UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

Commission File		Registrant; State of Incorporation;		IRS Employer
Number		Address and Telephone Number		Identification No.
1-34434		Madison Square Garden, Inc.		27-0624498
		Delaware
		Two Penn Plaza
		New York, NY 10121
		(212) 465-6000

Securities registered pursuant to Section 12(b) of the Act:		Name of each Exchange on which Registered:
Title of each class:
Class A Common Stock		The NASDAQ Stock Market LLC

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant has been required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No þ

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether each Registrant is a large accelerated filer, accelerated filer, non-accelerated filer or smaller reporting company. See definition of large accelerated filer and accelerated filer in Exchange Act Rule 12b-2.

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of June 30, 2009, the Registrant’s common stock was not publicly traded.

Number of shares of common stock outstanding as of March 12, 2010:

Class A Common Stock —			61,974,860
Class B Common Stock —			13,588,555

Documents incorporated by reference — Madison Square Garden, Inc. intends to file with the Securities and Exchange Commission, not later than 120 days after the close of its fiscal year, an amendment to this report containing the information required to be disclosed under Part III of Form 10-K filed under cover of Form 10-K/A.

 

 

TABLE OF CONTENTS

		Page
PART I
Item 1. Business			3
Item 1A. Risk Factors			24
Item 2. Properties			38
Item 3. Legal Proceedings			38
PART II
Item 5. Market for the Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			39
Item 6. Selected Financial Data			40
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			41
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			78
Item 8. Financial Statements and Supplementary Data.			78
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.			78
Item 9A. Controls and Procedures			78
Item 9B. Other Information			78
PART III
Item 10. Directors, Executive Officers and Corporate Governance*			79
Item 11. Executive Compensation*			79
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters*			79
Item 13. Certain Relationships and Related Transactions, and Director Independence*			79
Item 14. Principal Accountant Fees and Services*			79
PART IV
Item 15. Exhibits and Financial Statement Schedules			80
Exhibit 21.1
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I

Item 1. Business

We are a Delaware corporation with our principal executive offices at Two Penn Plaza, New York, NY, 10121. Our telephone number is 212-465-6000. Unless the context otherwise requires, all references to “we”, “us”, “our”, “Madison Square Garden” or the “Company” refer to Madison Square Garden, Inc., together with its direct and indirect subsidiaries. “Madison Square Garden, Inc.” refers to Madison Square Garden, Inc. individually as a separate entity. Madison Square Garden, Inc. is a holding company and conducts substantially all of its operations through its subsidiaries.

Madison Square Garden, Inc. was incorporated on July 29, 2009 as an indirect, wholly-owned subsidiary of Cablevision Systems Corporation (“Cablevision”). On January 12, 2010, Cablevision’s board of directors approved the distribution of all of the outstanding common stock of Madison Square Garden, Inc. to Cablevision shareholders (the “Distribution”) and the Company thereafter acquired the subsidiaries of Cablevision that owned, directly and indirectly, all of the partnership interests in Madison Square Garden, L.P. (“MSG L.P.”). MSG L.P. was the indirect, wholly-owned subsidiary of Cablevision through which Cablevision held the Madison Square Garden business until the Distribution occurred on February 9, 2010. MSG L.P. is now our wholly-owned subsidiary, through which we conduct substantially all of the business activities discussed in this Annual Report on Form 10-K.

Information concerning our business segments, including business segment financial information, and financial information about geographic areas for each of 2009, 2008 and 2007 is set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Financial Statements and Supplementary Data”, which are in Part II, Items 7 and 8 of this Annual Report on Form 10-K.

General

Madison Square Garden is a fully-integrated sports, entertainment and media business comprised of dynamic and powerful brands. Madison Square Garden’s business grew from the legendary venue widely known as “The World’s Most Famous Arena.” The Company’s three business segments: MSG Sports, MSG Entertainment and MSG Media, are strategically aligned to work together to drive our overall business, which is built on a foundation of iconic venues and compelling content, including live sports and entertainment events, that we create, produce, present and/or distribute through our programming networks and other media assets.

The Company operates in three business segments:

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MSG Sports. Our sports business consists of owning and operating sports franchises, including the New York Knicks, a founding member of the National Basketball Association (“NBA”) and the New York Rangers, one of the “original six” franchises of the National Hockey League (“NHL”). We also own and operate the New York Liberty of the Women’s National Basketball Association (“WNBA”), one of the league’s founding franchises, and the Hartford Wolf Pack of the American Hockey League (“AHL”), which is the primary player development team for the Rangers and competitive in its own right in the AHL. The Knicks, Rangers and Liberty play their home games at The Madison Square Garden Arena (which we also refer to as “The Garden”). The Company’s sports business also features other sports properties, including the presentation of a wide variety of premier live sporting events including professional boxing, college basketball (The Big East Tournament, Jimmy V Classic, Post-season NIT Finals and, on occasion, Duke University games), track and field (The Millrose Games) and tennis (The BNP Paribas Showdown for the Billie Jean King Cup, which features the women winners of the previous year’s Grand Slam tennis events).

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MSG Entertainment. Our entertainment business is one of the country’s leaders in live entertainment. We create, produce and/or present a variety of live productions, including the Radio City Christmas Spectacular, featuring the Radio City Rockettes (the “Rockettes”), which is the #1 live holiday family show in America and which was seen in 2009 by approximately 1.8 million people, and the world-renowned Cirque du Soleil’s Wintuk. We also present or host other live entertainment events, such as concerts, including shows by The Police, Eric Clapton, Jimmy Buffett, Bruce Springsteen, Justin Timberlake and Madonna; family shows, such as Dora the Explorer, Thomas the Tank Engine and Sesame Street Live; special events such as the Tony Awards and appearances by the Dalai Lama; and theatrical productions, such as The Wizard of Oz and Annie, in our diverse collection of venues. These venues include The Garden, Radio City Music Hall, The Theater at Madison Square Garden, the Beacon Theatre, The Chicago Theatre and the Wang Theatre. MSG Entertainment increasingly utilizes the strength of its industry relationships and live event expertise, as well as the reach of MSG Media, to create performance, promotion and distribution opportunities for artists and productions that, in turn, provide new programming and promotion for both our entertainment and our media businesses.

•

MSG Media. Our media business is a leader in production and content development for multiple distribution platforms, including content originating from our venues. For all periods presented, this business consists of programming networks and interactive offerings, including the MSG Networks (MSG network, MSG Plus, MSG HD and MSG Plus HD) and the Fuse Networks (Fuse and Fuse HD). MSG Networks are home to seven professional sports teams: the New York Knicks, New York Rangers, New York Liberty, New York Islanders, New Jersey Devils, Buffalo Sabres and New York Red Bulls, as well as to our critically acclaimed original and other programming, including Summer of ‘77, The Mike D’Antoni Show and MSG Originals, highlighted by the New York Emmy-award winning series The 50 Greatest Moments at MSG, Big 12 and PAC 10 football, and ACC, Big East and PAC 10 basketball. Since 2008, Fuse has focused on establishing itself as a unique multi-platform music destination, where artists and fans can interact and build relationships. Programming on Fuse focuses on music-related programming, including coverage of premier artists, events and festivals, original content and high profile concerts. Certain Fuse programming centers around its insider access to MSG Entertainment and Madison Square Garden’s venues, which Fuse uses to create music programming, while offering a voice and enhanced exposure to artists. Our interactive businesses include a group of highly targeted websites (including msg.com, thegarden.com, radiocity.com, nyknicks.com, newyorkrangers.com and fuse.tv) and wireless, video on demand and digital platforms for all Madison Square Garden properties. MSG Media allows us to leverage the value of the content created, produced and/or presented by MSG Sports and MSG Entertainment.

Our Strengths

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Owned sports franchises

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Media assets, including affiliation agreements with distributors and exclusive sports and entertainment programming rights

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Iconic venues

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Diverse collection of marquee brands and content, including the Radio City Christmas Spectacular and the Rockettes

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Powerful presence in the New York tri-state area with established core assets and expertise for strategic expansion

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Unique ability to provide artists and productions with multiple distribution platforms to develop and promote their businesses

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Strong industry relationships that create opportunities for new content and brand extensions

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Deep connection with loyal and passionate fan bases that span a wide demographic mix

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Strong and seasoned management team

Our Strategy

Madison Square Garden pursues opportunities that capitalize on the combination of our iconic venues, our popular sports franchises, the distribution of our programming networks and our exclusive sports and entertainment content.

The core of MSG Sports’ strategy is to develop teams that consistently compete for championships in their respective leagues. Leveraging the strength of its fan bases and the popularity of its teams, MSG Sports seeks to expand through the creation and/or acquisition of substantial, enduring sports properties and events that can be presented either inside or outside The Garden. Our extensive fan base provides broad access to growth opportunities and new revenue streams.

Building on our iconic venues and the hallmark Radio City Christmas Spectacular and Rockettes brands, MSG Entertainment is focused on enhancing the reach and breadth of our productions and creating a network of venues to deliver high quality live content to those venues and increased bookings across all our venues. We are pursuing a strategy of opportunistically acquiring, building or obtaining control of theater venues in additional major markets. Our expansion plans also include the development of new productions and live entertainment events.

MSG Media has a strong foundation of recurring revenue streams supported by our long-term rights for live-event content of our New York Knicks, New York Rangers and New York Liberty franchises, in addition to those of the New York Islanders, New Jersey Devils and Buffalo Sabres, and our affiliation agreements for distribution of our networks. MSG Media’s programming networks serve as strong platforms through which artists, performers and athletes are connected to regional and national audiences, including Fuse, which brings artists and fans together through its music programming and the network’s insider access to MSG Entertainment and our historic venues. Our ability to offer both marquee live performance venues and extensive public exposure through our significant marketing expertise and media platforms attracts world-class artists, performers and athletes to our businesses, and allows us to create with them a relationship built on mutual benefit. We obtain quality sports and entertainment content, while the artists, performers and athletes gain a unique opportunity to develop their brands.

The Company believes that its competitive strength stems from combining opportunities across more than one of our segments and aligning these businesses to provide what no other organization can: sports and entertainment content, derived from games and performances at our iconic venues and distributed through our regional and national programming networks.

We have an expansive view of the power of this integrated approach and believe no other organization can offer athletes, artists, performers, fans and business partners comparable opportunities or experiences. Examples of how we believe we have effectively implemented our strategy are:

•

We have expanded the programming on MSG network to include additional programming originating from or relating to our venues, while continuing to deliver award-winning live sports coverage. MSG network’s focus on becoming “all things Madison Square Garden” serves as a powerful platform for the distribution of our content and supports the Company’s integrated strategic vision, while differentiating our media offerings in a diverse and competitive environment.

•

Our media business continues to seek opportunities to collaborate with our entertainment and sports businesses. For example, in 2009 our media and entertainment businesses forged a multi-faceted relationship with the Dave Matthews Band, through which we booked the Beacon Theatre for a sold-out Dave Matthews Band concert and telecast the concert commercial-free on Fuse. Fuse also aired a week-long series of complementary Dave Matthews Band programming, leading up to the release of the band’s new album. Similarly, in 2008 our media and sports businesses collaborated on the Pete Sampras versus Roger Federer exhibition tennis match, an event that represented the revival of The Garden’s historic affiliation with big-event tennis. The sold-out match, which pitted the #1 ranked Federer against Sampras, who was at that time the recently retired holder of the most Grand Slam titles, originated from The Garden and was promoted as the first live sports programming on the newly rebranded MSG Plus (formerly known as FSN New York).

•

We acquired control of New York’s Beacon Theatre, purchased The Chicago Theatre, and entered into a long-term booking agreement in respect of the Wang Theatre in Boston, extending our geographic footprint and providing new distribution outlets for our live entertainment content. These transactions diversified the collection of venues we offer to artists and productions.

•

Building on their initial collaboration, Wintuk, MSG Entertainment and the world-renowned Cirque du Soleil have expanded their relationship this year with the debut of a new vaudeville-inspired live entertainment show, Banana Shpeel. The show began previews in The Chicago Theatre on November 19, 2009, and is expected to premiere at the Beacon Theatre in the spring of 2010. This plan illustrates our strategy of developing new live entertainment content that can be utilized through Madison Square Garden’s owned and operated venues.

Our commitment to strengthening our core assets is also exemplified by the planned full-scale renovation of The Garden. The renovation is expected to result in a state-of-the-art facility that enhances the experience of our customers, partners, athletes and entertainers and is designed to attract even more marquee events to the building, while augmenting our revenue streams. Utilizing The Garden’s current footprint, the renovation is designed to ensure The Garden’s continued and lasting prominence as a sports and entertainment venue.

We believe the Company’s unique combination of assets and integrated approach, the depth of our relationships within the sports, media and entertainment industries and strong connection with our diverse and passionate audiences, sets the Company apart in the industry and represents a substantial opportunity for growth.

MSG Sports

Our MSG Sports business consists of owning and operating sports franchises, including the New York Knicks, a founding member of the NBA, and the New York Rangers, one of the “original six” members of the NHL. We also own and operate the New York Liberty of the WNBA, one of the league’s founding franchises, and the Hartford Wolf Pack of the AHL, the primary player development team for the Rangers, which is competitive in its own right in the AHL. The Company’s sports business also features other sports properties, including the presentation of a wide variety of premier live sporting events including professional boxing, college basketball (The Big East Tournament, Jimmy V Classic, Post-season NIT Finals and, on occasion, Duke University games), track and field (The Millrose Games) and tennis (The BNP Paribas Showdown for the Billie Jean King Cup, which features the women winners of the previous year’s Grand Slam tennis events).

Our MSG Sports and MSG Media businesses naturally complement each other — with MSG Sports providing valuable content and MSG Media serving as a vital distribution system and promotional platform. MSG Media, through MSG Networks, telecasts games of our Knicks, Rangers and Liberty teams, and we are continually exploring opportunities to enhance the relationship between MSG Sports and MSG Media through new events, both at our venues and elsewhere. For example, we utilized the 2008 sold-out Pete Sampras versus Roger Federer tennis match at The Garden as the first live sporting event on our newly rebranded MSG Plus network, taking advantage of the significant interest in the match to enhance viewership. In 2008, we broadened our boxing programming on MSG network by telecasting a middleweight bout from the Beacon Theatre featuring John Duddy.

Our Sports Franchises

The New York Knicks and the New York Rangers are two of the most recognized franchises in professional sports, with storied histories and passionate, multi-generational fan bases. These teams are major occupants of The Garden, with a total of 82 regular season home games, often at or near capacity attendance. In addition, the New York Liberty play 17 regular season home games at The Garden each year. The number of home games increases if our teams qualify for the playoffs.

In addition to being valuable stand-alone businesses, the Knicks and Rangers provide core content for our MSG Media segment, with approximately 150 regular season games telecast on MSG Networks, and generate significant audience demand for wrap-around and themed programming. As part of team and league marketing and telecast efforts, our sports teams provide regional and national visibility for the Company.

New York Knicks

As an original franchise of the NBA, the New York Knicks have a rich history that includes two NBA Championships, eight conference titles and some of the greatest athletes to ever play the game. Under the leadership of Donnie Walsh and head coach Mike D’Antoni, the New York Knicks are focused on being competitive as they rebuild the team with the goal of becoming an elite member of the NBA. The Knicks’ current strategy centers on managing its rostered salary to be below the salary cap so that it can be active in the 2010 free agent market, while continuing to play an exciting, energetic and entertaining style of basketball. The Knicks enjoy the fierce allegiance of generations of passionate and knowledgeable fans. The Knicks ranked in the top three in the NBA for ticket sales receipts for the 2008-09 season, while experiencing a 20% increase in regular season television ratings over the previous season.

New York Rangers

The New York Rangers hockey club is one of the “original six” franchises of the NHL. Winners of four Stanley Cup Championships, the Rangers have won ten conference titles over their history. More recently, the team is one of only two Eastern Conference clubs to have made the playoffs in each of the last four seasons. The Rangers have a dynamic new style of play since hall of fame general manager Glen Sather hired head coach John Tortorella in February 2009. Tortorella is the winningest American coach in NHL history. The Rangers are known to have one of the most passionate, loyal and active fan bases in all of sports and ranked in the top three in the NHL for ticket sales receipts for the 2008-09 season.

New York Liberty

The New York Liberty were established on October 30, 1996, when New York was selected as one of eight charter members of the WNBA. The Liberty have won four conference championships and appeared in the post-season playoffs nine times. The Liberty have a well-known tradition of on-court competitiveness supported by an enthusiastic and loyal fan base.

Hartford Wolf Pack

The Company owns the Hartford Wolf Pack, a minor-league team, as a player development team for the Rangers, which is also competitive in its own right in the AHL. The Rangers send draft picks and other players to the Wolf Pack for skill development and injury rehabilitation, and can call up players as needed for the Rangers’ roster to enhance the team’s competitiveness. The Wolf Pack has reached the AHL playoffs every year of its existence, a streak of twelve straight seasons.

The Role of the Leagues in Our Operations

As franchises in professional sports leagues, our teams are members of the leagues and, as such, may be subject to certain limitations, under certain circumstances, on the control and management of their affairs. The respective league constitutions, under which each league is operated, together with the collective bargaining agreements each league has signed with its players’ association, contain numerous provisions that, as a practical matter in certain circumstances, could impact our ability to operate our businesses. In addition, under the respective league constitutions, the commissioner of each league, either acting alone or with the consent of a majority (or, in some cases, a supermajority) of the other teams in the league, may be empowered in certain circumstances to take certain actions felt to be in the best interests of the league, whether or not such actions would benefit our teams and whether or not we consent or object to those actions.

While the precise rights and obligations of member teams vary from league to league, the leagues may have varying degrees of control exercisable under certain circumstances over the length and format of the playing season, including pre-season and playoff schedules; the operating territories of the member teams; national and international media and other licensing rights; admission of new members and changes in ownership; franchise relocations; indebtedness affecting the franchise; and labor relations with the players’ associations, including collective bargaining, free agency, and rules applicable to player transactions, luxury taxes and revenue sharing. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — MSG Sports.” From time to time, we may disagree with or challenge actions the leagues take or the power and authority they assert, although the leagues’ governing documents and our agreements with the leagues purport to limit the manner in which we may challenge decisions and actions by a league commissioner or the league itself. See Item 3. “Legal Proceedings” for a discussion of recent litigation between us and the NHL.

Other Sports Properties

The Company’s sports business also features the presentation of a wide variety of premier live sporting events outside of Knicks, Rangers and Liberty games, including professional boxing, college basketball, track and field and tennis. MSG Sports also presents events such as WWE wrestling and the NBA and NFL Drafts. Our sports business includes events that have been among the most popular in our history, as well as perennial highlights on our annual calendar, and also features some of Madison Square Garden’s longest-running associations. We continue to focus on growing this business through an increase in the diversity and number of events and through brand extensions, both at our venues and elsewhere, as we believe it presents growth opportunities for both our MSG Sports and MSG Media segments.

Professional boxing, beginning with John L. Sullivan in 1882, has had a long association with The Garden. This includes hosting Muhammad Ali’s and Joe Frazier’s 1971 “The Fight of the Century,” which is considered among the greatest sporting events in modern history, as well as bouts featuring dozens of other boxing greats. These have included Miguel Cotto, Roberto Duran, George Foreman, Rocky Graziano, Emile Griffith, Bernard Hopkins, Oscar de la Hoya, Jake LaMotta, Sugar Ray Leonard, Lennox Lewis, Joe Louis, Rocky Marciano, Floyd Patterson, Sugar Ray Robinson, Felix Trinidad, Roy Jones, Jr., Mike Tyson, and Evander Holyfield. Additionally, The Golden Gloves amateur boxing tournament has called The Garden home since 1928.

College basketball has been a mainstay at The Garden for decades, with the sport’s longest running holiday tournament, the Holiday Festival, first tipping off over 50 years ago. In addition to St. John’s University calling The Garden its home away from home, the popular Big East Tournament celebrated its 27th anniversary at The Garden in 2009. Popular college basketball events also include visits from Duke University’s Blue Devils and the annual Jimmy V Classic and post-season NIT Finals. The Garden has hosted the Millrose Games, with their world famous Wanamaker Mile, since 1914. Additionally, the BNP Paribas Showdown for the Billie Jean King Cup, a premier tennis event featuring the women winners of the previous year’s Grand Slam events, debuted in 2009 and is scheduled to take place annually through 2013.

MSG Entertainment

Our entertainment business, MSG Entertainment, continues to solidify its position as one of the country’s leaders in live entertainment. It is responsible for the creation, production and/or presentation of a variety of live productions, including The Radio City Christmas Spectacular, featuring the Rockettes, which is the #1 live holiday family show in America and was seen by approximately 1.8 million people in 2009, and the world-renowned Cirque du Soleil’s Wintuk. MSG Entertainment also presents or hosts other live entertainment events such as concerts, including shows by The Police, Eric Clapton, Jimmy Buffett, Bruce Springsteen, Justin Timberlake, Pearl Jam, Chris Rock, Madonna and the Jonas Brothers; family shows, such as Dora the Explorer, Thomas the Tank Engine and Sesame Street Live; special events such as the premiere of Sex and the City: The Movie and the Tony Awards; and theatrical productions, such as The Wizard of Oz and Annie. MSG Entertainment focuses on consistently delivering unforgettable live entertainment experiences in exceptional settings, creating demand for an association with our brands by artists and demand for our productions by the public. From a starting point of world-class expertise in live entertainment, including the historic traditions of the “World’s Most Famous Arena” and Radio City Music Hall, as well as our other venues (including The Theater at Madison Square Garden, the Beacon Theatre, The Chicago Theatre and the Wang Theatre), MSG Entertainment has a proven ability to utilize the strength of its industry relationships and live event expertise to create performance, promotion and distribution opportunities for artists and productions.

MSG Entertainment’s unique combination of relationships and expertise is important not only for MSG Entertainment’s current and future business, but also to our MSG Media segment, which increasingly benefits from opportunities for quality new programming and relationships. For example, our recent, multi-faceted relationship with the Dave Matthews Band resulted in a sold-out show at the Beacon Theatre and exclusive content on Fuse, demonstrating our ability to help artists move beyond their core fan base to attract more diversified interest from fans, venues and other sources. MSG Entertainment’s industry relationships also helped Fuse secure agreements to become the television home of the Rock & Roll Hall of Fame induction ceremonies, Bonnaroo Festival and Lollapalooza.

Our Productions

Radio City Christmas Spectacular

One of MSG Entertainment’s core properties, the Radio City Christmas Spectacular, has been performed at Radio City Music Hall for 77 years and was the holiday celebration for approximately 1.8 million people in 2009. Featuring the world-famous Radio City Rockettes, the critically acclaimed Radio City Christmas Spectacular features show-stopping performances, festive holiday scenes and state-of-the-art special effects, including utilizing one of the world’s largest high definition LED screens.

