UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2011

OR

For the transition period fromto

Commission File Number: 1-34434

The Madison Square Garden Inc.Company

(Exact name of registrant as specified in its charter)

Two Penn Plaza

New York, NY 10121

(212) 465-6000

(Address, including zip code, and telephone number, including area code, of

registrant’s principal executive offices)

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 was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes      ¨x            No      x¨

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes      ¨              No      ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes      ¨             No      x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock outstanding, as the latest practicable date.

THE MADISON SQUARE GARDEN INC.COMPANY

INDEX TO FORM 10-Q

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

THE MADISON SQUARE GARDEN INC.COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN INC.COMPANY

CONSOLIDATED BALANCE SHEETS

See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN INC.COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

See accompanying notes to consolidated financial statements.

THE MADISON SQUARE GARDEN INC.COMPANY

CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

See accompanying notes to consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(InAll amounts included in the following Notes to Consolidated Financial Statements are presented in thousands, except per share amounts)data or as otherwise noted.

(Unaudited)

Note 1. Description of Business

The Madison Square Garden Inc.Company (together with its subsidiaries, the “Company” or “Madison Square Garden”), formerly named 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 the outstanding common stock of The Madison Square Garden Inc.Company 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,MSG Holdings, L.P. (“MSG L.P.”)., formerly named Madison Square Garden, L.P. MSG L.P. was the indirect, wholly-owned subsidiary of Cablevision through which Cablevision held the Company’s businesses until the Distribution occurred on February 9, 2010. Each holder of record of Cablevision NY Group Class A Common Stock as of close of business on January 25, 2010 (the “Record Date”) received one share of Madison Square Garden, Inc.the Company’s Class A Common Stock for every four shares of Cablevision NY Group Class A Common Stock held. Each holder of record of Cablevision NY Group Class B Common Stock as of the Record Date received one share of Madison Square Garden, Inc.the Company’s Class B Common Stock for every four shares of Cablevision NY Group Class B Common Stock held. MSG L.P. is now a wholly-owned subsidiary of The Madison Square Garden Inc.Company through which the Company conducts substantially all of its business activities.

Madison Square Garden is a fully-integrated sports, entertainment and media business. The Company classifies its business interests intois comprised of three reportable segments: MSG Media, MSG Entertainment, and MSG Sports. MSG Media produces, develops and acquires content for multiple distribution platforms, including content originating from the Company’s venues. The MSG Media segment includes the MSG Networks (MSG network, MSG Plus, MSG HD and MSG Plus HD), regional sports networks, and the Fuse Networks (Fuse and Fuse HD), a national television network dedicated to music. MSG Entertainment creates, produces and/or presents a variety of live productions, including theRadio City Christmas Spectacular, featuring the Radio City Rockettes and shows that the Company co-produces with(the “Rockettes”). We have also co-produced or presented events by Cirque du Soleil, such asincludingWintuk. MSG Entertainment also presents or hosts other live entertainment events such as concerts, family shows and special events in the Company’s diverse collection of venues. MSG Sports owns and operates sports franchises, including the New York Knicks (“Knicks”(the “Knicks”) of the National Basketball Association (“NBA”(the “NBA”), the New York Rangers (“Rangers”(the “Rangers”) of the National Hockey League (“NHL”(the “NHL”), the New York Liberty (the “Liberty”) of the Women’s National Basketball Association (the “WNBA”), and the Hartford Wolf PackConnecticut Whale of the American Hockey League (the “AHL”), which is the primary player development team for the Rangers. MSG Sports also features other sports properties, including the presentation of a wide variety of premier live sporting events.events, including professional boxing, college basketball, track and field and tennis.

The Company conducts a significant portion of its operations at venues that areit either ownedowns or operated by itoperates under long-term leases. The Company owns Thethe Madison Square Garden Arena (“The Garden”) and The Theater at Madison Square Garden in New York City, as well as The Chicago Theatre in Chicago. It leases Radio City Music Hall and the Beacon Theatre in New York City. The Company also has a booking agreement with respect to the Wang Theatre in Boston.

