Good morning. My name is Christie, and I'll be your conference operator today. At this time, I would like to welcome everyone to MSG Sports Fiscal 2020 Fourth Quarter and Year-End Earnings Conference Call. Later, we will conduct a question-and-answer session [Operator Instructions] I would now like to turn the call over to Ari Danes, Investor Relations. Please go ahead, sir.

Thank you, Christie. Good morning, and welcome to MSG Sports fiscal 2020 fourth quarter and year-end earnings conference call. Our President and CEO, Andy Lustgarten, will begin this morning's call with an update on the Company's operations. This will be followed by a review of our financial results with Victoria Mink, our EVP, Chief Financial Officer and Treasurer. After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release, it is available in the Investors section of our corporate website. Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results, developments and events may differ materially from those in the forward-looking statements as a result of various factors. These include financial community perceptions of the Company and its business, operations, financial condition and the industry in which it operates as well as the factors described in the Company's filings with the Securities and Exchange Commission, including the sections entitled Risk Factors, and Management's Discussion and Analysis of financial condition and results of operations contained therein. The Company disclaims any obligation to update any forward-looking statements that may be discussed during this call. On Pages 4 and 5 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income, or AOI, a non-GAAP financial measure. And with that, I'll now turn the call over to Andy.

Good morning, and thank you for joining us. Our first several months as a stand-alone sports company have been in the midst of an extremely difficult period, which has seen sports to season suspended and arenas closed to fans due to COVID-19 pandemic. And while the path ahead will be challenging, we remain confident that we have financial flexibility to weather these unprecedented times. And we continue to believe that creating a pure-play sports company better highlights our premium assets and sets the stage for long-term value creation. Our Company owns some of the most recognized franchises in professional sports, including the New York Knicks, the New York Rangers, their two development teams, the Westchester Knicks and Hartford Wolf Pack, Knicks Gaming and NBA 2K League franchise and Counter Logic Gaming, a North American esports organization. I'd like to share more about why we think these assets uniquely position MSG sports for long-term growth and value creation. But let me start by discussing how we're navigating our business through the current environment. The NBA and NHL suspended their '19/'20 regular seasons in March. At the time of the hiatus, our teams have already played the vast majority of their regular season games, with the Rangers missing 12 games, including five at home and the Knicks missing 16 games, including eight at home. Since then, both leagues have resumed to play. While the Knicks were not a part of the NBA's restart in Orlando, the Rangers did participate in the NHL's return in Toronto. And although we were disappointed with the outcome of the Rangers' qualifying round series against the Hurricanes, we are excited about the team's future, especially with us winning the first pick in the lottery earlier this week. We look forward to seeing them back on the ice…

Thank you, Andy, and good morning, everyone. In light of the current uncertainty around how the upcoming seasons will look, I'd like to start by providing an update on our Company's liquidity position. As of June 30, total cash and cash equivalents were approximately $78 million. In addition to our cash balance, we have $215 million in borrowing capacity between our delayed draw term loans with MSG Entertainment and our $15 million unsecured New York Knicks revolving credit facility. Our $350 million Knicks and Rangers senior secured revolving credit facilities remains fully drawn. As a reminder, the $200 million delayed draw term loans were put into place to provide a short-term source of liquidity in light of the COVID-19 pandemic. These loans mature in October 2021. As we continue to monitor the operating environment, we are assessing our options, including potentially seeking a longer-term source of financing as an alternative to the delayed draw term loans. With regard to our deferred revenue obligations, as of June 30, our current balance was approximately $126 million. Of this amount, approximately $61 million was related to the '19/'20 NBA and NHL seasons. This includes approximately $42 million associated with national media rights fees. Based on the completion of the '19/'20 season, we would recognize these rights fees in the first quarter of fiscal '21. In this morning's earnings release, and as you will see in more detail in our 10-K, which we expect to file later this month, our financial results for the fiscal '20 fourth quarter reflect a number of items, including the impact of the NBA and NHL season suspensions as well as discontinued operations accounting for the period through April 17, 2020, which was the entertainment spin-off date. The results for the post-spin period through the end of the quarter…

Thanks, Victoria. Christy, can we open up the call for questions, please?

[Operator Instructions] And your first question is from John Janedis of Wolfe Research.

Thank you. Andy to your point, I think we're all hopeful that we have basketball and hockey next season too. So, hopefully that works out. But as we look out to next season, though, it seems like there is a higher probability of that -- the [indiscernible] fans. And I know it was touched on in terms of a lot of moving pieces, but can you walk us through how this impacts the revenue lines and tax costs in that scenario? Thanks.