In 2007, in celebration of the show’s 75th anniversary and as part of our strategic commitment to invest in our core assets, we significantly enhanced the Radio City Christmas Spectacular. The enhanced show balances cutting-edge new Rockettes numbers with more nostalgic fan favorites, including “The Living Nativity” and “Parade of the Wooden Soldiers,” both of which have been performed in the show since its inception in 1933. Also as part of the 75th anniversary celebration and speaking to the show’s national appeal, NBC aired and Madison Square Garden produced a one-hour special of the Radio City Christmas Spectacular, anchored from Radio City Music Hall by Meredith Vieira and Matt Lauer. Additionally, as part of its MSG Originals series, and in another instance of collaboration among our segments, our MSG network created a documentary on the history of Radio City Music Hall and the 75th Anniversary of the Radio City Christmas Spectacular. The documentary, which first aired in 2007, utilized historic footage, interviews with historians, Rockettes and production representatives to showcase the remarkable history of the “Showplace of the Nation,” while also increasing awareness and interest in the Radio City Christmas Spectacular.

We continue to invest in strengthening and broadening our Rockette brand, targeting the most prominent and effective vehicles that elevate their visibility and underscore their reputation as beloved American cultural icons. The Rockettes have appeared or performed at high profile events, such as Super Bowl halftime shows, Presidential Inaugurations and the annual Macy’s Thanksgiving Day Parade, among many others, and we pursue carefully considered branded products, such as table-top books, apparel and Rockette dolls.

Based on the success of the Radio City Christmas Spectacular, in 1994 we expanded the Radio City Christmas Spectacular franchise outside of the New York area, with a specially designed theater-sized version of the show. Since that time, the Radio City Christmas Spectacular has been performed in many cities across North America, including Boston, Los Angeles, Atlanta, Toronto, St. Louis, Chicago, Detroit, Ft. Lauderdale, Denver, Cleveland, Columbus, Dallas, Seattle, Nashville and Phoenix. The current theatrical touring version of the show consists of three productions: a recurring production at the Grand Ole Opry House in Nashville, as well as two other productions that each perform in two cities for up to four weeks during the holiday season.

In 2008, we further extended the Radio City Christmas Spectacular brand with the debut of the Radio City Christmas Spectacular arena tour. This full-scale arena touring production of the show emulates the size and grandeur of the Radio City Christmas Spectacular experience at Radio City Music Hall and, as such, the production required significant investment to recreate the scope and energy of that experience. The show has played arenas in numerous cities across the United States and Canada, including Washington D.C., Minneapolis, Houston, Cincinnati, Baltimore, Toronto, Montreal, Philadelphia, Oklahoma City, Orlando and Memphis. This arena production took the show beyond its traditional theater environment, extending our presence into new markets, while attracting a greater audience. In 2010 it is expected to tour the western United States. Although playing to critical acclaim during its first two years, the performance of the show has not met our financial expectations due, in part, to the severe economic climate at the end of 2008 and throughout 2009. In 2009, improvements were made to the show’s design to make it more mobile to be able to tour more cities and be more cost efficient so that it is better positioned to achieve its goal of contributing to our profitability.

Since its inception, the Radio City Christmas Spectacular has played to approximately 67 million people in over 60 different cities. We acquired the rights to the Radio City Christmas Spectacular in 1997, and those rights are separate from, and do not depend on the continuation of, our lease on Radio City Music Hall. We also hold rights to the Rockettes in the same manner.

Wintuk and Other Cirque du Soleil Productions

In 2007, to realize our vision of creating, developing or acquiring unique and compelling new content for our venues, we entered into an agreement with the world-renowned Cirque du Soleil. This relationship led to the creation of Wintuk, the story of a boy’s quest for snow, which was built specifically for The Theater at Madison Square Garden and represents the first Cirque du Soleil family-themed show. Currently scheduled to run through the 2010 holiday season, Wintuk weaves together thrilling acrobatics, theatrical effects and memorable songs.

We plan to build on the strength of our current relationship with Cirque du Soleil and our shared commitment to create compelling new live events in exceptional settings. For example, we recently have expanded our relationship to include another new stage theatrical production, Banana Shpeel, based on a Vaudeville theme. Banana Shpeel began previews in The Chicago Theatre on November 19, 2009, and is expected to premiere at the Beacon Theatre in New York in the spring of 2010. This production was designed to be capable of touring theaters throughout the world. We hope to further expand our relationship with Cirque du Soleil in the future, with the creation of additional new productions for our venues, as well as touring productions.

Our Bookings and Other Entertainment Business Activities

MSG Entertainment is an established industry leader responsible for booking a wide variety of live entertainment events in our venues, which perennially include some of the biggest names in music and entertainment. Over the last several years, our venues have showcased artists including The Police, Jimmy Buffett, Bruce Springsteen, Justin Timberlake, Madonna, The Dead, Beyonce, Paul Simon and Eric Clapton and other popular events such as the Westminster Kennel Club Dog Show and the Tony Awards. Although we primarily license our venues to third-party promoters for a fee, we also promote or co-promote shows, in which case we share the economic risk relating to the event. We do not currently promote or co-promote events outside of our venues other than our productions described above.

MSG Media

MSG Media is a leader in production and content development for multiple distribution platforms, including content originating from our venues. For all periods presented, it consists of programming networks and interactive offerings, including the MSG Networks and the Fuse Networks. MSG Networks are home to seven professional sports teams: the New York Knicks, New York Rangers, New York Liberty, New York Islanders, New Jersey Devils, Buffalo Sabres and New York Red Bulls, as well as to our critically acclaimed original and other programming, including Summer of ‘77, The Mike D’Antoni Show and MSG Originals, highlighted by the New York Emmy-award winning series The 50 Greatest Moments at MSG, Big 12 and PAC 10 football, and ACC, Big East and PAC 10 basketball.

Since 2008, Fuse has focused on establishing itself as a unique multi-platform music destination, where artists and fans can interact and build relationships. Programming on Fuse focuses on music-related programming, including coverage of premier artists, events and festivals, original content and high profile concerts. Certain Fuse programming centers around its insider access to MSG Entertainment and Madison Square Garden’s venues that Fuse uses to create music programming, while offering a voice and enhanced exposure to artists. Our interactive businesses include a group of highly targeted websites (including msg.com, thegarden.com, radiocity.com, nyknicks.com, newyorkrangers.com and fuse.tv) and wireless, video on demand and digital platforms for all Madison Square Garden properties. MSG Media allows us to leverage the value of the content created, produced and/or presented by MSG Sports and MSG Entertainment.

MSG Networks and Fuse provide regional and national distribution for both MSG Sports and MSG Entertainment content, and thereby play a critical role in supporting, promoting and enhancing those businesses. Fuse’s national distribution and focus on music-related programming provide a national vehicle to expand MSG Media’s and MSG Entertainment’s involvement in the music and entertainment industries, deepening our ability to offer artists enhanced exposure. MSG network’s focus on being “all things Madison Square Garden,” allows it to serve as a powerful platform for the distribution of our sports and entertainment content, while differentiating our media offerings in a diverse and competitive environment.

Examples of the success of our business collaborations include Fuse becoming the television home of several music-focused events and festivals and Fuse’s groundbreaking series showcasing numerous performances from Madison Square Garden venues, entitled Fuse Presents. MSG network’s documentary on the history of Radio City Music Hall and the 75^th Anniversary of the Radio City Christmas Spectacular also epitomizes this cooperative approach. The documentary, which first aired in 2007, utilized historic footage, interviews with historians, Rockettes and production representatives to showcase the remarkable history of the “Showplace of the Nation,” while also increasing awareness and interest in the Radio City Christmas Spectacular. When the restored Beacon Theatre was re-opened, MSG network and Fuse collaborated on a one-hour documentary detailing the history of the theater and the process of restoration that was telecast on both networks. MSG Media and MSG Entertainment also worked together with Kanye West for The Kanye West Foundation event at The Chicago Theatre in June 2009. The event aired on Fuse, Fuse HD and Fuse On Demand, with subsequent re-airings on MSG network. This collaboration is indicative of the mutually beneficial opportunities we can provide today’s artists. Kanye West was able to perform a concert to benefit his foundation and received significant visibility between albums, while Fuse and MSG network produced exclusive content and targeted programming to increase viewership.

MSG Networks

Winner of more than 140 New York Emmy awards for live sports and original programming, MSG Networks are the home to seven professional sports teams: the New York Knicks, New York Rangers, New York Liberty, New York Islanders, New Jersey Devils, Buffalo Sabres and New York Red Bulls, as well as our critically acclaimed original and other programming, including Summer of ‘77, The Mike D’Antoni Show and MSG Originals are highlighted by the New York Emmy-award winning series The 50 Greatest Moments at MSG, Big 12 and PAC 10 football, and ACC, Big East and Pac 10 basketball. In addition to the Company’s ownership of Knicks, Rangers and Liberty rights, MSG Networks have long-term rights agreements with the Islanders, Devils and Sabres. MSG network and MSG Plus are among the nation’s largest regional cable networks and collectively telecast over 700 live sporting events over 2,100 hours of original programming in 2009. MSG HD and MSG Plus HD collectively telecast over 450 live sporting events in high definition in 2009. MSG network and MSG Plus are each received by approximately 8 million subscribers primarily in New York, New Jersey and Connecticut.

In 2006, we expanded the programming on MSG network to include additional programming originating from or related to our venues, while continuing to deliver award-winning live sports coverage. MSG network’s line-up of programming highlights how the Company’s sports, entertainment and media segments work together to increase exposure for our brands, enhance our offerings to artists and productions, and create must-see content for our programming networks. Examples include:

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The critically acclaimed and New York Emmy award-winning MSG Originals documentary series, which has featured such titles as The 50 Greatest Moments at MSG, Concert for New York City Remembered, Mecca of Boxing, and The Restoration of the Beacon Theatre

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The MSG Concert Series, which features a variety of past and present concerts or artists playing our venues

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Road to MSG, a series that brings viewers along as their favorite artists and athletes prepare to take the stage or hit the floor of the “World’s Most Famous Arena” or one of our other venues

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Programming relating to the Knicks, Rangers and Liberty, such as MSG Vault, MSG Profiles, Fans Most Wanted, Hockey Night Live, and dedicated pre- and post-game shows, all of which allow us to capitalize on the extraordinary enthusiasm of our teams’ fans

In March 2008, together with our MSG Sports segment, MSG Media capitalized on the interest and excitement regarding the Roger Federer versus Pete Sampras tennis match at The Garden to launch MSG Plus (previously known as FSN New York). The sold-out match, which pitted the #1 ranked Federer against Sampras, who was at that time the recently retired holder of the most Grand Slam titles, originated from The Garden and was aggressively promoted as the first live sports programming on the newly rebranded MSG Plus. We also have a long and rich tradition of presenting professional and amateur boxing events, including numerous title bouts and the Golden Gloves amateur boxing tournament, which has called The Garden home since 1928.

MSG Plus programming includes the best of live sports and original programming from Fox Sports Net, which has included a strong lineup of national and local college football and basketball, shows such as Best Damn Sports Show, The FSN Final Score and Sports Science, as well as a variety of live local sports. In addition, MSG Plus produces a robust lineup of original sports programming and games, including high school sports, supporting original programming for its professional teams, human interest shows, horse racing, and international sports content.

In 1998, MSG HD became the first regular provider of sporting events in high definition. Today we produce substantially all New York Knicks and New York Rangers telecasts, substantially all of the home telecasts and certain away telecasts of the New York Islanders and New Jersey Devils, substantially all of the home telecasts of the Buffalo Sabres and certain original programming in a high definition format for inclusion in MSG HD and MSG Plus HD.

Fuse

Fuse is a national programming network that provides a unique, multi-platform music destination, centered on the development of creative music programming driven by meaningful relationships within the music industry and the interaction of artists and fans. Fuse is received by approximately 55 million subscribers and has a video-on-demand platform that is available to over 31 million homes. Fuse Networks currently distributes programming on its linear television channel, Fuse, on its high-definition channel Fuse HD, on-demand via Fuse On Demand, on-line via fuse.tv and to mobile technologies via Fuse Mobile.

Closely tied to MSG Entertainment and to some of the world’s most iconic venues, such as The Garden, Radio City Music Hall, the Beacon Theatre, and The Chicago Theatre, we believe Fuse is positioned to provide artists and fans with a music experience that is not available anywhere else. Its unique access to Madison Square Garden assets allows Fuse to bring fans on-stage, off-stage and behind the stage of some of today’s hottest performances and events, while its ability to offer direct exposure to marketing opportunities for artists gives it credibility among today’s artists and their management. We believe this combination creates opportunities to expand Fuse’s distribution, domestically and internationally.

Prior to 2008, Fuse was part of Cablevision’s Rainbow segment, however, the combined financial statements of the Company and the operating results of our MSG Media segment include the operating results for Fuse for all periods presented in this Annual Report on Form 10-K. In 2008, Fuse was contributed to Madison Square Garden to fulfill a strategic objective to expand our reach to a national audience, increase the value proposition of our programming and marketing to promoters, artists and music labels and take advantage of the unique access to our iconic venues and our entertainment industry relationships through MSG Entertainment. Following the contribution, Fuse underwent a year of transition in 2008, as we invested in programming, production and marketing initiatives to reposition the network as a multi-platform music destination. After assessing Fuse’s development during 2008, we have refined our strategy to create a voice for artists and fans by emphasizing collaborations with MSG Entertainment, expanding industry relationships, creating innovative programming and exploiting Fuse’s insider access to our iconic venues.

As part of its efforts to enhance its position within the music television space, Fuse has forged exclusive arrangements with popular artists, events and festivals, produced original programming and featured high profile concerts and events. These initiatives often represent a coordinated effort between MSG Entertainment and Fuse. Fuse’s current slate of programming includes:

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Exclusive television coverage of one of music’s biggest annual events, the Rock and Roll Hall of Fame induction ceremonies. Branded Fuse Hall of Fame, this relationship also includes a year-long block of specially dedicated Hall of Fame programming that celebrates the classic and iconic in rock history

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FuseFest, featuring footage from Bamboozle, Warped Tour, Lollapalooza, Bonnaroo Music and Arts Festival and the New Orleans-focused Voodoo Experience

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No. 1 Countdown, Video Yearbook and Loaded, which feature top music videos in rock, pop, alternative, hip-hop and viewer’s choice and select documentaries of artists

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On The Record is a one-on-one interview series with today’s top artists. The series brings viewers exclusive and revealing in-depth conversations with the biggest and boldest names in music. Recent artists include John Mayer, Lady Gaga, and 50 Cent

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Hip Hop Shop is hosted by Fuse’s newest music insider Toure. The show dives into the world of hip hop, with up-to-date news, videos, interviews and celebrity guests including Jay Sean and Ludacris

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Fuse Presents, a select series of concert specials and dedicated support programming covering such artists as Dave Matthews Band, Kanye West, Jay-Z, John Mayer, Fall Out Boy, The Killers, Foo Fighters and The Cure

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Full Volume Flicks, which features Hollywood movies relating to music

Other Media Properties — MSG Interactive

MSG Interactive is the network of websites and wireless, video on demand and digital platforms for all Madison Square Garden properties. It includes sixteen interactive websites, blogs and social networking sites for our properties, which collectively reach two million unique users each month. Websites include msg.com, thegarden.com, beacontheatre.com, radiocity.com, chicagotheatre.com and fuse.tv, as well as sites dedicated to our sports teams (nyknicks.com, newyorkrangers.com and newyorkliberty.com). Like our MSG Sports business, the on-line operations relating to our sports teams may, in certain circumstances, be subject to certain agreements, rules, policies, regulations and directives of the leagues in which the respective team operates. See “—Regulation — Regulation of Our Media Business.” MSG Interactive properties also include the MSG Insider email, alert and wireless platform and a series of Madison Square Garden social network and blog sites. The MSG Interactive business generates revenue for Madison Square Garden via the sale of advertising and sponsorships on these digital properties. Additionally, supported by its database of nearly four million engaged sports and music fans, MSG Interactive offers a strategic marketing asset that creates opportunities to market directly to our fans and cross-promote across our businesses.

The Company has a small number of licensing arrangements permitting third parties to use trademarks or other intellectual property of the Company for limited purposes. For example, we have a licensing arrangement with Cablevision permitting it to use “MSG Varsity” as the name of its high school sports programming service.

Our Venues

The Company operates a mix of iconic venues that continue to build on their historic prominence as destinations for unforgettable experiences and events. Individually, these venues are each premier showplaces, with a passionate and loyal following of fans, performers and events. Taken together, we believe they represent an outstanding collection of venues.

We operate five venues in New York City and Chicago, which are either owned or operated under long-term leases, and have a long-term booking agreement with the Wang Theatre in Boston. Our New York City venues include the Madison Square Garden complex (which includes both The Garden and The Theater at Madison Square Garden), Radio City Music Hall and the Beacon Theatre, and our Chicago venue is the landmark Chicago Theatre.

Madison Square Garden Arena

Madison Square Garden has been a celebrated center of New York life since the first Garden opened its doors in 1879. Over its 130-year history, there have been four Garden buildings, each known for showcasing the best of the era’s live entertainment offerings. We believe that The Garden has come to epitomize the power and passion of live sports and entertainment to people around the world, with an appearance at The Garden often representing a pinnacle of an athlete’s or performer’s career. Known simply as “The World’s Most Famous Arena,” The Garden has been the site of some of the most memorable events in sports and entertainment, and, along with The Theater at Madison Square Garden, currently plays host to approximately 400 events and approximately four million visitors each year. The Garden is the highest-grossing entertainment venue in North America and the second highest-grossing entertainment venue in the world, based on Billboard Magazine’s 2009 rankings. The Garden was also ranked #1 venue of the decade in its respective class based upon gross ticket sales by Billboard Magazine. In addition, The Garden was voted “Arena of the Year” by the music industry’s trade magazine, Pollstar.

The Garden is home to three professional sports teams, the New York Knicks, New York Rangers and New York Liberty, and is associated with countless “big events,” inspired performances and one-of-a-kind moments. The Garden’s thousands of highlights include “The Fight of the Century” between Muhammad Ali and Joe Frazier in 1971 (considered among the greatest sporting events in history); the 1970 Knicks NBA Championship; the Rangers’ 1994 Stanley Cup Championship; three Democratic National Conventions and one Republican National Convention; a landmark visit from Pope John Paul II; Marilyn Monroe’s famous birthday serenade to President John F. Kennedy; Frank Sinatra’s “Main Event” concert in 1974; Elton John’s record 60 performances; Billy Joel’s record-setting 12 consecutive sold-out shows; three prominent benefit concerts, which galvanized the public to respond to national or global crises, including the first of its kind, The Concert for Bangladesh in 1972, as well as The Concert for New York City, following the events of 9/11 and The Big Apple to the Big Easy, following Hurricane Katrina in 2005.

The current Madison Square Garden complex, located between 31^st and 33^rd Streets and Seventh and Eighth Avenues on Manhattan’s West Side, opened on February 11, 1968, with a salute to the U.S.O., hosted by Bob Hope and Bing Crosby. From a structural standpoint, the construction of the current Garden was considered an engineering wonder for its time, including its famous circular shape and unique, cable-supported ceiling, which contributes to its intimate feel. It was the first large structure built over an active railroad track. The builder, R.E. McKee, had a national reputation and was later recognized as a “Master Builder” by the construction industry. Architect Joe Luckman had one of the largest firms in the country and designed such buildings as the Prudential Center in Boston and NASA’s flight center in Houston.

We own the Madison Square Garden building, the platform on which it is built and the development rights (including air rights) above our property. Madison Square Garden sits atop Pennsylvania Station, a major commuter hub in Manhattan, which is owned by the National Railroad Passenger Corporation (Amtrak). While the development rights we own would permit us to expand in the future, any such use of development rights would require various approvals from the City of New York. The Garden seats up to approximately 21,000 spectators for sporting and entertainment events. The Garden, along with The Theater at Madison Square Garden, contains approximately 985,600 square feet of floor space over 11 levels.

The Madison Square Garden Arena Renovation

The Garden has gone through four incarnations, with the current building occupying its position above Pennsylvania Station since 1968. We are in the pre-construction planning phase of our renovation of The Garden, which we believe will have multiple benefits, including:

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Providing a state-of-the-art venue that can attract concerts, as well as other large, high profile sports, entertainment and other special events which benefit our customers, as well as the New York City economy

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Improving the experience of customers in all parts of the venue

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Increasing our attractiveness to free agents in basketball and hockey

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Supporting our efforts to retain and grow our season ticket bases for our teams

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Increasing the breadth of VIP offerings and venue-based opportunities available to marketing partners

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Augmenting revenue streams

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Providing a new point of origination for programming from our MSG Networks studios

The renovation is an example of our strategic commitment to invest in our core assets and continue to provide the kind of historic, unforgettable experiences that have long been a key component of our business. Focused on the total fan experience, the renovation will benefit everyone in attendance, from the first row to the last, whether they are first time visitors, season ticket subscribers, athletes, suite holders or marketing partners. All of our customers will experience improved sight lines, entertainment and dining options, new concourses, hospitality areas, views of the city, new technology and a completely transformed interior. The current renovation plan, which is designed to ensure that attending an event at The Garden is unlike anywhere else, will be specifically highlighted by:

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A dramatically redesigned Seventh Avenue entrance

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New, more comfortable seats, with better sightlines that put patrons closer to the action

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New, wider and more spacious public concourses with spectacular views of the city

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Unique “bridges” suspended above each side of The Garden, providing seating for fans that does not exist in any arena today

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State-of-the-art lighting, sound and LED video systems in HDTV

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New food, beverage and bar options

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A new suite configuration that includes:

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58 new lower-level suites that are 50 percent larger than our current suites and half the distance to events

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20 new event level suites, which include the best seats in the house

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One super suite, which is the size of 10 traditional suites

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Improved dressing rooms, locker rooms, star dressing rooms and production offices for athletes and performers

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A new upper level with a party deck

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Additional new restrooms

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Restoration of The Garden’s famous ceiling

We continue to review all aspects of this complex project with our consultants in order to improve the renovation plans, mitigate project risks and identify efficiencies in all aspects of costs, planning and project-phasing. We also continue to develop our cost and capital investment estimates to ensure that the planned renovation meets our overall expectations and objectives.

While the pre-construction planning and cost estimates of this renovation are not yet final, we currently expect that the project’s cost will be between $775 million and $850 million. Total arena renovation expenditures incurred through December 31, 2009 were approximately $60 million of which approximately $35 million was in 2009. We expect that the estimated costs associated with the project will be met from cash on hand, receipt of repayments of advances made to a subsidiary of Cablevision and cash flow from our operations. We have recently entered into a senior secured revolving credit facility with a syndicate of lenders. (See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources —Financing Agreements.”) To the extent that management determines that financing for this renovation is required or desirable, we would expect to draw on this facility.