Note 2. Accounting Policies

Unaudited Interim Financial Statements

The accompanying unauditedinterim consolidated quarterly financial statements have been prepared on a basis consistentin accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and pursuantthe instructions to the rulesRule 10-01 of the U.S. Securities and Exchange Commission (“SEC”)Regulation S-X, and should be read in conjunction with the audited combinedconsolidated financial statements and related notes thereto includedof the Company filed in the Company’s 2009its 2010 Annual Report on Form 10-K filed on March 18, 2010 with the SEC (the “2009 Annual Report on Form 10-K”).10-K. The financial statements as of September 30, 2010March 31, 2011 and for the three and nine months ended September 30,March 31, 2011 and 2010 and 2009 presented in this Quarterly Report on Form 10-Q are unaudited; however, in the opinion of management such financial statements reflect all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results that might be expected for future interim periods or for the full year. The dependence of our revenues on our professional sports teams and theRadio City Christmas shows Spectaculargenerally make our business seasonal with a disproportionate share of our revenues and operating income being derived in the fourth quarter of each calendar year.

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of The Madison Square Garden Inc.Company and its subsidiaries. For periods prior to the Distribution date, the financial statements were prepared on a combined basis and reflect the assets, liabilities, revenues and expenses of the Company as if it were a separate entity for those periods. However, for all periods prior to the Distribution, deferred tax assets and liabilities have been measured using the estimated applicable corporate tax rates historically used by Cablevision (refer to Note 16). All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of the accompanying interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions thatabout future events. These estimates and the underlying assumptions affect the reported amounts of assets and liabilities at the date of the financial statementsreported, disclosures about contingent assets and theliabilities, and reported amounts of revenues and expenses duringexpenses. Such estimates include the reporting periods presented. Estimates are based on past experiencevaluation of accounts receivable, goodwill, intangible assets, other long-lived assets, tax accruals and other considerations reasonable under the circumstances. Actual results could differ from those estimates.liabilities. In

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except per share amounts)

(Unaudited)(Continued)

Reclassifications

Certain prior period amounts have been reclassified to conform toaddition, estimates are used in revenue recognition, income tax expense, performance-based compensation, depreciation and amortization, and the current year presentation.

Recently Adopted Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board issued Accounting Standards Update No. 2009-13,Multiple-Deliverable Revenue Arrangements (“ASU No. 2009-13”), which provides amendments that (a) update the criteriaallowance for separating consideration in multiple-deliverable arrangements, (b) establish a selling price hierarchy for determining the selling pricelosses. Management believes its use of a deliverable, and (c) replace the term “fair value”estimates in the revenue allocation guidance with the term “selling price”interim consolidated financial statements to clarify that the allocation of revenue is basedbe reasonable.

Management evaluates its estimates on entity-specific assumptions. ASU No. 2009-13 eliminates the residual method of allocating arrangement consideration to deliverables, requires the use of the relative selling price method and requires that a vendor determines its best estimate of selling price in a manner consistent with that used to determine the price to sell the deliverable on a stand-alone basis. ASU No. 2009-13 requires a vendor to significantly expand the disclosures related to multiple-deliverable revenue arrangements with the objective to provide information about the significant judgments made and changes to those judgments and how the application of the relative selling-price method affects the timing or amount of revenue recognition. ASU No. 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 with early adoption being permitted.

The Company has various types of multiple-deliverable arrangements, including multi-year sponsorship agreements. The deliverables included in each sponsorship agreement vary and may include suite licenses, event tickets, and various media and advertising benefits, which include items such as, but not limited to, signage in The Gardenan ongoing basis using historical experience and other MSG venues. The timing of revenue recognition for each deliverable is dependent upon meetingfactors, including the revenue recognition criteria forgeneral economic environment and actions it may take in the respective deliverable.

The Company allocates revenue to all deliverables in an arrangement based on their relative selling price. The new accounting principles establish a hierarchy to determine the selling price to be used for allocating revenue to the deliverables as follows: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”) and (iii) best estimate of selling price (“BESP”). VSOE is generally limited to the price that a vendor chargesfuture. We adjust such estimates when it sells the same or similar products or services on a standalone basis. TPE is determined based on the prices charged by competitors of the Company for a similar deliverable when sold separately. When the Company is unable to establish VSOE for deliverables, the Company determines the estimated selling price using BESP.

