payables, current

16,428

18,418

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

5,115

5,429

Accrued liabilities:

Employee related costs

50,977

68,837

Other accrued liabilities

114,326

125,452

Operating lease liabilities, current

54,963

53,388

Collections due to promoters

19,876

31,879

Deferred revenue

205,641

189,308

Total current liabilities

472,278

509,969

Long-term debt, net of deferred financing costs

649,445

28,126

Operating lease liabilities, noncurrent

155,440

174,219

Defined benefit and other postretirement obligations

25,103

26,132

Other employee related costs

13,481

15,591

Collections due to promoters, noncurrent

5,179

-

Deferred tax liabilities, net

12,927

12,450

Other liabilities

78,138

78,279

Total liabilities

1,411,991

844,766

Redeemable noncontrolling interests

14,543

20,600

Madison Square Garden Entertainment Corp. Stockholders' Equity:

Class A Common stock, par value $0.01, 120,000 shares authorized; 19,613 and 19,493 shares outstanding as of December 31, 2020 and June 30, 2020, respectively

196

195

Class B Common stock, par value $0.01, 30,000 shares authorized; 4,530 shares outstanding as of December 31, 2020 and June 30, 2020

45

45

Preferred stock, par value $0.01, 15,000 shares authorized; none outstanding as of December 31, 2020 and June 30, 2020

-

-

Additional paid-in capital

2,782,042

2,751,318

Retained earnings

(72,768

)

141,936

Accumulated other comprehensive loss

(25,381

)

(51,857

)

Total Madison Square Garden Entertainment Corp. stockholders' equity

2,684,134

2,841,637

Nonredeemable noncontrolling interests

11,171

12,203

Total equity

2,695,305

2,853,840

Total liabilities, redeemable noncontrolling interests and equity

$

4,121,839

$

3,719,206

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS (continued)

(In thousands, except per share data)

December 31, June 30, 2020 2020

(Unaudited)

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Current Liabilities:

Accounts payable $ 4,952 $ 17,258

Net related party payables, current 16,428 18,418

Current portion of long-term debt, net of 5,115 5,429 deferred financing costs

Accrued liabilities:

Employee related costs 50,977 68,837

Other accrued liabilities 114,326 125,452

Operating lease liabilities, current 54,963 53,388

Collections due to promoters 19,876 31,879

Deferred revenue 205,641 189,308

Total current liabilities 472,278 509,969

Long-term debt, net of deferred financing 649,445 28,126 costs

Operating lease liabilities, noncurrent 155,440 174,219

Defined benefit and other postretirement 25,103 26,132 obligations

Other employee related costs 13,481 15,591

Collections due to promoters, noncurrent 5,179 -

Deferred tax liabilities, net 12,927 12,450

Other liabilities 78,138 78,279

Total liabilities 1,411,991 844,766

Redeemable noncontrolling interests 14,543 20,600

Madison Square Garden Entertainment Corp. Stockholders' Equity:

Class A Common stock, par value $0.01,120,000 shares authorized; 19,613 and 196 195 19,493 shares outstanding as of December31, 2020 and June 30, 2020, respectively

Class B Common stock, par value $0.01,30,000 shares authorized; 4,530 shares 45 45 outstanding as of December 31, 2020 andJune 30, 2020

Preferred stock, par value $0.01, 15,000shares authorized; none outstanding as of - - December 31, 2020 and June 30, 2020

Additional paid-in capital 2,782,042 2,751,318

Retained earnings (72,768 ) 141,936

Accumulated other comprehensive loss (25,381 ) (51,857 )

Total Madison Square Garden Entertainment 2,684,134 2,841,637 Corp. stockholders' equity

Nonredeemable noncontrolling interests 11,171 12,203

Total equity 2,695,305 2,853,840

Total liabilities, redeemable $ 4,121,839 $ 3,719,206 noncontrolling interests and equity

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

SELECTED CASH FLOW INFORMATION

(Dollars in thousands)

(Unaudited)

Six Months Ended

December 31,

2020

2019

Net cash (used in) provided by operating activities

$

(215,632

)

$

103,758

Net cash provided by (used in) investing activities

146,682

(129,606

)

Net cash provided by (used in) financing activities

614,410

(40,885

)

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

7,795

1,693

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

553,255

(65,040

)

Cash, cash equivalents and restricted cash at beginning of period

924,304

1,092,065

Cash, cash equivalents and restricted cash at end of period

$

1,477,559

$

1,027,025

View source version on businesswire.com: https://www.businesswire.com/news/home/20210212005105/en/

CONTACT: Kimberly Kerns EVP and Chief Communications Officer Madison Square Garden Entertainment Corp. (212) 465-6442

CONTACT: Ari Danes, CFA Senior Vice President, Investor Relations & Treasury Madison Square Garden Entertainment Corp. (212) 465-6072