In order to most efficiently and effectively complete the renovation, it will be a year-round project. Our goal is to minimize disruption to current operations and, to achieve this, The Garden will remain open for the New York Knicks’ and New York Rangers’ seasons in the years when the renovation takes place, while we sequence the construction to ensure that we maximize our construction efforts when we close the arena during summer months. Our current expectation is that the renovated lower bowl of The Garden will be open for the 2011-12 seasons, and that the renovated upper bowl will be open for the 2012-13 seasons.

Although the Company continues to pursue the arena renovation plan, there can be no assurance that a renovation will occur or what the ultimate cost, scope or timing of any renovation activity may be.

The Theater at Madison Square Garden

The current incarnation of The Theater at Madison Square Garden has approximately 5,600 seats. The theater opened as part of the fourth Madison Square Garden complex in 1968, with seven nights of performances by Judy Garland. Since then, some of the biggest names in the music world have played the theater, including Bob Dylan, Diana Ross, Elton John, James Taylor, Melissa Etheridge, Neil Young, Radiohead, The Doors and Van Morrison. The theater has also hosted boxing events, the NBA Draft, as well as award shows such as The Daytime Emmys and the Essence Awards. We also host theatrical productions, family shows and other special events in the theater. Today, The Theater at Madison Square Garden is the third-highest grossing entertainment venue of its size in the world, based on Billboard Magazine’s 2009 rankings.

The Theater at Madison Square Garden is also home to Wintuk, the winter themed show we co-produce with Cirque du Soleil. See “Business — MSG Entertainment — Our Productions — Wintuk and Other Cirque du Soleil Productions.”

Radio City Music Hall

Radio City Music Hall has a rich history as a national theatrical and cultural mecca since it was first established by theatrical impresario S.L. “Roxy” Rothafel in 1932. Known as “The Showplace of the Nation” it was the first building in the Rockefeller Center complex and, at the time, the largest indoor theater in the world. Perhaps best known as home to the country’s #1 live holiday family show, the Radio City Christmas Spectacular, starring the world-famous Rockettes, Radio City Music Hall also hosts concerts, family shows and special events, such as the Tony Awards and the NFL Draft. See “— MSG Entertainment — Our Productions — Radio City Christmas Spectacular.” Today, Radio City Music Hall is the highest-grossing entertainment venue of its size in the world, based on Billboard Magazine’s 2009 rankings. Radio City Music Hall was also ranked #1 venue of the decade in its respective class based upon gross ticket sales by Billboard Magazine.

Built for approximately $8 million in 1932, Radio City Music Hall was designated a New York City landmark in 1979 and a National Historic Landmark in 1987. We acquired the lease in 1997, and in 1999, in another example of our commitment to invest in our core assets to help drive our long-term business, we invested approximately $70 million on a complete restoration that returned the legendary theater to its original grandeur. Our acclaimed restoration included burnishing the ceilings of Radio City with 720,000 sheets of gold and aluminum leaf, replacing the existing stage curtain with a new 112-foot wide golden silk replacement, and replacing its approximately 6,000 seats. All furniture, wall fabric, carpeting, lighting fixtures and appointments were cleaned, repaired or remade, and the three-story tall mural “The Fountain of Youth,” by Ezra Winter, which looms above the grand staircase, was cleaned of decades of grime, varnish and polyurethane. State-of-the-art sound systems, lighting and HDTV capabilities were also installed, and the theater now houses one of the world’s largest LED screens, which is prominently featured in the Radio City Christmas Spectacular.

We lease Radio City Music Hall, located at Sixth Avenue and 50th Street in Manhattan, pursuant to a long-term lease. The lease on Radio City Music Hall expires in 2023. We have the option to renew the lease for an additional ten years by providing two years’ notice prior to the initial expiration date.

The Beacon Theatre

In November 2006, we entered into a long-term lease agreement to operate the legendary Beacon Theatre, which sits on the corner of Broadway and 74^th Street in Manhattan. Designed by Chicago architect Walter Ahlschlager, and conceived of by Roxy Rothafel as the sister venue to Radio City Music Hall, the Beacon Theatre opened in 1929 as a forum for vaudeville acts, musical productions, drama, opera, and movies. In 1979, the Beacon was designated a New York landmark building by the NYC Landmarks Preservation Commission and a national landmark on the National Register of Historic Places. Over its history, the Beacon has been a veritable rock & roll room for some of the greatest names in music. The Beacon has also staged operatic events, including Madame Butterfly in 1988, and has hosted numerous luminaries, including His Holiness the Dalai Lama in 1999 and 2009, and President Bill Clinton in 2006, when the Rolling Stones played a private concert in honor of his 60th birthday.

In order to ensure that we could deliver a first-class experience to customers and performers, in August of 2008 we closed the Beacon for a seven-month restoration to return the theater to its original 1929 grandeur, at a cost of approximately $17 million. The comprehensive restoration of the Beacon focused on all historic, interior public spaces of the building, backstage and back-of-house areas, and was based on extensive historic research, as well as detailed, on-site examination of original, decorative painting techniques that had been covered by decades-old layers of paint. The widely acclaimed, comprehensive restoration was similar to our restoration of Radio City Music Hall, and reflects our commitment to New York City, which we believe should have the world’s most iconic venues that provide unforgettable experiences for millions of patrons every year. The Beacon Theatre is the third-highest grossing entertainment venue of its size in the world, based on Billboard Magazine’s 2009 rankings.

Our lease on the approximately 2,800 seat Beacon Theatre expires in 2026.

The Chicago Theatre

In October 2007, to extend our presence outside of New York and provide us with an anchor for content and distribution in a key market in the Midwest, we purchased the legendary Chicago Theatre, a venue with approximately 3,600 seats. The Chicago Theatre, which features its famous six-story-high “C-H-I-C-A-G-O” marquee, was built in 1921 and designed in the French Baroque style by architects Cornelius W. Rapp and George L. Rapp. It is the oldest surviving example of this architectural style in Chicago today, and was designated a Chicago landmark building in 1983 by the Mayor of Chicago and the Chicago City Council.

Today, The Chicago Theatre is becoming a highly attractive destination for concerts, shows and events, including a wide range of entertainers, such as Bob Dylan, Chris Rock, Fall Out Boy, Kanye West, Kathy Griffin and Steely Dan. The theatre also has served host to Broadway tours, including Joseph and the Amazing Technicolor Dreamcoat and Dreamgirls. While continuing to present first-class concert events, we also intend to diversify The Chicago Theatre’s entertainment offerings to include an increased number of theatrical and family shows, as well as special events. The Chicago Theatre is the eighth highest-grossing entertainment venue of its size in the world, based on Billboard Magazine’s 2009 rankings.

In connection with our acquisition of The Chicago Theatre, we assumed certain obligations of the previous owner contained in a redevelopment agreement between that owner and the City of Chicago, all of which expire in 2014. Until the expiration of those obligations, we are required to obtain the approval of the City of Chicago in connection with any sale of The Chicago Theatre.

The Wang Theatre

In August 2008, we entered into a booking agreement with respect to the historic Wang Theatre in Boston. Under the booking agreement, we are utilizing our experience in event production and entertainment marketing to increase the quantity and diversity of performances staged at the Wang Theatre. These performances include theatrical productions and family shows, such as Chitty Chitty Bang Bang, concerts, such as a multi-night run by Steely Dan and a performance by poet and singer-songwriter Leonard Cohen, and a timely speaker series featuring today’s newsmakers. The Wang Theatre seats approximately 3,600.

Our booking agreement expires in 2019. We have the option to renew the agreement at that time for an additional ten years.

Investment in Front Line Management Group Inc.

In June 2008, we purchased a 10% ownership interest in Front Line Management Group Inc. (“Front Line”), a musical artist management company. A controlling interest in Front Line is owned by Ticketmaster Entertainment, Inc. Front Line is one of the world’s leading artist management companies. Front Line manages musical artists and acts primarily in rock, classic rock, pop and country music, including the Eagles, Jimmy Buffett, Van Halen, Fleetwood Mac, Christina Aguilera, Stevie Nicks, Aerosmith, Steely Dan, Chicago and Journey. As of December 31, 2009, Front Line had almost 250 artists on its roster and approximately 75 managers providing services to artists. The investment is designed to more closely align Madison Square Garden with a strong collection of music artists. The Company is continuing to explore opportunities to attract Front Line’s artists to our portfolio of music related assets, including our historic venues, and to our media assets, including Fuse Networks and MSG Networks.

Garden of Dreams Foundation

Madison Square Garden also has a close association with Garden of Dreams Foundation, a non-profit charity. This foundation is dedicated to making dreams come true for children in crisis. Working with 21 organizations in New York, New Jersey and Connecticut, including hospitals, wish organizations, homeless shelters, foster care organizations and community-based organizations, Garden of Dreams Foundation utilizes the power and magic of Madison Square Garden and its properties to bring joy and happiness to children facing devastating problems. Garden of Dreams Foundation events and activities include full Knicks, Rangers and Liberty team events, special celebrations and event attendance at The Garden, Radio City Music Hall and the Beacon Theatre, visits by Madison Square Garden and Fuse on-air hosts, the MSG Entertainment Talent Show, where children perform on the Great Stage at Radio City Music Hall, a “Dream Week” summer camp, toy and coat drives, and the “Make A Dream Come True Program,” where children enjoy unforgettable experiences with celebrities and at events. In November of 2009, the Make-A-Wish Foundation presented the Chris Greicius Industry Award to the Garden of Dreams Foundation in recognition of Garden of Dreams’ exceptional dedication to helping grant the wishes of children with life-threatening medical conditions.

We believe the depth of Madison Square Garden’s relationship with Garden of Dreams Foundation, which is actively integrated with each of our business segments, reflects our commitment to positively impact our community. Since its inception in 2006, the foundation and Madison Square Garden have created once-in-a-lifetime experiences for more than 135,000 tri-state area children in crisis, with approximately 100,000 tickets donated to organizations served by Garden of Dreams.

Regulation

Regulation of Our Sports and Entertainment Businesses

Our sports and entertainment businesses are subject to legislation governing the sale and resale of tickets and consumer protection statutes generally.

In addition, many of the events produced or promoted by our sports and entertainment businesses are presented in our venues which are, similar to all public spaces, subject to building codes and fire regulations imposed by the state and local governments in the jurisdictions in which our venues are located. These venues are also subject to zoning and outdoor advertising regulations, which restrict us from making certain modifications to our facilities as of right or from operating certain types of businesses. These venues also require a number of licenses in order for us to operate, including occupancy permits, exhibition licenses, food and beverage permits, liquor licenses and other authorizations. In addition, our venues are subject to the federal Americans with Disabilities Act, which requires us to maintain certain accessibility features at each of our facilities.

The professional sports leagues, in which we operate, primarily the NBA and NHL, claim the right under certain circumstances to regulate important aspects of our sports business and our team-related interactive businesses. See “— MSG Sports — The Role of the Leagues in Our Operations.”

Regulation of Our Media Business

The Federal Communications Commission (“FCC”) imposes regulations on cable television operators and satellite operators that affect programming networks indirectly. In addition, cable television programming networks, such as our MSG Networks and Fuse Networks, are also regulated by the FCC in certain respects because they are affiliated with a cable television operator like Cablevision.

Closed Captioning and Advertising Restrictions on Children’s Programming

Certain of our networks must provide closed-captioning of programming for the hearing impaired, and any of our programming and Internet websites intended primarily for children 12 years of age and under must comply with certain limits on advertising.

Indecency and Obscenity Restrictions

Cable operators and other distributors are prohibited from transmitting obscene programming, and our affiliation agreements generally require us to refrain from including such programming on our networks.

Program Access

The “program access” provisions of the Federal Cable Act generally require satellite-delivered video programming in which a cable operator holds an attributable interest, as that term is defined by the FCC, to be made available to all multichannel video programming providers, including satellite providers and telephone companies, on nondiscriminatory prices, terms and conditions, subject to certain exceptions specified in the statute and the FCC’s rules. For purposes of these rules, the common directors and five percent or greater voting shareholders of Cablevision and the Company are deemed to be cable operators with attributable interests in Madison Square Garden. As long as we continue to have common directors and major shareholders with Cablevision, our satellite-delivered video programming services will remain subject to the program access provisions. Until October 2012, these rules also prohibit us from entering into exclusive contracts with cable operators for these services.

The FCC recently extended the program access rules to terrestrially-delivered programming created by cable operator-affiliated programmers. The new rules would compel the licensing of such programming in response to a complaint by a multichannel video programming distributor if the complainant can demonstrate that the lack of such programming, undue influence by the cable operator affiliate, or discrimination in the price, terms, or conditions for such programming significantly hinders or prevents the distributor from providing satellite cable programming. These new rules could require us to make some of our terrestrial programming services available to competing multichannel video programming providers on nondiscriminatory prices, terms and conditions. The new rules have been challenged in federal court. We cannot predict how the court will act on the challenge.

The FCC is seeking comment on a proposal to allow a cable operator to seek repeal of the exclusivity ban prior to 2012 with respect to programming it owns, in markets where the cable operator faces competition from other video programming distributors; and is considering revisions to the program access complaint procedures.

Verizon and AT&T each have filed a program access complaint at the FCC against us and Cablevision challenging their respective lack of access to our terrestrially-delivered MSG HD and MSG+ HD services. We and Cablevision are vigorously contesting these complaints.

Wholesale “A La Carte”

The FCC is also seeking comment on whether to require programming networks to make each of their services available to video programming distributors on an “a la carte” basis.

Effect of “Must-Carry” Requirements

The FCC’s implementation of the statutory “must-carry” obligations requires cable and satellite operators to give broadcasters preferential access to channel space. This may reduce the amount of channel space that is available for carriage of our networks by cable television systems and DBS operators.

Satellite Carriage

All satellite carriers must under federal law offer their service to deliver Madison Square Garden’s and its competitors’ programming networks on a nondiscriminatory basis (including by means of a lottery). A satellite carrier cannot unreasonably discriminate against any customer in its charges or conditions of carriage.

Media Ownership Restrictions

FCC rules set media ownership limits that restrict, among other things, the number of daily newspapers and radio and TV stations in which a single entity may hold an attributable interest as that term is defined by the FCC. The fact that the common directors and five percent or greater voting shareholders of Cablevision and the Company currently hold attributable interests in each of the companies for purposes of these rules means that these cross ownership rules may have the effect of limiting the activities or strategic business alternatives available to us, at least for as long as we continue to have common directors and major shareholders with Cablevision.

Website Requirements

Madison Square Garden maintains various websites that provide information and content regarding its businesses and offer merchandise for sale. The operation of these websites may be subject to a range of federal, state and local laws such as privacy and consumer protection regulations. The on-line operations relating to our sports teams may, in certain circumstances, be subject to certain agreements, rules, policies, regulations and directives of the leagues in which the respective team operates. See “MSG Sports — The Role of the Leagues in Our Operations.”

Other Regulation

The FCC has recommended that Congress prohibit the availability of violent programming, including cable programming, during the hours when children are likely to be watching. It also imposes rules regarding political broadcasts.

Competition

Competition in Our Sports Business

Our sports business operates in a market in which numerous sports and entertainment opportunities are available. In addition to the NBA, NHL and WNBA teams that we own and operate, the New York market is home to two Major League Baseball teams (the New York Yankees and the New York Mets), two National Football League teams (the New York Giants and the New York Jets), two additional NHL teams (the New York Islanders and the New Jersey Devils), a second NBA team (the New Jersey Nets) and a Major League Soccer franchise (the New York Red Bulls). In addition, there are a number of other amateur and professional teams that compete in other sports, including at the collegiate and minor league levels. New York is also home to the U.S. Open tennis event each summer, as well as many other non-sports related entertainment options.

As a result of the large number of options available, we face strong competition for the general New York sports fan. We must compete with these other sporting events in varying respects and degrees, including on the basis of the quality of the teams we field, their success in the leagues in which they compete, our ability to provide an entertaining environment at our games and the prices we charge for our tickets. In addition, for fans who prefer the unique experience of NHL hockey, we must compete with two other hockey teams located in the New York area as well as, in varying respects and degrees, with other NHL hockey teams and the NHL itself. Similarly, for those fans attracted to the equally unique experience of NBA basketball, we must compete, in varying respects and degrees, with another NBA team located in the New York area as well as other NBA teams and the NBA itself.

Competition in Our Entertainment Business

Our entertainment business competes, in certain respects and to varying degrees, with other live performances, sporting events, movies, home entertainment (including television, home video and gaming devices) and the large number of other entertainment options available to members of the public. Some of our businesses, such as our live productions and our sporting events, represent alternative uses for the public’s entertainment dollar. The primary geographic area, in which we operate, New York City, is among the most competitive entertainment markets in the world, with the world’s largest live theater industry, eleven major professional sports teams, numerous museums, galleries and other attractions, and hundreds of movie screens available to the public. We compete with these other entertainment options on the basis of the quality of our productions, as well as on the price of our tickets and the quality and location of our venues.

We compete for bookings with a large number of other venues in the cities in which our venues are located and in alternative locations. Generally, we compete for bookings on the basis of the size, quality, expense and nature of the venue required for the booking.

In addition to competition for ticket sales and bookings, we also compete to varying degrees with other live productions for advertising and sponsorship dollars.

Competition in Our Media Business

Distribution of Programming Networks

The business of distributing programming networks to cable television systems and satellite, telephone and other multichannel video programming distributors (“Distributors”) is highly competitive. Our programming networks face competition from other programming networks for the right to be carried by a particular Distributor, and for the right to be carried on the service tier that will attract the most subscribers. Once our programming network is selected by a Distributor for carriage, that network competes for viewers not only with the other channels available through the Distributor, but also with television, pay-per-view channels and video-on-demand channels, as well as online services, mobile services, radio, print media, motion picture theaters, DVDs, and other sources of information, sporting events and entertainment. Important to our success in each area of competition MSG Media faces are the price we charge for our programming networks; the quantity, quality and variety of programming offered on our networks; and the effectiveness of our networks’ marketing efforts.

Our ability to successfully compete with other programming networks for distribution may be hampered because the Distributors through which distribution is sought may be affiliated with other programming networks. In addition, because such affiliated Distributors may have a substantial number of subscribers, the ability of such programming networks to obtain distribution on affiliated Distributors may lead to increased subscriber and advertising revenue for such networks because of their increased penetration compared to our programming networks. Even if such affiliated Distributors carry our programming networks, there is no assurance that such Distributors would not place their affiliated programming network on a more desirable tier, thereby giving the affiliated programming network a competitive advantage over our own.

New or existing programming networks that are owned by or are affiliates of broadcasting networks like NBC, ABC, CBS or FOX may also have a competitive advantage over our networks in obtaining distribution through the “bundling” of agreements to carry those programming networks with the agreements giving the cable system or other Distributor the right to carry a station affiliated with the network.

Sources of Programming

We also compete with other programming networks to secure desired programming, including sports-related and music-related programming, although some of our programming is generated internally through our ownership of sports teams and our efforts in original programming. Competition for programming will increase as the number of programming networks increases. Other programming networks that are affiliated with or otherwise have larger relationships with programming sources such as movie or television studios, film libraries, record labels or sports teams may have a competitive advantage over us in this area.

Competition for Entertainment Programming Sources

With respect to the acquisition of music-related and entertainment programming, such as concerts, festivals, syndicated programs and movies, which are not produced by or specifically for programming networks, our competitors include national commercial broadcast television networks, local commercial broadcast television stations, the Public Broadcasting Service and local public television stations, pay-per-view programs, and other cable programming networks. Internet-based video content distributors may also emerge as competitors for the acquisition of content or the rights to distribute content.

Competition for Sports Programming Sources

Because the loyalty of the sports viewing audience to a sports programming network is primarily driven by loyalty to a particular team or teams, access to adequate sources of sports programming is particularly critical to our sports networks. We own the programming rights to the Knicks, the Rangers and the Liberty. We also have in place long-term rights agreements covering the New York Islanders, New Jersey Devils and Buffalo Sabres. The rights with respect to these professional teams may be limited in certain circumstances. See “MSG Sports — The Role of the Leagues in Our Operations.” Our programming networks compete for telecast rights for other teams or events principally with national or regional cable networks that specialize in or carry sports programming; television “superstations” which distribute sports and other programming by satellite; local and national commercial broadcast television networks; and independent syndicators that acquire and resell such rights nationally, regionally and locally. Some of our competitors may own or control, or are owned or controlled by, sports teams, leagues or sports promoters, which gives them an advantage in obtaining telecast rights for such teams or sports. Distributors may also contract directly with the sports teams in their local service areas for the right to distribute games on their systems. Our programming networks may also compete with Internet-based distributors of sports programming.

The increasing amount of sports programming available on a national basis, including pursuant to national rights arrangements (e.g., NBA on ABC, ESPN, and TNT and NHL on NBC and Versus), as part of league-controlled sports networks (e.g., NBA TV and NHL Network), and in out-of-market packages (e.g., NBA League Pass and NHL Center Ice), may have an adverse impact on our competitive position as our programming networks compete for distribution and for viewers.

Two professional sports teams located in New York have organized their own cable television networks featuring the games of their teams, which adversely affects the competitive position of MSG Networks by denying or limiting our access to those games for our own networks and subjecting our networks to competition from these team-owned networks. On the other hand, the competitive position of our programming networks is substantially enhanced by our ownership of the New York Knicks and the New York Rangers.

Competition for Advertising Revenue

The financial success of our programming businesses also depends in part upon unpredictable and volatile factors beyond our control, such as viewer preferences, the strength of the advertising market, the quality and appeal of the competing programming and the availability of other entertainment activities.

Employees

As of December 31, 2009 we had 1,327 full-time union and non-union employees and 8,226 part-time union and non-union employees. Approximately 64% of our employees are represented by unions. Labor relations in general and in the sports and theater industry in particular can be volatile, and though our current relationships with our unions are positive, we have from time to time faced labor action or had to make contingency plans because of threatened or potential labor actions.

The NHL players and the NBA players are covered by collective bargaining agreements between the NHL Players’ Association and the NHL and between the National Basketball Players Association and the NBA, respectively. Both the NHL and the NBA have experienced labor difficulties in the past and may have labor issues in the future.

Item 1A. Risk Factors

Risks Relating to Our Sports Business

Our Sports Business Faces Intense and Wide-Ranging Competition.

The success of a sports business, like ours, is dependent upon the performance and/or popularity of its franchises. Our New York Knicks and New York Rangers franchises compete, in varying respects and degrees, with other live sporting events, and with sporting events delivered over television networks, the Internet, radio, online services, and other alternative sources. For example, our sports teams compete for attendance, viewership and advertising with a wide range of alternatives available in New York City. During some or all of the basketball and hockey seasons, our sports teams face competition, in varying respects and degrees, from professional baseball (including the New York Yankees and the New York Mets), professional football (including the New York Giants and the New York Jets) and each other. For fans who prefer the unique experience of NHL hockey, we must compete with two other hockey teams located in the New York metropolitan area (the New York Islanders and the New Jersey Devils) as well as, in varying respects and degrees, with other NHL hockey teams and the NHL itself. Similarly, for those fans attracted to the equally unique experience of NBA basketball, we must compete, in varying respects and degrees, with another NBA team located in the New York metropolitan area (the New Jersey Nets) as well as other NBA teams and the NBA itself.