For many deliverables in an arrangement, such as game tickets and advertising assets, the Company has VSOE of selling price as it typically sells the same or similar deliverables regularly on a standalone basis. The Company’s process for determining its estimated selling prices for deliverables without VSOE or TPE involves management’s judgment. The Company’s process considers multiple factors that may vary depending upon the unique facts and circumstances related to each deliverable. Keydictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on our best judgment at a point in time and as such these estimates may ultimately differ from actual results. Changes in estimates resulting from weakness in the economic environment or other factors considered by the Companybeyond our control could be material and would be reflected in developing BESP for deliverables include, but are not limited to, prices charged for similar deliverables, the Company’s ongoing pricing strategy and policies, consideration of pricing of similar deliverables sold in other multiple-deliverable agreements, and other factors.

The Company retrospectively adopted ASU No. 2009-13 effective as of January 1, 2009 as the standard more appropriately reflects the economics of the Company’s multiple-deliverable agreements. The adoption of ASU 2009-13 had an immaterial impact on previously reported revenues and operating income and therefore, no adjustments to prior interim or annual financial statements were made.in future periods.

Note 3. NetComputation of Earnings per Common Share

Basic net earnings per common share (“EPS”) is based upon net income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted EPS for periods after the Distribution date, reflects the effect of the assumed exercise of stock options and vesting of restricted stock,shares, restricted stock units and shares restricted on the same basis as underlying Cablevision restricted shares (refer to(see Note 13)12) only in the periods in which such effect would have been dilutive.

Common shares assumed to be outstanding during the three and nine month periods ended September 30, 2009 totaled 73,309, representing the shares issued to Cablevision shareholders on the Distribution date for purposes of calculating EPS.

The following table presents a reconciliation of weighted-average shares used in the calculation of basic and diluted EPS.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except per share amounts)

(Unaudited)

The Company has excluded 29 and 42 shares from the calculation of diluted EPS for the three and nine months ended September 30,March 31, 2011 and 2010 does not include 4 and 40 shares, respectively, because the effect of their inclusion would have been anti-dilutive.

Note 4. Comprehensive Income

The following table presents comprehensive income for the three and nine months ended September 30, 2010 and 2009.

Note 5. Impairment Charges

During the second quarter of 2010, the Company evaluated whether or not an impairment of the deferred costs associated withBanana Shpeel, a show that the Company co-produced with Cirque du Soleil, had occurred as a result of its financial performance.

In determining whether the deferred costs were recoverable, the Company estimated the undiscounted future cash flows over the expected term of the show and compared the undiscounted cash flows to the asset’s carrying value. As a result, the Company concluded the costs would not be recoverable. The Company then determined the fair value of the asset by discounting the estimated future cash flows. The impairment charge was the difference between the carrying value of the asset and its fair value.

As such, during the second quarter of 2010, the Company’s MSG Entertainment reportable segment recorded a pre-tax impairment charge of $9,945 for the unamortized deferred costs remaining on the Company’s consolidated financial statements at the end of the show’s run at the Beacon Theatre.

This pre-tax impairment charge is reflected in direct operating expenses in the accompanying consolidated statement of operations for the nine months ended September 30, 2010.

Note 6.4. Team Personnel Transactions and Insurance Recoveries

Direct operating and selling, general and administrative expenses in the accompanying consolidated statements of operations include net provisions for transactions relating to players on our sports teams for season-ending injuries, waivers and trades and termination costs of other team personnel (“Team Personnel Transactions”). The Company’s MSG Sports segment recognizes the estimated ultimate costcosts of these events, including the Company’s estimated future obligation for luxury tax attributable to Knicks player transactions, in the period in which they occur, net of anticipated insurance recoveries. Amounts due to such players are generally paid over their remaining contract terms. There were no Team Personnel Transactions during the three months ended September 30, 2010 and 2009. For the nine months ended September 30, 2010 and 2009, provisionsProvisions for Team Personnel Transactions amounted to $6,313$9,675 and $23,486,$6,223 for the three months ended March 31, 2011 and 2010, respectively, which were net of insurance recoveries of $820$0 and $426,$820, respectively.

In addition, during the ninethree months ended September 30,March 31, 2011 and 2010, and 2009, the Company recorded $7,921$0 and $4,838,$7,320, respectively, in insurance recoveries related to non season-ending player injuries.

