Sphere Entertainment Co.SPHR

Sphere Entertainment Co. Fair Value Disclosure

10-KFiled Aug 23, 20212 min read
Fair Value Measurements
The following table presents the Company’s assets that are measured at fair value within Level I of the fair value hierarchy on a recurring basis using observable inputs that reflect quoted prices for identical assets in active markets. These assets include (i) cash equivalents in money market accounts, time deposits and U.S. treasury bills, (ii) short-term investments in term deposits and U.S. treasury bills, (iii) notes receivable, and (iv) equity investments with readily determinable fair value: 
Line Item on Consolidated Balance SheetJune 30,
20212020
Assets:
Money market accounts (a)
Cash and cash equivalents$362,237 $— 
Time deposits (a)
Cash and cash equivalents691,521 777 
U.S. treasury bills (a)
Cash and cash equivalents— 699,945 
Term deposits (b)
Short-term investments— 37,250 
U.S. treasury bills (b)
Short-term investments— 299,942 
Notes receivable (b)
Other current assets— 6,328 
Equity investments with readily determinable fair value (c)
Other assets86,264 57,061 
Total assets measured at fair value$1,140,022 $1,101,303 
_________________
(a)The carrying amount of the Company’s cash equivalents in money market accounts, time deposits, and U.S. treasury bills approximate fair value due to their short-term maturities.
(b)As of June 30, 2020, the Company’s short-term investments consisted of investments that (i) had original maturities of greater than three months and (ii) could be converted into cash by the Company within one year. In addition, the Company’s notes receivable were invested with a banking institution as collateral for issuances of letters of credit. The Company’s notes receivable and short-term investments in term deposits were carried at cost, including interest accruals, which approximated fair value and were classified within Level I of the fair value hierarchy.
(c)See Note 7 for more information on the Company’s equity investments with readily determinable fair value in Townsquare and DraftKings.
In addition to the table above, the carrying value and fair value of the Company’s financial instruments reported in the accompanying consolidated balance sheets are as follows:
June 30, 2021June 30, 2020
Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Liabilities
Current and non-current portion of long-term debt under National Properties Term Loan Facility (a)
$646,750 $669,386 $— $— 
Current and non-current portion of long-term debt under Tao Credit Facilities (a)
43,750 43,851 33,750 32,367 
_________________
(a)On May 23, 2019, Tao Group Intermediate Holdings LLC and Tao Group Operating LLC entered into a $40,000 five-year term loan facility and a $25,000 five-year term revolving facility. On November 12, 2020, MSG National Properties and certain subsidiaries of the Company entered into the National Properties Term Loan Facility, providing a five-year $650,000 term loan facility. The Company’s long-term debt is classified within Level II of the fair value hierarchy as it is valued using quoted indices of similar securities for which the inputs are readily observable. See Note 14 for more information and outstanding balances on this long-term debt.
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About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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