As a result of the large number of options available, we face strong competition for the New York sports fan. We must compete with these other sporting events, in varying respects and degrees, including on the basis of the quality of the teams we field, their success in the leagues in which they compete, our ability to provide an entertaining environment at our games and the prices we charge for tickets. Given the nature of sports, we cannot assure you that we will be able to compete effectively, including with companies that may have greater resources than we have, and as a consequence our operating margins and market position could be reduced and the growth of our business inhibited.

Our Basketball and Hockey Decisions, Especially Those Concerning Player Selection and Salaries, Affect Our Financial Performance.

Creating and maintaining our sports teams’ popularity and/or on-court and on-ice competitiveness is key to the success of our sports business. Accordingly, efforts to improve our revenues and income from period to period may be secondary to actions that management believes will generate long-term value. As with other sports teams, the competitive positions of our sports teams depends primarily on our ability to develop, obtain and retain talented players, for which we compete with other professional sports teams. Our efforts in this regard may include, among other things, trading for highly compensated players, signing draft picks, free agents or current players to new contracts, engaging in salary arbitration with existing players or terminating or waiving players. Any of these actions could increase expenses for a particular period, subject to salary cap restrictions contained in the respective leagues’ collective bargaining agreements. There can be no assurance that any actions taken by management to increase our long-term value will be successful.

A significant factor in our ability to attract and retain talented players is player compensation. NBA and NHL player salaries have generally increased significantly through the 1990s and 2000s, and may continue to increase. Although the collective bargaining agreements between, respectively, the NBA and the National Basketball Players Association and the NHL and the NHL Players’ Association cap player salaries at a prescribed percentage of league-wide revenues, such provisions do not apply on a team-by-team basis and, accordingly, we may pay our players different aggregate salaries and a different proportion of our revenues than other NBA or NHL franchises. Future collective bargaining agreements may increase the percentage of league-wide revenues to which NBA or NHL players are entitled, which may further increase our costs. In addition, we may also be obligated to pay the NBA a luxury tax each year, the calculation of which is determined by a formula that takes into account the aggregate salaries paid to our NBA players. Significant increases in players’ salaries or NBA luxury tax payments could have a material adverse effect on our financial condition, results of operations and cash flows if the increases are not offset by adequate increases in revenue.

We have incurred significant charges in each of the last three years for costs associated with transactions relating to players on our sports teams for season-ending and career-ending injuries and for waivers and terminations of players and other team personnel, including team executives. These transactions can result in significant charges as the Company recognizes the estimated ultimate costs of these events in the period in which they occur, although amounts due to these individuals are generally paid over their remaining contract terms. These expenses add to the volatility of the results of our MSG Sports segment.

The Actions of the Basketball and Hockey Leagues may Have a Material Effect on Our Businesses.

The governing bodies of the NBA (including the WNBA) and the NHL have certain rights under certain circumstances to take actions that they deem to be in the best interests of their respective sports, which may not necessarily be consistent with maximizing our results of operations and which could affect the Knicks or the Rangers in ways that are different than the impact on other teams. Certain of these decisions by the NBA or the NHL could have a material adverse effect on our business, results of operations, financial condition and cash flows. From time to time, we may disagree with or challenge actions the leagues take or the power and authority they assert. The following discussion highlights certain areas in which decisions of the NBA and the NHL could materially affect our businesses.

The NBA and the NHL may assert control over certain matters, under certain circumstances, that may affect our revenues such as the national and international rights to telecast the games of league members, including the Knicks and the Rangers, licensing of the rights to produce and sell merchandise bearing the logos of our teams and the leagues, and the online activities of our teams. Changes to national and international telecast rights could impact the availability of games covered by our local telecast rights. The NBA and NHL have each entered into agreements regarding the national and international telecasts of NBA and NHL games. We receive a share equal to that of other teams in the respective leagues of the income the NBA and the NHL generate from these contracts, which expire from time to time. There can be no assurance that the NBA or the NHL will be able to renew these contracts following their expiration on terms as favorable to us as those in the current agreements or that we will continue to receive the same level of revenues in the future.

The leagues have asserted control over certain other important decisions, under certain circumstances, such as the length and format of the playing season, including preseason and playoff schedules, the operating territories of the member teams, admission of new members, franchise relocations, labor relations with the players associations, collective bargaining, free agency, and luxury taxes and revenue sharing. Decisions on these matters, some or all of which are also subject to the terms of the relevant collective bargaining agreement, may materially affect our business. In addition, the NBA imposes a luxury tax and escrow system with respect to player salaries as well as a revenue assistance plan, and the NHL has also imposed a revenue sharing system.

The NBA and the NHL have imposed certain restrictions on the ability of owners to undertake some types of transactions in respect of teams, including a change in ownership, a relocation of a team and certain types of financing transactions. In certain instances, these restrictions could impair our ability to proceed with a transaction that is in the best interests of the Company and its stockholders if we were unable to obtain required league approvals in a timely manner or at all.

The leagues impose certain rules that define, under certain circumstances, the territories in which we operate, including the markets in which we telecast games. Changes to these rules could materially adversely affect us.

Each league’s governing body has imposed a number of rules, regulations, guidelines, bulletins, directives, policies and agreements upon its teams. Changes to these provisions may apply to our sports teams and their personnel, regardless of whether we agree or disagree with such changes, have voted against such changes or have challenged them through other means, and it is possible that any such changes could materially adversely affect our business to the extent they are ultimately determined to bind our teams. See Item 3. “Legal Proceedings” for a discussion of recent litigation between us and the NHL.

The commissioners of each of the NBA and NHL assert significant authority to take certain actions on behalf of their respective leagues under certain circumstances. Decisions by the commissioners of the NBA and the NHL, including on the matters described above, may adversely affect our businesses. The leagues’ governing documents and our agreements with the leagues purport to limit the manner in which we may challenge decisions and actions by a league commissioner or the league itself.

Injuries to Players on Our Sports Teams Could Hinder Our Success.

To the degree that our financial results are dependent on our sports teams’ popularity and/or on-court and on-ice success, the likelihood of achieving such popularity or competitive success may, given the nature of sports, be substantially impacted by serious or untimely injuries to key players. Nearly all of our Knicks and Rangers players, including those with multi-year contracts, have partially or fully guaranteed contracts, meaning that (subject to the terms of the applicable player contract and collective bargaining agreement) each player may be entitled to receive his salary even if the player dies or is unable to play as a result of injury. These salaries represent significant financial commitments for our sports teams. We are generally insured against having to pay salaries in the event of a player’s death and have obtained disability insurance policies for substantially all of our material player contracts. In the event of injuries sustained resulting in lost services (as defined in the policies), the policies provide for payment to us of the majority of the player’s salary for the remaining term of the contract or until the player can resume play, in each case following a deductible number of missed games. The cost of such insurance has risen substantially, however, and it may not be available in certain circumstances or on terms that are commercially feasible. We may choose not to obtain (or may not be able to obtain) such insurance in some cases, and we may change coverage levels (or be unable to change coverage levels) in the future.

If an injured player is not insured, we may be obligated to pay all of the injured player’s salary. In addition, player disability insurance policies do not cover any NBA luxury tax that we may be required to pay as a result of league rules and regulations and may exclude from coverage certain pre-existing medical conditions. For purposes of determining any NBA luxury tax, salary payable to an injured player is included in team salary, unless and until that player’s salary is removed from the team salary for purposes of calculating NBA luxury tax pursuant to the terms of the collective bargaining agreement. Replacement of an injured player may result in an increase in salary expense for us, subject to any applicable salary cap.

Risks Relating to Our Entertainment Business

Our Entertainment Business Faces Intense and Wide-Ranging Competition.

Our entertainment business competes, in certain respects and to varying degrees, with other leisure-time activities such as television, the Internet, radio, online services, motion picture theaters, Broadway shows, home video and other alternative sources of entertainment and information for total entertainment dollars in our marketplace. The success of our entertainment business is largely dependent on the continued success of our Radio City Christmas Spectacular, and, to a lesser extent, the availability of, and our venues’ ability to attract concerts, family shows and other events, competition for which is intense. For example, our Madison Square Garden complex (comprising The Garden and a theater within the complex currently known as The Theater at Madison Square Garden), Radio City Music Hall and the Beacon Theatre all compete with other entertainment venues in New York and elsewhere, such as the Nassau Coliseum, the Meadowlands Sports Complex, the IZOD Center and the Prudential Center. The Chicago Theatre and the Wang Theatre face similar competition from other venues in Chicago, Boston and elsewhere.

Further, in order to maintain the competitive positions of The Garden and our theaters, we must invest on a continuous basis in state-of-the-art technology while maintaining a competitive pricing structure for events that may be held in our venues, many of which have alternative venue options available to them in New York and other cities. In addition, we invest a substantial amount in our Radio City Christmas Spectacular and in new productions, to continue to attract our audiences. We cannot assure you that such investments will generate revenues that are sufficient to justify our investment or even that exceed our expenses.

The Success of Our Entertainment Business Depends on the Continued Popularity of Our Live Productions, Particularly the Radio City Christmas Spectacular.

The financial results of our entertainment business are dependent on the popularity of our live productions with audiences in New York and, with respect to our touring productions, other cities throughout North America. In particular, our entertainment business depends on the continuing popularity of the Radio City Christmas Spectacular, which has historically made up a significant portion of the revenues of our entertainment business.

Should the popularity of the Radio City Christmas Spectacular decline, our revenues from ticket sales, concession and merchandise sales would likely also decline, and we might not be able to replace that lost revenue with revenues from other sources. In addition, we have made a significant investment in the arena touring production of the Radio City Christmas Spectacular, and a decline in the popularity of the Radio City Christmas Spectacular franchise might mean that we are less able to recoup that investment.

Our Strategy for Our Entertainment Business Includes the Development of New Live Productions and the Possible Addition of New Venues, Each of Which Could Require Making Considerable Investments for Which There Can be No Guarantee of Success.

As part of our business strategy, we intend to develop new productions and live entertainment events, which may include expansions of our existing productions or relationships or the creation of entirely new live productions. Expansion of productions or the development of new productions could require significant upfront investment in sets, staging, creative processes, casting and advertising. To the extent that any efforts at expanding productions or creating new productions do not result in a viable live show, or to the extent that any such productions do not achieve expected levels of popularity among audiences, we may lose all or a portion of such investments.

Our strategy also involves the possible addition of venues, including in additional major markets beyond New York, Chicago and Boston. Any such additions may involve acquiring control of existing venues or constructing new venues and could require significant investment. In pursuing such an expansion strategy, we will face risks, potentially including risks associated with the construction of new facilities, such as cost overruns and construction delays, risks associated with financing, such as the potential lack of availability of adequate financing to commence or complete an acquisition or development, risks associated with operating in new markets and the risk that we may lose all or a part of our investment in any additional venues.

Risks Relating to Our Media Business

Our Media Business Faces Intense and Wide-Ranging Competition.

Our media business competes, in certain respects and to varying degrees, for viewers and advertisers with other programming networks, pay-per-view, video on demand, and other content offered on cable television and other programming distribution systems. We also compete for viewers and advertisers with other television networks, radio, motion picture theaters, home video, the Internet, mobile media and other sources of information and entertainment and advertising services. Important competitive factors are the prices charged for programming, the quantity, quality (in particular, the on-court and on-ice performance of our sports teams as well as other teams whose rights we control) and the variety of the programming offered and the effectiveness of marketing efforts.

The competitive environment in which our media business operates may be affected by technological developments. It is difficult to predict the future effect of technology on many of the factors affecting our competitive position. For example, data compression technology has made it possible for most programming distributors to increase their channel capacity, which may reduce the competition among programming networks and broadcasters for channel space. On the other hand, the addition of channel space could also increase competition for desired entertainment and sports programming and ultimately, for viewing by subscribers. As more channel space becomes available, the position of our programming networks in the most favorable tiers of these distributors would be an important goal. Additionally, video content delivered directly to viewers over the Internet competes with our programming networks for viewership.

With respect to advertising services, factors affecting the degree and extent of competition include prices, reach, audience demographics and similar factors.

Some of our competitors are large companies that have greater financial resources than us.

The Success of Our Media Business Also Depends on Affiliation Fees, and on the Existence of Agreements with a Limited Number of Distributors for Our Programming.

Our media business derives much of its revenues from affiliation fees paid by cable television operators (including cable television systems owned by Cablevision), satellite operators and other operators (which we collectively refer to as “Distributors”) that provide video service and sales of advertising. Increases in affiliation fee revenues result from a combination of changes in rates and changes in subscriber counts, factors that may be largely out of our control.

Our success is also dependent upon the existence of agreements between our programming networks and Distributors. Existing affiliation agreements of our programming networks expire at various dates. Although we have historically been able to secure distribution of our programming networks, we cannot assure you that we will be able to renew these affiliation agreements, or to obtain terms similar to our existing agreements in the event of a renewal. The loss of any of our significant Distributors could severely impact our business and results of operations. In addition, in some cases, if a Distributor is acquired, the affiliation agreement of the acquiring Distributor will govern following the acquisition. In those circumstances, the acquisition of a Distributor that is a party to one or more affiliation agreements with us on terms that are more favorable to us could materially adversely impact our business and results of operations.

We Derive Substantial Revenues From the Sale of Advertising Time and Those Revenues are Subject to a Number of Factors, Many of Which are Beyond Our Control.

Our media business is dependent on advertising revenues, which, in turn, depend on a number of factors, many of which are beyond our control, such as the health of the economy in the markets our businesses serve and in the nation as a whole, general economic trends in the advertising industry, the popularity of our programming, the activities of our competitors, including increased competition from other forms of advertising-based media (such as newspapers, cable television, Internet and radio), consumer budgeting and buying patterns, and team performance. A continuing decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers’ spending priorities, which could cause our revenues and operating results to decline significantly in any given period. In addition, we cannot assure you that our programming will achieve favorable ratings. Our ratings depend partly upon unpredictable and volatile factors beyond our control, such as viewer preferences, competing programming and the availability of other entertainment activities. A shift in viewer preferences could cause our advertising revenues to decline as a result of changes to the ratings for our programming.

Our Rights Agreements with Various Professional Sports Teams that We Do Not Own Have Varying Durations and Renewal Terms and We may be Unable to Renew Those Agreements on Acceptable Terms.

In addition to carrying the games of the Knicks, Rangers and Liberty, our media business has rights agreements with other professional sports teams that we do not control. We may seek renewal of these contracts and, if we do so, we may be outbid by a competing network for these contracts or the renewal costs could substantially exceed our costs under the current contracts. One or more of these teams may seek to establish their own programming network or join a competitor’s network and, in certain circumstances, we may not have an opportunity to bid for the rights. Moreover, the value of these contracts may also be affected by various league decisions and/or league agreements that we may not be able to control, including a decision to alter the number of games played during a season. The value of these rights can also be affected, or we could lose such rights entirely, if a team is liquidated, undergoes reorganization in bankruptcy or relocates to an area where it is not possible or commercially feasible for us to continue to carry games. Any loss or diminution in the value of rights could impact the extent of the sports coverage offered by us and could adversely affect our affiliation fee and advertising revenues. In addition, our distribution agreements typically include certain remedies in the event our MSG Networks fail to meet a minimum number of professional events, and, accordingly, any loss of rights could adversely affect our business.

Each league’s governing body has imposed a number of rules, regulations, guidelines, bulletins, directives, policies and agreements upon its teams, including the teams we carry on our MSG Networks. Changes to these provisions could materially adversely affect our business.

Our Programming Business is Subject to Direct and Indirect Government Regulation, in Part as a Result of Federal Law and Federal Communications Commission (“FCC”) Regulations Applicable Because of Cablevision’s and Our Common Directors, Officers, and Shareholders.

For FCC purposes, the common directors and five percent or greater shareholders of Cablevision and Madison Square Garden are deemed to hold attributable interests in each of the companies. As a result, certain regulations applicable to a programming network affiliated with a cable television operator apply to Madison Square Garden. This affiliation may also limit the activities or strategic business alternatives available to Madison Square Garden, including the ability to own or operate media properties we do not presently own or operate. Other FCC regulations, although imposed on cable television operators and satellite operators, affect programming networks indirectly. See Item 1. “Business —Regulation — Regulation of Our Media Business.” Legislative enactments, court actions, and federal regulatory proceedings could materially affect our programming business by modifying the rates, terms, and conditions under which we offer our programming services to distributors and the public, or otherwise materially affect the range of our activities or strategic business alternatives. We cannot predict the likelihood or results of any such legislative, judicial, or regulatory actions.

General Risks

Our Business has been Adversely Impacted and may, in the Future, be Materially Adversely Impacted by the Economic Downturn.

Our businesses depend upon the ability and willingness of consumers and businesses to purchase tickets (including season tickets) or to license suites at our facilities and to spend on concessions and merchandise, and upon advertising revenues. As a result, the current economic downturn and its negative effects on consumers’ discretionary spending has adversely affected our revenues. The New York City metropolitan area has been particularly adversely affected by the impact of the economic downturn.

Our Business Could be Adversely Affected by Terrorist Activity or the Threat of Terrorist Activity and Other Developments that Discourage Congregation at Prominent Places of Public Assembly.

The venues we operate, like all prominent places of public assembly, could be the target of terrorist activities. The success of our businesses is dependent upon the willingness of patrons to attend events at our venues. Terrorist activity at other locations, or even the threat of terrorist activity, could result in reduced attendance at our venues. Similarly, a major epidemic or pandemic, or the threat of such an event, could adversely affect attendance at our events.

Our Businesses are Substantially Dependent on the Continued Popularity and/or Competitive Success of the New York Knicks and the New York Rangers, Which Cannot be Assured.

Our financial results have historically been dependent on, and are expected to continue to depend in large part on, the New York Knicks and the New York Rangers remaining popular with our fan bases and, in varying degrees, on the teams’ achieving on-court and on-ice success, which can generate fan enthusiasm, resulting in sustained ticket, premium seating, suite, concession and merchandise sales during the regular season, greater shares of total viewership and increased advertising sales. Furthermore, success in the regular season may qualify a team for participation in post-season playoffs, which provides us with additional revenue by increasing the number of games played by our teams and, more importantly, by generating increased excitement and interest in our teams, which can improve attendance and viewership in subsequent seasons. There can be no assurance that any sports teams, including the New York Knicks and the New York Rangers, will compete in post-season play in 2010 or thereafter.

We are Planning an Extensive Renovation of The Garden, the Cost, Timing and Revenue Impact of Which are Uncertain.

We previously announced our intent to pursue a major renovation of The Garden. We continue to review all aspects of this complex project with our consultants in order to improve the renovation plans, mitigate project risks and identify efficiencies in all aspects of costs, planning and project-phasing. We also continue to develop our cost and capital investment estimates to ensure that the planned renovation meets our overall expectations and objectives.

While the pre-construction planning and cost estimates of this renovation are not yet final, we currently expect that the project’s cost will be between $775 million and $850 million. Total arena renovation expenditures incurred through December 31, 2009 were approximately $60 million of which approximately $35 million was in 2009. We expect that the estimated costs associated with the project will be met from cash on hand, receipt of repayments of advances made to a subsidiary of Cablevision and cash flow from our operations. We have recently entered into a senior secured revolving credit facility with a syndicate of lenders. (See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Financing Agreements.”) To the extent that management determines that financing for this renovation is required or desirable, we would expect to draw on this facility.

In order to most efficiently and effectively complete the renovation, it will be a year-round project. Our goal is to minimize disruption to current operations and, to achieve this, The Garden will remain open for the New York Knicks’ and New York Rangers’ seasons in the years when the renovation takes place, while we sequence the construction to ensure that we maximize our construction efforts when we close the arena during summer months. Our current expectation is that the renovated lower bowl of The Garden will be open for the 2011-12 seasons, and that the renovated upper bowl will be open for the 2012-13 seasons.

Although the Company continues to pursue the arena renovation plan, there can be no assurance that a renovation will occur or what the ultimate cost, scope or timing of any renovation activity may be.

We Do Not Own all of Our Venues and Our Failure to Renew Our Leases or Booking Agreement on Economically Attractive Terms Could Have an Adverse Effect on Our Business.

The lease on Radio City Music Hall expires in 2023. We have the option to renew the lease for an additional ten years by providing two years’ notice prior to the initial expiration date. Similarly, we lease the Beacon Theatre pursuant to a lease that expires in 2026. We have also entered into a booking agreement in respect of the Wang Theatre in Boston. Our booking agreement expires in 2019 and we have the option to renew the agreement at that time for an additional ten years. If we are unable to renew these leases or the booking agreement on economically attractive terms, our business could be adversely affected.

Our Properties are Subject to, and Benefit from, Certain Easements, the Availability of Which may Not Continue on Terms Favorable to Us or at All.

Our properties are subject to, and benefit from, certain easements. For example, the “breezeway” into the Madison Square Garden complex from Seventh Avenue in New York City is a significant easement that we share with other property owners. Our ability to continue to utilize this and other easements, including for advertising purposes, requires us to comply with a number of conditions. Moreover, certain adjoining property owners have easements over our property, which we are required to maintain so long as those property owners meet certain conditions. It is possible that we will be unable to continue to access or maintain any easements on terms favorable to us, or at all, which could have a significant negative impact on our revenues and results of operations.

We may Require Third-Party Financing to Fund Our Ongoing Operations and Capital Expenditures, Including Our Planned Renovation of The Garden, the Availability of Which is Highly Uncertain.

The capital and credit markets have been experiencing extreme volatility and disruption. The markets have exerted extreme downward pressure on stock prices and upward pressure on the cost of new debt capital and have severely restricted credit availability for most issuers.

Our business has been characterized by significant expenditures for properties and businesses, for renovations and for productions. In particular, our planned renovation of The Garden will require significant cash resources. In the future we may also engage in similar transactions and such transactions may be dependent on our ability to obtain third-party financing. We may also seek third-party financing to fund our ongoing operations.

Although we have entered into a credit facility (see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources — Financing Agreements”), our ability to draw on any such facility will depend on our ability to meet certain financial tests and other conditions. In addition, you should not assume that we will be able to refinance any such facility in the future or raise any required additional capital or do so on favorable terms. We may not be able to raise additional capital on favorable terms, or at all, if unsettled conditions in financial markets continue to exist. In addition, as described above, the leagues in which our sports teams compete may have, under certain circumstances, approval rights over certain financing transactions, and in connection with those rights, could affect our ability to use third-party financing. If we are unable to pursue our current and future spending programs, we may be forced to cancel or scale back those programs. Our choice of which spending programs to cancel or reduce may be limited, although we do not currently anticipate that unavailability of third-party financing in any circumstances would materially affect our spending on player salaries in any respect. Failure to successfully pursue our capital expenditure and other spending plans could materially and adversely affect our ability to compete effectively.