The accompanying consolidated balance sheets as of September 30, 2010 and December 31, 2009 include $0 and $5,929, respectively, in other current assets, for these team personnel-related insurance recoveries.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except per share amounts)

(Unaudited)

Note 7.5. Investments

In June 2008, theThe Company purchasedhad an investment of $37,632 in which it held a minoritynon-controlling ownership interest in a company for $37,632,Front Line Management Group, Inc. (“Front Line”), which iswas accounted for under the cost method.method and reported as a component of other assets in the accompanying consolidated balance sheet as of December 31, 2010. During both of the nine month periodsthree months ended September 30,March 31, 2011 and 2010, and 2009, the Company received a$2,186 and $2,000, dividendrespectively, in dividends representing the distribution of earnings from this cost method investment which was recognized in miscellaneous income in the accompanying consolidated statements of operations.

On February 4, 2011, the Company exchanged its ownership interest in Front Line, valued at approximately $41,000, for approximately 3,913 shares, or 2.16%, of Live Nation Entertainment, Inc. (“Live Nation”) common stock as of that date. As a result of September 30, 2010 and Decemberthis exchange the Company recorded a pretax gain of $3,375 during the three months ended March 31, 2009, this2011, which was recognized in miscellaneous income in the accompanying consolidated statement of operations. This investment is recognized as a component of other assetsreported in the accompanying consolidated balance sheets. It was not practicable forsheet as of March 31, 2011 in other assets, and is classified as available-for-sale. Investments in

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

available-for-sale securities are carried at fair market value with the Company to estimateunrealized gains and losses, net of tax, included in the determination of comprehensive income and reported in stockholders’ equity. The fair value of this minority ownership interest.the investment in Live Nation common stock as of March 31, 2011 was $39,128.

Note 8.6. Goodwill and Intangible Assets

The carrying amount of goodwill, by reportable segment, as of September 30, 2010March 31, 2011 and December 31, 20092010 is as follows:

Based on the Company’s annual impairment test duringDuring the first quarter of 2010,2011, the Company’s reporting units had significant safety margins, representing the excess of the estimated fair value of each reporting unit lessCompany performed its respective carrying value (including goodwill allocated to each respective reporting unit). In order to evaluate the sensitivity of the estimated fair value calculations of the Company’s reporting units on the annual impairment calculation fortest of goodwill, the Company applied a hypothetical 30% decrease to the estimated fair valueand there was no impairment of each reporting unit. This hypothetical decrease of 30% would have no impact on the goodwill impairment analysisidentified for any of the Company’s reporting units.its reportable segments.

The Company’s intangible assets are as follows:

During the first quarter of 2011, the Company performed its annual impairment test of identifiable indefinite-lived intangible assets, and there was no impairment identified.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except per share amounts)

(Unaudited)(Continued)

Based on the Company’s annual impairment test during the first quarter of 2010, the Company’s Radio City related trademarks and sports franchise identifiable indefinite-lived intangible assets had significant safety margins, representing the excess of each identifiable indefinite-lived intangible asset’s estimated fair value less its respective carrying value. In order to evaluate the sensitivity of the fair value calculations of all the Company’s identifiable indefinite-lived intangibles, the Company applied hypothetical 15%, 20% and 30% decreases to the estimated fair value of each of the Company’s identifiable indefinite-lived intangibles. These hypothetical 15%, 20% and 30% decreases in estimated fair value would not have resulted in an impairment of any of our identifiable indefinite-lived intangibles other than The Chicago Theatre related trademarks, which have a carrying value of $8,000. The hypothetical fair value decline would have resulted in impairment charges against The Chicago Theatre related trademarks of approximately $95, $560 and $1,490 at 15%, 20% and 30%, respectively.

Amortization expense was $4,305 and $4,597,$4,528 for the three months ended September 30,March 31, 2011 and 2010, and 2009, respectively. Amortization expense was $13,320 and $14,952 for the nine months ended September 30, 2010 and 2009, respectively. The Company expects its aggregate annual amortization expense for existing intangible assets subject to amortization for each year from 20102011 through 20142015 to be as follows:

Note 9. Commitments7. Property and Contingencies

CommitmentsEquipment

As more fully described in Notes 7of March 31, 2011 and 8December 31, 2010, property and equipment (including equipment under capital leases) consisted of the audited combined financial statements offollowing assets:

Depreciable and amortizable assets are depreciated or amortized on a straight-line basis over their estimated useful lives.

Depreciation and amortization expense on property and equipment (including equipment under capital leases) amounted to $16,865 and $10,533 for the Company included in the 2009 Annual Report on Form 10-K, the Company’s commitments primarily consist of long-term agreements for exclusive broadcast rights for certain live sporting events, obligations under employment agreements thatthree months ended March 31, 2011 and 2010, respectively.

