January 28, 2020
James L. Dolan
Chief Executive Officer
MSG Entertainment Spinco, Inc.
Two Pennsylvania Plaza
New York, NY 10121
Re: MSG Entertainment Spinco, Inc.
Amendment No. 1 to Draft Registration Statement on Form 10
Submitted on January 13, 2020
CIK No. 0001795250
Dear Mr. Dolan:
We have reviewed your amended 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.
Amendment No. 1 to Draft Registration Statement on Form 10
Exhibit 99.1
Legal Proceedings, page 58
1. We note your disclosure that the litigation relating to the compensation
package of James
L. Dolan was stayed until December 19, 2019. Please provide updated
disclosure relating
to this litigation.
Note 1. Description of Business, page F-9
2. We note your response to our prior comment 10 and your conclusion that
you have a
single operating segment. However, on page five of your response you
state that the
CODM, James Dolan, is responsible for the allocation of resources and
assessment of
James L. Dolan
FirstName LastNameJames L. Dolan
MSG Entertainment Spinco, Inc.
Comapany NameMSG Entertainment Spinco, Inc.
January 28, 2020
January 28, 2020 Page 2
Page 2
FirstName LastName
performance of MSG's operating segments, including all operating
segments within the
Entertainment reportable segment which will represent substantially
all of the Company's
operations upon separation. Please tell us to what "all operating
segments" refers and
whether the Entertainment reportable segment of MSG does, in fact,
consist of multiple
operating segments.
3. You state that the CODM will be solely responsible for determining how
resources will be
allocated across the enterprise. Please tell us how the CODM ensures
resources are
allocated to the various components in the most effective manner to
drive shareholder
value without the use of component-level data. Please also tell us
what information the
CODM uses to make resource allocation decisions.
4. Please describe in further detail the President and segment manager,
Andrew Lustgarten's,
role, including in allocating resources to and assessing the
performance of the components
of the Company, how his role in these tasks differs from the CODM's
role, and what
ability he has to make operating decisions.
5. You state the Company's organizational chart indicates that
component-level profit and
loss management will report directly to the President. Please tell us
whether these
managers currently meet with the President and whether the President
does and/or will
receive and review operating results from those component managers.
6. Please tell us the financial information the CODM reviews to prepare
for meetings with
the President and segment manager, the financial information discussed
in those meetings,
and who else attends those meetings.
7. We note the description of operating results regularly reviewed by the
CODM. You state
a weekly report "aggregates information prepared by each component."
Please clarify
whether a weekly report aggregates component information or whether it
includes only
aggregated information. You state the weekly reports do not include
"full financial
information" for components. Please tell us what information they
include.
8. Please also tell us whether the CODM regularly reviews results on a
basis other than
weekly and monthly, such as on a quarterly basis. If so, tell us what
information the
results include or are expected to include.
9. In your response to our prior comment 6, you state that a principal
objective of MD&A is
to provide a narrative explanation of financial statements that
enables investors to see the
company "through the eyes of management." We note your results of
operations
disclosure in MD&A analyzes changes in both revenues and direct
operating expenses by
categories even more granular than the components you identified on
page 6 of your
response. Please explain to us how the granular-level detail in MD&A
is "through the
eyes of management" while at the same time the CODM doesn't use
component-level
financial information.
10. Your analysis of whether discrete financial information is available
(ASC 280-10-50-1c)
on page seven appears to instead relate to the nature of operating
results regularly
James L. Dolan
MSG Entertainment Spinco, Inc.
January 28, 2020
Page 3
reviewed by the CODM. Please specifically address whether discrete
financial
information for your components is available.
Notes to Consolidated Financial Statements
Note 3. Revenue Recognition, page F-26
11. We note your response to our prior comment 11. With regard to
disaggregated revenue
disclosures, you state you selected "(e) timing of transfer of goods or
services" from the
examples of categories that might be appropriate in ASC 606-10-55-91
because a
significant portion of revenue is recognized over time. Note that ASC 606
does not limit
selecting only a single basis of disaggregation from paragraph 55-91. For
example,
paragraph 50-5 states an entity shall disaggregate revenue recognized
from contracts with
customers into categories that depict how the nature, amount, timing, and
uncertainty of
revenue and cash flows are affected by economic factors. We understand
that the timing
of cash flows between suite licenses (upfront collection), ticket sales
(upfront collection),
and entertainment dining and nightlife (point of sale collection) differ
from each other.
We also note that your response to our prior comment 10 includes a list
of business
activities from which you earn revenues (page seven) and that your MD&A
includes a list
of changes in similar (but not the same) revenue categories for which you
assess your
performance. For these reasons, we believe you should reassess your
evaluation of
disaggregation of revenue, which may include more than one type of
category to meet the
objective in paragraph 606-10-50-5 for disaggregating revenue. Paragraph
55-297
includes an example of disaggregation on the basis of several categories.
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,
FirstName LastNameJames L. Dolan
Division of
Corporation Finance
Comapany NameMSG Entertainment Spinco, Inc.
Office of Trade &
Services
January 28, 2020 Page 3
cc: Robert W. Downes, Esq.
FirstName LastName