Let me give it a high level, and then I'm going to pass over to Victoria to take you through some of the details. Of course, we want to be back in the building next year in front of fans. It's obviously our first desire. But we're only going to do that under one scenario, one is that it's safe, safe for our fans, safe for our players, safe for our staff. And so I'll tell you, we're looking at a lot of scenarios, everything from no fans to full buildings and in between. Obviously, if we have no fans, our revenues are going to come down pretty substantially. It's -- we will still have our media rights revenue to recognize, signage, sponsorship, tickets, those will be obviously impacted. I can't tell you that leagues have been great currently in the bubbles of trying to find new opportunities to generate revenue with signage, new locations, and we'd expect something like that as we look towards the future. And then, of course, there's -- some of our expenses will come down as they're variable based on games such as players and game expenses. But Victoria, why don't you take us through the details?

Sure. Hi, John. So let me provide a little more color. On the revenue side, we would, of course, not receive revenue related to tickets, suites, food, beverage and merchandise, so of our in-arena business. But if the seasons are playing in broadcast, we would expect to receive our local and national media rights fees, which represent approximately $250 million in our annual revenues. And while sponsorship revenue would be reduced, we would still likely recognize revenue from certain of our agreements. For example, related to the broadcast exposure, certain partners receive as well as, for example, the NBA jersey patch sponsorship. In addition, in fiscal 2021, it's somewhat of a unique year since we also expect to receive our pro rata share of the NHL expansion fee related to the new Seattle franchise. Now but on the expense side, our single largest expense item is player compensation. The NHL recently extended its CBA, which is -- with some sort of helpful terms. And the NBA, we're still waiting for some guidance there. But to the extent the are arena license fee payments to the Garden, it would be impacted if we're unable to play in front of fans. And since the Garden is currently closed due to the pandemic, we're not currently paying these license fees. If the Garden is made available to us, but capacity is limited, our fees would be reduced by up to 80%, depending on the capacity constraints. I guess there's also a number of reductions across additional areas of expense, including our revenue sharing, league assessments and, of course, day of game costs and marketing expenses. I hope this color that I provided is helpful.

Very helpful, thank you.

Thank you. Your next question is from Brandon Ross of LightShed Partners.

Hey guys, thanks. First, a follow-up to John's last question. Can you just summarize what the cash burn rate is kind of in between seasons? And then assuming there were no fans to start the season, next season, what you would expect the cash burn rate to look like then? And then on the job cuts, what percent of those do you foresee being permanent or efficiencies you found? And if some of them are temporary, why not do furloughs instead of full cuts? And then I have one for Andy after.

Sure. Okay, Brandon. So I guess regarding cash burn and sort of our overall liquidity, as we operate in this period of uncertainty, we're carefully considering and planning for a range of scenarios with respect to our '20/'21 seasons. And as you'd imagine, we're very focused on cost reduction and cash conservation. We recently implemented these cost-cutting measures that will help us preserve additional cash as we continue to navigate through this period of uncertainty. And sort of as we mentioned, we reduced our workforce by approximately 15% in our business operations and admin area. We're carefully reviewing any potential new hires going forward. We've reduced use of third-party vendors and additional cuts to discretionary spending. But just as a reminder, at fiscal year-end, we had over $290 million of liquidity. This included capacity under our delayed draw term loans, which were put in place with this exact purpose as a short-term source of additional liquidity given the impact of COVID-19 and if it continues into next season. And looking ahead, we'll continue to monitor the operating environment and assess our options. For example, we may seek a longer-term source of financing as an alternative to the delayed draw term loans. And at the end of the day, our sport franchises are extremely valuable assets with strong long-term growth. And so we're confident that we'll have the financial flexibility to navigate through this challenging time. And but whether or not our cost reductions are permanent, I guess I would consider like other companies, we've been focused during this time on how we can operate more efficiently. So I'm sure we'll be able to realize some savings as a result of this. But yes, many of -- we do anticipate many of our -- many of the positions that we had to unfortunately eliminate, we do anticipate them coming back as our business returns to normal operations. Specifically, we need to hire back to the extent we need to drive revenue and deliver great experiences for our guests and for our players.

Got it. And then, just for Andy, I know your contract with Chase is up very shortly. Is there anything to report there on those negotiations? I know recent sponsorship numbers, including in Seattle, have been pretty encouraging, just your thoughts there.

Brandon, thanks. At the highest level, I'll just start -- we don't really comment or we don't comment on any individual agreement. It's just been our policy. I will say, however, with Chase, they've been a long time, great partner of ours. I believe they understand the value we bring, and we incredibly value their partnership. And this relationship has been very strong. I can't really give you much more than that right now. So I don't think that gets you there, Brandon.

Okay, no problem. Thank you.

