Madison Square Garden Sports Corp.MSGS
Madison Square Garden Sports Corp. Leases Disclosure
Leases
The Company’s leases primarily consist of the lease of the Company’s corporate offices under the Sublease Agreement (as defined below) with MSG Entertainment for the Company’s principal executive offices at Two Pennsylvania Plaza in New York and a lease agreement for an aircraft. In addition, we are party to the Arena License Agreements, which are long term license agreements with MSG Entertainment that end June 30, 2055 that allow the Knicks and the Rangers to play their home games at The Garden. The Company accounts for the rights of use of The Garden pursuant to the Arena License Agreements as leases under the ASC Topic 842, Leases. The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the lease term is assessed based on the date when the underlying asset is made available for the Company’s use by the lessor. The Company’s assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain not to exercise, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the lease term.
For leases with a term exceeding 12 months, a lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present value of the fixed minimum payment obligations over the lease term. A corresponding ROU asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received.
The Company includes fixed payment obligations related to non-lease components in the measurement of ROU assets and lease liabilities, as the Company has elected to account for lease and non-lease components together as a single lease component. ROU assets associated with finance leases are presented separate from operating lease ROU assets and are included within Property and equipment, net on the Company’s consolidated balance sheets. For purposes of measuring the present value of the Company’s fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in the underlying leasing arrangements are typically not readily determinable. The Company’s incremental borrowing rate reflects the rate it would pay to borrow on a secured basis and incorporates the term and economic environment surrounding the associated lease.
For operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For finance leases, the initial ROU asset is depreciated on a straight-line basis over the lease term, along with recognition of interest expense associated with accretion of the lease liability, which is ultimately reduced by the related fixed payments. For leases with a term of 12 months or less (“short-term leases”), any fixed lease payments are recognized on a straight-line basis over the lease term and are not recognized on the consolidated balance sheet. Variable lease costs for both operating and finance leases, if any, are recognized as incurred and such costs are excluded from lease balances recorded on the consolidated balance sheet.
The Company is party to the Sublease Agreement for the Company’s principal executive offices at Two Pennsylvania Plaza in New York. The sublease ROU assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term.
In November 2021, Sphere Entertainment entered into a new lease for principal executive offices at Two Pennsylvania Plaza in New York, which was assigned to MSG Entertainment in connection with the MSGE Distribution (the “New MSGE Lease Agreement”). In accordance with the terms of the Prior Sublease Agreement (as defined below) and the New MSGE Lease Agreement, the lease term of the Prior Sublease Agreement was extended until October 31, 2024. The Company accounted for this extension as a lease remeasurement and remeasured the ROU asset and operating lease liability utilizing the Company’s incremental borrowing rate as of the date of remeasurement.
During the second quarter of fiscal 2025, the Company amended and restated its prior sublease agreement with MSG Entertainment (the “Prior Sublease Agreement”) to enter into a short term lease for new principal executive offices through December 31, 2024. The Company recorded the short term operating lease costs for this amendment within Selling, general and administrative expenses in the accompanying consolidated statements of operations for the year ended June 30, 2025.
In January 2025, the Company entered into a new sublease agreement with MSG Entertainment for new principal executive offices at Two Pennsylvania Plaza in New York with a lease term which ends January 31, 2046 (the “New Sublease Agreement” and together with the Prior Sublease Agreement, the “Sublease Agreement”) and fixed lease payment obligations of $167,444 over the lease term. The Company recorded a lease right-of-use asset and liability in the accompanying consolidated balance sheet as of June 30, 2025 based on the present value of minimum fixed lease payments over the lease term utilizing the Company’s incremental borrowing rate as of the lease commencement date. In addition, the Company entered into a commitment whereby if the MSG Entertainment’s lease for principal executive offices at Two Pennsylvania Plaza in New York were terminated under
certain circumstances, the Company would be required to enter into a new lease for executive offices at Two Pennsylvania Plaza directly with the landlord, with a consistent lease term through January 31, 2046.
In addition, the Company is party to long term leases with MSG Entertainment through June 30, 2055 that allow the Knicks and the Rangers to play their home games at The Garden. The Arena License Agreements provide for fixed payments to be made from inception through June 30, 2055 in 12 equal installments during each year of the contractual term. The contracted license fee for the first full contract year ended June 30, 2021 was approximately $22,500 for the Knicks and approximately $16,700 for the Rangers, and then for each subsequent year, the license fees are 103% of the license fees for the immediately preceding contract year.