Project-to-date, the Company has with its professional sports teams’ personnel, long-term noncancelable operating lease agreements for entertainment venues and office and storage space, and minimum purchase requirements. These arrangements result from the Company’s normal course of business and represent obligations that may be payable over several years.

On July 8, 2010,incurred approximately $222,000 in connectionconstruction costs associated with the comprehensive transformation of The Garden into a state-of-the-art arena (the “Transformation”), the Company entered into a that are primarily recorded in construction management agreement (the “Construction Agreement”) with Turner Construction Company (“Turner”). Under the Construction Agreement, the Company has engaged Turnerin progress. As of March 31, 2011, approximately $23,000 of property and equipment related to act as construction manager for the Transformation with responsibilityhave been placed in service. Depreciation is being accelerated for the orderly and expeditious performanceThe Garden assets that are planned to be removed as a result of the construction work associated withTransformation.

As of March 31, 2011 and December 31, 2010, the Transformation, including the direct performancegross amount of construction work, the engagementequipment and supervision of, and responsibility for, subcontractors and the achievement of specific construction-related milestones in accordance with the timetable prescribed for the Transformation. For more information on the Construction Agreement, refer to the Company’s filing on Form 8-K filed with the SEC on July 9, 2010.

Legal Matters

In March 2008, a lawsuit was filedrelated accumulated depreciation recorded under capital leases included 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 alcohol at several different establishments prior to the accident, allegedly including at an event at The Garden. The accident resulted in the death of two individuals. 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.table above are as follows:

In addition to the matter 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 financial position or liquidity of the Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except per share amounts)

(Unaudited)(Continued)

Note 10. Debt

Total debtThe Company has recorded asset retirement obligations primarily related to the estimated cost associated with the removal of assets as a result of the Company consistsTransformation. The change in the carrying amount of asset retirement obligations for the three months ended March 31, 2011 is as follows:

As of March 31, 2011, $32,972 of the following:

On January 28, 2010, MSG L.P. and certain of its subsidiaries entered into a credit agreement with a syndicate of lenders providing for a new senior secured revolving credit facility of up to $375,000 with a term of five years (the “Revolving Credit Facility”). The proceeds of borrowings under the Revolving Credit Facility are available for working capital and capital expenditures, including but not limited to the Transformation, and for general corporate purposes. All borrowings under the Revolving Credit Facility are subject to the satisfaction of customary conditions, including covenant compliance, absence of a default and accuracy of representations and warranties. As of September 30, 2010, there was $3,657 in letters of credit issued under the Revolving Credit Facility. The Company’s available borrowing capacity under the Revolving Credit Facility as of September 30, 2010 remained in excess of $370,000.

The Revolving Credit Facility requires MSG L.P. to comply with the following financial covenants: (i) a maximum total secured leverage ratio of 3.50:1.00; and (ii) a maximum total leverage ratio of 6.00:1.00. In addition, there is a minimum interest coverage ratio of 2.50:1.00 for Madison Square Garden, Inc. As of September 30, 2010, the Company wasremaining balance recorded in compliance with the financial covenantsother liabilities, in the Revolving Credit Facility.accompanying consolidated balance sheet.

In connection with the entry into this borrowing facility, the Company incurred deferred financing costs of $10,900, which are being amortized to interest expense over the five-year term of the Revolving Credit Facility.

Note 11.8. Commitments and Contingencies

Commitments

As more fully described in Notes 10 and 11 to the consolidated financial statements of the Company included in the 2010 Annual Report on Form 10-K, the Company’s commitments primarily consist of long-term agreements for exclusive broadcast rights for certain live sporting events, obligations under employment agreements that the Company has with its professional sports teams’ personnel, long-term noncancelable operating lease agreements for entertainment venues and office and storage space, and minimum purchase requirements. These arrangements result from the Company’s normal course of business and represent obligations that may be payable over several years.

Legal Matters

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 an event at The Garden. 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. On April 13, 2011, the claims against the Company were resolved directly by our insurers and dismissed with prejudice, without any payment by the Company to the plaintiffs.

In addition to the matter 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.

