Business Context and Reporting Period
Company: The Madison Square Garden Company (MSG)
Filing Type: Form 8-K (Current Report)
Date of Report: June 29, 2018
Subject: Entry into Material Definitive Agreements regarding aircraft support services and time-sharing/dry lease arrangements.
Key Financial Metrics
This filing does not report consolidated revenue, profit, cash flow, margins, debt, or liquidity metrics. It discloses specific contractual financial terms related to aircraft operations:
- Monthly Services Fee: $14,584 per counterparty for aircraft support services (pilots, maintenance, hangar, etc.), effective July 1, 2018.
- Expense Reimbursement: Counterparties reimburse MSG for certain costs and expenses.
- Lease Rates: MSG will pay hourly rent and specified flight expenses for leased aircraft (GV and G450 models).
- True-Up Mechanism: Agreements include provisions for additional hourly payments if MSG's annual usage of leased aircraft exceeds the counterparties' usage of MSG's aircraft.
Material Changes and Agreements
On June 29, 2018, MSG Sports & Entertainment, LLC (a wholly-owned subsidiary) entered into new agreements replacing expired arrangements with related parties:
- Counterparties: Charles F. Dolan (Director) and Sterling Aviation, LLC; JD & the Straight Shot, LLC (owned by CEO James L. Dolan); and QUART 2C, LLC (owned by CEO James L. Dolan).
- Aircraft Support Services: MSG will provide support services to the counterparties for a fixed monthly fee plus cost reimbursement.
- Time Sharing Agreements:
- CFD and Q2C may lease MSG's Gulfstream G550 aircraft on a non-exclusive basis, paying actual flight expenses up to FAA limits.
- Dry Lease Agreements:
- MSG may lease Sterling's Gulfstream G-V aircraft.
- MSG may lease Q2C's Gulfstream G450 aircraft.
Guidance, Risks, and Contingencies
Management Commentary: The agreements are designed to ensure equitable economic terms, including "true-up" mechanisms to address potential imbalances in aircraft usage between MSG and the related parties.
Risks and Contingencies: The filing highlights related-party transactions involving the Company's Executive Chairman, CEO, and Director. The financial impact depends on actual aircraft usage hours and variable flight expenses, which are not quantified in this report.
Investor Verification Checklist
- Verify the total annual cost impact of the $14,584 monthly fees and variable lease expenses on MSG's operating costs.
- Review the attached Exhibits (10.1 through 10.6) for specific hourly lease rates and expense definitions.
- Assess the historical usage data referenced in the "true-up" clauses to estimate potential additional payments.
- Confirm the related-party nature of all counterparties (Dolan family entities) and ensure compliance with internal conflict-of-interest policies.