Madison Square Garden Entertainment Corp.MSGE
Madison Square Garden Entertainment Corp. Income Taxes Disclosure
Income Taxes
Income tax (expense) benefit is comprised of the following components:
| Year Ended June 30, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current expense: | ||||||||||||||||||||
| Federal | $ | (2,327) | $ | (97) | $ | (1,008) | ||||||||||||||
| State and other | (11,969) | (91) | — | |||||||||||||||||
| (14,296) | (188) | (1,008) | ||||||||||||||||||
| Deferred (expense) benefit: | ||||||||||||||||||||
| Federal | (10,861) | 47,607 | 6,198 | |||||||||||||||||
| State and other | (2,973) | 44,590 | (6,918) | |||||||||||||||||
| (13,834) | 92,197 | (720) | ||||||||||||||||||
| Income tax (expense) benefit | $ | (28,130) | $ | 92,009 | $ | (1,728) | ||||||||||||||
The income tax (expense) benefit differs from the amount derived by applying the statutory federal rate to pre-tax income (loss) principally due to the effect of the following items:
| Year Ended June 30, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Federal tax expense at statutory federal rate | $ | (13,768) | $ | (10,981) | $ | (16,332) | ||||||||||||||
| State income taxes, net of federal tax expense | (11,686) | (9,039) | (13,033) | |||||||||||||||||
| Change in valuation allowance | — | 108,506 | 34,147 | |||||||||||||||||
| Return to provision | (142) | 4,487 | — | |||||||||||||||||
Federal tax credits | 1,172 | 1,139 | — | |||||||||||||||||
| Change in the estimated applicable tax rate used to determine deferred taxes | 233 | 280 | (557) | |||||||||||||||||
| Nondeductible officers’ compensation | (3,590) | (2,385) | (3,861) | |||||||||||||||||
| Nondeductible expenses | (343) | (413) | (266) | |||||||||||||||||
| Excess tax benefit related to share-based payment awards | 12 | 412 | (5,457) | |||||||||||||||||
| Capital loss carryover | — | — | 3,960 | |||||||||||||||||
| Nondeductible transaction costs | — | — | (206) | |||||||||||||||||
| GAAP income of consolidated partnership attributable to non-controlling interest | — | — | (116) | |||||||||||||||||
| Other, net | (18) | 3 | (7) | |||||||||||||||||
| Income tax (expense) benefit | $ | (28,130) | $ | 92,009 | $ | (1,728) | ||||||||||||||
The tax effects of temporary differences which give rise to significant portions of the deferred tax assets and liabilities at June 30, 2025 and 2024 were as follows:
| June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating losses (“NOLs”) | $ | — | $ | 15,736 | |||||||
| Federal tax credits | — | 1,295 | |||||||||
| Accrued employee benefits | 15,311 | 25,219 | |||||||||
| Restricted stock units and stock options | 6,434 | 8,337 | |||||||||
| Deferred revenue | 2,929 | 3,498 | |||||||||
| Right-of-use lease assets and lease liabilities, net | 40,461 | 22,696 | |||||||||
| Deferred interest | 23,371 | 20,367 | |||||||||
| Property and equipment | 41,441 | 38,564 | |||||||||
| Investments | 1,372 | 921 | |||||||||
| Other, net | 9,930 | 9,248 | |||||||||
| Total deferred tax assets | $ | 141,249 | $ | 145,881 | |||||||
| Deferred tax liabilities: | |||||||||||
| Intangibles and other assets | $ | (40,395) | $ | (40,022) | |||||||
| Prepaid expenses | (6,460) | (5,746) | |||||||||
| Straight-line rent | (40,322) | (31,806) | |||||||||
| Total deferred tax liabilities | $ | (87,177) | $ | (77,574) | |||||||
| Deferred tax assets, net | $ | 54,072 | $ | 68,307 | |||||||
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company’s ability to realize its deferred tax assets depends upon the generation of sufficient future taxable income to allow for the utilization of its NOLs and future deductible temporary differences. In determining the likelihood of future realization of the deferred tax assets as of June 30, 2025, the Company considered both positive and negative evidence and weighted the effect of such evidence based upon its objectivity. This included consideration of both cumulative pretax income, including permanent items, for current fiscal year and the two preceding years; and projected future pretax income. Based on current facts and circumstances, management believes that it is more likely than not that the Company will realize its deferred tax
assets. The Company will continue to assess the realizability of its deferred tax assets on a quarterly basis. The deferred tax valuation allowance was $0 for Fiscal Years 2025 and 2024, and $95,352 for Fiscal Year 2023.
Prior to the MSGE Distribution, the Company and Sphere Entertainment entered into a Tax Disaffiliation Agreement (“TDA”) that governs the parties’ respective rights, responsibilities and obligations with respect to taxes and tax benefits. Under the TDA, Sphere Entertainment will generally be responsible for all U.S. federal, state, local and other applicable income taxes of the Company for any taxable period or portion of such period ending on or before the MSGE Distribution Date.
Prior to the MSGE Distribution, the Company’s collections for ticket sales, sponsorships and suite rentals in advance were recorded as deferred revenue and were recognized as revenues when earned for both accounting and tax purposes. The tax recognition on most of these deferred revenues was accelerated to the date of the MSGE Distribution and is the responsibility of Sphere Entertainment. The Company will not reimburse Sphere Entertainment for such taxes. At the time of the MSGE Distribution, the Company recorded a deferred tax asset of $71,395 and a corresponding valuation allowance of $71,395 with regard to the deferred revenue acceleration for income tax purposes. As of June 30, 2025, the Company has a deferred tax asset of $2,929 with regard to the deferred revenue acceleration and the remaining tax deduction will be recorded as deferred revenue is earned and the associated events occur or upon payment of refunds.
Income tax payments, net of refunds, were $17,788 and $58 for Fiscal Years 2025 and 2024, respectively. Income tax refunds, net of payments were $2,031 for Fiscal Year 2023, as if the Company was on a standalone basis prior to the MSGE Distribution.
On Friday, July 4, 2025, President Trump signed into law the Reconciliation Bill commonly known as the “One Big Beautiful Bill Act” (the “OBBBA”). OBBBA includes a broad range of tax reform provisions affecting businesses, including extending and modifying certain key Tax Cuts & Jobs Act provisions (both domestic and international), expanding certain Inflation Reduction Act incentives, and accelerating the phase-out of others. The Company is currently evaluating the impact of these provisions on the Company’s consolidated financial statements.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 13, 2025 | Showing above |
| 2023 | Aug 18, 2023 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.