Note 9. Debt

Total debt of the Company consists of the following:

On January 28, 2010, MSG L.P. and certain of its subsidiaries entered into a credit agreement with a syndicate of lenders providing for a new senior secured revolving credit facility of up to $375,000 with a term of five years (the “Revolving Credit Facility”). The proceeds of borrowings under the Revolving Credit Facility are available for working capital and capital expenditures, including but not limited to the Transformation, and for general corporate purposes. All borrowings under the Revolving Credit Facility are subject to the satisfaction of customary conditions, including covenant compliance, absence of a default and accuracy of representations and warranties. As of March 31, 2011, there was $6,900 in letters of credit issued under the Revolving Credit Facility. Available borrowing capacity under the Revolving Credit Facility as of March 31, 2011 was $368,100.

The Revolving Credit Facility requires MSG L.P. to comply with the following financial covenants: (i) a maximum total secured leverage ratio of 3.50:1.00 and (ii) a maximum total leverage ratio of 6.00:1.00. In addition, there is a minimum interest coverage

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Continued)

ratio of 2.50:1.00 for the Company. As of March 31, 2011, the Company was in compliance with the financial covenants in the Revolving Credit Facility.

In connection with the establishment of this borrowing facility, the Company incurred deferred financing costs of $10,900, which are being amortized to interest expense over the five-year term of the Revolving Credit Facility.

Note 10. Fair Value Measurements

The fair value hierarchy, as outlined in the guidance under Accounting Standards Codification Topic 820, is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:

The following table presents for each of these hierarchy levels, the Company’s financial assets that are measured at fair value on a recurring basis at September 30, 2010 and December 31, 2009:basis:

The Company’s cash equivalents are primarily invested in moneyMoney market fundsaccounts and time deposits

Money market accounts and time deposits are classified within Level 1 of the fair value hierarchy as they are valued using observable inputs that reflect quoted prices for identical assets in active markets. The carrying amount of the Company’s cash equivalentsmoney market accounts and time deposits approximates fair value due to their short-term maturities.

Note 12. Pension and Other Postretirement Benefit PlansAvailable-for-sale securities (in other assets)

The Company sponsors a non-contributory qualified defined benefit pension plan covering its non-union employees hired prior to Januaryavailable-for-sale securities category includes available-for-sale marketable equity securities, whose fair value is determined using quoted market prices. Such items are classified in Level 1 2001 (the “Retirement Plan”). Benefits payable to retirees under the Retirement Plan are based upon years of service and participants’ compensation. The Company also sponsors an unfunded, non-qualified defined benefit pension plan for the benefit of certain employees who participate in the underlying qualified plan (the “Excess Plan”). This plan provides that, upon retirement, a participant will receive a benefit based on a formula which reflects the participant’s years of service and compensation. As of December 31, 2007, both the Retirement Plan and Excess 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except per share amounts)

(Unaudited)

In addition, the Company sponsors two non-contributory qualified defined benefit pension plans covering certain of its union employees (“Union Plans”). Benefits payable to retirees under the Union Plans are based upon years of service and, for one of the plans, participants’ compensation.

Effective January 1, 2010, employees of the Company ceased participation in the Cablevision Cash Balance Pension Plan and Cablevision Excess Cash Balance Plan (the “Cablevision Cash Balance Plans”) and began participation in the Company-sponsored MSG Cash Balance Pension Plan and MSG Excess Cash Balance Plan, an unfunded non-contributory, non-qualified excess cash balance plan (collectively, the “MSG Cash Balance Plans”). Also effective January 1, 2010, the Company assumed the liability to pay benefits to current and former employees of the Company who had previously participated in the Cablevision Cash Balance Plans. The estimates of such liabilities assumed under the MSG Cash Balance Pension Plan and MSG Excess Cash Balance Plan as of January 1, 2010 were $3,187 and $2,564, respectively, and are reflected in the accompanying consolidated balance sheet as of September 30, 2010.

The Retirement Plan, Excess Plan, Union Plans, and MSG Cash Balance Plans are collectively referred to as “Pension Plans.”

The Company also sponsors a contributory welfare plan which provides certain postretirement healthcare benefits to certain employees hired prior to January 1, 2001 and their dependents that are eligible for early or normal retirement under the Retirement Plan, as well as certain union employees (“Postretirement Plan”)(See Note 5).

Components of net periodic benefit cost for the Company’s Pension Plans and Postretirement Plan for the three and nine months ended September 30, 2010 and 2009 are as follows: