MSG’s Vegas Sphere Hits $574M in 2023 Revenue Ahead of Launch
Jim Dolan’s Sphere Entertainment reported fourth quarter revenue Tuesday morning of $129.1 million, down 8% from the prior year. MSG Networks represented 99.5% of the revenue for the final quarter before the opening of Las Vegas’ Sphere. Total revenue for the year was $574 million, down 6%, with an operating loss of $273 million due to Sphere-related costs.
The company completed several transactions during the quarter that shifted its core businesses; moving forward, those will be the regional sports networks and new Vegas venue. In April, Madison Square Garden Entertainment was renamed Sphere Entertainment, and it spun off two-thirds of its traditional live entertainment business. The spun-off entity was renamed MSG Entertainment and includes the MSG arena, Radio City Music Hall, Beacon Theatre and Chicago Theatre. The company also sold its 67% interest in Tao Group Hospitality.
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“These transactions have supported our growth plans for Sphere and next-generation entertainment medium that we believe will disrupt the traditional venue model,” Dolan said in a conference call discussing the financial results.
The opening of Sphere—which is the world’s largest spherical building, at 516 feet wide by 366 feet high—has been widely anticipated since construction began in 2018, and the venue is on track to open in September. Sphere was originally slated to cost $1.2 billion; the company reaffirmed in its financial filings that it expects the final cost to be $2.3 billion.
“We didn’t anticipate spending $2.3 billion, we also didn’t anticipate COVID,” Dolan said. “The business is really built on the notion of changing the model that is currently used to operate entertainment venues.” Dolan said the venue should “theoretically” be used 365 days a year. He wants partners for future Sphere projects and expects more of a “franchise-type model.”
Rock band U2 is scheduled to play the first of its 25-show residency at the Sphere on Sept. 29. The following week will feature the public debut of The Sphere Experience, featuring the original immersive production, Postcard from Earth, directed by Darren Aronofsky. Formula 1 will have a “multi-day takeover” of the Sphere in mid-November for the inaugural Las Vegas Grand Prix.
Sphere Entertainment’s fourth quarter revenue drop was spurred by an 11.5% decline in cable subscribers, partially offset by higher affiliate fees. The company is expected to generate $1.1 billion in revenue for its next fiscal year with Sphere online and an operating profit of $57 million, according to estimates from S&P Global Market Intelligence.
In late June, MSG launched MSG+, its direct-to-consumer streaming offering. For $30 a month or $310 for a full year, fans can access all MSG-produced Knicks, Rangers, Islanders, Devils and Sabres games, plus 24/7 access to the company’s linear channel content ahead of the upcoming NBA and NHL seasons. There will be a $10 per game cost. It is only accessible to those who live in areas where MSG’s channels are available.
Sphere Entertainment’s stock was up 6% in early trading, with investors likely buoyed by the reiterated guidance on the final cost of the Sphere.
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