December 23, 2019
James L. Dolan
Chief Executive Officer
MSG Entertainment Spinco, Inc.
Two Pennsylvania Plaza
New York, NY 10121
Re: MSG Entertainment Spinco, Inc.
Draft Registration Statement on Form 10
Submitted on December 3, 2019
CIK No. 0001795250
Dear Mr. Dolan:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form 10
Exhibit 99.1
Summary
Our Strategy, page 2
1. We note your disclosure here and in other sections of the filing that
MSG Sphere will
"deliver an entirely new guest experience." Please briefly describe how
this new venue
will provide an entirely new guest experience.
Key Challenges, page 5
2. Please revise this section to balance the summary disclosure by
providing additional detail
regarding each of the key challenges that may be material to the
business. Please discuss,
James L. Dolan
MSG Entertainment Spinco, Inc.
December 23, 2019
Page 2
for example, the projected costs associated with the MSG Sphere venues
and the potential
costs overruns and the challenges those projects present for the
business.
Questions and Answers about the Distribution, page 11
3. Please add a question and answer that briefly and clearly describes
what business and
assets will remain with MSG Sports and what types of business and
assets will remain
with the new MSG Entertainment company.
4. Please add a question and answer to discuss the reasons behind the
decision of the MSG
board of directors to pursue a revised plan for the separation of the
sports and
entertainment businesses.
Management Discussion and Analysis of Financial Condition and Results of
Operations
Proposed Distribution and Basis of Presentation, page 66
5. We note your disclosure in this section that completion of the
spin-off transactions
requires "certain league approvals." Please briefly describe what
league approvals are
required.
Combined Results of Operations, page 73
6. When you identify more than one factor underlying the changes in your
results please
quantify, to the extent practical, the impact of each material factor
identified. For example,
on page 76 you identify four factors as contributing to the increase
in selling general and
administrative expenses, however, none are quantified. We note similar
instances with
respect to your discussion, of earnings(loss) in equity method
investments and
miscellaneous expenses, net. Please refer to Item 303(a)(3) of
Regulation S-K and SEC
Release No. 34-48960 for further guidance.
Executive Compensation
MSG's Post-Termination Compensation, page 121
7. Please advise, and revise if applicable, whether any of your named
executive officers or
directors will receive payments under any of your agreements' change
of control
provisions triggered by this spin-off transaction.
Certain Relationships and Related Party Transactions, page 139
8. We note a general description of a number of agreements with related
parties on pages
139-142. To the extent possible, please disclose the material terms and
quantify the
FirstName LastNameJames L. Dolan
amounts payable to MSG and/or you under each of these agreements. In
addition, if
Comapany NameMSG revise your MD&A section to include quantified disclosure of
the
material, please Entertainment Spinco, Inc.
December 23, 2019 Page commitments you will have to MSG in connection with the
separation.
ongoing financial 2
FirstName LastName
James L. Dolan
FirstName LastNameJames L. Dolan
MSG Entertainment Spinco, Inc.
December NameMSG Entertainment Spinco, Inc.
Comapany23, 2019
Page 3
December 23, 2019 Page 3
FirstName LastName
Security Ownership of Certain Beneficial Owners, page 147
9. Please include the information you have omitted from this section or
tell us why you are
unable to do so.
Notes to Combined Financial Statements
Note 1. Description of Business, page F-9
10. Please tell us, and revise to disclose, the factors used to identify
your reportable segments,
including the basis of organization (for example, whether management
has chosen to
organize the company around differences in products and services,
geographic areas, or a
combination of factors and whether operating segments have been
aggregated). Please
refer to ASC 280-10-50-21. As part of your response, please also tell
us how you
identified your operating segments based on the criteria provided in
ASC 280-10-50-1
through 50-9 and provide us with a list of these operating segments.
To the extent you
have more than one operating segment, please tell us how you
considered the aggregation
criteria in ASC 280-10-50-11 and the quantitative thresholds in ASC
280-10-50-12 in
determining your reportable segments. Please be detailed in your
response.
Note 3. Revenue Recognition, page F-26
11. We note your disclosure of disaggregation of revenue on page F-29 is
based on the timing
of transfer of goods or services to customers. We also note your
disclosure of revenues by
component on page F-9. Please tell us what the term component refers
to. Please provide
us with your analysis of the guidance in ASC 606-10-55-89 through
55-91 when selecting
the categories to use to disaggregate revenue. In this regard, we note
that in your results
of operations discussion in MD&A you quantify changes in major revenue
categories such
as revenue from concerts, sporting events, Christmas Spectacular,
entertainment, dining,
and nightlife offerings, etc. Please consider whether providing
disaggregated revenue on
that or a similar basis might provide better context for the factors
quantified in MD&A
and reduce confusion between the revenue disclosures on pages F-9 and
F-29, in which
certain revenue types are categorized differently in the two
disclosures.
12. We note your disclosure on page F-27 that performance obligations with
respect to event-
related revenues from the sale of tickets, venue license fees from
third-party promoters,
sponsorships, concessions and merchandise are satisfied at the point
of sale or as the
related event occurs. Please revise this disclosure to clarify which
performance
obligations are satisfied at the point of sale and which are satisfied
as the event occurs.
13. We note your disclosure on page F-27 that management fee revenues
which are earned in
accordance with specific venue management agreements are recorded over
the period in
which the management services are performed. Please clarify whether
these revenues are
recognized ratably over the period or on some other basis.
James L. Dolan
FirstName LastNameJames L. Dolan
MSG Entertainment Spinco, Inc.
Comapany23, 2019
December NameMSG Entertainment Spinco, Inc.
Page 4
December 23, 2019 Page 4
FirstName LastName
You may contact Scott Stringer at (202) 551-3272 or Lyn Shenk,
Accounting Branch
Chief, at (202) 551-3380 if you have questions regarding comments on the
financial statements
and related matters. Please contact Tonya K. Aldave at (202) 551-3601 or Justin
Dobbie, Legal
Branch Chief, at (202) 551-3469 with any other questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services
cc: Robert W. Downes, Esq.