We have Substantial Credit Exposure to a Subsidiary of Cablevision.

Prior to the Distribution, Cablevision actively managed the available cash of its subsidiaries to minimize the overall need for short term borrowings. As a result, subsidiaries of Cablevision with excess cash from time to time advanced some or all of those funds to Cablevision or to other subsidiaries of Cablevision which had funding needs. As of December 31, 2009, we have intercompany advances outstanding with a total balance of $190 million to a subsidiary of Cablevision. These advances are unsecured and have not been guaranteed by any person. On January 28, 2010, the intercompany advances were replaced with a promissory note having a principal amount of $190 million. The note accrues interest at a rate of 3.25% per annum. The note is non-amortizing and has a maturity date of June 30, 2010 with prepayment without penalty at Cablevision’s option. Until the note is repaid to us we are exposed to the credit risk of a subsidiary of Cablevision for a substantial portion of our liquid assets.

Our Business is Subject to Seasonal Fluctuations.

The revenues of our MSG Sports and MSG Entertainment segments tend to be cyclical. For example, because 41% of our MSG Entertainment segment’s revenues and 11% of our combined revenues in 2009, net of intersegment eliminations, were derived from our Radio City Christmas Spectacular, including its touring shows, the revenues of our MSG Entertainment segment are highest in the fourth quarter when these performances primarily occur. As a result, MSG Entertainment earns a disproportionate amount of its revenue and operating income in the fourth quarter of each year. Similarly, because of the nature of the NBA and NHL playing seasons, revenues from our sports teams are concentrated in the first and last quarters of each year. Revenues from our business on a consolidated basis tend to be at their lowest in the second and third quarters.

Our Sales of Beverages Entails Certain Legal, Regulatory and Reputational Risks.

We hold liquor licenses at each of our venues and are subject to licensing requirements with respect to the sale of alcoholic beverages in the jurisdictions in which we serve those beverages. Failure to receive or retain, or the suspension of, liquor licenses or permits could interrupt or terminate our ability to serve alcoholic beverages at the applicable venue and could have a material adverse effect on our results of operations. Additional regulation relating to liquor licenses may limit our activities in the future or significantly increase the cost of compliance, or both.

In the jurisdictions in which our venues are located, we are subject to statutes that generally provide that serving alcohol to a visibly intoxicated or minor patron is a violation of the law. Our liability insurance coverage may not be adequate or available to cover any potential liability. See Item 3. “Legal Proceedings.”

Our Business Benefits from a New York City Real Estate Tax Exemption, Which Could be Changed or Withdrawn.

Many arenas, ballparks and stadia nationally and in New York City have received significant public support, including tax exempt financing, other tax benefits, direct subsidies and other contributions, including for public infrastructure critical to the facilities such as parking lots and transit improvements. Our Madison Square Garden complex benefits from a more limited real estate tax exemption pursuant to an agreement with the City of New York and legislation enacted by the State of New York in 1982. This tax exemption results in annual expense savings of approximately $12.4 million. From time to time there have been calls to repeal or amend the tax exemption. Repeal or amendment would require legislative action by New York State. There can be no assurance that the tax exemption will not be amended in a manner adverse to us or repealed in its entirety, either of which would be financially adverse to us.

Organized Labor Matters Could Adversely Impact Our Business and Our Results of Operations.

Our business is dependent upon the efforts of unionized workers. Any labor disputes, such as strikes or lockouts, with the unions with which we deal could materially adversely affect our businesses, including our ability to produce or present concerts, theatrical productions, sporting events and live telecasts.

The NHL players and the NBA players are covered by collective bargaining agreements between the NHL Players’ Association and the NHL and between the National Basketball Players Association and the NBA, respectively. Both the NHL and the NBA have experienced labor difficulties in the past and may have labor issues in the future. Labor difficulties may include players’ strikes or management lockouts. In 1992, the NHL Players’ Association conducted a 10-day strike. A lockout during the 1994-95 NHL season resulted in the regular season being shortened from 84 to 48 games. A lockout beginning in September 2004 resulted in the cancellation of the entire 2004-05 NHL season. The current NHL collective bargaining agreement was last negotiated in 2005 and expires in 2011, with the players association having a one-year extension option. The NBA has also experienced labor difficulties, including a lockout during the 1998-99 season, which resulted in the regular season being shortened from 82 to 50 games. The current NBA collective bargaining agreement was last negotiated in 2005 and expires in 2011.

The Distribution Could Result in Significant Tax Liability.

Prior to the Distribution, Cablevision received a private letter ruling from the Internal Revenue Service (“IRS”) to the effect that, among other things, the Distribution, and certain related transactions, would qualify for tax-free treatment under the Internal Revenue Code of 1986, as amended (the “Code”).

Although a private letter ruling from the IRS generally is binding on the IRS, if the factual representations or assumptions made in the letter ruling request were untrue or incomplete in any material respect, Cablevision would not be able to rely on the ruling. Furthermore, the IRS will not rule on whether a distribution satisfies certain requirements necessary to obtain tax-free treatment under the Code. Rather, the ruling was based upon representations by Cablevision that these conditions were satisfied, and any inaccuracy in such representations could invalidate the ruling.

If the Distribution does not qualify for tax-free treatment for U.S. federal income tax purposes, then, in general, Cablevision would be subject to tax as if it had sold the common stock of our Company in a taxable sale for its fair market value. Cablevision’s shareholders would be subject to tax as if they had received a distribution equal to the fair market value of our common stock that was distributed to them, which generally would be treated first as a taxable dividend to the extent of Cablevision’s earnings and profits, then as a non-taxable return of capital to the extent of each shareholder’s tax basis in his or her Cablevision stock and thereafter as capital gain with respect to the remaining value. It is expected that the amount of any such taxes to Cablevision’s shareholders and Cablevision would be substantial. See “ — We may have a Significant Indemnity Obligation to Cablevision if the Distribution is Treated as a Taxable Transaction.”

We may have a Significant Indemnity Obligation to Cablevision if the Distribution is Treated as a Taxable Transaction.

We have entered into a Tax Disaffiliation Agreement with Cablevision, which sets out each party’s rights and obligations with respect to deficiencies and refunds, if any, of federal, state, local or foreign taxes for periods before and after the Distribution and related matters such as the filing of tax returns and the conduct of IRS and other audits. Pursuant to the Tax Disaffiliation Agreement, we are required to indemnify Cablevision for losses and taxes of Cablevision resulting from the breach of certain covenants and for certain taxable gain recognized by Cablevision, including as a result of certain acquisitions of our stock or assets. If we are required to indemnify Cablevision under the circumstances set forth in the Tax Disaffiliation Agreement, we may be subject to substantial liabilities, which could materially adversely affect our financial position.

The Tax Rules Applicable to the Distribution may Restrict Us from Engaging in Certain Corporate Transactions or From Raising Equity Capital Beyond Certain Thresholds for a Period of Time After the Distribution.

To preserve the tax-free treatment of the Distribution to Cablevision and its shareholders, under the Tax Disaffiliation Agreement with Cablevision, for the two-year period following the Distribution, we are subject to restrictions with respect to:

•

entering into any transaction pursuant to which 50% or more of our shares or assets would be acquired, whether by merger or otherwise, unless certain tests are met;

•

issuing equity securities, if any such issuances would, in the aggregate, constitute 50% or more of the voting power or value of our capital stock;

•

certain repurchases of our common shares;

•

ceasing to actively conduct our business;

•

amendments to our organizational documents (i) affecting the relative voting rights of our stock or (ii) converting one class of our stock to another;

•

liquidating or partially liquidating; and

•

taking any other action that prevents the Distribution and related transactions from being tax-free.

These restrictions may limit our ability during such period to pursue strategic transactions of a certain magnitude that involve the issuance or acquisition of our stock or engage in new businesses or other transactions that might increase the value of our business. These restrictions may also limit our ability to raise significant amounts of cash through the issuance of stock, especially if our stock price were to suffer substantial declines, or through the sale of certain of our assets.

We do not have a Significant Operating History as a Public Company.

In the past, we relied on Cablevision for various financial, operational and managerial resources in conducting our businesses. Following the Distribution, we now maintain our own credit and banking relationships and perform our own financial and operational functions. We cannot assure you that we will be able to successfully put in place the financial, operational and managerial resources necessary to operate as a public company or that we will be able to be profitable doing so.

Our Historical Financial Results as a Business Segment of Cablevision may Not be Representative of Our Results as a Separate, Stand-Alone Company.

The historical financial information we have included in this Annual Report on Form 10-K has been derived from the consolidated financial statements and accounting records of Cablevision and does not necessarily reflect what our financial position, results of operations or cash flows would have been had we been a separate, stand-alone company during the periods presented. Although Cablevision did account for our company as a business segment, we were not operated as a separate, stand-alone company for the historical periods presented. The historical costs and expenses reflected in our combined financial statements include an allocation for certain corporate functions historically provided by Cablevision, including general corporate expenses and employee benefits and incentives. These allocations were based on what we and Cablevision considered to be reasonable reflections of the historical utilization levels of these services required in support of our business. The historical information does not necessarily indicate what our results of operations, financial position, cash flows or costs and expenses will be in the future.

Our Ability to Operate Our Business Effectively may Suffer If We do Not, Quickly and Effectively, Establish Our Own Financial, Administrative and Other Support Functions in Order to Operate as a Stand-Alone Company, and We cannot Assure You that the Transition Services Cablevision has Agreed to Provide Us will be Sufficient for Our Needs.

Historically, we have relied on financial, administrative and other resources of Cablevision to support the operation of our business. In conjunction with our separation from Cablevision, we will need to expand our financial, administrative and other support systems or contract with third parties to replace certain of Cablevision’s systems. Any failure or significant downtime in our own financial or administrative systems or in Cablevision’s financial or administrative systems during the transition period could impact our results and/or prevent us from performing other administrative services and financial reporting on a timely basis and could materially harm our business, financial condition and results of operations.

We may Incur Material Costs and Expenses as a Result of Our Separation from Cablevision.

We may incur costs and expenses greater than those we currently incur as a result of our separation from Cablevision. These increased costs and expenses may arise from various factors, including financial reporting, costs associated with complying with federal securities laws (including compliance with the Sarbanes-Oxley Act of 2002), tax administration, legal and human resources related functions. Although Cablevision will continue to provide certain of these services to us under a services agreement, such services are for a limited period of time. We cannot assure you that these costs will not be material to our business.

In Connection with the Distribution, We will Rely on Cablevision’s Performance Under Various Agreements.

In connection with the Distribution, we entered into various agreements with Cablevision, including a Distribution Agreement, a Tax Disaffiliation Agreement, a Transition Services Agreement, an Employee Matters Agreement and certain other related party agreements and arrangements. These agreements govern our relationship with Cablevision subsequent to the Distribution and provide for the allocation of employee benefits, taxes and certain other liabilities and obligations attributable to periods prior to the Distribution. These agreements also include arrangements with respect to transition services and a number of on-going commercial relationships. The Distribution Agreement includes an agreement that we and Cablevision agree to provide each other with indemnities with respect to liabilities arising out of the businesses that were transferred to us by Cablevision. We are also party to other arrangements with Cablevision, such as affiliation agreements covering the MSG Networks and Fuse. We and Cablevision will rely on the other to perform its obligations under these agreements. If Cablevision were to breach or to be unable to satisfy its material obligations under these agreements, including a failure to satisfy its indemnification obligations, we could suffer operational difficulties or significant losses.

If We are Unable to Satisfy the Requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or Our Internal Control Over Financial Reporting is not Effective, the Reliability of Our Financial Statements may be Questioned and Our Stock Price may Suffer.

Section 404 of the Sarbanes-Oxley Act of 2002 requires any company subject to the reporting requirements of the U.S. securities laws to do a comprehensive evaluation of its and its consolidated subsidiaries’ internal control over financial reporting. To comply with this statute, we will be required in 2010 to document and test our internal control procedures, and our management will be required to assess and issue a report concerning our internal control over financial reporting. In addition, our independent auditors will be required to issue an opinion on the effective operation of the Company’s internal control over financial reporting as of December 31, 2010. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknesses or deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act. If our management or our independent auditors cannot favorably assess the effectiveness of our internal control over financial reporting, investor confidence in our financial results may weaken, and our stock price may suffer.

We are Controlled by the Dolan Family.

We have two classes of common stock:

•

Class B Common Stock, which is generally entitled to ten votes per share and is entitled collectively to elect 75% of our Board of Directors, and

•

Class A Common Stock, which is entitled to one vote per share and is entitled collectively to elect the remaining 25% of our Board of Directors.

As of the Distribution date, the Dolan family, including trusts for the benefit of members of the Dolan family, collectively owned all of our Class B Common Stock, less than 3% of our outstanding Class A Common Stock and approximately 70% of the total voting power of all our outstanding common stock. Of this amount, Cablevision’s Chairman, Charles F. Dolan, beneficially owned approximately 46% of our outstanding Class B Common Stock, less than 1% of our outstanding Class A Common Stock and approximately 32% of the total voting power of all our outstanding common stock. The members of the Dolan family holding Class B Common Stock have executed a voting agreement that has the effect of causing the voting power of the holders of our Class B Common Stock to be cast as a block with respect to all matters to be voted on by holders of Class B Common Stock. The Dolan family is able to prevent a change in control of our company and no person interested in acquiring us will be able to do so without obtaining the consent of the Dolan family.

Charles F. Dolan, members of his family and certain related family entities, by virtue of their stock ownership, have the power to elect all of our directors subject to election by holders of Class B Common Stock and are able collectively to control stockholder decisions on matters on which holders of all classes of our common stock vote together as a single class. These matters could include the amendment of some provisions of our certificate of incorporation and the approval of fundamental corporate transactions.

In addition, the affirmative vote or consent of the holders of at least 66 2/3% of the outstanding shares of the Class B Common Stock, voting separately as a class, is required to approve:

•

the authorization or issuance of any additional shares of Class B Common Stock, and

•

any amendment, alteration or repeal of any of the provisions of our certificate of incorporation that adversely affects the powers, preferences or rights of the Class B Common Stock.

As a result, Charles F. Dolan, members of his family and certain related family entities also collectively have the power to prevent such issuance or amendment.

The members of the Dolan family group have entered into an agreement with the Company in which they agree that during the 12-month period beginning on the Distribution date, the Dolan family group must obtain the prior approval of a majority of the Company’s Independent Directors prior to acquiring common stock of the Company through a tender offer that results in members of the Dolan family group owning more than 50% of the total number of outstanding shares of common stock of the Company. For purposes of this agreement, the term “Independent Directors” means the directors of the Company who have been determined by our Board of Directors to be independent directors for purposes of The NASDAQ Stock Market LLC corporate governance standards.

We Have Elected to be a “controlled company” for The NASDAQ Stock Market LLC Purposes Which Allows Us Not to Comply with all of the Corporate Governance Rules of The NASDAQ Stock Market LLC.

Charles F. Dolan, members of his family and certain related family entities have entered into a Stockholders Agreement relating, among other things, to the voting of their shares of our Class B Common Stock. As a result, we are a “controlled company” under the corporate governance rules of The NASDAQ Stock Market LLC. As a controlled company, we have the right to elect not to comply with the corporate governance rules of The NASDAQ Stock Market LLC requiring: (i) a majority of independent directors on our Board and (ii) an independent corporate governance and nominating committee. Our Board of Directors has elected for the Company to be treated as a “controlled company” under The NASDAQ Stock Market LLC corporate governance rules and to not comply with The NASDAQ Stock Market LLC requirement for a majority independent board of directors and for an independent corporate governance and nominating committee because of our status as a controlled company.

Future Stock Sales, Including as a Result of the Exercising of Registration Rights by Certain of our Shareholders, Could Adversely Affect the Trading Price of Our Class A Common Stock.

Certain parties have registration rights covering a portion of our shares. We have entered into registration rights agreements with Charles F. Dolan, certain Dolan family interests and the Dolan Family Foundations that provide them with “demand” and “piggyback” registration rights with respect to approximately 15 million shares of Class A Common Stock, including shares issuable upon conversion of shares of Class B Common Stock. Sales of a substantial number of shares of Class A Common Stock could adversely affect the market price of the Class A Common Stock and could impair our future ability to raise capital through an offering of our equity securities.

Transfers and Ownership of Our Common Stock are Subject to Restrictions Under Rules of the NBA and the NHL and Our Certificate of Incorporation Provides Us With Remedies Against Holders Who Don’t Comply with Those Restrictions.

The Company is the owner of professional sports franchises in the NBA and the NHL. As a result, transfers and ownership of our Common Stock are subject to certain restrictions under the constituent documents of the NBA and the NHL as well as the Company’s consent agreements with the NBA and the NHL in connection with their approval of the Distribution. These restrictions are described under “Description of Capital Stock Class A Common Stock and Class B Common Stock Transfer Restrictions” in our registration statement on Form 10 filed with the Securities and Exchange Commission. In order to protect the Company and its NBA and NHL franchises from sanctions that might be imposed by the NBA or the NHL as a result of violations of these restrictions, our amended and restated certificate of incorporation provides that if a transfer of shares of our Common Stock to a person or the ownership of shares of our Common Stock by a person requires approval or other action by a league and such approval or other action was not obtained or taken as required, the Company shall have the right by written notice to the holder to require the holder to dispose of the shares of Common Stock which triggered the need for such approval. If a holder fails to comply with such a notice, in addition to any other remedies that may be available, the Company may redeem the shares at 85% of the fair market value of those shares.

We Share Certain Key Executives and Directors with Cablevision Which Means Those Executives Will Not Devote Their Full Time and Attention to Our Affairs and the Overlap may Give Rise to Conflicts.

Our Executive Chairman, James L. Dolan, also serves as the President and Chief Executive Officer of Cablevision and our President and Chief Executive Officer, Hank J. Ratner also serves as a Vice Chairman of Cablevision. This arrangement is similar to the historical situation whereby Messrs. Dolan and Ratner have served as senior officers of both companies. As a result, the two most senior officers of the Company do not devote their full time and attention to the Company’s affairs. In addition, eight members of our Board of Directors are also directors of Cablevision, and several of our directors serve as employees of Cablevision concurrently with their service on our Board of Directors. These officers and directors may have actual or apparent conflicts of interest with respect to matters involving or affecting each company. For example, the potential for a conflict of interest exists when we or Cablevision look at acquisitions and other corporate opportunities that may be suitable for both companies. Also, conflicts may arise if there are issues or disputes under the commercial arrangements that exist between Cablevision and us. In addition, certain of our directors and officers own Cablevision stock and options to purchase Cablevision stock, as well as cash performance awards with any payout based on Cablevision’s performance, including Messrs. Dolan and Ratner. These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for our Company and Cablevision. See “Certain Relationships and Related Party Transactions — Certain Relationships and Potential Conflicts of Interest” in our registration statement on Form 10 filed with the Securities and Exchange Commission for a discussion of certain procedures we will institute to help ameliorate such potential conflicts that may arise.

Our Overlapping Directors and Executive Officers with Cablevision may Result in the Diversion of Corporate Opportunities and Other Conflicts to Cablevision and Provisions in Our Amended and Restated Certificate of Incorporation may Provide Us No Remedy in That Circumstance.

The Company’s amended and restated certificate of incorporation acknowledges that directors and officers of the Company may also be serving as directors, officers, employees, consultants or agents of Cablevision and its subsidiaries and that the Company may engage in material business transactions with such entities. The Company has renounced its rights to certain business opportunities and the Company’s amended and restated certificate of incorporation provides that no director or officer of the Company who is also serving as a director, officer, employee, consultant or agent of Cablevision and its subsidiaries will be liable to the Company or its stockholders for breach of any fiduciary duty that would otherwise exist by reason of the fact that any such individual directs a corporate opportunity (other than certain limited types of opportunities set forth in our certificate of incorporation) to Cablevision or any of its subsidiaries instead of the Company, or does not refer or communicate information regarding such corporate opportunities to the Company. These provisions in our amended and restated certificate of incorporation also expressly validate certain contracts, agreements, assignments and transactions (and amendments, modifications or terminations thereof) between the Company and Cablevision and/or any of its subsidiaries and, to the fullest extent permitted by law, provide that the actions of the overlapping directors or officers in connection therewith are not breaches of fiduciary duties owed to the Company, any of its subsidiaries or their respective shareholders. See “Description of Capital Stock — Certain Corporate Opportunities and Conflicts” in our registration statement on Form 10 filed with the Securities and Exchange Commission.

Item 2. Properties

We own the Madison Square Garden complex (with a maximum capacity of approximately 21,000 seats in The Garden), including The Theater at Madison Square Garden (approximately 5,600 seats) in New York City, comprising approximately 985,600 square feet; a training center in Greenburgh, New York with approximately 105,000 square feet of space, and The Chicago Theatre (approximately 3,600 seats) in Chicago comprising approximately 72,600 square feet.

Significant properties that are leased in New York City include approximately 346,000 square feet housing Madison Square Garden’s administrative and executive offices and certain studio space, approximately 577,000 square feet comprising Radio City Music Hall (approximately 6,000 seats) and approximately 57,000 square feet comprising the Beacon Theatre (approximately 2,800 seats). We also lease approximately 13,000 square feet of warehouse space in Jersey City, New Jersey and storage space in various other locations.

For more information on our venues, see Item 1. “Business — Our Venues.”

Our Madison Square Garden complex is subject to and benefits from various easements, including the “breezeway” into Madison Square Garden from Seventh Avenue in New York City (which we share with other property owners). Our ability to continue to utilize this and other easements requires us to comply with certain conditions. Moreover, certain adjoining property owners have easements over our property, which we are required to maintain so long as those property owners meet certain conditions.

Item 3. Legal Proceedings

In March 2008, a lawsuit was filed in the United States District Court for the Southern District of New York against MSG L.P. arising out of a January 23, 2007 automobile accident involving an individual who was allegedly drinking at several different establishments prior to the accident, allegedly including at an event at The Garden. The accident resulted in the death of one person and caused serious injuries to another. The plaintiffs filed suit against MSG L.P., the driver, and a New York City bar, asserting claims under the New York Dram Shop Act and seeking unspecified compensatory and punitive damages. The Company has insurance coverage for compensatory damages and legal expenses in this matter. Discovery in the case has been completed and MSG L.P. has filed a motion for summary judgment, which is pending before the court.

MSG L.P. filed a lawsuit in September 2007 against the NHL and certain related entities. This suit, filed in the United States District Court for the Southern District of New York, alleged violations of the United States Federal and New York State antitrust laws as a result of agreements providing the NHL with the exclusive right to control, for most commercial purposes, the individual clubs’ trademarks, licensing, advertising and distribution opportunities. The suit sought declaratory relief against these alleged anticompetitive activities and against the imposition by the NHL of any sanctions or penalties for the filing and prosecution of the lawsuit. The NHL filed counterclaims against MSG L.P. alleging that MSG L.P.’s prosecution of its lawsuit violated contractual obligations and seeking a judicial declaration that the NHL had the right to pursue disciplinary proceedings against MSG L.P. under the NHL constitution. In March 2009, the parties entered into a settlement agreement, and this action and the counterclaims have been dismissed.

In addition to the matters discussed above, the Company is a defendant in various lawsuits. Although the outcome of these matters cannot be predicted with certainty, management does not believe that resolution of these lawsuits will have a material adverse effect on the Company.

PART II

Item 5. Market for the Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our Class A Common Stock is listed on The NASDAQ Stock Market LLC under the symbol “MSG”. Our Class B Common Stock is not listed on any exchange. No class of our common stock was listed during 2009.

As of March 12, 2010, there were 1,223 holders of record of our Class A Common Stock and 26 holders of record of our Class B Common Stock. We did not pay any dividend on our common stock during 2009 and do not expect to pay a cash dividend on our common stock for the foreseeable future.

On July 29, 2009, in connection with the incorporation of Madison Square Garden, Inc., Regional Programming Partners, an indirect subsidiary of Cablevision Systems Corporation, acquired 1,000 shares of common stock of Madison Square Garden, Inc. for $10.

On January 12, 2010, in connection with the Distribution and related transactions, Regional Programming Partners, an indirect subsidiary of Cablevision Systems Corporation, acquired 5,000 shares of common stock of Madison Square Garden, Inc. in consideration for contributing 100% of the outstanding stock and limited liability company interests, respectively, of Rainbow Garden Corp. and MSG Regional Holdings LLC, which in turn hold, directly and indirectly, 100% of Madison Square Garden L.P. On February 5, 2010, pursuant to our amended and restated certificate of incorporation, the 6,000 shares of common stock outstanding were converted to 61,913,882.25 shares of Class A Common Stock and 13,588,562.75 shares of Class B Common Stock.

Item 6. Selected Financial Data

The operating and balance sheet data included in the following selected financial data table have been derived from the combined financial statements of Madison Square Garden, Inc. and its subsidiaries (which represents a combination of certain media, entertainment and sports businesses and assets that were historically owned and operated as parts of Cablevision prior to February 9, 2010). The financial information does not necessarily reflect what our results of operations and financial position would have been if we had operated as a separate publicly-traded entity during the periods presented. The selected financial data presented below should be read in conjunction with the annual financial statements included in Item 8. of this Annual Report on Form 10-K and with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

		Years Ended December 31,
		2009				2008				2007				2006				2005
		(Dollars in thousands)
Operating Data:
Revenues, net		$	1,062,417			$	1,042,958			$	1,002,182			$	905,196			$	847,552
Operating expenses:
Technical and operating (excluding depreciation and amortization shown below)			682,337				724,904				635,108				637,090				543,279
Selling, general and administrative			273,712				270,065				243,196				222,962				198,198
Gain on curtailment of pension plans(a)			—				—				(15,873	)			—				—
Restructuring expense			—				—				221				143				367
Depreciation and amortization			61,336				66,231				62,223				64,995				68,616
Operating income (loss)			45,032				(18,242	)			77,307				(19,994	)			37,092
Other income (expense):
Interest income (expense), net			(1,117	)			1,919				11,607				6,212				1,582
Miscellaneous			2,000				—				(1,000	)			(250	)			(1	)
Income (loss) from operations before income taxes and cumulative effect of a change in accounting principle			45,915				(16,323	)			87,914				(14,032	)			38,673
Income tax benefit (expense)			(18,266	)			11,387				(45,031	)			1,173				(6,900	)
Cumulative effect of a change in accounting principle, net of taxes			—				—				—				(238	)			—
Net income (loss)		$	27,649			$	(4,936	)		$	42,883			$	(13,097	)		$	31,773
Balance Sheet Data:
Advances due from Cablevision(b)		$	190,000			$	190,000			$	130,000			$	—			$	21,000
Total assets			2,041,499				2,000,341				1,969,321				1,891,282				1,933,938
Capital lease obligations			6,235				7,457				7,774				5,050				5,865
Combined group equity			1,106,103				1,072,623				1,072,316				999,076				990,811

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In this Management’s Discussion and Analysis of Financial Condition and Results of Operations, there are statements concerning our future operating and future financial performance, including our estimate of the costs and timing of the planned renovation of the Madison Square Garden Arena and the anticipated benefits of the renovation, the potential benefit to our future operating results from the touring version of the Radio City Christmas Spectacular and the expected increases in affiliation agreement revenues during 2010 in our MSG Media segment. Words such as “expects”, “anticipates”, “believes”, “estimates”, “may”, “will”, “should”, “could”, “potential”, “continue”, “intends”, “plans”, and similar words and terms used in the discussion of future operating and future financial performance identify forward-looking statements. Investors are cautioned that such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors. Factors that may cause such differences to occur include, but are not limited to:

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the level of our revenues, which depends in part on the popularity and competitiveness of our sports teams and the level and popularity of the Radio City Christmas Spectacular and other entertainment events which are presented in our venues;

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costs associated with player injuries, and waivers or terminations of players and other team personnel;

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changes in professional sports teams compensation, including the impact of signing of free agents, subject to league salary caps;

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the level of our capital expenditures, including the planned renovation of The Garden;

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the expected impact of the planned renovation of The Garden on our operations;

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the demand for our programming among cable television systems, satellite, telephone and other multichannel distributors (which we refer to in this discussion as “Distributors”), and our ability to renew affiliation agreements with them;

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general economic conditions especially in the New York metropolitan area where we conduct the majority of our operations;

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the demand for advertising time and viewer ratings for our programming;

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competition, for example, from other regional sports networks, other teams and other entertainment options;

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changes in laws, NBA or NHL rules, regulations, guidelines, bulletins, directives, policies and agreements (including the leagues’ respective collective bargaining agreements with their players’ associations, salary caps, NBA luxury tax thresholds and revenue sharing) or other regulations under which we operate;

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our ability to maintain, obtain or produce content for our MSG Media segment, together with the cost of such content;

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the level of our expenses, including the anticipated expenditures related to the expected increase in our corporate expenses as a stand-alone publicly-traded company;

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future acquisitions and dispositions of assets;

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the costs associated with, and the outcome of, litigation and other proceedings to the extent uninsured, including the matters described under Item 3. “Legal Proceedings;”

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financial community and rating agency perceptions of our business, operations, financial condition and the industry in which we operate;

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our ownership of professional sports franchises in the NBA and NHL and certain transfer restrictions on our common stocks; and

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the factors described under “Risk Factors” in this Annual Report on Form 10-K.

We disclaim any obligation to update or revise the forward-looking statements contained herein, except as otherwise required by applicable federal securities laws.

All dollar amounts included in the following Management’s Discussion and Analysis of Financial Condition and Results of Operations are presented in thousands, except as otherwise noted.

Introduction

Management’s discussion and analysis, or MD&A, of our results of operations and financial condition is provided as a supplement to the audited combined annual financial statements and footnotes thereto included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. The information included in MD&A should be read in conjunction with the annual combined financial statements included in this Annual Report on Form 10-K as well as the financial data set forth under Item 6. “Selected Financial Data.” Our MD&A is organized as follows:

Business Overview. This section provides a general description of our business, as well as other matters that we believe are important in understanding our results of operations and financial condition and in anticipating future trends.

Combined Results of Operations. This section provides an analysis of our results of operations for the years ended December 31, 2009, 2008 and 2007. Our discussion is presented on both a combined and segment basis. Our segments are MSG Media, MSG Entertainment and MSG Sports.

Liquidity and Capital Resources. This section provides a discussion of our financial condition, as well as an analysis of our cash flows for the years ended December 31, 2009, 2008 and 2007. The discussion of our financial condition and liquidity includes summaries of (i) our primary sources of liquidity and (ii) our contractual obligations and off balance sheet arrangements that existed at December 31, 2009.

Seasonality of Our Business. This section discusses the seasonal performance of our MSG Sports and MSG Entertainment segments.

Recently Issued Accounting Pronouncements Not Yet Adopted and Critical Accounting Policies. This section discusses accounting policies considered to be important to our financial condition and results of operations and which require significant judgment and estimates on the part of management in their application. In addition, all of our significant accounting policies, including our critical accounting policies, are discussed in the notes to our annual combined financial statements included elsewhere in this Annual Report on Form 10-K.

Business Overview

Madison Square Garden is a fully-integrated media, entertainment and sports business comprised of dynamic and powerful brands. Madison Square Garden’s business grew from the legendary venue widely known as “The World’s Most Famous Arena,” and is organized into three strategically aligned segments: MSG Media, MSG Entertainment and MSG Sports. Our business capitalizes on the combination of our iconic venues, our popular sports franchises, the distribution of our programming networks and our exclusive sports and entertainment content. A description of our segments follows:

MSG Media

MSG Media, which represented 45% of our combined revenues for the year ended December 31, 2009, is a leader in production and content development for multiple distribution platforms, including content originating from our venues. For all periods presented, this business consists of programming networks and interactive offerings, including the MSG Networks and the Fuse Networks. MSG Networks are home to seven professional sports teams: the New York Knicks, New York Rangers, New York Liberty, New York Islanders, New Jersey Devils, Buffalo Sabres and New York Red Bulls, as well as to our critically acclaimed original and other programming. Programming on Fuse focuses on music-related programming, including coverage of premier artists, events and festivals, original content and high profile concerts.

For all periods presented, MSG Media also includes our interactive businesses, which are comprised of a group of highly targeted websites (including msg.com, thegarden.com, radiocity.com, nyknicks.com, newyorkrangers.com and fuse.tv) and wireless, video on demand and digital platforms for all Madison Square Garden properties.

Revenue Sources

Our MSG Media segment earns revenues from two primary sources: affiliation fees and advertising. Affiliation fees, which are the fees we earn from Distributors that carry our programming, constitute the significant majority of the MSG Media segment revenues. Fees paid by advertisers to show commercials during our programs make up a smaller portion of MSG Media segment overall revenues.

Affiliation Fees

We earn affiliation fees from certain Distributors that carry our programming services, including Cablevision. The fees we receive depend largely on the demand from subscribers for our programming. Our affiliation agreements generally require us to meet certain content criteria, such as minimum thresholds for professional event telecasts throughout the year. If we were to be unable to meet these thresholds, we could become subject to remedies available to the Distributors, which may include termination of these agreements in some cases. Affiliation fees from Cablevision accounted for more than 10% of the Company’s combined revenues in each of 2009, 2008 and 2007.

Advertising Revenues

In addition to affiliation fees, we earn a smaller amount of revenue through the sale of commercial time to advertisers during our programming or through the sale of program sponsorship rights. We typically sell advertising time through our in-house staff and, to a lesser extent, through agencies.

Expenses

The principal expenses of our MSG Media segment are rights fees, which we pay to sports teams in order to carry their games and others who hold rights to the programming content (such as movies, concerts and other programming) we telecast; production costs, which include the salaries of on-air personalities, producers and technicians; and the costs of studio, broadcast and transmission facilities. We also allocate a portion of our corporate expenses to the MSG Media segment.

Programming Acquisition Costs

MSG Networks obtains telecast rights for the sports teams whose games we televise, the cost of which we accrue evenly over the applicable contract year. We negotiate directly with the teams to determine the fee and other provisions of the rights arrangement. Rights fees for sports programming are influenced by, among other things, the size and demographics of the geographic area in which the programming is distributed, and the popularity and/or the on-court or on-ice competitiveness of a team. For purposes of reporting our segment information the rights fees we pay to our owned teams are recognized as an inter-segment charge to our MSG Media segment. These inter-segment charges are eliminated in the combined financial statements. In addition to the rights for our Knicks, Rangers and Liberty franchises, we have long-term rights agreements in place with the New York Islanders, New Jersey Devils and Buffalo Sabres.

In addition to rights fees for sports telecasts, we must also pay to acquire the right to carry or produce other events or programming, such as movies, concerts or specials.

Production Costs

We incur costs to pay the salaries of our on-air personalities, producers, directors, technicians, writers and other creative and technical staff, as well as expenses associated with maintaining studios and transmission facilities.

Marketing and Advertising Costs

We incur costs to market our media business and our programs through outdoor and newspaper advertisements, television and radio advertising and online marketing.

Factors Affecting Operating Results

The financial performance of our MSG Media segment is affected by the affiliation arrangements we are able to negotiate with Distributors and also by the advertising rates we can charge advertisers. These factors in turn depend on the popularity and/or on-court and on-ice competitiveness of the professional sports teams carried on MSG Networks and the attractiveness of the programming content generally on MSG Networks and Fuse.

Due largely to our long-term rights agreements and the generally recurring nature of our affiliation arrangements; the MSG Networks have consistently produced operating profits over a number of years. Advertising revenues are less predictable and can vary based upon a number of factors, including general economic conditions.

In 2008, Fuse was in transition, implementing a strategy to rebrand the network and more closely integrate its content with our MSG Entertainment business and our venues. Fuse has incurred operating losses and they will likely continue. These losses are expected to decrease in future periods as we refine our strategy and incur expenses to acquire and produce compelling content and market the Fuse brand to effectively position it as a unique multi-platform music destination.

Our MSG Media segment’s future performance is also dependent on general economic conditions, in particular those affecting the New York metropolitan area, the impact of direct competition, and the relative strength of our current and future advertising customers. Continuation of the economic downturn and the global financial crisis may lead to lower demand for television advertising. We have already experienced some of these effects during this economic downturn and any continuation could adversely affect our future results of operations, cash flows and financial position.

MSG Entertainment

Our MSG Entertainment segment, which, net of inter-segment revenues, represented 27% of our combined revenues for the year ended December 31, 2009, is one of the country’s leaders in live entertainment. Our MSG Entertainment segment creates, produces and/or presents a variety of live productions, including the Radio City Christmas Spectacular, featuring the Rockettes, which is the #1 live holiday family show in America and was seen by approximately 1.8 million people in 2009, and the world-renowned Cirque du Soleil’s Wintuk. MSG Entertainment also presents and hosts other live entertainment events, such as concerts, including shows by The Police, Eric Clapton, Jimmy Buffett, Bruce Springsteen, Justin Timberlake, Madonna and the Jonas Brothers; family shows, such as Dora the Explorer, Thomas the Tank Engine and Sesame Street Live; special events such as the premiere of Sex and the City: The Movie, the Tony Awards and appearances by the Dalai Lama; and theatrical productions, such as The Wizard of Oz and Annie, in our diverse collection of venues. MSG Entertainment presents its live entertainment events to audiences both at our six venues in New York, Chicago and Boston and, with respect to our touring productions, at other arenas and theatrical venues.

Revenue Sources

Our primary sources of revenue in our entertainment business are ticket sales to our live audiences for events that we promote or co-promote (“Promote”, “Promotes” or “Promoted”) and license fees for our venues paid by third-party promoters in connection with events that we do not Promote. We also derive smaller amounts of revenue from other sources, including a portion of suite licensing fees at The Garden, facility and ticketing fees, concessions, sponsorships, merchandising and tours of our venues. The levels of revenue and expense we record in our MSG Entertainment segment for a given event depends to a significant extent on whether we are Promoting the event or are licensing our venue to a third-party promoter.

Ticket Sales and Suite Licenses

For our productions and for entertainment events in our venues that we Promote, we recognize revenues from the sale of tickets to our audiences. We sell tickets to the public through our box office, on our websites and through ticket agencies. The amount of revenue we earn from ticket sales depends on the number of shows and the mix of events that we Promote, the seating capacity of the venue used, the extent to which we can sell our seating capacity and our average ticket prices.

The Garden has 89 club suites and ten other premium seating products that are licensed annually. Suite licenses at The Garden are generally sold to corporate customers pursuant to multi-year licenses. Under standard suite licenses, the licensees pay an annual license fee, which varies depending on the location of the suite. The license fee includes, for each seat in the suite, tickets for events at The Garden for which tickets are sold to the general public, subject to certain exceptions. In addition, suite holders pay for food and beverage service in their suite at The Garden. Revenues from the sale of suite licenses are shared between our MSG Entertainment and MSG Sports segments.

Venue License Fees

For entertainment events held at our venues that we do not produce or Promote, we earn venue license fees from the third-party promoter of the event. These events include theatrical productions and other events, such as concerts, award shows, family shows and trade shows. The amount of license fees we charge varies by venue and by the complexity of the production, among other factors. Our fees include both the cost of renting space in our venues and costs for providing production services, such as front-of-house and back-of-house staff, including stagehands, box office staff, ushers and security staff, staging, lighting and sound, and building services.

Whether we are Promoting an event or licensing our venues to a third-party promoter has a significant impact on the level of revenues and the costs that we record in our MSG Entertainment segment.

Facility and Ticketing Fees

For all public and ticketed entertainment events held in our venues, we also earn additional revenues on substantially all tickets sold, whether we Promote the event or license the venue to a third party. These revenues are earned in the form of certain fees and assessments including the facility fee we charge on each ticket sold, and varies by venue.

Concessions

We sell food and beverages during substantially all entertainment events held at our venues. In addition to concession-style sales of food and beverages, which represent the majority of our concession revenues, we also provide catering for our suites at The Garden.

Merchandise

We earn revenues from the sale of merchandise relating to our proprietary productions and other live entertainment events that take place at our venues. The majority of our merchandise revenues are generated through on-site sales during performances of our productions and other live events. We also generate revenues from the sales of our Radio City Christmas Spectacular merchandise, such as DVDs, CDs, and books, through traditional retail channels. Typically, revenues from our merchandise sales at our non-proprietary events relate to sales of merchandise provided by the artist, the producer or promoter of the event.

Venue Signage and Sponsorship

We earn revenues through the sale of signage space at our venues and sponsorship rights in connection with our productions and other live entertainment events. Signage sales generally involve the sale of advertising space within The Garden during entertainment events and otherwise in our theaters.

Sponsorship rights may require us to use the name, logos and other trademarks of a sponsor in our advertising and in promotions for our venues, productions and other live entertainment events. Sponsorship arrangements may be exclusive within a particular sponsorship category or non-exclusive and generally permit a sponsor to use the name, logos and other trademarks of our productions and events in connection with their own advertising and in promotions in our venues or in the community.

Expenses

Our MSG Entertainment segment’s principal expenses are payments made to performers and co-promoters, staging costs and day-of-event costs associated with events, and advertising costs. We charge a portion of our actual expenses associated with the ownership, lease, maintenance and operation of our venues, along with a portion of our corporate expenses to our MSG Entertainment segment. However, the operating results of our MSG Entertainment segment benefit from the fact that no rent is imposed on our MSG Entertainment segment for events that it presents at our owned venues (The Garden, The Theater at Madison Square Garden and The Chicago Theatre). We do not allocate to our segments any of the depreciation and amortization charges related to The Garden and The Theater at Madison Square Garden.

Performer Payments

Our productions are performed by talented actors, dancers, singers and entertainers. In order to attract and retain this talent, we are required to pay our performers an amount that is commensurate both with their ability and with demand for their services from other entertainment companies.

Our productions, including the Radio City Christmas Spectacular, typically feature ensemble casts (such as the Rockettes), where there is no single “headline” performer. As a result, most of our performers are paid based on a standard “scale,” pursuant to collective bargaining agreements we negotiate with the performers’ unions.

Staging Costs

Staging costs for our proprietary events as well as others that we Promote include the costs of sets, lighting, display technologies, special effects, sound and all of the other technical aspects involved in presenting a live entertainment event. These costs vary substantially depending on the nature of the particular show, but tend to be highest for large-scale theatrical productions, such as the Radio City Christmas Spectacular. For concerts we Promote, the performer usually provides a fully-produced show. As with performer salaries, the staging costs associated with a given production are an important factor in our determination of ticket prices.

Day-of-event Costs

For days on which MSG Entertainment stages its productions, Promotes an event or provides one of our venues to a third-party promoter under a license fee arrangement, it is charged the variable costs associated with such event, including box office personnel, stagehands, ticket takers, ushers, security, and other similar expenses. Where we are receiving a license fee from a third-party promoter, we will typically charge these variable costs to the promoter.

Marketing and Advertising Costs

We incur significant costs promoting our productions and other events through outdoor and newspaper advertisements, television and radio advertising and online marketing. In light of the intense competition for entertainment events, especially in the New York metropolitan area, such expenditures are a necessity to drive interest in our productions and encourage members of the public to purchase tickets to our shows.

Touring Expenses

For productions that we take on the road, such as the Radio City Christmas Spectacular, we must pay the logistical costs associated with travel and equipment, as well as fees and expenses, including the costs of venue staff, for the use of third-party venues.

Factors Affecting Operating Results

The operating results of our MSG Entertainment segment are largely dependent on the continued success of our Radio City Christmas Spectacular as well as our ability to attract concerts, family shows and other events to our venues. Our MSG Entertainment segment recorded an operating profit in 2007, but it recognized operating losses in 2008 and 2009, primarily we believe, due to the economy.

The success of the Radio City Christmas Spectacular at Radio City Music Hall, has allowed us to invest in the development of the arena and theater touring versions of the show. While the arena tour did not contribute to operating income in 2008 or in 2009, we believe this investment will benefit our future operating results.

Our MSG Entertainment segment’s future performance is dependent on general economic conditions, and the effect of these conditions on our customers. Continuation of the economic downturn and the global financial crisis may lead to lower demand for suite licenses and tickets to our live productions, concerts, family shows and other events, which would also negatively affect merchandise and concession sales, as well as lower levels of sponsorship and venue signage. These conditions may also affect the level of concerts, family shows and other events that take place in the future. We have already experienced some of these effects during this economic downturn and any continuation could adversely affect our future results of operations, cash flows and financial position.

We are pursuing a strategy of opportunistically acquiring, building or obtaining control of theater venues in additional major markets. It is likely that any such new venues will not initially contribute to operating income, but will be expected to become operationally profitable over time.

We have previously announced our intent to pursue a major renovation of The Garden. In order to most efficiently and effectively complete the renovation, it will be a year-round project. Our goal is to minimize disruption to current operations and, to achieve this, The Garden will remain open for live entertainment events during the period coinciding with the Knicks’ and Rangers’ seasons in the years when the renovation takes place, while we sequence the construction to ensure that we maximize our construction efforts when we close the arena during the summer months. An important objective for us to achieve in connection with the renovation will be to manage the project in a manner that minimizes the impact of the renovation on our ability to generate revenues from live entertainment events. Our current expectation is that the renovated lower bowl of The Garden will be open for the 2011-12 seasons, and that the renovated upper bowl will be open for the 2012-13 seasons.

MSG Sports

Our MSG Sports segment, which, net of inter-segment revenues, represented 28% of our combined revenues for the year ended December 31, 2009, owns and operates sports franchises, including the New York Knicks, a founding member of the NBA and the New York Rangers, one of the “original six” franchises of the NHL. MSG Sports also owns and operates the New York Liberty of the WNBA, one of the league’s founding franchises, and the Hartford Wolf Pack of the AHL, which is the primary player development team for the Rangers, and is competitive in its own right in the AHL. The Knicks, Rangers and Liberty play their home games at The Garden. Our sports business also features other sports properties, including the presentation of a wide variety of premier live sporting events including professional boxing, college basketball (The Big East Tournament, Jimmy V Classic, Post-season NIT Finals and, on occasion, Duke University games), track and field (The Millrose Games) and tennis (The BNP Paribas Showdown for the Billie Jean King Cup, which features the women winners of the previous year’s Grand Slam tennis events).

Revenue Sources

We earn revenue in our MSG Sports segment from several primary sources: ticket sales and a portion of our suite license fees at The Garden, our share of distributions from NHL and NBA league-wide national and international television contracts and other league-wide revenue sources, in-venue signage and sponsorships, concessions and merchandising. We also earn venue license fees, primarily from the rental of The Garden to third-party promoters holding their sports events at our arena. The amount of revenue we earn is influenced by many factors, including the popularity and on-court or on-ice performance of our professional sports teams and general economic conditions. Our MSG Sports segment also earns substantial fees from our MSG Media segment for the right to telecast the games of our professional sports teams. These inter-segment revenues are eliminated in our combined financial statements.

Ticket Sales, Suite Licenses, Venue Licenses, Facility Fees and Charges

Ticket sales constitute the largest single source of revenue for our MSG Sports segment. We sell tickets to our sports teams’ home games through season tickets, which are typically held by long-term season subscribers, and through single-game tickets, which are purchased by fans either individually or in multi-game packages. The prices of our tickets vary, depending on the sports team and the location of the seats. We generally review and set the price of our tickets before the start of each teams’ season. We also earn revenue from the sale of tickets to live sporting events that we Promote other than Knicks, Rangers and Liberty games.

The Garden has 89 club suites and ten other premium seating products that are licensed annually. Suite licenses at The Garden are generally sold to corporate customers pursuant to multi-year licenses. Under standard suite licenses, the licensees pay an annual license fee, which varies depending on the location of the suite. The license fee includes, for each seat in the suite, tickets for events at The Garden for which tickets are sold to the general public, subject to certain exceptions. In addition, suite holders pay for food and beverage service in their suite at The Garden. Revenues from the sale of suite licenses are shared between our MSG Entertainment and MSG Sports segments.

In addition to Knicks, Rangers and Liberty home games, we also present at our venues other live sporting events, such as boxing matches, tennis, college basketball and track and field meets. When we act as the Promoter of such events, we earn revenues from ticket sales and incur expenses associated with the event. When these events are promoted by third-party promoters, we earn revenues from the venue license fee we charge to such promoter for use of our venues. When licensing our venues, the amount recorded as revenue also includes the event’s variable costs such as the costs of front-of-house and back-of-house staffs, including union laborers, box office staff, ushers, security and building services, which we pass along to the Promoter. The mix of live sporting events, including whether we are the Promoter of an event or license our venues to a third-party promoter, has a significant effect on the level of revenues and event related costs that we report in our MSG Sports segment.

Our MSG Sports segment revenues also include proceeds from certain fees and assessments added to ticket prices for events held at our venues, regardless of whether we act as Promoter for such events. This currently includes a facility fee on tickets to all events at our facilities, except for team season tickets and certain other limited exceptions.

Telecast Rights

We earn revenue from the sale of telecast rights for our sports teams’ home and away games and also through the receipt of our share of fees paid for league-wide telecast rights, which are awarded under contracts negotiated and administered by each league.

Telecast rights for the Knicks and Rangers are held by MSG Networks, pursuant to inter-segment arrangements between our MSG Sports and MSG Media segments. The financial success of our MSG Sports segment is largely dependent on the rights fees we receive from our MSG Media segment in connection with the telecast of our Knicks and Rangers games. These inter-segment fees are eliminated in our combined financial statements.

National and international telecast arrangements differ by league. Fees paid by telecasters under these arrangements are pooled by each league and then generally shared equally among all teams.

Venue Signage and Sponsorships

We earn revenues through the sale of signage space at The Garden and sponsorship rights in connection with our sports teams and certain other sporting events. Signage sales generally involve the sale of advertising space within The Garden during our teams’ home games and includes the sale of signage on the ice and on the boards of the hockey rink during Rangers games, courtside during Knicks and Liberty games, or on the various scoreboards and display panels at The Garden. We offer both television camera-visible and non-camera-visible signage space.

Sponsorship rights generally require us to use the name, logos and other trademarks of a sponsor in our advertising and in promotions for our sports teams and during our sports events. Sponsorship arrangements may be exclusive within a particular sponsorship category or non-exclusive and generally permit a sponsor to use the name, logos and other trademarks of our sports teams in connection with their own advertising and in promotions on-court, on-ice or in the community.

Concessions

We sell food and beverages during all sporting events held at our venues. In addition to concession-style sales of food and beverages, which represent the majority of our concession revenues, we also provide higher-end dining at our full service restaurants and catering for suites at The Garden.

Merchandise

We earn revenues from the sale of our sports teams’ merchandise both through the in-venue (and in some cases, on-line) sale of items bearing the logos or other marks of our sports teams and through our share of league distributions of royalty and other revenues from the league’s licensing of team and league trademarks, which revenues are generally shared equally among the teams in the leagues. By agreement among the teams, each of the leagues in which we operate act as agent for the teams to license their logos and other marks, as well as the marks of the leagues, subject to certain rights retained by the teams to license these marks within their arenas and the geographic areas in which they operate.

Expenses

The most significant expenses in our MSG Sports segment are player and team personnel salaries and charges for transactions relating to players for career-ending and season-ending injuries and waivers and termination costs of players and other team personnel. We also incur costs for travel, player insurance, league assessments (including a 6% NBA assessment on regular season ticket sales), NHL revenue sharing and NBA luxury tax and revenue assistance. We charge a portion of our actual expenses associated with the ownership, lease, maintenance and operation of our venues, along with a portion of our corporate expenses to our MSG Sports segment. However, the operating results of our teams and our MSG Sports segment benefit from the fact that no rent charge is allocated to the teams or to our MSG Sports segment for games or other sporting events that it presents at The Garden. We do not allocate to our segments any of the depreciation and amortization charges of The Garden and The Theater at Madison Square Garden.

Player Salaries and League Payments

The amount we pay an individual player is determined by negotiation between the player (typically represented by an agent) and us, and is generally influenced by the player’s individual playing statistics, by the amounts paid to players with comparable playing statistics by other sports teams and by restrictions in the collective bargaining agreements (“CBA”), including the salary caps. Each league is party to a CBA with the respective players association that contains restrictions on when players may move between league clubs following expiration of their contracts and what rights their current and former clubs have. Our most significant player expenses generally come from signing unrestricted free agents, because players are generally able to negotiate the highest salary when they become unrestricted free agents.

The NBA CBA was last negotiated in 2005 and expires in 2011. The NBA CBA contains a “soft” salary cap (i.e., a cap on each team’s aggregate salaries but with certain exceptions that enable teams to pay more, sometimes substantially more than the cap). The NBA CBA also provides that players receive a designated percentage of league-wide revenues (generally between 57% and 58% depending on the level of league-wide revenues and other factors), and the teams retain the remainder. This provision does not apply on a team-by-team basis and accordingly we may pay our players a higher or lower portion of our revenues than other NBA teams.

Throughout each season, NBA teams withhold a portion of each player’s salary and contribute the withheld amounts to an escrow account. If the league’s aggregate player compensation exceeds the designated percentage of league-wide revenues, some or all of such escrowed amounts are distributed equally to all NBA teams. The NBA CBA also provides for a luxury tax that is applicable to all teams with aggregate player salaries exceeding a threshold that is set prior to each season based upon league-wide revenues (as defined under the CBA). The luxury tax is generally equal to the amount by which a team’s aggregate player salaries exceed such threshold. The aggregate luxury tax payments collected by the league are distributed in equal one-thirtieth shares to non-taxpaying teams. The NBA also has a revenue assistance program, by which a pool of funds (up to a maximum of $60,000 for the 2009-10 season) is collected from a combination of the undistributed luxury tax discussed above and contributions from teams (a portion of which is based on local team revenues) and is then distributed to lower revenue teams that meet certain operating requirements. We record our combined luxury tax and revenue assistance expense net of the amount we expect to receive from the escrow. Our net provision for these items for the year ended December 31, 2009, including luxury tax provisions related to team personnel transactions, was approximately $4,707. Whether or not we will be a net NBA luxury tax payer for the 2009-10 season will be dependent on the variables described above.

The NBA also imposes on each team a 6% assessment on regular season ticket revenue and an assessment of between 45% and 55% on playoff ticket revenue, depending on the number of home games played.

The current NHL CBA was last negotiated in 2005 and expires in 2011, with the players association having a one-year extension option. The NHL CBA contains a “hard” salary cap (i.e., teams may not exceed a stated maximum that is adjusted each season based upon league-wide revenues). The NHL CBA provides that players receive a designated percentage of league-wide revenues (between 54% and 57% depending on the level of league-wide revenues), and the teams retain the remainder. This provision does not apply on a team-by-team basis and accordingly we may pay our players a higher or lower portion of our revenues than other NHL teams.

Throughout each season, NHL teams withhold a portion of each player’s salary and contribute the withheld amounts to an escrow account. If the league’s aggregate player compensation exceeds the designated percentage of league-wide revenues, some or all of the escrowed amounts are retained by the league and distributed as follows: first, to fund a portion of the revenue sharing pool as described below, then disproportionately to certain lower-payroll teams, and then to all teams in equal shares.

The NHL CBA also provides for a revenue sharing plan that generally requires the distribution of a pool of funds approximating 4.5% of league-wide revenues to certain qualifying lower-revenue teams. This pool is funded from a combination of the escrow amounts discussed above, league-wide revenues, payments by teams participating in the playoffs and disproportionate contributions by the top ten revenue earning teams (based on preseason and regular season revenues). The Rangers are consistently among the top ten revenue teams and, accordingly, contribute to this pool on a disproportionate basis. We record our revenue sharing expense net of the amount we expect to receive from the escrow. Our net provision for these items for the year ended December 31, 2009 was $4,154 (including $3,007 related to playoffs).

Other Expenses

Our sports teams also pay expenses associated with day-to-day operations, including for travel, equipment maintenance and selling, general and administrative expenses. Direct variable day-of-event costs incurred at The Garden, such as the costs of front-of-house and back-of-house staff, including union laborers, box office staff, ushers, security, and event production are charged to our MSG Sports segment. We charge a portion of our actual expenses associated with the ownership, lease, maintenance and operation of our venues, along with a portion of our corporate expenses to our MSG Sports segment. However, the operating results of our teams and our MSG Sports segment benefit from the fact that no rent is imposed on the teams or to the segment for use of The Garden. We do not allocate to our segments any of the depreciation and amortization charges relating to The Garden and The Theater at Madison Square Garden. Operating costs of the Company’s training facility in Greenburgh, New York and the operating and maintenance costs of the aircraft that the Company owns are also charged to our MSG Sports segment. The operation of the Hartford Wolf Pack is also a net Ranger player development expense for our MSG Sports segment.

Factors Affecting Operating Results

The operating results of our MSG Sports segment are largely dependent on the continued popularity and/or on-ice or on-court competitiveness of our Knicks and Rangers teams, which has a direct effect on ticket sales for the teams’ home games, which is each team’s largest single source of revenue.

Our MSG Sports segment has incurred substantial operating losses in each of the last three years. These losses primarily reflect the impact of high costs for player salaries (including NBA luxury tax) and salaries of non-player team personnel. In addition, we incurred significant charges in each of those years for career-ending and season-ending injuries of players and for waivers and terminations of players and other team personnel, including team executives. Waiver and termination costs reflect our efforts to improve the competitiveness of our teams. These transactions can result in significant charges as the Company recognizes the estimated ultimate costs of these events in the periods in which they occur, although amounts due are generally paid over the remaining contract terms. For example, the expense for these items was approximately $23,800, $24,900 and $6,800 in 2009, 2008 and 2007, respectively. These expenses add to the volatility of the results of our MSG Sports segment. We expect to continue to pursue opportunities to improve the overall quality of our teams and our efforts may result in continued significant expenses and charges. Such expenses and charges may result in future operating losses for our MSG Sports segment although it is not possible to predict their timing or amount.

In addition to our MSG Sports segment’s future performance being dependent upon on the continued popularity and/or on-ice or on-court competitiveness of our Knicks and Rangers teams, it is also dependent on general economic conditions, in particular those in the New York metropolitan area and the effect of these conditions on our customers. Continuation of the economic downturn and the global financial crisis may lead to lower demand for suite licenses and tickets to the games of our sports teams, which would also negatively affect merchandise and concession sales, as well as lower levels of sponsorship and venue signage revenues. These conditions may also affect the number of other live sporting events that this segment is able to present. We have already experienced some of these effects during this economic downturn and any continuation could adversely affect our future results of operations, cash flows and financial position.

We have previously announced our intent to pursue a major renovation of The Garden. In order to most efficiently and effectively complete the renovation, it will be a year-round project. Our goal is to minimize disruption to current operations and, to achieve this, The Garden will remain open during the Knicks’ and Rangers’ seasons in the years when the renovation takes place, while we sequence the construction to ensure that we maximize our construction efforts when we close the arena during summer months. An important objective for us to achieve in connection with the renovation will be to manage the project in a manner that does not impair our ability to generate revenues from Knicks and Rangers home games. Our current expectation is that the renovated lower bowl of The Garden will be open for the 2011-12 seasons, and that the renovated upper bowl will be open for the 2012-13 seasons.

Corporate Expenses

The Company’s historical results of operations reflected in our combined financial statements include an allocation for certain corporate functions historically provided by Cablevision. These allocations were based on what the Company and Cablevision considered to be reasonable reflections of the historical utilization levels of these services required in support of our business. As a stand-alone company, we will need to expand our financial, administrative and other staff to support these new requirements. In addition, we will need to add staff and systems to replace many of the functions previously provided by Cablevision. As a result, our corporate operating costs as a separate company, including those associated with being a publicly-traded company, are expected to be higher subsequent to the Distribution.

Impact of Current Economic Conditions

Our future performance is dependent, to a large extent, on general economic conditions, including capital market conditions, the impact of direct competition, our ability to manage our businesses effectively and our relative strength and leverage in the marketplace, both with suppliers and customers.

Continuation of the economic downturn and the global financial crisis may lead to lower demand for suite licenses and tickets to the games of our sports teams and to our live productions, as well as lower levels of sponsorship, venue signage and television advertising revenues. We have already experienced some of these effects during this economic downturn, including a reduction in the renewal of certain of our suite licenses and a lower level of arena event bookings, and any continuation could adversely affect our future results of operations, cash flows and financial position.

Combined Results of Operations

The tables below set forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues, net. All dollar amounts included in the following combined results of operations are presented in thousands, except as otherwise noted.

STATEMENT OF OPERATIONS DATA

		Years Ended December 31,																Increase
		2009								2008								(Decrease)
						% of Net								% of Net				in Net
		Amount				Revenues				Amount				Revenues				Income
Revenues, net		$	1,062,417				100	%		$	1,042,958				100	%		$	19,459
Operating expenses:
Technical and operating (excluding depreciation and amortization shown below)			682,337				64				724,904				70				42,567
Selling, general and administrative			273,712				26				270,065				26				(3,647	)
Depreciation and amortization			61,336				6				66,231				6				4,895
Operating income (loss)			45,032				4				(18,242	)			(2	)			63,274
Other income (expense):
Interest income (expense), net			(1,117	)			—				1,919				—				(3,036	)
Miscellaneous			2,000				—				—				—				2,000
Income (loss) from operations before income taxes			45,915				4				(16,323	)			(2	)			62,238
Income tax benefit (expense)			(18,266	)			(2	)			11,387				1				(29,653	)
Net income (loss)		$	27,649				3	%		$	(4,936	)			—	%		$	32,585

The following is a reconciliation of operating income (loss) to adjusted operating cash flow:

		Years Ended December 31,								Increase
		2009				2008				(Decrease)
		Amount				Amount				in AOCF
Operating income (loss)		$	45,032			$	(18,242	)		$	63,274
Share-based compensation			14,262				12,732				1,530
Depreciation and amortization			61,336				66,231				(4,895	)
Adjusted operating cash flow		$	120,630			$	60,721			$	59,909

		Years Ended December 31,																(Increase)
		2008								2007								Decrease
						% of Net								% of Net				in Net
		Amount				Revenues				Amount				Revenues				Loss
Revenues, net		$	1,042,958				100	%		$	1,002,182				100	%		$	40,776
Operating expenses:
Technical and operating (excluding depreciation and amortization shown below)			724,904				70				635,108				63				(89,796	)
Selling, general and administrative			270,065				26				243,196				24				(26,869	)
Gain on curtailment of pension plans			—				—				(15,873	)			2				(15,873	)
Restructuring expense			—				—				221				—				221
Depreciation and amortization			66,231				6				62,223				6				(4,008	)
Operating income (loss)			(18,242	)			(2	)			77,307				8				(95,549	)
Other income (expense):
Interest income, net			1,919				—				11,607				1				(9,688	)
Miscellaneous			—				—				(1,000	)			—				1,000
Income (loss) from operations before income taxes			(16,323	)			(2	)			87,914				9				(104,237	)
Income tax benefit (expense)			11,387				1				(45,031	)			(4	)			56,418
Net income (loss)		$	(4,936	)			—	%		$	42,883				4	%		$	(47,819	)

The following is a reconciliation of operating income (loss) to adjusted operating cash flow:

		Years Ended December 31,								Increase
		2008				2007				(Decrease)
		Amount				Amount				in AOCF
Operating income (loss)		$	(18,242	)		$	77,307			$	(95,549	)
Share-based compensation			12,732				11,715				1,017
Restructuring expense			—				221				(221	)
Depreciation and amortization			66,231				62,223				4,008
Adjusted operating cash flow		$	60,721			$	151,466			$	(90,745	)

See “Business Segment Results” within the discussion of each of the comparative financial periods for a more detailed discussion relating to the operating results of our segments. The business segment results reflected on pages 56 to 61 and pages 63 to 69 do not reflect inter-segment eliminations.

Comparison of Combined Year Ended December 31, 2009 Versus Year Ended December 31, 2008

Combined Results

Revenues, net for the year ended December 31, 2009 increased $19,459 (2%) as compared to revenues, net for the prior year. The net increase is attributable to the following:

Increase in MSG Media segment revenues, net		$	44,135
Decrease in MSG Entertainment segment revenues, net			(21,273	)
Decrease in MSG Sports segment revenues, net			(726	)
Inter-segment eliminations			(2,677	)
		$	19,459

Technical and operating expenses (excluding depreciation and amortization) include primarily:

•

contractual compensation expense pursuant to employment agreements with the personnel of our professional sports teams;

•

cost of team personnel transactions for career- and season-ending player injuries, net of anticipated insurance recoveries, and waivers and termination costs of players and other team personnel;

•

payments we make to obtain the contractual rights to carry certain live sporting events on our networks;

•

other programming and production costs of our networks;

•

event costs related to the presentation and production of our entertainment and live sporting events;

•

venue lease, maintenance and operating expenses; and

•

the cost of concessions and merchandise sold.

Technical and operating expenses (excluding depreciation and amortization) for the year ended December 31, 2009 decreased $42,567 (6%) as compared to the prior year. The net decrease is attributable to the following:

Decrease in MSG Media segment expenses		$	(10,281	)
Increase in MSG Entertainment segment expenses			6,135
Decrease in MSG Sports segment expenses			(35,506	)
Decrease in other expenses			(247	)
Inter-segment eliminations			(2,668	)
		$	(42,567	)

As a percentage of revenues, net, technical and operating expenses decreased 6% for the year ended December 31, 2009 as compared to the prior year.

Selling, general and administrative expenses primarily consist of administrative costs, including compensation, severance and professional fees, and sales, marketing and non-event related advertising expenses. Selling, general and administrative expenses for the year ended December 31, 2009 increased $3,647 (1%) as compared to the prior year. The net increase is attributable to the following:

Increase in MSG Media segment expenses		$	820
Increase in MSG Entertainment segment expenses			6,762
Increase in MSG Sports segment expenses			20,013
Decrease in litigation expense not allocated to segments			(24,699	)
Increase in other expenses			760
Inter-segment eliminations			(9	)
		$	3,647

As a percentage of revenues, net, selling, general and administrative expenses remained flat for the year ended December 31, 2009 as compared to the prior year.

Depreciation and amortization for the year ended December 31, 2009 decreased $4,895 (7%) as compared to the prior year. The decrease reflects lower amortization of intangible assets primarily due to certain intangible assets becoming fully amortized.

Adjusted operating cash flow for the year ended December 31, 2009 increased $59,909 (99%) as compared to the prior year. The net increase is attributable to the following:

Increase in adjusted operating cash flow of the MSG Media segment		$	55,241
Decrease in adjusted operating cash flow of the MSG Entertainment segment			(32,442	)
Increase in adjusted operating cash flow of the MSG Sports segment			12,924
Increase in adjusted operating cash flow due to lower litigation expense not allocated to segments			24,699
Other net decreases			(513	)
		$	59,909

Interest income (expense), net for the year ended December 31, 2009 decreased $3,036 (158%) as compared to the prior year. The net decrease reflects lower interest income of $2,434 and was primarily attributable to lower levels of invested cash, reflecting in part our use of cash to make a non-interest bearing advance in the amount of $60,000 to a subsidiary of Cablevision in 2008, and due to lower interest rates. As of December 31, 2009, the total amount of advances outstanding to a subsidiary of Cablevision was $190,000.

Income taxes

The Company operated as a partnership during the periods presented. However, the income tax expense or benefit and deferred tax liability presented have been determined as if Madison Square Garden, Inc. had owned all of the partnership interests in Madison Square Garden, L.P. (“MSG L.P.”) for all periods presented notwithstanding that such interests in MSG L.P. were contributed to Madison Square Garden, Inc. on January 12, 2010. The Company’s provision for income taxes is based on current period income and changes in deferred tax assets and liabilities.

Income tax expense for the year ended December 31, 2009 of $18,266 differs from the income tax expense derived from applying the federal statutory tax rate to pretax income due principally to state income taxes, tax benefit of $191 resulting from nontaxable disability insurance recoveries offset by tax expense of $1,323 relating to nondeductible expenses, and a tax benefit of $1,845 resulting from a change in the estimated applicable corporate tax rate used to determine deferred tax assets and liabilities.

Income tax benefit for the year ended December 31, 2008 of $11,387 differs from the income tax benefit derived from applying the federal statutory tax rate to the pretax loss due principally to state income taxes, tax benefit of $1,555 resulting from nontaxable disability insurance recoveries offset by tax expense of $2,464 relating to nondeductible expenses, and a tax benefit of $5,769 resulting from a change in the estimated applicable corporate tax rate used to determine deferred tax assets and liabilities.

Upon completion of the Distribution on February 9, 2010, certain adjustments to the net deferred tax liability will be recorded as adjustments to equity as of the Distribution date. Deferred tax assets and liabilities presented have been measured using the estimated applicable corporate tax rates historically used by Cablevision for the periods presented. Due to the Company’s significant presence in the City of New York, the estimated applicable corporate tax rates used to measure deferred taxes will be higher on a stand-alone basis. Presenting income tax expense and deferred taxes on a separate return basis results in a difference between the net operating loss carry forward reflected in the deferred tax asset and the actual deferred tax asset for such carry forwards under the applicable tax laws because the operations of the Company were included in the consolidated federal income tax returns of Cablevision for all periods presented. Such inclusion results in utilization of tax losses each year to offset the taxable income of other members in the Cablevision federal consolidated group that are not included in these financial statements. The Company will have an insignificant amount of net operating loss carry forwards immediately subsequent to the Distribution. Finally, the Company may reduce its deferred tax asset with regard to certain compensation awards if it is anticipated that a portion thereof may not be realized pursuant to Internal Revenue Code Section 162(m).

Business Segment Results

MSG Media

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues, net for the Company’s MSG Media segment.

		Years Ended December 31,																Increase
		2009								2008								(Decrease) in
						% of Net								% of Net				Operating
		Amount				Revenues				Amount				Revenues				Income
Revenues, net		$	474,139				100	%		$	430,004				100	%		$	44,135
Technical and operating expenses (excluding depreciation and amortization)			217,465				46				227,746				53				10,281
Selling, general and administrative expenses			95,163				20				94,343				22				(820	)
Depreciation and amortization			19,723				4				22,451				5				2,728
Operating income		$	141,788				30	%		$	85,464				20	%		$	56,324

The following is a reconciliation of operating income to adjusted operating cash flow (“AOCF”):

		Years Ended December 31,								Increase
		2009				2008				(Decrease) in
		Amount				Amount				AOCF
Operating income		$	141,788			$	85,464			$	56,324
Share-based compensation			5,847				4,202				1,645
Depreciation and amortization			19,723				22,451				(2,728	)
Adjusted operating cash flow		$	167,358			$	112,117			$	55,241

Revenues, net for the year ended December 31, 2009 increased $44,135 (10%) as compared to revenues, net for the prior year. The net increase is attributable to the following:

Increase in affiliation fee revenue, primarily at MSG Networks (see discussion below)		$	42,134
Increase in advertising revenue (see discussion below)			1,466
Other net increases			535
		$	44,135

The increase in affiliation fee revenue discussed above was primarily attributable to increases in contractual affiliation rates and higher subscriber counts. Most of MSG Media’s affiliation agreements provide for rate increases effective January 1 of each year.

Effective January 1, 2010, a new long-term affiliation agreement was entered into between Cablevision and the MSG Networks. This new long-term affiliation agreement will result in estimated incremental revenues provided to MSG Media of approximately $30,000 for 2010, as compared to the amount recognized by the Company pursuant to the Company’s arrangement with Cablevision for 2009, and other additional consideration. This new affiliation agreement provides for the carriage of the MSG network and MSG Plus program services on Cablevision’s cable systems in the New York tri-state area. This agreement has a term of 10 years, obligates Cablevision to carry such program services on its cable systems and provides for the payment by Cablevision to the Company of a per subscriber license fee, which fee is increased each year during the term of the agreement.

The increase in advertising revenue discussed above primarily reflects higher ratings at Fuse.

Technical and operating expenses (excluding depreciation and amortization) for the year ended December 31, 2009 decreased $10,281 (5%) as compared to the prior year. The net decrease is attributable to the following:

Increase in rights fees		$	3,188
Decrease due to lower levels of other production costs, primarily at Fuse			(13,469	)
		$	(10,281	)

As a percentage of revenues, net, technical and operating expenses decreased 7% during the year ended December 31, 2009 as compared to the prior year.

Selling, general and administrative expenses for the year ended December 31, 2009 increased $820 (1%) as compared to the prior year. The net increase is attributable to the following:

Increase due to higher employee salaries and related benefits		$	11,370
Decrease due to lower marketing costs, primarily at Fuse			(9,363	)
Other net decreases			(1,187	)
		$	820

As a percentage of revenues, net, selling, general and administrative expenses decreased 2% during the year ended December 31, 2009 as compared to the prior year.

Depreciation and amortization for the year ended December 31, 2009 decreased $2,728 (12%) as compared to the prior year resulting primarily from lower amortization of intangible assets of $3,591 for the year ended December 31, 2009 compared to 2008 primarily due to certain intangible assets becoming fully amortized.

Adjusted operating cash flow increased $55,241 (49%) for the year ended December 31, 2009 as compared to the prior year. The increase, as discussed above, was due primarily to an increase in affiliation fee revenue and a net decrease in operating costs.

MSG Entertainment

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues, net for the Company’s MSG Entertainment segment.

		Years Ended December 31,
		2009								2008								Increase in
						% of Net								% of Net				Operating
		Amount				Revenues				Amount				Revenues				Loss
Revenues, net		$	286,543				100	%		$	307,816				100	%		$	(21,273	)
Technical and operating expenses (excluding depreciation and amortization)			250,068				87				243,933				79				(6,135	)
Selling, general and administrative expenses			63,701				22				56,939				18				(6,762	)
Depreciation and amortization			10,346				4				9,407				3				(939	)
Operating loss		$	(37,572	)			(13	)%		$	(2,463	)			(1	)%		$	(35,109	)

The following is a reconciliation of operating loss to adjusted operating cash flow:

		Years Ended December 31,								Increase
		2009				2008				(Decrease) In
		Amount				Amount				AOCF
Operating loss		$	(37,572	)		$	(2,463	)		$	(35,109	)
Share-based compensation			5,420				3,692				1,728
Depreciation and amortization			10,346				9,407				939
Adjusted operating cash flow		$	(21,806	)		$	10,636			$	(32,442	)

Revenues, net for the year ended December 31, 2009 decreased $21,273 (7%) as compared to revenues, net for the prior year. The net decrease is attributable to the following:

Decrease in revenues at The Garden (see discussion below)		$	(20,617	)
Decrease in revenues from the winter themed production, Wintuk, due primarily to lower attendance in 2009 than in 2008			(6,305	)
Decrease in revenues from the presentation of the Radio City Christmas Spectacular (see discussion below)			(3,492	)
Increase in revenues at the Beacon Theatre which was shut down for the last five months of 2008 for its restoration			12,573
Increase in revenues from the Chicago Theatre, primarily due to a new production, Banana Shpeel, first presented in 2009			3,437
Other net decreases			(6,869	)
		$	(21,273	)

For the year ended December 31, 2009, revenues at The Garden have decreased as compared to the prior year primarily due to a decline in the number of events booked at The Garden due to fewer artists touring in 2009 than in 2008, primarily we believe reflecting the current economic environment.

Net lower revenues from the presentation of the Radio City Christmas Spectacular primarily reflects lower attendance at the show’s presentation at Radio City Music Hall, primarily we believe reflecting the current economic environment. This decline was offset in part by an increase in revenues from the show’s theater touring productions.

Technical and operating expenses (excluding depreciation and amortization) for the year ended December 31, 2009 increased $6,135 (3%) as compared to the prior year. The net increase is attributable to the following:

Increase in event expenses for the Beacon Theatre which was shut down for the last five months of 2008 for its restoration		$	7,326
Increase in show costs for the Chicago Theatre almost entirely related to event costs associated with the new production, Banana Shpeel			5,189
Increase in venue operating costs, including the impact of a new venue booking agreement for the Wang Theatre			4,418
Net increase in expenses from the presentation of the Radio City Christmas Spectacular (see discussion below)			1,658
Net decrease in event expenses for The Garden			(9,497	)
Decrease in show costs related to the winter themed production, Wintuk			(3,560	)
Other net increases			601
		$	6,135

The increase in expenses from the presentation of the Radio City Christmas Spectacular is primarily due to an increase in costs related to the show’s arena-sized touring production partly offset by decreases in expenses related to the presentation at Radio City Music Hall.

As a percentage of revenues, net, technical and operating expenses increased 8% during the year ended December 31, 2009 as compared to the prior year.

Selling, general and administrative expenses for the year ended December 31, 2009 increased $6,762 (12%) as compared to the prior year. The net increase is attributable to the following:

Increase in employee salaries and related benefits		$	7,719
Other net decreases			(957	)
		$	6,762

As a percentage of revenues, net, selling, general and administrative expenses increased 4% during the year ended December 31, 2009 as compared to the prior year.

Adjusted operating cash flow decreased $32,442 (305%) for the year ended December 31, 2009 as compared to the prior year. The decrease, as discussed above, was due primarily to lower revenues from live entertainment events and a net increase in operating costs.

MSG Sports

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues, net for the Company’s MSG Sports segment.

		Years Ended December 31,																(Increase)
		2009								2008								Decrease in
						% of Net								% of Net				Operating
		Amount				Revenues				Amount				Revenues				Loss
Revenues, net		$	368,607				100	%		$	369,333				100	%		$	(726	)
Technical and operating expenses (excluding depreciation and amortization)			281,217				76				316,723				86				35,506
Selling, general and administrative expenses			108,344				29				88,331				24				(20,013	)
Depreciation and amortization			10,956				3				10,706				3				(250	)
Operating loss		$	(31,910	)			(9	)%		$	(46,427	)			(13	)%		$	14,517

The following is a reconciliation of operating loss to adjusted operating cash flow:

		Years Ended December 31,								Increase
		2009				2008				(Decrease) in
		Amount				Amount				AOCF
Operating loss		$	(31,910	)		$	(46,427	)		$	14,517
Share-based compensation			2,995				4,838				(1,843	)
Depreciation and amortization			10,956				10,706				250
Adjusted operating cash flow		$	(17,959	)		$	(30,883	)		$	12,924

Revenues, net for the year ended December 31, 2009 decreased $726 as compared to revenues, net for the prior year. The net decrease is attributable to the following:

Decrease in sports team playoff related revenues, primarily due to fewer playoff games		$	(4,003	)
Decrease in revenues from other live sporting events (see discussion below)			(3,657	)
Increase in sports team regular season ticket related revenue due primarily to higher average ticket prices			6,416
Other net increases, primarily related to an increase in rights fees charged to MSG Media partly offset by a decrease in suite revenues			518
		$	(726	)

The decrease in revenues from other live sporting events discussed above was primarily due to lower boxing ticket sales, mostly attributable to the absence of large scale boxing events, such as those Promoted in 2008, partly offset by an increase in revenues for college basketball in 2009.

Technical and operating expenses (excluding depreciation and amortization) for the year ended December 31, 2009 decreased $35,506 (11%) as compared to the prior year. The net decrease is attributable to the following:

Decrease in net provisions for certain team personnel transactions (including the impact of NBA luxury tax) (see discussion below)		$	(16,887	)
Decrease due to lower net provision for NBA luxury tax (excluding the impact of certain team personnel transactions described above) of $7,948 and lower net provision for NHL revenue sharing (excluding playoffs) of $3,512 (see discussion below)			(11,460	)
Decrease in expenses associated with other live sporting events (see discussion below)			(8,912	)
Decrease in sports team playoff related expenses, including playoff related NHL revenue sharing			(1,577	)
Increase in other team operating costs, including team personnel compensation, net of insurance recovery (see discussion below)			1,207
Increase in venue operating costs			1,088
Other net increases			1,035
		$	(35,506	)

Net provisions for certain team personnel transactions (including the impact of NBA luxury tax), NBA luxury tax (excluding the impact of certain team personnel transactions) and NHL revenue sharing (excluding playoffs) were as follows:

		Years Ended December 31,
		2009				2008
		Amount				Amount				Decreases
Net provisions for certain team personnel transactions (including the impact of NBA luxury tax)		$	8,040			$	24,927			$	(16,887	)
Net provisions for NBA luxury tax (excluding the impact of certain team personnel transactions) and NHL revenue sharing (excluding playoffs)			3,488				14,948				(11,460	)

Team personnel transactions for the year ended December 31, 2009 primarily reflect provisions recorded for player waivers and the costs associated with a player trade of $5,169 and $3,286, respectively. Team personnel transactions for the year ended December 31, 2008 primarily reflect provisions recorded for career-ending and season-ending player injuries of $20,952, which is net of anticipated insurance recoveries of $11,935, as well as player waivers of $3,226. The cost of these transactions are recorded when the transaction occurs, but payments owed are generally paid over the remaining contract terms.

The change in the net provisions for NBA luxury tax (excluding the impact of certain team personnel transactions) and NHL revenue sharing (excluding playoffs) for the year ended December 31, 2009 as compared to the prior year, as reflected in the table above, reflects a lower net provision for NBA luxury tax, based primarily on the Knicks’ estimated season-ending team salaries subject to the tax and a lower net provision for NHL revenue sharing expense, based primarily on estimates of the Rangers’ and league-wide season-ending revenues. See “Business Overview—MSG Sports—Expenses—Player Salaries and League Payments.”

The lower expenses associated with other live sporting events primarily reflect the absence of costs associated with one of the large scale boxing events Promoted in 2008.

The increase in other team operating costs during the year ended December 31, 2009, as compared to the prior year, is net of $4,838 in insurance recoveries related to a non season-ending player injury in 2009.

As a percentage of revenues, net, technical and operating expenses decreased 10% during the year ended December 31, 2009 as compared to the prior year.

Selling, general and administrative expenses for the year ended December 31, 2009 increased $20,013 (23%) as compared to the prior year. The net increase is attributable to the following:

Increase in severance-related costs, primarily attributable to a separation agreement with a team executive entered into in 2009		$	14,779
Increase in employee salaries and related benefits			4,345
Other net increases			889
		$	20,013

As a percentage of revenues, net, selling, general and administrative expenses increased 5% during the year ended December 31, 2009 as compared to the prior year.

Adjusted operating cash flow increased $12,924 (42%) for the year ended December 31, 2009 as compared to 2008. The increase was due primarily to lower operating expenses partly offset by the higher severance costs discussed above.

Comparison of Combined Year Ended December 31, 2008 Versus Year Ended December 31, 2007

Combined Results

Revenues, net for the year ended December 31, 2008 increased $40,776 (4%) as compared to revenues, net for the prior year. The net increase is attributable to the following:

Increase in MSG Media segment revenues, net		$	38,482
Decrease in MSG Entertainment segment revenues, net			(8,476	)
Increase in MSG Sports segment revenues, net			13,535
Inter-segment eliminations			(2,765	)
		$	40,776

Technical and operating expenses (excluding depreciation and amortization) for the year ended December 31, 2008 increased $89,796 (14%) as compared to 2007. The net increase is attributable to the following:

Increase in MSG Media segment expenses		$	26,634
Increase in MSG Entertainment segment expenses			22,515
Increase in MSG Sports segment expenses			43,156
Increase in other expenses			247
Inter-segment eliminations			(2,756	)
		$	89,796

As a percentage of revenues, net, technical and operating expenses increased 7% in 2008 as compared to 2007.

Selling, general and administrative expenses for the year ended December 31, 2008 increased $26,869 (11%) as compared to 2007. The net increase is attributable to the following:

Increase in MSG Media segment expenses		$	7,774
Increase in MSG Entertainment segment expenses			8,788
Increase in MSG Sports segment expenses			8,904
Increase in litigation expense and settlements not allocated to segments			7,911
Decrease in other expenses			(6,508	)
		$	26,869

The decrease in other expenses discussed above primarily reflects lower other professional fees.

As a percentage of revenues, net, selling, general and administrative expenses increased 2% in 2008 as compared to 2007.

Gain on curtailment of pension plans for the year ended December 31, 2007 amounted to $15,873. As of December 31, 2007, a Company-sponsored qualified defined benefit pension plan covering certain non-union employees and a Company-sponsored, non-qualified unfunded defined benefit pension plan covering certain employees who participate in the underlying qualified plan were amended to freeze all benefits earned through December 31, 2007 and eliminate the ability of participants to earn benefits for future service under these plans.

Depreciation and amortization for the year ended December 31, 2008 increased $4,008 (6%) as compared to 2007. The net increase resulted from higher depreciation of $5,137, which was primarily attributable to the acceleration of depreciation of certain components of The Garden due to its planned renovation, offset by lower amortization of intangible assets of $1,129 due primarily to certain intangible assets becoming fully amortized.

Adjusted operating cash flow for the year ended December 31, 2008 decreased $90,745 (60%) as compared to the prior year. The net decrease is attributable to the following:

Increase in adjusted operating cash flow of the MSG Media segment		$	3,709
Decrease in adjusted operating cash flow of the MSG Entertainment segment			(39,181	)
Decrease in adjusted operating cash flow of the MSG Sports segment			(37,741	)
Decrease in adjusted operating cash flow due to higher litigation expense not allocated to segments			(7,911	)
Gain on curtailment of pension plans recorded in 2007			(15,873	)
Other net increases			6,252
		$	(90,745	)

Interest income, net for the year ended December 31, 2008 decreased $9,688 (83%) as compared to 2007. The net decrease was primarily attributable to lower levels of interest income caused primarily by our use of cash to make non-interest bearing advances to a subsidiary of Cablevision of $130,000 in 2007 and an additional $60,000 in 2008.

Income tax benefit for the year ended December 31, 2008 of $11,387 differs from the income tax benefit derived from applying the federal statutory tax rate to the pretax loss due principally to state income taxes, a tax benefit of $1,555 resulting from nontaxable disability insurance proceeds offset by tax expense of $2,464 relating to nondeductible expenses, and a tax benefit of $5,769 resulting from a change in the estimated applicable corporate tax rate used to determine deferred tax assets and liabilities.

Income tax expense for the year ended December 31, 2007 of $45,031 differs from the income tax expense derived from applying the federal statutory tax rate to pretax income due principally to state income taxes, tax expense of $2,362 resulting from nondeductible disability insurance premiums, tax expense of $1,212 relating to nondeductible expenses, and tax expense of $4,385 resulting from a change in the estimated applicable corporate tax rate used to determine deferred tax assets and liabilities.

Business Segment Results

MSG Media

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues, net for the Company’s MSG Media segment.

		Years Ended December 31,																Increase
		2008								2007								(Decrease) in
						% of Net								% of Net				Operating
		Amount				Revenues				Amount				Revenues				Income
Revenues, net		$	430,004				100	%		$	391,522				100	%		$	38,482
Technical and operating expenses (excluding depreciation and amortization)			227,746				53				201,112				51				(26,634	)
Selling, general and administrative expenses			94,343				22				86,569				22				(7,774	)
Restructuring expense			—				—				221				—				221
Depreciation and amortization			22,451				5				21,067				5				(1,384	)
Operating income		$	85,464				20	%		$	82,553				21	%		$	2,911

The following is a reconciliation of operating income to adjusted operating cash flow:

		Years Ended December 31,								Increase
		2008				2007				(Decrease) in
		Amount				Amount				AOCF
Operating income		$	85,464			$	82,553			$	2,911
Share-based compensation			4,202				4,567				(365	)
Restructuring expense			—				221				(221	)
Depreciation and amortization			22,451				21,067				1,384
Adjusted operating cash flow		$	112,117			$	108,408			$	3,709

Revenues, net for the year ended December 31, 2008 increased $38,482 (10%) as compared to revenues, net for the prior year. The net increase is attributable to the following:

Increase in affiliation fee revenue (see discussion below)		$	43,667
Decrease in advertising revenue (see discussion below)			(7,471	)
Other net increases			2,286
		$	38,482

The increase in affiliation fee revenue was primarily attributable to increases in contractual affiliation rates and higher subscriber counts. Most of MSG Media’s affiliation agreements provide for rate increases effective January 1 of each year.

Advertising revenues at MSG Networks were lower in 2008 as compared to 2007 due primarily to lower per game advertising revenues in the fourth quarter of 2008 for the sports teams. This variance reflected the period’s economic environment. Advertising revenues at Fuse in 2008 as compared to 2007 were also lower primarily as a result of lower program ratings.

Technical and operating expenses (excluding depreciation and amortization) for the year ended December 31, 2008 increased $26,634 (13%) as compared to the prior year. The net increase is attributable to the following:

Increase in level of MSG Media rights fee expense due primarily to MSG Networks’ annual sports rights increases		$	10,901
Increase in levels of other production costs due primarily to Fuse (see discussion below)			15,733
		$	26,634

Fuse’s programming and other production costs in 2008 were higher than 2007 as a result of initiatives taken to develop programming in support of our effort to reposition the network as a national multi-platform music network.

As a percentage of revenues, net, technical and operating expenses increased 2% during the year ended December 31, 2008 as compared to the prior year.

Selling, general and administrative expenses for the year ended December 31, 2008 increased $7,774 (9%) as compared to the prior year. The net increase is attributable to the following:

Increase in marketing costs, primarily at Fuse (see discussion below)		$	10,960
Other net decreases, primarily lower rent			(3,186	)
		$	7,774

Marketing costs at Fuse in 2008 were higher than 2007 reflecting marketing initiatives taken to rebrand Fuse as a network primarily dedicated to music, as well as marketing support for the programming initiatives set forth above.

As a percentage of revenues, net, selling, general and administrative expenses remained flat during the year ended December 31, 2008 as compared to the prior year.

Depreciation and amortization for the year ended December 31, 2008 increased $1,384 (7%) as compared to the prior year resulting primarily from higher depreciation expense of $1,401 primarily due to fixed asset additions.

Adjusted operating cash flow increased $3,709 (3%) for the year ended December 31, 2008 as compared to 2007. The increase, as discussed above, was due primarily to an increase in affiliation fee revenue, substantially offset by higher operating costs.

MSG Entertainment

The table below sets forth, for the periods presented, certain historical financial information and the percentage that those items bear to revenues, net for the Company’s MSG Entertainment segment.

		Years Ended December 31,
		2008								2007								Increase in
						% of Net								% of Net				Operating
		Amount				Revenues				Amount				Revenues				Loss
Revenues, net		$	307,816				100	%		$	316,292				100	%		$	(8,476	)
Technical and operating expenses (excluding depreciation and amortization)			243,933				79				221,418				70				(22,515	)
Selling, general and administrative expenses			56,939				18				48,151				15				(8,788	)
Depreciation and amortization			9,407				3				8,718				3				(689	)
Operating income (loss)		$	(2,463	)			(1	)%		$	38,005				12	%		$	(40,468	)