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

Thank you, Christie. Good morning, and welcome to MSG Entertainment's fiscal 2020 fourth quarter and year-end earnings conference call. Our President, 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 by Mark FitzPatrick, our EVP and Chief Financial Officer. 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 Investor 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 5 and 6 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income or a 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. I know we've all heard the word unprecedented many times over the past few months, but it truly has been an unprecedented year that no one could have anticipated. Through mid-March, we are experiencing impressive momentum across the Company. The Christmas Spectacular celebrated its highest grossing run ever. Our booking business was on track to deliver a record number of events for the year, and Tao Group was on its way to generating strong year-over-year growth. In addition, we are full speed ahead on MSG Sphere in Las Vegas, preparing for the $400 million sale of the Forum, and finalizing the details of our spinoff transaction. And then in March, the global pandemic hit, changing the outlook not only for our Company, but the world. Even with these difficult circumstances, we successfully completed the spinoff of MSG Entertainment in April, followed by the sale of the Forum in May. And despite the current environment, we remain confident in the strength and resilience of our assets, and believe that establishing MSG Entertainment at its own company sets the stage for long-term value creation for our shareholders. I'd like to spend a few minutes talking about how COVID-19 has impacted our business and the steps we're taking to position the Company to weather these difficult times. Our shutdown began in mid-March, when each of our entertainment venues closed its doors due to the pandemic. This was followed by the temporary closure of all Tao Group entertainment, dining, and nightlife venues, and the cancellation of our Boston Calling Music Festival, which was scheduled for Memorial Day weekend. And last week, we announced that this season's production of the Christmas Spectacular has been canceled. It was a very tough decision. We considered a number of factors,…

Thank you, Andy, and good morning, everyone. I'm very excited about joining MSG Entertainment, a Company with iconic venues and marquee brands that I am confident will weather this period of uncertainty. I joined this Company because I was inspired by its vision for the future, and I look forward to working with the executive team on achieving our long-term goals. Over the next few minutes, I will provide additional details on our liquidity and go-forward cash outflows, as well as briefly discussing our recent results in segment reporting. So, let's start by walking you through our current liquidity position and the actions we have implemented to preserve flexibility, so we are ready to return to business as soon as possible. First, as Andy mentioned, we had $1.244 billion of cash and short-term investments on our balance sheet as of June 30. Our cash balances include approximately $200 million in deferred revenue and collections due to promoters. These amounts reflect tickets, suites, and sponsorships related to future events. A significant majority of deferred ticket revenue is for events that have been or are expected to be rescheduled to calendar 2021. To date, most people have opted to hold on to their tickets for these rescheduled events. But if requested, we have provided refunds. In terms of suites and sponsorships, we are in constant dialogue with our partners, discussing ways to address these obligations via non-cash means, such as credit and make good. However, if necessary, we will provide cash refunds. In terms of debt, Tao's $34 million bank term loan is our only debt outstanding, and it was recently amended to suspend certain financial covenants through calendar 2021. And as a reminder, it matures in May of 2024. I would also like to note that we hold equity interest in…

Thank you, Mark. Christie, can we open up the call for questions, please?

Certainly. [Operator Instructions] And your first question is from Brandon Ross of Lightshed Partners.

Hey, guys, how are you doing? A couple of questions. First, New York and Vegas have obviously been hit hard by the events of 2020, wanted to get your outlook going forward for the cities as entertainment markets, I guess starting with Vegas, do you see this changing the return profile for the Sphere? And then, in New York, how are you planning for the long-term? I guess with the permanent job cuts you did? Is that a signal that you've received more permanent impairment from the pandemic and the other issues going on in New York? And then I have a follow-up.