Thank you. Your next question is from Ben Swinburne of Morgan Stanley.

Thanks, good morning. Just going back to the balance sheet, Victoria, anything you can tell us about plans around the term loan -- the revolvers at the Knicks and the Rangers? I think they mature in the next, I think it's 12, 18 months. Just any plans to maybe term those out? And remind us if there's any restrictions that the league sets on debt levels as those teams on the franchises, just as we think about ability to raise more capital? And then, I had two for Andy. One is whether or not a bubble is under consideration, bubble approach for this upcoming season. And if so, what that might mean to the financials. And then you mentioned in your remarks, Andy, about sports betting, and you talked about benefiting the in-venue business. And sports betting is continuing to happen now during the COVID period, so at least that's going on. I'm wondering if you could just update us on your thoughts around that opportunity for the Company, especially based on what we've seen so far over the last couple of weeks and months, given the return of sports would be great.

Sure, Ben. So let me address your debt question first. So yes, the Knicks senior secured revolver matures in September of '21, and the Rangers matures in January of '22. So regarding the Knicks, well, it's still early. We expect to begin the refinancing process for that Knicks facility in the near term and with the Rangers be following thereafter. Now as you know, our sports franchises are extremely valuable assets, and I carry a relative small amount of debt -- relatively small amount of debt as compared to the estimated values. We have strong relationships with our bank group and expect to be able to successfully refinance these credit facilities in the ordinary course. Our delayed draw term loans are also available to us, and they were intended to be a short-term source of liquidity. And -- but as I mentioned earlier, we continue to monitor the operating environment and are assessing our options, including potentially seeking a longer-term source of financing as an alternative to the delayed draw term loans.

Any restrictions from the leagues that we should be keeping in mind in terms of the amount of money you're able to raise?

So the leagues have approved the delayed draw term loans, which is the additional $200 million of availability. I mean and around those loans, there are some parameters there with the delayed draw, where we would first have to secure commercially -- use commercially reasonable efforts to raise alternative debt financing. But we, of course, there are restrictions that the league have in place, but we're clear for this $200 million.

Got you. Thank you.

Just as an add on that, I will say the leagues have shown willingness to understand where we are and work through waivers to policies, both with us and with other -- as we can see with our delayed draw term as well as with other teams, understanding what's the uncertainty in the market. And I'd expect it to work -- and I'd expect them to work with us as well.

Great. Anything on a bubble and sports betting, Andy you can add?

Absolutely. Bubble question, as I said, every -- we're looking at every -- many different scenarios. The leagues are looking through many scenarios. But everyone's focused on one scenario, which is being with our fans in the building, but in a safe and secure manner. It's hard to go in any more detail than that. But obviously, you got to look at every option. In terms of sports betting, I only mentioned in venue, I just feel like you think there's a big opportunity there, but I think there's also an opportunity in the market. We've talked about this many times. We love what sports gaming does for sport. And just on its face, if I didn't make a dollar from partnerships or from any direct -- or any other direct revenue from gaming, I still -- we would still love the business. It encourages engagement. It drives tune in, it drives in-venue, and then adding the fact when people -- we will have the opportunity to monetize through various means. You've already seen already through drafting partnership historically. And we think it's just a market that's growing. In-venue, maybe you've noticed what's going on recently in Washington DC. They opened the Capital One arena, they opened a book [ph] within the building that will benefit both the building and the teams. Hopefully, I could -- something I could be on table and we look across the river to New Jersey where the sports book there is the -- the largest in the country. So we know that there's a huge opportunity, and it's just a question of timing in our mind. And I think this is a really big opportunity for us.

Okay, thank you.

Thanks, Ben. Christie, we'll take one last caller please.

Certainly, your final question is from John Belton of Evercore.

Hi, good morning, it's Patel [ph] on for John Belton. Could you just share any thoughts around how has pandemic impacted your core view around the esports universe and kind of any longer term implications around that?

Sure, esports universe, the benefit of these esports right now it's not a fixed location in-venue business. There are opportunities here and there for -- to more of as a booking type of a business, right with the championships. Right now, it's more of a media play and the eyeballs are off. And so when we think -- and it's very millennial-focused and these people are spending more and more time online or on TV and esports plays right into that. The eye balls just keep on growing and it's something that we -- initial bullish of the long term, as we begin to figure out how to turn those eyeballs into dollars and we think you -- we just -- we think that's just going to keep on going. So, thank you.

Thank you. With that I will turn the call back over to Ari Danes for any additional or closing remarks.

Thanks, Christie. And thank you all for joining us. We look forward to speaking with you on our next earnings call. Have a great day.

Thank you. This does conclude today's conference call. You may now disconnect.