Business Context and Reporting Period
Company: The Madison Square Garden Company (MSG)
Filing Type: Form 8-K (Current Report)
Date of Report: December 17, 2018
Reporting Period: Specific event date (December 17, 2018)
Context: This filing discloses the entry into and termination of material definitive agreements regarding aircraft support services and leasing arrangements involving MSG Sports & Entertainment, LLC (MSG S&E), the Dolan family (controlling shareholders and directors), and company executive Andrew Lustgarten.
Key Financial Metrics
This filing does not contain consolidated financial statements, revenue, profit, cash flow, or margin data. The only specific financial metric disclosed relates to the new aircraft support agreement:
- Monthly Services Fee: $14,584 (payable by MSG S&E to the Dolan Family Members for aircraft support services).
- Lease Costs: MSG S&E will pay an hourly rate and specified flight expenses to Sterling2K LLC for the dry lease of a Gulfstream G550. Specific hourly rates are not disclosed in the text.
- Executive Usage: Andrew Lustgarten will pay actual flight expenses for personal use, capped by FAA rules.
Material Changes Versus Prior Period
The filing details the replacement of existing aircraft agreements effective December 17, 2018, driven by the Dolan family's purchase of a new Gulfstream G550 aircraft (DFO G550) and the sale of their previous Gulfstream G-V (GV).
- Support Services: The "Old Support Agreement" (effective July 1, 2018, for the GV) was terminated and replaced by the "New Support Agreement" for the DFO G550. Terms are substantially the same, with a fixed monthly fee of $14,584.
- Dry Lease: The "Old Dry Lease" (for the GV) automatically terminated upon the sale of the GV. It was replaced by the "New Dry Lease" with Sterling2K LLC for the DFO G550. Terms are substantively the same, including a "true-up" mechanism for excess usage hours.
- Time Sharing: The existing time sharing agreement with Andrew Lustgarten was replaced by a "New Time Sharing Agreement" for the DFO G550, with substantively the same terms.
Guidance, Outlook, and Risks
Management Commentary: The agreements are structured to ensure economic fairness, including a "true-up" mechanism in the dry lease to cover additional costs if MSG S&E's usage exceeds historical levels. The filing notes that the Dolan family members are directors and controlling shareholders, and Andrew Lustgarten is the President of the Company.
Risks and Contingencies:
- Related Party Transactions: All agreements involve related parties (the Dolan family and company President), requiring strict adherence to fairness and disclosure standards.
- Regulatory Compliance: Agreements must comply with Federal Aviation Administration (FAA) rules regarding expense reimbursement and usage.
Unusual Items: None identified beyond the routine renewal of aircraft support and leasing contracts necessitated by the acquisition of a new aircraft.
Investor Verification Checklist
- Verify the full text of the attached exhibits (10.1, 10.2, 10.3) to confirm the specific hourly lease rates and expense definitions not detailed in the summary.
- Confirm the historical usage data referenced for the "true-up" mechanism to assess potential future cost variability.
- Review the company's related party transaction policies to ensure these agreements align with internal governance standards.
- Monitor future filings for any changes in aircraft usage that might trigger the "true-up" payment clause.