Hey, Brandon, thanks. We'll start with these two and then we'll go back to your follow up. Let's start at the top with Vegas. So I'll tell you our - both our revenue and our AOL projections have not changed because. No. What has changed is our timing, right? We've moved it out [ph] as we've discussed. We think this is the best - one of the best, if not the best entertainment market in the world. We think that I'm running this project for long-term. I think people will need to get - feel safe, both consumers, artists, and our employees. But once that happens, and we believe it will, we think the market is going to come back roaring. And our view has not changed; we believe this year it's going to be the most utilized venue in our portfolio in terms of events. We think the attractions business is going to play multiple times a day year-round, which is a key part of our strategy. We think the new immersive experiences will take advantage of the venue state of the art technology in a way that will change live entertainment. And we're, as we've talked about before, very bullish on our sponsorship opportunity. So while both New York, Vegas and all of U.S. are fighting through the pandemic right now, we think live experiences are going to come back, roaring once people feel safe and feel very bullish. Now, in New York, similar message. The New York is a - was the hotspot and the center of the - epicenter of the pandemic in the start. But as we can see, it's been moving all over the country. New York, specifically, of all cities has been resilient through many difficult times over the course of its history. And I think New Yorkers are going to come back strong. The best proof that we have in the pudding, as I mentioned earlier, we have a backlog of live bookings for 2021 that's twice the size of where it was this time last year. That's made up of both rescheduled events and new bookings, which tells me the artists want to be here. And then when we offered fans the ability to refund their tickets, 80% chose to keep their tickets. What does that say to me? Fans want to be coming to the events once they feel safe and once we reopen. So we feel really strong that both New York and Vegas will come rushing back once we're able to be open and running.

Great. And then, wanted to ask about venue rental pricing. For this big backlog of shows that you've booked for 2021, have you taken cuts on venue rental pricing or shared the risk with promoters? And have there been any changes to the contract that you had signed on the dates that were rescheduled from 2020?

So simple law of economics, supply and demand; when your supply is twice as high, you can figure out what you can think about on pricing. So I guess the simple answer is no, we haven't changed pricing at all. We feel very good about the future.

Great, thanks.

Thank you. Your next question is from John Janedis of Wolfe Research.

Thank you. Good morning. I had two, guys. One on the Sphere and one on cost. And by the way, thanks for the color on the Sphere. I was hoping you could give us an update on the timing of the London Sphere. Is that getting pushed down the road indefinitely? And in Vegas, how do you think about the potential for a cost increase above and beyond the $1.6 or $1.7 billion given the delay? And then separately, on the $100 million of reduced run rate costs, to what extent are those permanent or do the majority of those come back as you get back up and running?

Why don't I - hey, how are you doing, John, first off? Why don't I start and then I'm going to pass over to Mark? I'll start with the London question. So we are currently working towards a planning approval with the London Legacy Development Corporation. We don't see the - the earliest we see getting planning permission would be in the autumn of 2020. And as we work through this planning process and design process, our timeline will continue to evolve. So, I don't have any - anything to give you more on in terms of our opening timeline, but can tell you we intend to open London after Vegas. Once we have our planning approval, once we have the designs filled, and we are committed to bringing it to straight to [ph] London, but it's going to be post-Vegas. I think the other part of your question is on cost cuts. Mark, you want to answer that?

Sure. Hi, John. I think the second question was just on the overall Vegas Call. Is that correct? I just want to make sure I'm…

I think there were two pieces of costs. One would be on the Vegas costs and the second on the $100 million of the run-rate cost reduction? Are those permanent or a piece of those, I assume, come back as you guys get back up and running?

Sure, I'll start with the Vegas cost. One, I think we saw in our release today, we're still comfortable with the $1.6 billion of total costs. We are spending - spraying the time to spend that, but we are still comfortable with the $1.6 billion. We think over time, we're going to reevaluate some of the spending associated with the different aspects of that and we think we'll be able to offset any potential cost increases and may actually be able to drive it lower. But overall, we're still comfortable the $1.6 billion - $1.66 billion. And then, in terms of your permanent costs, as I mentioned in my speech, we took a comprehensive look at our operations to find out what we could eliminate. We made the difficult decisions to eliminate some of our headcount to preserve cash, ensure we're healthy for the future. So we reduced our workforce and spending across all our departments. As our business comes back, some of the spending will obviously return. We don't think all of it will return as we think there's efficiencies and we'll be able to embed those into our go-forward cost base. So like every other company, we're going to continue to focus on it and make sure that we can reduce our cost base going forward and increase the profitability of our business. So, we're excited about the future in terms of lowering our overall costs.

Thank you.

Thank you. Your next question is from John Belton of Evercore.

Hi, thanks. I just have one on this Las Vegas Sphere project. So it looks like given the remaining CapEx associated with that project and events over the last few months, that you may no longer be able to fully self-fund that project. So how is your view on the financing strategy changed? You've spoken in the past about looking at an array of options for other venue projects like debt financing, joint ventures and strategic Equity Partners. How are you thinking about those options as they pertain to Las Vegas Sphere and the potential you might need to raise capital several quarters down the line?

Sure, this is Mark, I'll answer that question. First, I'll just remind you that we have over $1.2 billion in cash on our balance sheet as of June 30. And as we mentioned in our prepared remarks, we plan to raise another $500 million in debt. Secondly, in addition, we've changed the calendar for the MSG Sphere so we're able to spread the capital expenditures over a longer period of time. In terms of future Spheres, no. As we've mentioned before, our intent is to explore other options including non-recourse debt financing, joint ventures, equity partners and a managed venue model. Hopefully, that answered your question.

So, you're not necessarily looking into any of those options for Las Vegas at the moment?

Look, we always consider options, both potentially, they make sense for the company strategically and financially, but we're not currently looking into those options right now.

Got it, thank you very much.

All right. Christie, we'll take the next question.

The next question is from Ben Swinburne of Morgan Stanley.

Thanks, good morning. It's good to hear from everybody and hope everyone's doing well. I have two questions. You know, Andy, as you look at the portfolio of assets at this company and think about kind of reopening over the next, who knows? 6, 12 months, what, if any, changes or adjustments do you think you want to make or could make to the various offerings given we're going to be coming out of this COVID situation incrementally rather than flipping a switch and going back to pre-COVID? I'm thinking about things like the Christmas Spectacular, reopening the garden, even Sphere, which you obviously haven't built yet the other changes you think about making given just we're going to be dealing with the lingering effects of this one way or the other, even psychologically long-term. And then, I was curious on the sponsorship and sweet front, how demand is holding up given the - just the economic pressures we're seeing. If you look at - I know those are multi-year contracts, you've got the visibility, but just give us a sense for what the demand looks like as you have contracts come off and potential new sales. Anything you could tell us there would be helpful. Thank you.

Well, Ben, first off, nice to speak to you this morning. In terms of what changes we're making to our venues and our events. I mean, we are following extremely closely working with our government officials, working with the leagues on the sports side. Obviously, they're our biggest tenants here at MSG Entertainment, as well as all of our partners and our promoter partners. And the first thing that's important to us is the safety of our - I'll start - I should have started with that; the most important thing is the safety of our guests, our employees and our artists, right? Nothing can start until they're safe, right? That is the number one point. And as I think we've shown many times over, we're the leader in terms of both amenities for our guests and artists, as well as safety, and protocols. So what I'd say to you is we're going to do everything we can to make sure people feel safe. We're going to do - we're going to modify our venue as we need be. But right now, it's still early. We don't know when - we don't know what the, to your point, the ramp-up will look like. Will it be capacity constraints, will it be spacing between patrons? We'll - and we're exploring every option and have a taskforce looking at ways to deliver the best experience to our guests, our artists and our employees as they come back. In terms of the future, I know you mentioned the Christmas Show. Obviously, we - as I mentioned before, this was a tough decision. We waited until the last minute till we made the decision. We did that for a reason, because we believe in the demand of the show. We just weren't - we couldn't take on the risk of the mount with such uncertainty in the short order. In the long-term, we feel very good about the return to the show and its appeal. And it's just a question of how quickly can we get to that long-term? Not enough with the Rockettes, I'm just saying, in terms of our total business. And we think this is coming back, we think people want live events. I think if you look across the world, at other countries that have slowly started to open up, the demand has been there. Yes, people have modified their behavior, wearing a mask, etcetera, but we'll - we're going to stay on top of it and we're going to get this business back up and we feel really good about the long-term future.

Anything on sponsorships and sweet demand?

You know, it's still - to be honest, it's still early.

Yes.

Right. It's our - These agreements are long-term multi-year. We've got great partners, who view us as long-term, see the value of our business long-term. And we're working through stuff right now.

Okay.

Don't read anything negative or positive into it, just it's a - these are long - these are long-term relationships. And long-term relationships, again, when you have a business and what we can deliver, we feel good about the long-term.

Got it. Thank you very much.

Thank you. With that, I'll turn the floor back over to Ari Danes for any additional or closing remarks.

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

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