The Knicks and the Rangers are entitled to use The Garden on home game days, which are usually nonconsecutive, for a pre-defined period of time before and after the game. In evaluating the Company’s lease cost, the Company considered the timing of payments throughout the lease terms and the nonconsecutive periods of use, provided for within each license. While payments are made throughout the contract year in twelve equal installments under each arrangement, the periods of use only span each of the individual team event days. As such, the Company concluded that the related straight-line operating lease costs should be recorded by each team equally over each team’s individual event days.
In June 2023, the Company entered into a lease agreement for an aircraft with a term through December 30, 2031. The lease ROU asset and liability were recorded in the Company’s consolidated balance sheet based on the present value of minimum lease fixed payments over the lease term utilizing the Company’s incremental borrowing rate as of the lease commencement date.
As of June 30, 2025, the Company’s existing operating leases, which are recorded in the accompanying consolidated financial statements, have remaining lease terms ranging from 7 to 30 years. In certain instances, leases include options to renew, with varying option terms. The exercise of lease renewal, if available under the lease options, is generally at the Company’s discretion and is considered in the Company’s assessment of the respective lease term. The Company’s lease agreements do not contain material residual value guarantees or material restrictive covenants.
The following table summarizes the ROU assets and lease liabilities recorded on the Company’s consolidated balance sheet as of June 30, 2025 and 2024:
| Line Item in the Company’s Consolidated Balance Sheet | June 30, 2025 | June 30, 2024 | ||||||||||||||||||
| Right-of-use assets: | ||||||||||||||||||||
| Operating leases | Right-of-use lease assets | $ | 760,456 | $ | 694,566 | |||||||||||||||
| Lease liabilities: | ||||||||||||||||||||
Operating leases, current (a) | Operating lease liabilities, current | 52,618 | 50,267 | |||||||||||||||||
Operating leases, noncurrent (a) | Operating lease liabilities, noncurrent | 841,050 | 749,952 | |||||||||||||||||
| Total lease liabilities | $ | 893,668 | $ | 800,219 | ||||||||||||||||
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(a)As of June 30, 2025, Operating lease liabilities, current and Operating leases liabilities, noncurrent included balances of $46,040 and $811,190, respectively, that are payable to MSG Entertainment. As of June 30, 2024, Operating lease liabilities, current and Operating leases liabilities, noncurrent included balances of $43,689 and $715,507, respectively, that were payable to Sphere Entertainment.
The following table summarizes the activity recorded within the Company’s consolidated statement of operations for the years ended June 30, 2025, 2024 and 2023:
| Years Ended June 30, | ||||||||||||||||||||||||||
| Line Item in the Company’s Consolidated Statement of Operations | 2025 | 2024 | 2023 | |||||||||||||||||||||||
| Operating lease cost | Direct operating expenses | $ | 67,619 | $ | 67,619 | $ | 68,233 | |||||||||||||||||||
| Operating lease cost | Selling, general and administrative expenses | 11,819 | 9,886 | 2,452 | ||||||||||||||||||||||
| Short-term lease cost | Selling, general and administrative expenses | 3,971 | — | — | ||||||||||||||||||||||
| Short-term lease cost | Direct operating expenses | — | — | 185 | ||||||||||||||||||||||
| Total lease cost | $ | 83,409 | $ | 77,505 | $ | 70,870 | ||||||||||||||||||||
Supplemental Information
For the years ended June 30, 2025, 2024 and 2023, cash paid for amounts included in the measurement of lease liabilities was $51,880, $52,700 and $44,986, respectively.
For the years ended June 30, 2025, 2024 and 2023, non-cash additions to ROU assets and operating lease liabilities were $86,201, $789 and $45,357, respectively.
The weighted average remaining lease term for operating leases recorded on the accompanying consolidated balance sheet as of June 30, 2025 and 2024 was 28.1 years and 29.8 years, respectively. The weighted average discount rate was 7.05% and 7.10% as of June 30, 2025 and 2024, respectively, and represented the Company’s estimated incremental borrowing rate, assuming a secured borrowing, based on the remaining lease term at the time of either (i) adoption of the standard or (ii) the period in which the lease term expectation commenced or was modified.
Maturities of operating lease liabilities as of June 30, 2025 are as follows:
| Fiscal year ending June 30, 2026 | $ | 54,369 | ||||||
| Fiscal year ending June 30, 2027 | 59,716 | |||||||
| Fiscal year ending June 30, 2028 | 62,388 | |||||||
| Fiscal year ending June 30, 2029 | 63,874 | |||||||
| Fiscal year ending June 30, 2030 | 65,361 | |||||||
| Thereafter | 2,063,934 | |||||||
| Total lease payments | 2,369,642 | |||||||
| Less imputed interest | (1,475,974) | |||||||
| Total lease liabilities | $ | 893,668 | ||||||
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 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.