Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
All dollar amounts included in the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are presented in thousands, except as otherwise noted.
This MD&A contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this MD&A, there are statements concerning our future operating and future financial performance, including (i) the success of Sphere and The Sphere Experience and development of new immersive productions content, (ii) our plans to bring Sphere to Abu Dhabi, United Arab Emirates, under a franchise model, and to National Harbor, Maryland (iii) our ability to reduce or defer certain discretionary capital projects, (iv) our plans for possible additional debt financing and (v) MSG Networks subscriber declines. Words such as “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 such forward-looking statements are not guarantees of future performance, results or events and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:
• the substantial amount of debt we have incurred, the ability of our subsidiaries to make payments on, or repay or refinance, such debt under their respective credit facilities (including MSG Networks’ ability to make its quarterly principal amortization payments pursuant to its term loan facility), and, if unsuccessful, the implications thereof;
• our ability to make payments on our 3.50% Convertible Senior Notes;
• our ability to obtain additional financing, to the extent required, on terms favorable to us or at all;
• the popularity of The Sphere Experience, as well as our ability to continue to attract advertisers and marketing partners, audiences to attend, and artists, entertainers and athletes to perform at, residencies, concerts and other events at Sphere in Las Vegas and other future Sphere venues;
• the successful development of The Sphere Experience and related original immersive productions and the investments associated with such development, as well as investment in personnel, content and technology for Sphere;
• our ability to successfully provide design, construction and pre- and post-opening services to Sphere partners, including DCT Abu Dhabi in connection with Sphere Abu Dhabi;
• DCT Abu Dhabi’s ability to complete construction of Sphere Abu Dhabi;
• our ability to negotiate and execute definitive agreements for the development of a Sphere venue at National Harbor, Maryland, as well as the receipt of certain governmental incentives and approvals from Prince George’s County and the State of Maryland related to the development and construction of the venue;
• our ability to construct, finance and operate new Sphere venues, and the investments, costs and timing associated with those efforts, including obtaining financing, the impact of inflation and tariffs, and any construction delays;
• general economic conditions, especially in the Las Vegas and New York City metropolitan areas where we have significant business activities, including the impact of a recession or a government shutdown on our business;
• our ability to successfully implement cost reductions and reduce or defer certain discretionary capital projects, if necessary;
• the level of our expenses and our operational cash burn rate, including our corporate expenses;
• the demand for MSG Networks programming among Distributors and the number of subscribers thereto, and our ability to enter into and renew affiliation agreements with Distributors, including the terms of any such renewals, as well as the impact of consolidation among Distributors;
• our ability to successfully execute MSG Networks’ strategy for its DTC and authenticated streaming offering, MSG+ (which is included in the Gotham Sports streaming product), the success of such offering and our ability to adapt to new content distribution platforms or changes in consumer behavior resulting from emerging technologies;
• the ability of our Distributors to minimize declines in subscriber levels;
• any adverse changes in the distribution of our networks or the impact of subscribers selecting Distributors’ packages that do not include our networks or distributors that do not carry our networks at all;
• MSG Networks’ ability to renew, renegotiate or replace its media rights agreements with professional sports teams and its ability to perform its obligations thereunder;
• the relocation or insolvency of professional sports teams with which we have a media rights agreement;
• the demand for advertising and marketing partnership offerings at Sphere and advertising sales and viewer ratings for our networks;
• competition, for example, from other venues (including the construction of new competing venues) and other regional sports and entertainment offerings;
• our ability to effectively manage any impacts of future pandemics or public health emergencies, as well as renewed actions taken in response by governmental authorities or certain professional sports leagues, including ensuring compliance with rules and regulations imposed upon our venues, to the extent applicable;
• the effect of any postponements or cancellations of events by third-parties or the Company as a result of future pandemics, due to operational challenges, force majeure events and other health and safety concerns;
• the extent to which attendance at Sphere in Las Vegas or future Sphere venues may be impacted by government actions, health concerns of potential attendees or reduced tourism;
• the security of our MSG Networks program signal and electronic data;
• the on-ice and on-court performance and popularity of the professional sports teams whose games we broadcast on our networks;
• changes in laws, guidelines, bulletins, directives, policies and agreements, and regulations under which we operate;
• any economic, social or political actions, such as boycotts, protests, work stoppages or campaigns by labor organizations, including the unions representing players and officials of the NBA and the NHL, artists or employees involved in our productions or other work stoppages that may impact us or our business partners;
• seasonal fluctuations and other variations in our operating results and cash flow from period to period;
• business, reputational and litigation risk if there is a cyber or other security incident resulting in loss, disclosure or misappropriation of stored personal information, disruption of our Sphere or MSG Networks businesses or disclosure of confidential information or other breaches of our information security;
• activities or other developments (including pandemics, such as the COVID-19 pandemic) that discourage or may discourage congregation at prominent places of public assembly, including our venue;
• the level of our capital expenditures and other investments (and any impairment charges related thereto);
• the acquisition or disposition of assets or businesses and/or the impact of, and our ability to successfully pursue, acquisitions or other strategic transactions;
• our ability to successfully integrate acquisitions, new venues or new businesses into our operations and secure intellectual property rights in territories where such businesses operate and/or conduct business;
• the operating and financial performance of our strategic acquisitions and investments, including those we do not control, and the impact of goodwill and other impairments with respect to businesses (including as a result of changes to the MSG Networks business);
• our internal control environment and our ability to identify and remedy any future material weaknesses;
• the costs associated with, and the outcome of, litigation and other proceedings to the extent uninsured, including litigation or other claims against companies we invest in or acquire;
• the impact of governmental regulations or laws, changes in these regulations or laws or how those regulations and laws are interpreted, as well as our ability to maintain necessary permits, licenses and easements;
• the impact of sports league rules, regulations and/or agreements and changes thereto;
• financial community perceptions of our business, operations, financial condition and the industries in which we operate;
• the ability of our investees and others to repay loans and advances we have extended to them;
• the performance by our affiliated entities of their obligations under various agreements with us, as well as our performance of our obligations under such agreements and ongoing commercial arrangements;
• the tax-free treatment of the MSGE Distribution and the distribution from MSG Sports in 2020; and
• the additional factors described under “Part I — Item 1A. Risk Factors” included in this Form 10-K.
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Form 10-K may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. We cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-K to conform these statements to actual results or to changes in our expectations.
Introduction
This MD&A is provided as a supplement to, and should be read in conjunction with, the audited consolidated financial statements and footnotes thereto included in Item 8 of this Form 10-K to help provide an understanding of our financial condition, changes in financial condition and results of operations .
Our MD&A is organized as follows:
Business Overview. This section provides a general description of our business, as well as other matters that we believe are important in understanding our results of operations and financial condition and in anticipating future trends.
Results of Operations. This section provides an analysis of our results of operations for the years ended December 31, 2025 and December 31, 2024 and six months ended December 31, 2024 and December 31, 2023 on both a (i) consolidated basis and (ii) segment basis .
Liquidity and Capital Resources. This section provides a discussion of our financial condition and liquidity, as well as an analysis of our cash flows for the years ended December 31, 2025 and December 31, 2024. The discussion of our financial condition and liquidity includes summaries of our primary sources of liquidity, our contractual obligations and off balance sheet arrangements that existed at December 31, 2025.
Seasonality of Our Business. This section discusses the seasonal performance of our business .
Recently Issued Accounting Pronouncements and Critical Accounting Policies . This section cross-references a discussion of critical accounting policies considered to be important to our financial condition and results of operations and which require significant judgment and estimates on the part of management in their application. Our critical accounting policies and recently issued accounting pronouncements, are discussed in Items 7 and 8, respectively, of this Form 10-K.
Business Overview
The Company is a leader in immersive experiences, technology and media and is comprised of two reportable segments, Sphere and MSG Networks. Sphere is an experiential medium powered by advanced technologies, and MSG Networks operates two regional sports and entertainment networks, as well as a DTC and authenticated streaming product.
Sphere : This segment reflects Sphere, an experiential medium powered by advanced technologies that bring storytelling to a new level. The Company’s first Sphere venue opened in Las Vegas on September 29, 2023. The entire exterior surface of Sphere, referred to as the Exosphere, is covered with nearly 580,000 square feet of fully programmable LED lighting, creating the largest
LED screen in the world and an impactful display for artistic and branded content. Inside, the venue features a 16K x 16K interior display plane – the world’s highest-resolution LED screen that wraps up, over, and around the audience creating a fully immersive visual environment. In addition, Sphere’s advanced technologies include Sphere Immersive Sound – Sphere’s proprietary audio system – as well as haptic seating and 4D environmental effects. The venue can accommodate up to 20,000 guests and hosts a wide variety of events year-round, including The Sphere Experience, which features original immersive productions, as well as concerts and residencies from renowned artists, and marquee sports and brand events (formerly referred to as corporate events). Production efforts for Sphere events are supported by Sphere Studios, an immersive content studio dedicated to creating multi-sensory experiences exclusively for Sphere, using proprietary technology, tools and production facilities. Sphere Studios is home to a team of creative, production, technology and software engineering experts who provide full in-house creative and production services. The studio campus in Burbank includes a 68,000-square-foot development facility, as well as Big Dome, a 28,000-square-foot, 100-foot high custom dome, with a quarter-sized version of the interior display plane at Sphere in Las Vegas, that serves as a specialized screening, production facility, and lab for content at Sphere.
The Company is focused on creating a global network of Spheres. We are working with DCT Abu Dhabi to bring Sphere to Abu Dhabi, United Arab Emirates. In January 2026, the Company, the State of Maryland, Prince George’s County, and Peterson Companies announced the Company’s intent to develop a new Sphere venue at National Harbor, Maryland.
MSG Networks: This segment is comprised of the Company’s regional sports and entertainment networks, MSG Network and MSG Sportsnet, as well as its DTC and authenticated streaming offering, MSG+ (which is included in the Gotham Sports streaming product). MSG Networks serves the New York designated market area, as well as other portions of New York, New Jersey, Connecticut and Pennsylvania and features a wide range of sports content, including exclusive live local games and other programming of the Knicks of the NBA and the Rangers, the Islanders, the Devils and the Sabres of the NHL, as well as significant coverage of the Giants and the Bills of the NFL.
Description of Our Segments
Sphere
Revenue Sources — Sphere
The Sphere segment earns revenue from several primary sources:
• ticket sales to our audiences for The Sphere Experience,
• license fees for our venue paid by third-party promoters or licensees in connection with events that we do not produce or promote/co-promote,
• sponsorships, signage and Exosphere advertising,
• suite license fees at Sphere,
• facility and ticketing fees,
• concessions, and
• the sale of merchandise.
The amount of revenue and expense recorded for a given event depends to a significant extent on whether the Company is promoting or co-promoting the event or is licensing the venue to a third party.
For the year ended December 31, 2025, the Sphere segment represented approximately 64% of our consolidated revenues.
Ticket Sales and Suite Licenses
For The Sphere Experience we recognize revenues from the sale of tickets to our audiences. We sell tickets to the public through our box office, via our websites, ticketing agencies and through group sales. The amount of revenue we earn from ticket sales depends on the number of shows and the mix of events that we promote, the available venue capacity, the extent to which we can sell to fully utilize the capacity, and our ticket prices.
Sphere in Las Vegas has 23 premium suites. Suite licenses at Sphere in Las Vegas are generally sold to corporate customers, including some with multi-year licenses with annual escalators.
Under standard suite licenses, the licensees pay an annual license fee, which varies depending on the location of the suite. The license fee includes, for each seat in the suite, tickets for events at Sphere in Las Vegas for which tickets are sold to the general
public, subject to certain exceptions. In addition, suite holders separately pay for food and beverage service in their suites at Sphere in Las Vegas.
Venue License Fees
For entertainment events held at Sphere that we do not produce, promote or co-promote, we typically earn revenue from venue license fees charged to the third-party promoter or producer of the event (including live entertainment, marquee sporting and brand events). The amount of license fees we charge varies by the size of the production and the number of days utilized, among other factors. Our fees typically include both the cost of renting Sphere in Las Vegas and costs for providing event staff, such as front-of-house and back-of-house staff, including stagehands, electricians, laborers, box office staff, ushers and security as well as production services such as staging, lighting and sound.
Sponsorship, Signage and Exosphere Advertising
We earn (or may in the future earn) revenues through the sale of advertising, signage space and sponsorship rights in connection with Sphere, The Sphere Experience and third-party live entertainment events, including advertising displayed on the Exosphere.
Sponsorship agreements may require us to use the name, logos and other trademarks of sponsors in our advertising and in promotions for Sphere, The Sphere Experience and other live entertainment events. Sponsorship arrangements may be exclusive within a particular sponsorship category or non-exclusive and generally permit a sponsor to use the name, logos and other trademarks of Sphere, The Sphere Experience, and other events in connection with their own advertising and in promotions in our venue or in the community.
Facility and Ticketing Fees
For all public and ticketed events held in Sphere in Las Vegas we also earn additional revenues on substantially all tickets sold, whether we promote/co-promote the event or license the venue to a third party. These revenues are earned in the form of certain fees and assessments, including the facility fees we charge.
Concessions
We sell food and beverages during substantially all events held at Sphere in Las Vegas. In addition to concession-style sales of food and beverages, which represent the majority of our concession revenues, we also generate revenue from catering for our suites at Sphere in Las Vegas.
Merchandise
We earn revenues from the sale of merchandise related to The Sphere Experience and other live entertainment events that take place at Sphere. The majority of our merchandise revenues are generated through on-site sales during performances of The Sphere Experience and other live events. Typically, the revenues we earn from merchandise sales at events other than The Sphere Experience relate to sales of merchandise provided by the artist, the producer or promoter of the event and are generally subject to a revenue sharing arrangement and are generally recorded on a net basis (as agent).
See Note 2. Summary of Significant Accounting Policies to the consolidated financial statements included in Item 8 of this Form 10-K for further details regarding our accounting policies on revenue recognition.
Expenses — Sphere
The Sphere segment incurs expenses related to day-of-event costs associated with events, costs to produce The Sphere Experience and costs associated with the promotion of events through various advertising campaigns, including production costs for Exosphere advertising. Additionally, it incurs corporate and supporting department operating costs, including charges under the transition services/services agreement with MSG Entertainment, and other operating expenses such as insurance, utilities, repairs and maintenance, labor related to the overall management of the Sphere segment, non-capitalizable content development and technology costs associated with the Company’s Sphere initiative, and depreciation and amortization expense related to certain corporate property, equipment and leasehold improvements.
Day-of-Event Costs
For days in which the Company promotes an event or licenses Sphere in Las Vegas to a third-party promoter under a license fee arrangement, the event is charged the variable costs associated with such event, including box office staff, stagehands, ticket takers, ushers, security, and other similar expenses. In situations where we license Sphere in Las Vegas to a third-party promoter under a license fee arrangement, day-of-event costs are typically included in the license fees charged to the promoter.
Production Costs
The Company incurs certain costs during the production phase of original immersive productions (which are part of The Sphere Experience) that are directly related to production activities. Such costs include, but are not limited to, fees paid to writers, directors and producers as well as video and music production costs and production-specific overhead. Production costs are generally deferred when incurred and are subsequently amortized over the run of a production, in line with the corresponding proportional revenue.
Venue Usage
The Company’s consolidated financial statements include expenses associated with the ownership, maintenance and operation of Sphere.
Marketing and Advertising Costs
The Company incurs significant costs promoting The Sphere Experience and other events held at Sphere through various advertising campaigns, including advertising on social and digital platforms, television, outdoor platforms and radio, and in newspapers. In light of the intense competition for entertainment events, such expenditures are a necessity to drive interest in our productions and encourage members of the public to purchase tickets to our shows.
Exosphere Advertising Costs
The Company incurs in-house and third party production costs to create content for companies to advertise on the Exosphere. Production costs are generally deferred when incurred and are subsequently expensed when the advertisement runs on the Exosphere, in line with the corresponding proportional revenue.
Other Expenses
The Company’s selling, general and administrative expenses primarily consist of administrative costs, including compensation, professional fees, advertising sales commissions, as well as sales and marketing costs, including non-event related advertising expenses. Operating expenses also include corporate overhead costs and venue operating expenses. Venue operating expenses include the non-event related costs of operating Sphere, and include such costs as real estate taxes, insurance, utilities, repairs and maintenance, and labor related to the overall management of the venue.
See Note 2. Summary of Significant Accounting Policies to the consolidated financial statements included in Item 8 of this Form 10-K for further details regarding our accounting policies on direct operating expenses.
MSG Networks
Revenue Sources — MSG Networks
The MSG Networks segment generates revenues principally from distribution fees, as well as from the sale of advertising. For the year ended December 31, 2025, this segment represented approximately 36% of our consolidated revenues.
Distribution Revenue
Distribution revenue includes both affiliation fee revenue earned from Distributors for the right to carry the Company’s networks as well as revenue earned from DTC subscriptions and single game purchases on MSG+, which is included in the Gotham Sports streaming product . The fees we receive depend largely on the demand from subscribers for our programming.
Advertising Revenue
MSG Networks’ advertising revenue is largely derived from the sale of inventory in its live professional sports programming. As such, a disproportionate share of this revenue is earned in the three months ending March 31 and December 31. In certain advertising arrangements, the Company guarantees specific viewer ratings for its programming.
Expenses — MSG Networks
Direct operating expenses primarily include the cost of professional team rights acquired under media rights agreements to telecast various sporting events on our networks, and other direct programming and production-related costs of our networks.
MSG Networks is a party to media rights agreements with the Knicks and the Rangers, which provide the Company with the exclusive live media rights to the teams’ games in their local markets. In addition, MSG Networks has multi-year media rights agreements with the Islanders, Devils and Sabres. The media rights acquired under these agreements to telecast various sporting
events and other programming for exhibition on our networks are typically expensed on a straight-line basis over the applicable annual contract or license period. We negotiate directly with the teams to determine the fee and other provisions of the media rights agreements. Media rights fees for sports programming are influenced by, among other things, the size and demographics of the geographic area in which the programming is distributed, and the popularity and/or the competitiveness of a team.
Other direct programming and production-related costs include, but are not limited to, the salaries of on-air personalities, producers, directors, technicians, writers and other creative staff, as well as expenses associated with location costs, remote facilities and maintaining studios, origination, and transmission services and facilities.
Other Expenses
The Company’s selling, general and administrative expenses primarily consist of administrative costs, including compensation, professional fees, advertising sales commissions, as well as sales and marketing costs, including non-event related advertising expenses.
Factors Affecting Operating Results
The operating results of our Sphere segment are largely dependent on our ability to continue to attract (i) audiences to The Sphere Experience, (ii) advertisers and marketing partners, and (iii) guests to attend, and artists, entertainers and athletes, to perform at, residencies, concerts and other events at our venue. The operating results of our MSG Networks segment are largely dependent on (i) the terms of MSG Networks’ affiliation agreements with Distributors (including renewals thereof), (ii) the number of subscribers of MSG Networks’ Distributors, (iii) the terms of MSG Networks’ media rights agreements (including renewals thereof), (iv) the ability of MSG Networks to make its required debt service payments, including quarterly principal amortization payments pursuant to the terms of its term loan facility, (v) the success of MSG+, MSG Networks’ DTC and authenticated streaming offering (which is included in the Gotham Sports streaming product), and (vi) the advertising rates MSG Networks charges advertisers. Certain of these factors in turn depend on the popularity and/or performance of the professional sports teams whose games MSG Networks broadcasts on its networks.
Our Company’s future performance is dependent in part on general economic conditions and the effect of these conditions on our customers. Weak economic conditions may lead to lower tourism and lower demand for our entertainment offerings (including The Sphere Experience) and programming content, which would also negatively affect concession and merchandise sales, and could lead to lower levels of advertising, sponsorship and venue signage. Recent developments relating to tariffs have intensified concerns over the global macroeconomic environment, which has resulted in a rise in volatility across financial markets and concerns over the prospect of a U.S. recession. These conditions may also affect the number of immersive productions, concerts, residencies and other events that take place in the future. An economic downturn could adversely affect our business and results of operations.
The Company continues to explore additional opportunities to expand our presence in the entertainment industry, both domestically and internationally. Any new investment may not initially contribute to operating income, but is intended to contribute to the success of the Company over time. Our results will also be affected by investments in, and the success of, new immersive productions.
Factors Affecting Comparability
MSG Networks Debt Restructuring
On April 24, 2025, the Company, MSG Networks and certain subsidiaries of MSG Networks entered into a Transaction Support Agreement (the “Transaction Support Agreement”) with the other parties thereto with respect to the restructuring of the debt of subsidiaries of MSG Networks, amendments to the media rights agreements between subsidiaries of MSG Networks, on the one hand, and New York Knicks, LLC and New York Rangers, LLC, each a wholly-owned subsidiary of MSG Sports, on the other hand, and certain other matters. On June 27, 2025, the transactions contemplated by the Transaction Support Agreement were consummated, as further described below.
MSGN Term Loan Facility
MSGN L.P., MSG Networks, MSGN Eden, LLC, an indirect, wholly-owned subsidiary of the Company and the general partner of MSGN L.P. (“MSGN Eden”), Regional MSGN Holdings LLC, an indirect , wholly-owned subsidiary of the Company and the limited partner of MSGN L.P. (“Regional MSGN”), Rainbow Garden Corp., a wholly-owned subsidiary of MSG Networks (“Rainbow Garden Corp.” and, collectively with MSG Networks, MSGN Eden and Regional MSGN, the “MSGN Holdings Entities”), and certain subsidiaries of MSGN L.P. entered into the A&R MSGN Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (the “MSGN Lenders”). Pursuant to the A&R MSGN Credit Agreement, MSGN L.P.’s prior credit facility was replaced with a $210,000 term loan facility, the MSGN Term Loan Facility,
which matures on December 31, 2029. See Note 14. Credit Facilities and Convertible Notes to the consolidated financial statements in Item 8 of this Form 10-K for a more detailed discussion of the MSGN Term Loan Facility.
Investor Agreement
The Company, the MSGN Holdings Entities and MSGN L.P. entered into an investor agreement, pursuant to which, among other matters, (i) the Company made a capital contribution to MSG Networks in an amount equal to $15,000 and (ii) the parties thereto agreed that MSGN L.P. will be a part of the same affiliated group of which the Company is the common parent that files U.S. federal income tax returns on a consolidated basis.
Limited Partnership Agreement of MSGN L.P.
The Limited Partnership Agreement of MSGN L.P. was amended to provide for the issuance of contingent interest units (the “Contingent Interest Units”) to the MSGN Lenders. Beginning with the fiscal calendar year-end following the repayment in full of the MSGN Term Loan Facility, the Contingent Interest Units entitle the MSGN Lenders to receive annual payments in an amount equal to 50% of the difference between MSGN L.P.’s balance sheet cash (subject to certain exclusions) and certain minimum cash balances, specified with respect to the applicable measurement date, until the earlier of (i) December 31, 2029 and (ii) payment of $100,000 in the aggregate to the MSGN Lenders. The Contingent Interest Units are also entitled to receive 50% of the proceeds of a merger and/or acquisition event related to MSG Networks and its subsidiaries occurring prior to December 31, 2029, subject to an aggregate cap of $100,000 considered together with the annual payments of excess cash described in the previous sentence.
Amendments to Media Rights Agreements
The media rights agreements between subsidiaries of MSG Networks, on the one hand, and New York Knicks, LLC and New York Rangers, LLC, on the other hand, were amended to provide for (among other things):
• Knicks:
• a modification to the annual rights fee to effect a 28% reduction as of January 1, 2025;
• an elimination of the annual rights fee escalator; and
• a change to the contract expiration date to the end of the 2028-29 season, subject to a right of first refusal in favor of MSG Networks; and
• Rangers:
• a modification to the annual rights fee to effect a reduction of 18% as of January 1, 2025;
• an elimination of the annual rights fee escalator; and
• a change to the contract expiration date to the end of the 2028-29 season, subject to a right of first refusal in favor of MSG Networks.
MSG Networks also entered into amendments with certain other professional sports teams that provide for, among other matters, reductions in the annual rights fees payable to such teams.
Warrants for Common Stock of MSG Networks
MSG Networks issued penny warrants to MSG Sports exercisable for 19.9% of the common stock of MSG Networks.
Change in Fiscal Year
On June 26, 2024, the Company’s Board of Directors approved a change in the Company’s fiscal year-end from June 30 to December 31, effective December 31, 2024, resulting in a six-month Transition Period from July 1, 2024 to December 31, 2024. Financial statements for the years ended June 30, 2024 and 2023 continue to be presented on the basis of our previous fiscal year-end.
Results of Operations
Comparison of the Year Ended December 31, 2025 versus the Year Ended December 31, 2024
Consolidated Results of Operations
The table below sets forth, for the periods presented, certain historical financial information.
Years Ended December 31,
Change
Amount
Percentage
Revenues
Direct operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Impairment and other losses, net
Restructuring charges
Operating loss
Gain on extinguishment of debt
Interest income
Interest expense
Other expense, net
Income (loss) from operations before income taxes
Income tax (expense) benefit
Income (loss) from continuing operations
Income from discontinued operations, net of taxes
Net income (loss)
NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.
The following is a summary of changes in our segments’ operating results for the year ended December 31, 2025 as compared to the year ended December 31, 2024, which are discussed below under “Business Segment Results.”
Changes attributable to
Revenues
Direct operating expenses
Selling, general and administrative expenses
Depreciation
and
amortization
Impairment and other losses, net
Restructuring charges
Operating income (loss)
Sphere segment
MSG Networks segment
Depreciation and amortization
Depreciation and amortization for the year ended December 31, 2025 increased $8,975 to $336,411 as compared to the year ended December 31, 2024 due to the increase in total property and equipment, gross in 2025 as compared to 2024.
Impairment and other losses, net
Impairment and other losses, net , were $69,781 for the year ended December 31, 2025 as compared to $70,968 for the year ended December 31, 2024 . The current year charges primarily relate to a $65,400 goodwill impairment charge for the MSG Networks reporting unit. During the year ended December 31, 2024, the Company recognized charges relating to (i) a $61,200 goodwill impairment charge for the MSG Networks reporting unit and (ii) fixed assets at Sphere Las Vegas that were removed from the venue and were impaired.
Restructuring charges
For the years ended December 31, 2025 and 2024, the Company recorded restructuring charges of $11,520 and $9,972, respectively, related to termination benefits provided for certain executives and employees.
Gain on Debt Extinguishment
For the year ended December 31, 2025, the Company recorded a gain on extinguishment of debt of $346,092, reflecting the net impact of the restructuring of the Prior MSGN Credit Facilities (as defined below). Refer to Note 14. Credit Facilities and Convertible Notes in this Form 10-K for additional information.
Interest income
Interest income for the year ended December 31, 2025 decreased $13,298 as compared to the prior year primarily due to lower interest rates and lower average cash and cash equivalents.
Interest expense
Interest expense for the year ended December 31, 2025 decreased $40,882 as compared to the prior year primarily due to (i) a reduction in the average outstanding principal balance of the MSGN Term Loan Facility as compared to the prior year, (ii) the application of troubled debt restructuring for interest recognition for the MSGN Term Loan Facility, and (iii) a reduction in commitment charges resulting from the termination of the revolving credit facility under the Prior MSGN Credit Agreement (as defined below) on October 11, 2024.
Other expense, net
Other expense, net for the year ended December 31, 2025 decreased $3,648 as compared to the prior year primarily due to smaller losses on equity method investments and foreign exchange.
Income taxes
Income tax expense for the year ended December 31, 2025 of $23,810, reflects an effective tax rate of 42%. The effective tax rate is higher than the statutory federal rate of 21% primarily due to income tax expense related to the impact of cancellation of debt income, partially offset by income tax benefit from the reversal of the gain on extinguishment of debt presentation under the accounting principles generally accepted in the United States of America (“GAAP”) and income tax benefits due to a decrease in the valuation allowance and state and local taxes.
Income tax benefit for the year ended December 31, 2024 of $113,185, reflects an effective tax rate of 24%. The effective tax rate is higher than the statutory federal rate of 21% primarily due state and local taxes.
See Note 18. Income Taxes to the consolidated financial statements included in Item 8 of this Form 10-K for further details on the components of income tax and a reconciliation of the statutory federal rate to the effective tax rate.
Adjusted operating income (loss) (“AOI”)
The Company evaluates segment performance based on several factors, of which the key financial measure is adjusted operating income (loss), a non-GAAP financial measure. We define adjusted operating income (loss) as operating income (loss) excluding:
(i) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets,
(ii) amortization for capitalized cloud computing arrangement costs,
(iii) share-based compensation expense,
(iv) restructuring charges or credits,
(v) merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries,
(vi) gains or losses on sales or dispositions of businesses and associated settlements,
(vii) the impact of purchase accounting adjustments related to business acquisitions, and
(viii) gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan.
See Note 20. Segment Information to the consolidated financial statements included in Item 8 of this Form 10-K for further discussion on the definition of AOI.
The Company believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the Company’s business without regard to the settlement of an obligation that is not expected to be made in cash. The Company eliminates merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries, 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 Company’s Executive Deferred Compensation Plan provides investors with a clearer picture of the Company’s operating performance given that, in accordance with GAAP, gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan are recognized in Operating income (loss) whereas gains and losses related to the remeasurement of the assets under the Company’s Executive Deferred Compensation Plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Other (expense) income, net, which is not reflected in Operating income (loss).
The Company believes AOI is an appropriate measure for evaluating the operating performance of its business segments and the Company on a consolidated basis. AOI and similar measures with similar titles are common performance measures used by investors and analysts to analyze the Company’s performance. The Company uses revenues and AOI measures as the most important indicators of its business performance, and evaluates management’s effectiveness with specific reference to these indicators.
AOI should be viewed as a supplement to and not a substitute for operating loss, net loss, cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP. Since AOI is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. The Company has presented the components that reconcile operating income (loss), the most directly comparable GAAP financial measure, to AOI.
The following is a reconciliation of operating loss to adjusted operating income:
Years Ended December 31,
Change
Amount
Percentage
Operating loss
Share-based compensation expense
Depreciation and amortization
Restructuring charges
Impairment and other losses, net
Merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries
Amortization for capitalized cloud computing costs
Remeasurement of deferred compensation plan liabilities
Adjusted operating income
NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.
Adjusted operating income for the year ended December 31, 2025 increased $151,984 to $261,824 as compared to the year ended December 31, 2024 . The net increase was attributable to the following:
Year Ended December 31, 2025
Increase in adjusted operating income of the Sphere segment
Decrease in adjusted operating income of the MSG Networks segment
Business Segment Results
Sphere
The table below sets forth, for the periods presented, certain historical financial information and a reconciliation of operating loss to adjusted operating income (loss) for the Company’s Sphere segment.
Years Ended December 31,
Change
Amount
Percentage
Revenues
Direct operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Impairment and other losses, net
Restructuring charges
Operating loss
Reconciliation to adjusted operating income (loss):
Share-based compensation expense
Depreciation and amortization
Restructuring charges
Impairment and other losses, net
Merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries
Amortization for capitalized cloud computing costs
Remeasurement of deferred compensation plan liabilities
Adjusted operating income (loss)
NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.
Revenues
Revenues increased $163,739 from $617,673 for the year ended December 31, 2024 to $781,412 for the year ended December 31, 2025. The net increase was attributable to the following:
Year Ended December 31, 2025
Increase in revenues for The Sphere Experience
Increase in event-related revenues
Other net increases
Decrease in revenues from sponsorship, signage, Exosphere advertising, and suite license fee revenues
For the year ended December 31, 2025, the increase in revenues for The Sphere Experience reflects higher average per-show revenue due to the impact of The Wizard of Oz at Sphere, which debuted on August 28, 2025, and, to a lesser extent, an increase in the number of overall performances. In the current year period, The Sphere Experience included 880 total performances, comprised of 494 performances of Postcard From Earth , 59 performances of V-U2 An Immersive Concert Film, and 327 performances of The Wizard of Oz at Sphere (which generated a combined average per-show revenue of approximately $497). In the prior year period, The Sphere Experience included 862 total performances, comprised of 805 performances of Postcard from Earth and 57 performances of V-U2 An Immersive Concert Film (which generated a combined average per-show revenue of approximately $386).
For the year ended December 31, 2025, the increase in event-related revenues reflects (i) higher revenues from concerts due to 37 additional concert residency shows held at Sphere in Las Vegas during the period, partially offset by lower average per-concert revenue due to the mix of concerts as compared to the prior year period, and (ii) higher revenues from brand events (previously referred to as corporate events) held at Sphere in Las Vegas, primarily driven by an increase in the number of events as compared to the prior year period. These increases were partially offset by a decrease in revenues, primarily due to a decrease in the number of marquee sporting events held during the year ended December 31, 2024.
For the year ended December 31, 2025, the decrease in revenues from sponsorship, signage, Exosphere advertising and suite license fees reflects lower Exosphere advertising revenues, partially offset by higher sponsorship revenues due to increased sales of existing sponsorship inventory and higher suite license fee revenues. Exosphere advertising revenues for the year ended December 31, 2024 included revenues from advertising campaigns around the Super Bowl, which was held in Las Vegas in the prior year period.
Direct operating expenses
Direct operating expenses increased $52,987 from $265,278 for the year ended December 31, 2024 to $318,265 for the year ended December 31, 2025. The net increase was primarily attributable to the following:
Year Ended December 31, 2025
Increase in direct operating expenses for The Sphere Experience
Increase in event-related direct operating expenses
Increase in venue operating expenses
Increase in Holoplot expenses
Other net increases
Decrease in expenses from sponsorship, signage, Exosphere advertising, and suite license fees
For the year ended December 31, 2025, the increase in direct operating expenses for The Sphere Experience reflects higher average per-show expenses, primarily due to the impact of The Wizard of Oz at Sphere , which debuted on August 28, 2025 (combined average direct operating expenses of $155 per show in the current year period as compared to $124 per show in the prior year period) and an increase in the number of overall performances.
For the year ended December 31, 2025, the increase in event-related direct operating expenses reflects (i) higher expenses from concerts, primarily due to an increase in the number of concert residency shows held at Sphere in Las Vegas as compared to the prior year period, partially offset by lower average per-concert expenses, and (ii) higher expenses from brand events (previously referred to as corporate events) held at Sphere in Las Vegas, primarily driven by higher average per-event expenses and an increase in the number of events as compared to the prior year period. These increases were partially offset by a decrease in expenses due to a decrease in the number of marquee sporting events held during the year ended December 31, 2024.
For the year ended December 31, 2025, the increase in venue operating expenses was related to an increase in repairs and maintenance and employee compensation and benefits, partially offset by other cost decreases.
For the year ended December 31, 2025, the increase in direct operating expenses from Holoplot reflects the impact of consolidating Holoplot following its acquisition by the Company in April 2024.
Selling, general and administrative expenses
Selling, general and administrative expenses decreased $45,444, or 10%, for the year ended December 31, 2025 to $389,594 as compared to the year ended December 31, 2024. The decrease was primarily due to lower employee compensation and related benefits of $40,032 and lower professional fees of $19,230, partially offset by other cost increases.
Impairments and other losses, net
During the year ended December 31, 2025, the Company recognized a loss resulting from the sale of its land in Stratford, London. During the year ended December 31, 2024, the Company recognized a charge relating to fixed assets at Sphere Las Vegas that were removed from the venue and were impaired.
Depreciation and amortization
Depreciation and amortization for the year ended December 31, 2025 increased $9,102, to $327,769 as compared to the year ended December 31, 2024, primarily due to the increase in total property and equipment, gross.
Restructuring charges
For the year ended December 31, 2025, the Company recognized restructuring charges of $9,560 as compared to restructuring charges of $9,932 for the prior year, related to termination benefits provided for certain executives and employees.
Operating loss
Operating loss for the year ended December 31, 2025 improved $152,853 to $268,157 as compared to an operating loss of $421,010 in the year ended December 31, 2024. The improvement in operating loss was primarily due to the increase in revenue and decrease in selling, general and administrative expenses, partially offset by an increase in direct operating expenses.
Adjusted operating income (loss)
Adjusted operating income for the year ended December 31, 2025 increased $164,225 to $144,562 as compared to the year ended December 31, 2024. The increased adjusted operating income was primarily due to an increase in revenues and decrease in selling, general and administrative expenses, partially offset by an increase in direct operating expenses.
MSG Networks
The tables below set forth, for the periods presented, certain historical financial information and a reconciliation of operating income to adjusted operating income for the Company’s MSG Networks segment.
Years Ended December 31,
Change
Amount
Percentage
Revenues
Direct operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Impairment and other losses, net
Restructuring charges
Operating income
Reconciliation to adjusted operating income:
Share-based compensation expense
Depreciation and amortization
Restructuring charges
Impairment and other losses, net
Merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries
Amortization for capitalized cloud computing costs
Adjusted operating income
NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.
Revenues
Revenues for the year ended December 31, 2025 decreased $74,622, or 15%, to $438,633 as compared to the prior year. The changes in revenues were attributable to the following:
Year Ended December 31, 2025
Decrease in distribution revenue
Decrease in advertising revenue
Other net increases
In June 2023, MSG Networks introduced MSG+, a DTC and authenticated streaming product, which allows subscribers to access MSG Network and MSG Sportsnet as well as on demand content across various devices. As of October 2024, MSG+ is included in the Gotham Sports streaming product launched as part of MSG Networks’ joint venture with YES Network. MSG+ is available on a free, authenticated basis to subscribers of participating Distributors (including all of MSG Networks’ major Distributors), as well as for purchase by viewers on a DTC basis through monthly and annual subscriptions, as well as single game purchases. As a result, (i) distribution revenue as presented above includes both affiliation fee revenue earned from Distributors for the right to carry the Company’s networks as well as revenue earned from subscriptions and single game purchases on MSG+; (ii) advertising revenue as presented above includes the impact of MSG+ advertising revenue; and (iii) total subscribers as discussed below includes both subscribers of Distributors as well as monthly and annual subscribers of MSG+.
For the year ended December 31, 2025, distribution revenue decreased $73,648, primarily due to a decrease in subscribers of approximately 13% (excluding the impact of the Altice non-carriage period in the current period). In addition, results for the year ended December 31, 2025 reflect the absence of revenues from Altice during the non-carriage period.
MSG Networks has experienced significant ongoing subscriber declines and is expected to continue to experience significant subscriber declines in the future, which is expected to result in reductions in MSG Networks’ revenue, operating income and AOI in future periods.
For the year ended December 31, 2025, advertising revenue decreased $1,188, primarily due to a lower number of combined live regular season and postseason professional sports telecasts and other revenue decreases, partially offset by higher advertising revenue related to MSG+, higher advertising revenue from branded content and higher per-game advertising revenue related to live professional sports telecasts on the linear networks.
Direct operating expenses
For the year ended December 31, 2025, direct operating expenses decreased $73,438, or 21%, to $271,714 as compared to the prior year. The changes were attributable to the following:
Year Ended December 31, 2025
Decrease in rights fees expense
Decrease in other programming and production costs
On June 27, 2025, MSG Networks completed the restructuring of its credit facilities and amended certain of its media rights agreements to, among other things, effect a reduction in the annual media rights fees payable under such agreements as of January 1, 2025, discussed in further detail in Note 14. Credit Facilities and Convertible Notes and Note 19. Related Party Transactions to the consolidated financial statements included in Part IV of this Form 10-K. For the year ended December 31, 2025, rights fees expense decreased by $65,190, primarily reflecting reductions in media rights fees for certain professional sports teams as a result of such amendments, including any retroactive adjustments for the 2024-25 NBA and NHL seasons recorded during the year ended December 31, 2025.
For the year ended December 31, 2025, other programming and production costs decreased $8,248 which includes lower costs related to MSG+ and other cost decreases.
Selling, general and administrative expenses
For the year ended December 31, 2025, selling, general and administrative expenses increased $2,910, to $52,324 as compared to the prior year primarily due to (i) higher advertising and marketing costs of $14,071 and (ii) higher professional fees of $2,984, partially offset by (iii) lower employee compensation and related benefits of $12,366 and (iv) other cost decreases.
Impairments and other losses, net
In connection with the performance of the Company’s annual goodwill impairment test as of August 31, 2025, the Company recognized impairments and other losses, net of $65,400, during the year ended December 31, 2025, related to the goodwill of the MSG Networks reporting unit, due to projected declines in the reporting unit’s business. As a result of the interim impairment test, the Company recorded a goodwill impairment charge of $61,200 during the year ended December 31, 2024 within the MSG Networks reporting unit.
Restructuring charges
For the year ended December 31, 2025 , the Company recognized restructuring charges of $1,960 as compared to restructuring charges of $40 for the prior year, related to termination benefits provided for certain executives and employees.
Operating income
For the year ended December 31, 2025, operating income decreased $10,087, or 21%, to $38,593 as compared to the prior year primarily due to the decrease in revenues and, to a lesser extent, the higher selling, general and administrative expenses, partially offset by the decrease in direct operating expenses.
Adjusted operating income
For the year ended December 31, 2025, adjusted operating income decreased $12,241, or 9%, to $117,262 as compared to the prior year, primarily due to the decrease in revenues and, to a lesser extent higher selling, general and administrative expenses (excluding share-based compensation expense and merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries), partially offset by the decrease in direct operating expenses.
Results of Operations
Comparison of the Six Months Ended December 31, 2024 versus the Six Months Ended December 31, 2023
Consolidated R esults of Operations
The table below sets forth, for the periods presented, certain historical financial information.
Six Months Ended December 31,
Change
Amount
Percentage
Revenues
Direct operating expenses
Selling, general and administrative expenses
Depreciation and amortization
Impairment and other losses, net
Restructuring charges
Operating loss
Interest income
Interest expense
Other (expense) income, net
Loss from operations before income taxes
Income tax benefit
Loss from continuing operations
Loss from discontinued operations, net of taxes
Net loss
NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.
The following is a summary of changes in our segments’ operating results for the six months ended December 31, 2024 as compared to the six months ended December 31, 2023, which are discussed below under “Business Segment Results.”
Changes attributable to
Revenues
Direct
operating
expenses (a)
Selling, general and administrative expenses
Depreciation
and
amortization
Impairment and other losses, net
Restructuring charges
Operating (loss) income
Sphere segment
MSG Networks segment
(a) Components of Direct operating expenses are discussed below under “Business Segment Results”.
Depreciation and amortization
Depreciation and amortization for the six months ended December 31, 2024 increased $70,942, to $165,232 as compared to the six months ended December 31, 2023 . A ssets related to Sphere in Las Vegas were placed in service in September 2023. Accordingly, the six months ended December 31, 2024 reflect a full six months of depreciation expense as compared to a partial period of depreciation expense in the prior year period.
Impairment and other losses, net
Impairment and other losses, net , were $65,233 for the six months ended December 31, 2024 as compared to $115,738 for the six months ended December 31, 2023 . The 2024 charge relates to (i) a $61,200 goodwill impairment charge for the MSG Networks reporting unit and (ii) fixed assets at Sphere Las Vegas that were removed from the venue and were impaired. The prior year period charges were primarily due to the Company’s decision in November 2023 to no longer pursue the development of a Sphere in the United Kingdom, which resulted in the recording of an impairment charge of $116,541 during that period.
Restructuring charges
For the six months ended December 31, 2024 and 2023, the Company recorded restructuring charges of $5,164 and $4,678 , respectively , related to termination benefits provided for certain executives and employees.
Interest income
Interest income for the six months ended December 31, 2024 increased $1,109 as compared to the six months ended December 31, 2023, primarily due to higher average cash and cash equivalent balances.
Interest expense
Interest expense for the six months ended December 31, 2024 increased $31,560 as compared to the six months ended December 31, 2023 primarily due to (i) the Company discontinuing the capitalization of interest expense during the three months ended December 31, 2023 as assets were placed in service following the opening of Sphere in Las Vegas in September 2023 and (ii) interest expense on the 3.50% Convertible Senior Notes, which were issued in December 2023 .
Other (expense) income, net
Other expense, net for the six months ended December 31, 2024, was $44, compared to other income, net of $41,066 in the prior year period, which included a realized gain of $62,647 related to the settlement of litigation related to the Networks Merger, partially offset by a realized loss of $19,027 related to the sale of a portion of the MSGE Retained Interest in the corresponding prior year period.
Income taxes
Inco me tax benefit from continuing operations for the six months ended December 31, 2024 of $75,346 differs from income tax benefit derived from applying the statutory federal rate of 21% to the pretax loss primarily due to tax benefit of $14,403 related to state and local taxes, partially offset by tax expense of $4,706 related to nondeductible officers’ compensation.
Income tax benefit from continuing operations for the six months ended December 31, 2023 of $97,753 differs from income tax benefit derived from applying the statutory federal rate of 21% to the pretax loss primarily due to discrete items including tax benefit of $64,401 related to the state tax rate change used to measure the deferred taxes and income tax benefit of $15,655 related to the nontaxable gain on the repayment of all amounts outstanding under the DDTL Facility, partially offset by an increase in the foreign valuation allowance of $28,807.
See Note 18. Income Taxes to the consolidated financial statements included in Item 8 of this Form 10-K for further details on the components of income tax and a reconciliation of the statutory federal rate to the effective tax rate.
Adjusted operating income (loss) (“AOI”)
The following is a reconciliation of operating loss to adjusted operating income (loss):
Six Months Ended December 31,
Change
Amount
Percentage
Operating loss
Share-based compensation expense
Depreciation and amortization
Restructuring charges
Impairment and other losses, net
Merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries
Amortization for capitalized cloud computing costs
Remeasurement of deferred compensation plan liabilities
Adjusted operating income (loss)
NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful .
Adjusted operating income for the six months ended December 31, 2024 increased $29,109 to $22,662 as compared to adjusted operating loss for the six months ended December 31, 2023 . The net increase was attributable to the following:
Six Months Ended December 31, 2024
Decrease in adjusted operating loss of the Sphere segment
Decrease in adjusted operating income of the MSG Networks segment
Business Segment Results
Sphere
The table below sets forth, for the periods presented, certain historical financial information and a reconciliation of operating loss to adjusted operating loss for the Company’s Sphere segment.
Six Months Ended December 31,
Change
Amount
Percentage
Revenues
Direct operating expenses (a)
Selling, general and administrative expenses
Depreciation and amortization
Impairment and other losses, net
Restructuring charges
Operating loss
Reconciliation to adjusted operating loss:
Share-based compensation expense
Depreciation and amortization
Restructuring charges
Impairment and other losses, net
Merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries
Amortization for capitalized cloud computing costs
Remeasurement of deferred compensation plan liabilities
Adjusted operating loss
NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.
(a) Direct operating expenses include Event-related expenses and Other direct operating expenses, as presented in Note 20. Segment Information to the consolidated financial statements included in Item 8 of this Form 10K.
Revenues
Revenues increased $120,514 from $175,578 for the six months ended December 31, 2023 to $296,092 for the six months ended December 31, 2024. The net increase was attributable to the following:
Six Months Ended December 31, 2024
Increase in revenues for The Sphere Experience
Increase in event-related revenues
Increase in revenues from sponsorship, signage, Exosphere advertising, and suite license fee revenues
Other net increases
On September 29, 2023, the Company opened Sphere in Las Vegas. As a result, the six months ended December 31, 2023 reflect operations beginning on that date while the six months ended December 31, 2024 reflect a full six months of operations.
For the six months ended December 31, 2024, the increase in revenues for The Sphere Experience reflects revenues associated with 340 performances of The Sphere Experience featuring Postcard From Earth , and 57 performances of V-U2 An Immersive Concert Film , which debuted in September 2024, generating combined average revenues of approximately $398 per performance, as compared to 192 performances of The Sphere Experience featuring Postcard From Earth , generating average revenues of approximately $486 per performance in the prior year period.
For the six months ended December 31, 2024, the increase in event-related revenues reflects higher revenues from concerts, primarily due to a full six months of concerts held at Sphere in Las Vegas, and, to a lesser extent, revenues from two brand takeovers (previously referred to as corporate takeovers) and two marquee sporting events held at Sphere in Las Vegas during the six months ended December 31, 2024, as compared to approximately three months of concerts held at Sphere in Las Vegas and one marquee sporting event in the six months ended December 31, 2023.
For the six months ended December 31, 2024, the increase in revenues from sponsorship, signage, Exosphere advertising and suite license fee revenues primarily reflects (i) higher Exosphere advertising revenues, primarily due to a full six months of campaigns in the period as compared to a partial period of activity in the prior year period as a result of the start of Exosphere campaigns in September 2023 and, to a lesser extent, (ii) higher sponsorship revenues due to increased sales of existing sponsorship inventory, and (iii) higher suite license fee revenues, primarily due to six months of venue operations in the period as compared to a partial period of activity in the prior year period as a result of the opening of Sphere in Las Vegas on September 29, 2023.
For the six months ended December 31, 2024, the increase in other revenues primarily reflects the impact of consolidating Holoplot’s results following its acquisition by the Company in April 2024 and, to a lesser extent, revenue related to the Company’s plans to bring Sphere to Abu Dhabi, United Arab Emirates.
Direct operating expenses
Direct operating expenses increased $59,971 from $75,143 for the six months ended December 31, 2023 to $135,114 for the six months ended December 31, 2024. The net increase was primarily attributable to the following:
Six Months Ended December 31, 2024
Increase in direct operating expenses for The Sphere Experience
Increase in venue operating expenses
Increase in event-related direct operating expenses
Increase in expenses from sponsorship, signage, Exosphere advertising, and suite license fees
Other net increases
For the six months ended December 31, 2024, the increase in direct operating expenses for The Sphere Experience reflects expenses associated with 340 performances of The Sphere Experience featuring Postcard From Earth and 57 performances of V-U2 An Immersive Concert Film , which debuted in September 2024, equating to combined average direct operating expenses of approximately $139 per performance, as compared to 192 performances of The Sphere Experience featuring Postcard From Earth, equating to average direct operating expenses of approximately $155 per performance in the prior year period.
For the six months ended December 31, 2024, the increase in venue operating expenses reflects a full six months of venue operations in the period as compared to a partial period of activity in the prior year period as a result of the opening of Sphere in Las Vegas on September 29, 2023.
For the six months ended December 31, 2024, the increase in event-related direct operating expenses was primarily due to higher expenses from concerts, primarily due to an increase in the number of concerts held at Sphere in Las Vegas as compared to the prior year period, and, to a lesser extent, expenses from two marquee sporting event and two brand event takeovers (previously referred to as corporate event takeovers) held at Sphere in Las Vegas during the period, as compared to one marquee sporting event in the prior year period.
For the six months ended December 31, 2024, the increase in direct operating expenses from sponsorship, signage, Exosphere advertising and suite license fees primarily reflects higher expenses related to advertising campaigns on the venue’s Exosphere, primarily due to a full six months of campaigns in the period as compared to a partial period of activity in the prior year period as a result of the start of Exosphere campaigns in September 2023.
For the six months ended December 31, 2024, the increase in other direct operating expenses primarily reflects the impact of consolidating Holoplot’s results following its acquisition by the Company in April 2024.
Selling, general and administrative expenses
Selling, general and administrative expenses increased $41,999, or 23%, for the six months ended December 31, 2024 to $223,953 as compared to the six months ended December 31, 2023. The increase was primarily due to (i) higher employee compensation and related benefits, including the impact of approximately $8,300 in executive management transition costs in the period as compared to approximately $1,200 of executive management transition costs in the prior year period, and, to a lesser extent, (ii) higher professional fees, including $4,843 of costs associated with MSG Networks’ pursuit of a work-out of its credit facilities and litigation-related expenses associated with the Networks Merger recorded in the six months ended December 2024, as well as (iii) other net cost increases.
Depreciation and amortization
Depreciation and amortization for the six months ended December 31, 2024 increased $70,419 , to $160,840 as compared to the six months ended December 31, 2023 . A ssets related to Sphere in Las Vegas were placed in service in September 2023. Accordingly, the period reflects a full six months of expense as compared to a partial period of expense in the prior year period.
Impairment and other losses, net
For the six months ended December 31, 2024 and 2023, the Company recorded impairment and other losses, net, of $4,033 and $115,738 respectively. The current year six-month period charge relates to fixed assets at Sphere in Las Vegas that were removed from the venue and were impaired. The prior year six-month period charge relates to Company’s decision in November 2023 to no longer pursue the development of a Sphere in the United Kingdom.
Restructuring charges
For the six months ended December 31, 2024 and 2023, the Company recorded restructuring charges of $5,134 and $4,678, respectively, related to termination benefits provided for certain executives and employees.
Operating loss
Operating loss for the six months ended December 31, 2024 improved $59,374 to $232,982 as compared to an operating loss of $292,356 for the six months ended December 31, 2023, primarily due to an increase in revenues and a decrease in impairment and other losses, partially offset by an increase in depreciation and amortization, direct operating expenses, and selling, general and administrative expenses.
Adjusted operating loss
Adjusted operating loss for the six months ended December 31, 2024 improved $41,880 to $27,099 as compared to the six months ended December 31, 2023, primarily due to an increase in revenues, partially offset by an increase in direct operating expenses and selling, general and administrative expenses (excluding share-based compensation expense and merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries).
MSG Networks
The tables below set forth, for the periods presented, certain historical financial information and a reconciliation of operating (loss) income to adjusted operating income for the Company’s MSG Networks segment.
Six Months Ended December 31,
Change
Amount
Percentage
Revenues
Direct operating expenses (a)
Selling, general and administrative expenses
Depreciation and amortization
Impairment and other losses, net
Restructuring charges
Operating (loss) income
Reconciliation to adjusted operating income:
Share-based compensation expense
Depreciation and amortization
Restructuring charges
Impairment and other losses, net
Merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries
Amortization for capitalized cloud computing costs
Adjusted operating income
NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful.
(a) Direct operating expenses include Rights fees and Other programming and production costs, as presented in Note 20. Segment Information.
Revenues
Revenues for the six months ended December 31, 2024 decreased $16,475, or 6%, to $240,111 as compared to the six months ended December 31, 2023. The changes in revenues were attributable to the following:
Six Months Ended December 31, 2024
Decrease in distribution revenue
Increase in advertising revenue
Other net decreases
In June 2023, MSG Networks introduced MSG+, a DTC and authenticated streaming product, which allows subscribers to access MSG Network and MSG Sportsnet as well as on demand content across various devices. As of October 2024, MSG+ is included in the Gotham Sports streaming product launched as part of MSG Networks’ joint venture with YES. MSG+ is available on a free, authenticated basis to subscribers of participating Distributors (including all of MSG Networks’ major Distributors), as well as for purchase by viewers on a DTC basis through monthly and annual subscriptions, as well as single game purchases. As a result, (i) distribution revenue as presented above includes both affiliation fee revenue earned from Distributors for the right to carry the Company’s networks as well as revenue earned from subscriptions and single game purchases on MSG+; (ii) advertising revenue as presented above includes the impact of MSG+ advertising revenue; and (iii) total subscribers as discussed below includes both subscribers of Distributors as well as monthly and annual subscribers of MSG+.
For the six months ended December 31, 2024, distribution revenue decreased $17,965, primarily due to a decrease in total subscribers of approximately 12.5%, partially offset by the impact of higher affiliation rates.
Effective December 31, 2024, Altice’s license to carry MSG Networks expired and MSG Networks was not carried by Altice from January 1, 2025 through February 21, 2025. On February 22, 2025, MSG Networks reached a new multi-year agreement with Altice to resume carriage of MSG Networks’ programming. As a result, results for the three months ended March 31, 2025 will reflect the absence of revenues from Altice during the non-carriage period.
Direct operating expenses
For the six months ended December 31, 2024, direct operating expenses increased $2,635, or 2%, to $171,757 as compared to the six months ended December 31, 2023. The changes were attributable to the following:
Six Months Ended December 31, 2024
Increase in other programming and production costs
Increase in rights fees expense
For the six months ended December 31, 2024, other programming and production costs increased $1,719 primarily due to the impact of MSG+.
For the six months ended December 31, 2024, right fees expense increased $916 primarily due to the impact of annual contractual rate increases, partially offset by the net impact of reductions resulting from fewer NBA and NHL games made available to MSG Networks for exclusive broadcast.
Selling, general and administrative expenses
For the six months ended December 31, 2024, selling, general and administrative expenses increased $9,600, to $30,310 as compared to the six months ended December 31, 2023 primarily due to (i) higher professional fees of $13,207, mainly reflecting costs associated with pursuing a work-out of the MSG Networks Credit Facilities with its syndicate of lenders and the absence of litigation-related insurance recoveries associated with the Networks Merger recorded in the prior year period, and (ii) higher employee compensation and related benefits of $2,387, partially offset by (iii) lower advertising and marketing costs of $2,668 and (iv) other cost decreases.
Impairment and other losses, net
Impairment and other losses, net increased by $61,200 for the six months ended December 31, 2024. The increase is due to a goodwill impairment charge for the MSG Networks reporting unit recorded during the six months ended December 31, 2024.
Operating (loss) income
For the six months ended December 31, 2024, operating income decreased $90,463, to an operating loss of $27,578 as compared to the six months ended December 31, 2023. The decrease in operating income was primarily due to an increase in impairment and other losses, net, and, to a lesser extent, a decrease in revenues, an increase in selling, general and administrative expenses, and to a lesser extent, an increase in direct operating expenses.
Adjusted operating income
For the six months ended December 31, 2024, adjusted operating income decreased $12,771, or 20%, to $49,761 as compared to the six months ended December 31, 2023, primarily due to the decrease in revenues and to a lesser extent, an increase in direct operating expenses, partially offset by a decrease in selling, general and administrative expenses (excluding share-based compensation expense and merger, debt work-out, and acquisition-related costs, including merger-related litigation expenses, net of insurance recoveries).
Comparison of the Fiscal Year Ended June 30, 2024 versus the Fiscal Year Ended June 30, 2023
Analysis of our results of operations for Fiscal Year 2024, including a comparison of Fiscal Year 2024 to Fiscal Year 2023, is included in “Part II — Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for Fiscal Year 2024, filed on August 14, 2024.
Liquidity and Capital Resources
Sources and Uses of Liquidity
The Company’s primary sources of liquidity are cash and cash equivalents, cash flows from the operations of our businesses and available borrowings under the LV Sphere Revolving Credit Facility. The Company’s uses of cash over the next 12 months and thereafter are expected to be substantial and include working capital-related items (including funding its operations and satisfying its accounts payable and accrued liabilities), capital spending (including the creation of additional original content for Sphere), required debt service payments (including principal amortization payments and excess cash flow payments pursuant to the MSGN Term Loan Facility), and investments, including in connection with its Sphere initiative, and related loans and advances that the Company may fund from time to time. The Company may also use cash to repurchase its common stock. The Company’s decisions as to the use of its available liquidity will be based upon the ongoing review of the funding needs of its businesses, the optimal allocation of cash resources, and the timing of cash flow generation. To the extent that the Company desires to access alternative sources of funding through the capital and credit markets, market conditions could adversely impact its ability to do so at that time.
As of December 31, 2025, the Company’s unrestricted cash and cash equivalents balance was $507,776, as compared to $384,835 as of September 30, 2025. Included in unrestricted cash and cash equivalents as of December 31, 2025 was (1) $376,813 in advance cash proceeds primarily from ticket sales, a portion of which the Company expects to pay to artists and promoters, and (2) $30,468 of cash and cash equivalents at MSG Networks, which were not available for distribution to the Company pursuant to the terms of the A&R MSGN Credit Agreement. In addition, as of December 31, 2025, the Company had $24,593 of Accounts payable and $431,477 of Accrued expenses and other current liabilities, including $130,061 of capital expenditure accruals primarily related to Sphere construction (a significant portion of which is in dispute). The balance of the Company’s total debt outstanding as of December 31, 2025 was $830,448. We believe we have sufficient liquidity from cash and cash equivalents, cash flows from operations and available borrowings under the LV Sphere Revolving Credit Facility, to fund our operations and service debt payments under our credit facilities for the foreseeable future.
The Company’s ability to have sufficient liquidity to fund its operations, refinance its indebtedness and make investments, including in connection with its Sphere initiative, is dependent on the ability of Sphere to generate significant positive cash flow. Although Sphere has been embraced by guests, artists, promoters, advertisers and marketing partners, and the Company anticipates that Sphere will generate substantial revenue and adjusted operating income on an annual basis over time, there can be no assurance that guests, artists, promoters, advertisers and marketing partners will continue to embrace this platform. Original immersive productions, such as Postcard From Earth, V-U2 An Immersive Concert Film and The Wizard of Oz at Sphere, have not been previously pursued on the scale of Sphere, which increases the uncertainty of our operating expectations. To the extent that the Company’s efforts do not result in viable shows, or to the extent that any such productions do not achieve expected levels of popularity among audiences, the Company may not generate the cash flows from operations necessary to fund its operations. To the extent the Company does not realize expected cash flows from operations from Sphere, it would have to take several actions to improve its financial flexibility and preserve liquidity, including significant reductions in both labor and non-labor expenses as well as reductions and/or deferrals in capital spending. Therefore, while the Company currently believes it will have sufficient liquidity from cash and cash equivalents, cash flows from operations (including expected cash flows from operations from Sphere) and available borrowings under the LV Sphere Revolving Credit Facility to fund its operations, no assurance can be provided that its liquidity will be sufficient in the event any of the preceding uncertainties facing Sphere are realized over the next 12 months. See “Part I — Item 1A. Risk Factors — Risks Related to Our Indebtedness, Financial Condition, and Internal Control — We Have Substantial Indebtedness and Are Highly Leveraged, Which Could Adversely Affect Our Business.”
For additional information regarding the Company’s capital expenditures, including those related to Sphere in Las Vegas, see the Company’s statements of cash flows included in the consolidated financial statements in Item 8. of this Form 10-K.
On March 31, 2020, the Company’s Board of Directors authorized a share repurchase program to repurchase up to $350,000 of the Company’s Class A Common Stock. The program was re-authorized by the Company’s Board of Directors on March 29, 2023. Under the authorization, shares of Class A Common Stock may be purchased from time to time in open market transactions, in accordance with applicable insider trading and other securities laws and regulations. The timing and amount of purchases will depend on market conditions and other factors. During the year ended December 31, 2025, the Company repurchased 1,054 shares of Class A Common Stock for $50,024 inclusive of $24 in excise taxes. As of December 31, 2025, the Company had approximately $300,000 remaining available for repurchases of Class A Common Stock.
Sphere
The Company opened Sphere in Las Vegas in September 2023. See “Part I — Item 1. Our Business — Sphere” in this Form 10-K. The venue has a number of revenue streams, including The Sphere Experience (which includes original immersive productions), advertising and marketing partnerships, concert residencies, and brand and marquee sporting events, each of which the Company expects to become significant over time. As a result, we anticipate that Sphere in Las Vegas will generate substantial revenue and adjusted operating income on an annual basis over time.
On October 15, 2024, the Company and DCT Abu Dhabi announced that they would work together to bring Sphere to Abu Dhabi, United Arab Emirates. On July 25, 2025, Sphere Entertainment Group and DCT Abu Dhabi finalized and entered into a Franchise Agreement, a Joint Development and Partnership Agreement and a Pre-Opening Services Agreement relating to the construction, development and operation of Sphere Abu Dhabi. Under the terms of the Franchise Agreement, DCT Abu Dhabi has agreed to pay Sphere Entertainment Group a franchise initiation fee (a portion of which has been received) and royalties in connection with DCT Abu Dhabi’s use of Sphere Entertainment Group’s intellectual property (including The Sphere Experience content and other creative content). Pursuant to the terms of the Pre-Opening Services Agreement, Sphere Entertainment Group is providing pre-construction and construction related services to DCT Abu Dhabi, with construction being funded by DCT Abu Dhabi. Following the venue’s opening, the Company will receive annual royalty fees for creative and artistic content licensed by Sphere Entertainment Group, such as The Sphere Experience content, and use of Sphere’s intellectual property and other ancillary content. In addition, prior to the opening of Sphere Abu Dhabi, Sphere Entertainment Group and DCT Abu Dhabi expect to enter into an Operational Services Agreement, pursuant to which Sphere Entertainment Group will provide to be agreed upon operational services to DCT Abu Dhabi prior to and following the opening of Sphere Abu Dhabi. In January 2026, the Company, the State of Maryland, Prince George’s County, and Peterson Companies announced the intent to develop a new Sphere venue at National Harbor, Maryland. Any construction, development, financing and operation of a Sphere venue at National Harbor is contingent upon, among other things, negotiation and execution of definitive agreements, as well as receipt of certain governmental incentives and approvals from Prince George’s County and the State of Maryland.
The Company will continue to explore additional domestic and international markets where it believes Sphere venues can be successful. The Company’s intention for any future venues is to utilize several options, such as joint ventures, equity partners, a managed venue or franchise model, sale-leaseback arrangements and debt financing.
Financing Agreements
See Note 14. Credit Facilities and Convertible Notes to the consolidated financial statements included in Item 8 of this Form 10-K for discussions of the Company’s debt obligations and various financing arrangements.
MSGN Term Loan Facility
General. MSGN L.P., MSGN Eden, Regional MSGN, and certain subsidiaries of MSGN L.P. entered into the Prior MSGN Credit Agreement providing for the Prior MSGN Credit Facilities which included (i) an initial $1,100,000 term loan facility and (ii) a $250,000 revolving credit facility. The outstanding principal amount under the Prior MSGN Credit Agreement of $829,125 matured without repayment on October 11, 2024, and an event of default occurred pursuant to the Prior MSGN Credit Agreement due to MSGN L.P.’s failure to make payment on the outstanding principal amount on the maturity date.
After a series of forbearances from the lenders under the Prior MSGN Credit Agreement, on June 27, 2025, MSG Networks, MSGN L.P., MSGN Eden, Regional MSGN, Rainbow Garden Corp. and certain subsidiaries of MSGN L.P. entered into the A&R MSGN Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the MSGN Lenders. The A&R MSGN Credit Agreement amended and restated the Prior MSGN Credit Agreement in its entirety.
Pursuant to the A&R MSGN Credit Agreement, the Prior MSGN Credit Facilities were replaced with the MSGN Term Loan Facility, which has a principal amount of $210,000 and matures on December 31, 2029. The outstanding balance under the MSGN Term Loan Facility was $158,937 as of December 31, 2025 (the carrying amount of the debt under the troubled debt restructuring guidance is $303,704). In January 2026, MSGN L.P. made a $5,468 mandatory cash sweep payment based on excess cash as of December 31, 2025.
In connection with the execution of the A&R MSGN Credit Agreement, the Company, the MSGN Holdings Entities and MSGN L.P. entered into an investor agreement, pursuant to which, among other matters, (i) the Company made a capital contribution to MSG Networks in an amount equal to $15,000; and (ii) the parties agreed that MSGN L.P. will be a part of the same affiliated group of which the Company is the common parent that files U.S. federal income tax returns on a consolidated basis. On June 27, 2025, MSGN L.P. made a cash payment of $80,000 (including the $15,000 capital contribution from the Company to MSG Networks) to the MSGN Lenders.
Interest Rates. Borrowings under the A&R MSGN Credit Agreement bear interest at a rate per annum, which at the option of MSGN L.P., may be equal to either (i) adjusted Term SOFR (i.e., Term SOFR as defined in the A&R MSGN Credit Agreement, plus 0.10%) plus 5.00% or (ii) Alternate Base rate, as defined in the A&R MSGN Credit Agreement, plus 4.00%. Upon a payment default in respect of principal, interest or other amounts due and payable under the A&R MSGN Credit Agreement or related loan documents, default interest will accrue on all overdue amounts at an additional rate of 2.00% per annum. The interest rate on the MSGN Term Loan Facility as of December 31, 2025 was 8.82%.
Covenants. The A&R MSGN Credit Agreement and the related security agreement contain certain customary representations and warranties, and certain affirmative covenants and events of default. The A&R MSGN Credit Agreement contains significant restrictions (and in some cases prohibitions) on the ability of MSGN L.P. and the MSGN Subsidiary Guarantors (as defined below) to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the A&R MSGN Credit Agreement, including without limitation the following: (i) incurring additional indebtedness and contingent liabilities; (ii) creating or granting liens on certain assets; (iii) making investments, loans or advances in or to other persons; (iv) paying dividends and distributions or repurchasing capital stock; (v) changing its lines of business; (vi) engaging in certain transactions with affiliates; (vii) amending specified agreements; (viii) with respect to restricted subsidiaries, issuing shares of stock such that MSGN L.P.’s ownership of any such restricted subsidiary is reduced; (ix) merging, dissolving, liquidating, consolidating, or disposing of all or substantially all of its assets; (x) making certain dispositions; (xi) making certain changes to its accounting practices; (xii) entering into agreements that restrict the granting of liens; (xiii) requesting any borrowing the proceeds of which are used in violation of anti-corruption laws or sanctions; (xiv) engaging in a liability management transaction; and (xv) limiting certain operating expenses incurred by MSGN L.P. and the MSGN Guarantors (as defined below). The MSGN Holdings Entities are subject to the restrictions described in the foregoing clauses (iv) and (xv), as well as customary passive holding company covenants.
Principal Repayments. Subject to customary notice and minimum amount conditions, MSGN L.P. may voluntarily prepay outstanding loans under the A&R MSGN Credit Agreement at any time, in whole or in part, without premium or penalty (except for customary breakage costs with respect to Term Benchmark (as defined in the A&R MSGN Credit Agreement) loans). The MSGN Term Loan Facility has a fixed amortization of $10,000 per quarter commencing on September 30, 2025. During the quarters ending September 30, 2025 and December 31, 2025, MSGN L.P. made fixed amortization payments of $10,000. MSGN L.P. is required to make mandatory prepayments pursuant to a mandatory cash sweep, determined at the end of each fiscal quarter, that requires 100% of MSGN L.P.’s and the MSGN Subsidiary Guarantors’ excess balance sheet cash over certain thresholds (subject to certain exclusions) to be used to repay the principal amount outstanding. In January 2026, MSGN L.P. made a $5,468 mandatory cash sweep payment based on excess cash as of December 31, 2025. MSGN L.P. is further required to make mandatory prepayments in certain circumstances, including from the net cash proceeds of certain dispositions of assets or casualty insurance and/or condemnation awards (subject to a threshold below which payments are not required, as well as certain reinvestment, repair and replacement rights) and upon the incurrence of indebtedness (subject to certain exceptions).
In connection with the execution of the A&R MSGN Credit Agreement, the Limited Partnership Agreement of MSGN L.P. was amended to provide for the issuance of the Contingent Interest Units to the MSGN Lenders. Beginning with the fiscal calendar year-end following the repayment in full of the MSGN Term Loan Facility, the Contingent Interest Units entitle the MSGN Lenders to receive annual payments in an amount equal to 50% of the difference between MSGN L.P.’s balance sheet cash (subject to certain exclusions) and certain minimum cash balances, specified with respect to the applicable measurement date, until the earlier of (i) December 31, 2029 and (ii) payment of $100,000 in the aggregate to the MSGN Lenders. The Contingent Interest Units are also entitled to receive 50% of the proceeds of a merger and/or acquisition event related to MSG Networks and its subsidiaries occurring prior to December 31, 2029, subject to an aggregate cap of $100,000 considered together with the annual payments of excess cash described in the previous sentence.
Guarantors and Collateral. All obligations under the A&R MSGN Credit Agreement are guaranteed by the MSGN Holdings Entities and MSGN L.P.’s direct and indirect domestic subsidiaries that are not designated as unrestricted subsidiaries (the “MSGN Subsidiary Guarantors” and, together with the MSGN Holdings Entities, the “MSGN Guarantors”). All obligations under the A&R MSGN Credit Agreement, including the guarantees of those obligations, are secured by certain of the assets of MSGN L.P. and each MSGN Guarantor (collectively, “MSGN Collateral”), including, but not limited to, a pledge of the equity interests in MSGN L.P. held directly by the MSGN Holdings Entities and the equity interests in each MSGN Subsidiary Guarantor held directly or indirectly by MSGN L.P. The Company, Sphere Entertainment Group and the subsidiaries of Sphere Entertainment Group (collectively, the “Non-Credit Parties”) are not legally obligated to repay the outstanding borrowings under the MSGN Term Loan Facility, nor are the assets of the Non-Credit Parties pledged as security under the MSGN Term Loan Facility.
2026 LV Sphere Facilities
General . On January 29, 2026, MSG LV entered into a credit agreement with JPMorgan Chase Bank, N.A., as Administrative Agent and L/C Issuer, and the lenders party thereto, which refinanced in full the 2022 LV Sphere Term Loan Facility. The new credit agreement provides for (i) the $275,000 2026 LV Sphere Term Loan Facility, the proceeds of which were used to refinance the 2022 LV Sphere Term Loan Facility, and (ii) the $275,000 2026 LV Sphere Revolving Credit Facility, the proceeds of which are expected to be used for working capital and general corporate purposes, including distributions to the Sphere Entertainment Group.
Financial Covenants . The 2026 LV Sphere Facilities include financial covenants requiring MSG LV to maintain a minimum debt service coverage ratio of 2.50:1.00 and a maximum total leverage ratio of 3.50:1.00. Both covenants are tested quarterly based on the four consecutive fiscal quarters of MSG LV then most recently ended.
Principal Repayments. The 2026 LV Sphere Facilities will mature on January 29, 2031. Commencing with the first fiscal quarter to occur after the second anniversary of the closing of the 2026 LV Sphere Term Loan Facility, the principal obligations under the 2026 LV Sphere Term Loan Facility will be subject to amortization payments of 5% per annum, paid in quarterly installments, with the remainder of the term loans due at maturity. Under certain circumstances, MSG LV is required to make mandatory prepayments on the loans, including prepayments in an amount equal to the net cash proceeds of casualty insurance and/or condemnation recoveries (subject to certain reinvestment, repair or replacement rights), subject to certain exceptions.
Interest Rates. Borrowings under the 2026 LV Sphere Facilities will bear interest at a floating rate, which at the option of MSG LV may be either (i) Term SOFR (as defined in the 2026 LV Sphere Facilities) plus a margin that ranges from 2.50% to 3.00% based on MSG LV’s total leverage ratio or (ii) the Alternative Base Rate (as defined in the 2026 LV Sphere Facilities) plus a margin that ranges from 1.50% to 2.00% based on MSG LV’s total leverage ratio.
Guarantors and Collateral. All obligations under the 2026 LV Sphere Facilities are guaranteed by Sphere Entertainment Group. All obligations under the 2026 LV Sphere Facilities, including the guarantees of those obligations, are secured by all of the assets of MSG LV and a pledge of the equity interests in MSG LV held directly by Sphere Entertainment Group including, but not limited to, MSG LV’s leasehold interest in the land on which the Sphere in Las Vegas is located.
Covenants. In addition to the financial covenants described above, the 2026 LV Sphere Facilities and the related guaranty and security and pledge agreements contain certain customary representations and warranties, affirmative and negative covenants and events of default. The 2026 LV Sphere Facilities contain certain restrictions on the ability of MSG LV to take certain actions as provided in (and subject to various exceptions and baskets set forth in) the 2026 LV Sphere Facilities, including the following: (i) incurring additional indebtedness; (ii) incurring liens on its assets; (iii) making investments, loans or advances in or to other persons; (iv) paying dividends and distributions to the extent a default or event of default under the 2026 LV Sphere Facilities is in effect at such time or the debt service reserve account is not funded to the extent required; (v) changing its lines of business; (vi) engaging in certain transactions with affiliates; (vii) amending organizational documents; (viii) merging or consolidating; and (ix) making certain dispositions.
3.50% Convertible Senior Notes
On December 8, 2023, the Company completed a private unregistered offering of $258,750 in aggregate principal amount of its 3.50% Convertible Senior Notes due 2028 (the “3.50% Convertible Senior Notes”), which amount includes the full exercise of the initial purchasers’ option to purchase additional 3.50% Convertible Senior Notes. See Note 14. Credit Facilities and Convertible Notes, included in Item 8 of this Form 10-K, for details on the 3.50% Convertible Senior Notes.
Letters of Credit
The Company uses letters of credit to support its business operations. The Company has letters of credit relating to operating leases which are supported by cash and cash equivalents that are classified as restricted.
Cash Flow Discussion
As of December 31, 2025, cash, cash equivalents and restricted cash totaled $521,264, as compared to $515,633 and $627,827 as of December 31, 2024 and 2023, respectively. The following table summarizes the Company’s cash flow activities for the years ended December 31, 2025 and 2024, and six months ended December 31, 2024 and 2023:
Year Ended December 31,
Six Months Ended December 31,
(Unaudited) 2024
(Unaudited)
Net cash provided by (used in) operating activities
Net cash (used in) provided by investing activities
Net cash (used in) provided by financing activities
Effect of exchange rates on cash, cash equivalents and restricted cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Operating Activities
Net cash provided by (used in) operating activities attributable to changes in assets and liabilities for the year ended December 31, 2025 and 2024 equaled $42,242 and $(4,681), respectively, a net increase of $46,923. The primary drivers of that net change are as follows.
The Company had increases in cash provided by operating activities related to (i) greater net cash inflows from Deferred revenue of $77,131, primarily related to cash proceeds from The Wizard of Oz at Sphere ticket sales, (ii) lower net cash outflows related to Accrued and other current liabilities of $30,249 due to the timing of payments for accrued expenses, including compensation and employee related benefits, and (iii) greater net cash inflows from Related party receivables and payables, net of $21,654 due to the timing of related party settlements.
These increases in cash provided by operating activities were partially offset by increases in cash used in operating activities related to (i) lower net cash inflows from Accounts receivable of $43,655, primarily due to the timing of cash collections from the Company’s third-party ticketing service provider as well as the timing of billings for certain other arrangements, (ii) greater net cash outflows for Prepaid expenses and other current and non-current assets of $16,507, primarily due to an increase in deferred production costs for The Wizard of Oz at Sphere and other productions, (iii) greater net cash outflows related to Accounts payable of $14,969 due to the timing of payments to vendors, and (iv) greater net cash outflows related to Right-of-use lease assets and operating lease liabilities of $6,980 due to the timing of lease payments and other leasing activity.
In addition to the net increase in cash provided by operating activities driven by changes in assets and liabilities, the Company generated net income of $33,405 in the current year period, compared to a net loss of $325,059 in the prior year period, as adjusted by non-cash net amounts of $167,699 in the current year period, compared to $399,147 in the prior year period. Refer to “— Business Segment Results” for further detail pertaining to the Company’s operating results.
Investing Activities
Net cash used in investing activities for the year ended December 31, 2025 decreased by $102,411 as compared to the prior year period primarily due the $48,757 in cash received from the sale of land in Stratford, London and lower net cash outflows for capital expenditures of $30,819. The prior year period included the acquisition of Holoplot GmbH.
