Madison Square Garden Sports Corp.MSGS
Madison Square Garden Sports Corp. Income Taxes Disclosure
Income Taxes
Income tax expense (benefit) attributable to operations is comprised of the following components:
| Years Ended June 30, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current expense: | ||||||||||||||||||||
| Federal | $ | 30,094 | $ | 27,605 | $ | 23,161 | ||||||||||||||
| State and other | 26,841 | 26,427 | 6,110 | |||||||||||||||||
| 56,935 | 54,032 | 29,271 | ||||||||||||||||||
| Deferred (benefit) expense: | ||||||||||||||||||||
| Federal | (27,976) | (3,506) | (643) | |||||||||||||||||
| State and other | (23,793) | (3,629) | 15,665 | |||||||||||||||||
| (51,769) | (7,135) | 15,022 | ||||||||||||||||||
| Income tax expense | $ | 5,166 | $ | 46,897 | $ | 44,293 | ||||||||||||||
The income tax expense attributable to operations differs from the amount derived by applying the statutory federal rate to pre-tax (loss) income principally due to the effect of the following items:
| Years Ended June 30, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Federal tax (benefit) expense at statutory federal rate | $ | (3,627) | $ | 22,190 | $ | 18,883 | ||||||||||||||
| State income taxes, net of federal benefit | 2,686 | 18,348 | 15,066 | |||||||||||||||||
| Change in the estimated applicable tax rate used to determine deferred taxes | 47 | 29 | 1,788 | |||||||||||||||||
| Capital loss carryover | — | — | (2,728) | |||||||||||||||||
| GAAP income of consolidated partnership attributable to non-controlling interests | — | — | 455 | |||||||||||||||||
| Return to provision | (87) | (1,446) | 366 | |||||||||||||||||
| Change in valuation allowance | 177 | 1,432 | 2,728 | |||||||||||||||||
| Nondeductible officers’ compensation | 5,291 | 5,899 | 5,238 | |||||||||||||||||
| Nondeductible disability insurance premiums expense | 1,710 | 1,349 | 1,227 | |||||||||||||||||
| Other nondeductible expenses | 559 | 631 | 558 | |||||||||||||||||
| Dividends received deduction | (1,159) | (814) | — | |||||||||||||||||
| Excess tax benefit related to shared based-payments awards | (468) | (265) | 636 | |||||||||||||||||
| Other | 37 | (456) | 76 | |||||||||||||||||
| Income tax expense | $ | 5,166 | $ | 46,897 | $ | 44,293 | ||||||||||||||
The tax effects of temporary differences which give rise to significant portions of the deferred tax assets and liabilities as of June 30, 2025 and 2024 are as follows:
| June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax asset: | |||||||||||
| Capital loss and tax credit carryforwards | $ | 4,333 | $ | 4,168 | |||||||
| Accrued employee benefits | 26,197 | 14,426 | |||||||||
| Accrued expenses | 39,689 | 32,412 | |||||||||
| Restricted stock units and stock options | 6,434 | 6,064 | |||||||||
| Arena deferred rent adjustment | 42,094 | 34,342 | |||||||||
| NBA luxury tax | 12,528 | — | |||||||||
| Investments | 9,018 | 3,303 | |||||||||
| Deferred revenue accelerated for tax purposes | 964 | 4,945 | |||||||||
| Other | 5,695 | 58 | |||||||||
| Total deferred tax assets | 146,952 | 99,718 | |||||||||
| Less valuation allowance | (4,337) | (4,160) | |||||||||
| Net deferred tax assets | $ | 142,615 | $ | 95,558 | |||||||
| Deferred tax liabilities: | |||||||||||
| Intangible and other assets | $ | (103,482) | $ | (102,961) | |||||||
| Prepaid expenses | (4,312) | (9,522) | |||||||||
| Total deferred tax liabilities | $ | (107,794) | $ | (112,483) | |||||||
| Net deferred tax asset (liability) | $ | 34,821 | $ | (16,925) | |||||||
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. As of June 30, 2025, based on current facts and circumstances, management believes that it is more likely than not that the Company will not realize the benefit for a portion of its deferred tax assets related to capital loss carryforwards. The Company will continue to assess the realizability of its deferred tax assets on a quarterly basis.
The Company does not have any uncertain tax positions as of June 30, 2025 and 2024.
Prior to the Sphere 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, the Company will generally be responsible for all U.S. federal, state, local and other applicable income taxes of Sphere Entertainment for any taxable period or portion of such period ending on or before the Sphere Distribution Date.
The Company was notified in March of 2025 that the State of New York was commencing an audit of the state income tax returns for the fiscal years ended June 30, 2022 and 2023. The audit was finalized in July 2025 and resulted in no material changes.
The federal and state statute of limitations are currently open for tax returns for years starting with 2022.
During the years ended June 30, 2025, 2024 and 2023, the Company made income tax payments, net of refunds, of $65,733, $48,035 and $18,615, respectively.
On July 4, 2025, the Reconciliation Bill commonly known as the “One Big Beautiful Bill Act” (the “OBBBA”) was enacted into law. 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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 12, 2025 | Showing above |
| 2024 | Aug 13, 2024 | |
| 2023 | Aug 17, 2023 | |
| 2022 | Aug 18, 2022 | |
| 2021 | Aug 19, 2021 | |
| 2020 | Aug 31, 2020 | |
| 2019 | Aug 20, 2019 | |
| 2018 | Aug 17, 2018 | |
| 2017 | Aug 17, 2017 | |
| 2016 | Aug 19, 2016 | |
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.