Financing Activities
Net cash used in financing activities for the year ended December 31, 2025 increased by $159,177 as compared to the prior year period, primarily due to greater cash outflows for principal repayments of debt of $102,043 in the current year period as well as $50,024 in stock repurchases.
Contractual Obligations
As of December 31, 2025, the approximate future payments under our contractual obligations were as follows:
Payments Due by Period (c)
Total
Year
Years
Years
More Than
5 Years
Leases (a)
Debt repayments (b)
Total future payments under contractual obligations
(a) Includes contractually obligated minimum lease payments for operating leases having an initial noncancellable term in excess of one year for various office space and equipment. These commitments are presented exclusive of the imputed interest used to reflect the payment’s present value. See Note 11. Leases to the consolidated financial statements included in Item 8 of this Form 10-K for more information.
(b) See Note 14. Credit Facilities and Convertible Notes to the consolidated financial statements included in Item 8 of this Form 10-K for more information surrounding the principal repayments required under the credit agreements.
(c) Pension obligations have been excluded from the table above as the timing of the future cash payments is uncertain. See Note 15. Pension Plans and Other Postretirement Benefit Plan to the consolidated financial statements included in Item 8 of this Form 10-K for more information on the future funding requirements under our pension obligations.
Off Balance Sheet Arrangements
As of December 31, 2025, the Company has the following off balance sheet arrangements:
Commitments
December 31, 2026
December 31, 2027
December 31, 2028
December 31, 2029
December 31, 2030
Thereafter
Total
Sphere
Event-related commitments
Letter of credit
Other
Total Sphere commitments
MSG Networks
Broadcast rights
Purchase commitments
Total MSG Networks commitments
Total Commitments
Seasonality of Our Business
Our MSG Networks segment generally earns a higher share of its annual revenues in the three months ending March 31 and December 31 as a result of MSG Networks’ advertising revenue being largely derived from the sale of inventory in its live NBA and NHL professional sports programming.
Recently Issued Accounting Pronouncements and Critical Accounting Estimates
Recently Issued Accounting Pronouncements
See Note 2. Summary of Significant Accounting Policies to the consolidated financial statements included in Item 8 of this Form 10-K for discussion of recently issued accounting pronouncements.
Critical Accounting Estimates
Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties may result in materially different amounts being reported under different conditions or using different assumptions.
The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Management believes its use of estimates in the consolidated financial statements to be reasonable. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:
Revenue Recognition - Arrangements with Multiple Performance Obligations
The Company may enter into arrangements with multiple performance obligations, such as multi-year sponsorship agreements which may derive revenues for the Company as well as MSG Entertainment and MSG Sports within a single arrangement. The Company may also derive revenue from similar types of arrangements which are entered into by MSG Entertainment or MSG Sports. Payment terms for such arrangements can vary by contract, but payments are generally due in installments throughout the contractual term. The performance obligations included in each sponsorship agreement vary and may include advertising and other benefits such as, but not limited to, signage at Sphere, digital advertising, event or property specific advertising, as well as non-advertising benefits such as suite licenses and event tickets. To the extent the Company’s multi-year arrangements provide for performance obligations that are consistent over the multi-year contractual term, such performance obligations generally meet the definition of a series as provided for under the accounting guidance. If performance obligations are concluded to meet the definition of a series, the contractual fees for all years during the contract term are aggregated and the related revenue is recognized proportionately as the underlying performance obligation is satisfied.
The timing of revenue recognition for each performance obligation is dependent upon the facts and circumstances surrounding the Company’s satisfaction of its respective performance obligation. The Company allocates the transaction price for such arrangements to each performance obligation within the arrangement based on the estimated relative standalone selling price of the performance obligation. The Company’s process for determining its estimated standalone selling prices involves management’s judgment and considers multiple factors including company specific and market specific factors that may vary depending upon the unique facts and circumstances related to each performance obligation. Key factors considered by the Company in developing an estimated standalone selling price for its performance obligations include, but are not limited to, prices charged for similar performance obligations, the Company’s ongoing pricing strategy and policies, and consideration of pricing of similar performance obligations sold in other arrangements with multiple performance obligations.
The Company may incur costs such as commissions to obtain its multi-year sponsorship agreements. The Company assesses such costs for capitalization on a contract by contract basis. To the extent costs are capitalized, the Company estimates the useful life of the related contract asset which may be the underlying contract term or the estimated customer life depending on the facts and circumstances surrounding the contract. The contract asset is amortized over the estimated useful life.
Impairment of Long-Lived and Indefinite-Lived Assets
The Company’s long-lived and indefinite-lived assets accounted for approximately 75% of the Company’s consolidated total assets as of December 31, 2025 and consisted of the following:
December 31, 2025
Goodwill
Intangible assets, net
Property and equipment, net
Right-of-use lease assets
In assessing the recoverability of the Company’s long-lived and indefinite-lived assets when there is an indicator of potential impairment, the Company must make estimates and assumptions regarding future cash flows and other factors to determine the fair value of the respective assets. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized as well as the magnitude of any such charge. Fair value estimates are made at a specific point in time, based on relevant information. These estimates are subjective in nature and involve significant uncertainties and judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. If these estimates or material related assumptions change in the future, the Company may be required to record impairment charges related to its long-lived and/or indefinite-lived assets.
Impairment of Goodwill
Goodwill is tested annually for impairment as of August 31 and at any time upon the occurrence of certain events or substantive changes in circumstances. The Company performs its goodwill impairment test at the reporting unit level. At the time of the annual impairment test and as of December 31, 2025, the Company had two reportable segments and two reporting units, Sphere and MSG Networks, consistent with the way management makes decisions and allocates resources to the business.
The goodwill balance reported on the Company’s consolidated balance sheets as of December 31, 2025 by reporting unit was as follows:
Sphere
MSG Networks
Total
Balance as of June 30, 2024
Acquisitions
Impairments
Balance as of December 31, 2024
Impairments
Balance as of December 31, 2025
The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. If the Company can support the conclusion that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would not need to perform a quantitative impairment test for that reporting unit. If the Company cannot support such a conclusion or the Company does not elect to perform the qualitative assessment, a quantitative goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The estimates of the fair value of the Company’s reporting units are primarily determined using discounted cash flows, comparable market transactions or other acceptable valuation techniques, including the cost approach. These valuations are based on estimates and assumptions including projected future cash flows, discount rates, cost-based assumptions, determination of appropriate market comparables and the determination of whether a premium or discount should be applied to comparables. Significant judgments inherent in a discounted cash flow analysis include the selection of the appropriate discount rate, the estimate of the amount and timing of projected future cash flows and identification of appropriate continuing growth rate assumptions. The discount rates used in the analysis are intended to reflect the risk inherent in the projected future cash flows.
In the event a quantitative goodwill impairment assessment is performed, the reporting unit’s amortizable intangible assets and other long-lived assets are first tested for impairment. In doing so, amortizable intangible assets and other long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent from cash flows from other assets and liabilities. In determining whether an impairment of long-lived assets has occurred, the Company considers both qualitative and quantitative factors. The quantitative analysis involves estimating the undiscounted future cash flows directly related to that asset group and comparing the resulting value against the carrying value of the asset group. If the carrying value of the asset group is greater than the sum of the undiscounted future cash flows, an impairment loss is recognized for the difference between the carrying value of the asset group and its estimated fair value, before recording any impairment of goodwill. The amount of any remaining goodwill impairment loss is subsequently measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.
The Company elected to perform the qualitative assessment of impairment for its Sphere reporting unit during the quarterly period ended September 30, 2025. This assessment considered qualitative factors such as:
• macroeconomic conditions;
• industry and market considerations;
• cost factors;
• overall financial performance of the reporting units;
• other relevant company-specific factors such as changes in management, strategy or customers; and
• relevant reporting unit specific events such as changes in the carrying amount of net assets.
No impairment of Sphere’s goodwill was identified as a result of this assessment as the Company concluded that the reporting unit had a sufficient safety margin, representing the excess of the estimated fair value of the reporting unit, derived from the most recent quantitative assessments, less its respective carrying value (including goodwill). The Company believes that if the fair value of the reporting unit exceeds its carrying value by greater than 10%, a sufficient safety margin has been realized.
For the Company’s MSG Networks reporting unit, the Company performed a quantitative assessment of impairment. In doing so, the Company estimated the fair value of the MSG Networks reporting unit based on a discounted cash flow model (income approach). This approach relied on numerous assumptions and judgments within the model that were subject to various risks and uncertainties. Principal assumptions utilized, all of which are considered Level III inputs under the fair value hierarchy, include the Company’s estimates of future revenue, estimates of future operating cost, margin assumptions, terminal growth rates and the discount rate applied to estimate future cash flows. The assumptions utilized were subject to a high degree of judgment and complexity, particularly in light of economic and operational uncertainty relating to the MSG Networks business.
Based upon the results of the Company’s annual quantitative impairment test, the Company concluded that the carrying value of the MSG Networks reporting unit exceeded its estimated fair value as of the annual impairment testing date. Based on the evaluation of amortizable intangible assets and other long-lived assets performed as of the annual impairment testing date, the Company did not record any impairments of such assets. The Company did however record a non-cash goodwill impairment charge of $65,400 for the MSG Networks reporting unit as a result of the projected declines in the reporting unit’s business. The goodwill impairment charge was calculated as the amount that the carrying value of the reporting unit, including any goodwill, exceeded its fair value as of the annual impairment testing date. No additional indicators of impairment were identified through the remainder of the year ended December 31, 2025.
The Company continues to closely monitor the performance and fair value of its MSG Networks reporting unit. A significant adverse change in market factors or the business outlook for the MSG Networks reporting unit could negatively impact the fair value of the MSG Networks reporting unit and result in an additional goodwill impairment charge at that time.
See “Part I — Item 1A. Risk Factors — Risks Related to Our MSG Networks Business” for more information about the risks related to the MSG Networks business.
Other Long-Lived Assets
For other long-lived assets, including right-of-use lease assets and intangible assets that are amortized, the Company evaluates assets for recoverability when there is an indication of potential impairment. Amortizable intangible assets and other long-lived assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows that are independent from cash flows from other assets and liabilities. In determining whether an impairment of long-lived assets has occurred, the Company considers both qualitative and quantitative factors. The quantitative analysis involves estimating the undiscounted future cash flows directly related to that asset group and comparing the resulting value against the carrying value of the asset group. If the carrying value of the asset group is greater than the sum of the undiscounted future cash flows, an impairment loss is recognized for the difference between the carrying value of the asset group and its estimated fair value.
The Company has recognized intangible assets for affiliate relationships as a result of purchase accounting, and has determined that these intangible assets have finite lives. The Company also recognized intangible assets subject to amortization during Fiscal Year 2024 as a result of the acquisition of Holoplot. Refer to Note 2 Summary of Significant Accounting Policies to the consolidated financial statements included in Item 8 of this Form 10-K for the estimated useful lives of the Company’s major classes of intangible assets subject to amortization as of December 31, 2025.
The useful lives of the Company’s long-lived assets are based on estimates of the period over which the Company expects the assets to be of economic benefit to the Company. In estimating the useful lives, the Company considers factors such as, but not limited to, risk of obsolescence, anticipated use, plans of the Company, and applicable laws. In light of these facts and circumstances, the Company has determined that its estimated useful lives are appropriate.
