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Sphere Entertainment Co., the company behind an expensive, state-of-the-art venue opening this fall in Las Vegas, is selling about a quarter of its stake in MSG Entertainment — 5.25 million shares of Class A common stock — in a secondary offering, the company announced Wednesday. That amount could grow by 787,500 shares if the offering’s […]
The price tag on opening the much-anticipated Sphere arena in Las Vegas is now at a whopping $2.3 billion after the company added an additional $125 million recently, according to documents filed with the SEC on Wednesday (May 10).
That’s more than $1 billion increase from the original projection of $1.2 billion when the Sphere was first announced in 2018, although industry experts say the more realistic estimate came the following year when architects from architecture firm AECON estimated the actual cost of the project would likely be $1.7 billion.
The project’s price has continued to rise since breaking ground in 2021 due to negative effects on the construction business caused by the coronavirus pandemic and the the one-of-a-kind entertainment complex’s unusual nature and design. Company officials cited the “overall complexity of the project” for the current increase while noting they had made “significant progress,” including completing the “LED installation on the Exosphere earlier in the third quarter” that will allow the venue to make dramatic design and appearance changes at the push of a button. Company officials have also made significant progress building out “the venue’s interior spaces, including the suites and hospitality areas,” the filing states.
U2 will open the venue on Sept. 29 with a five-week, 17-show run that has already generated hundreds of millions of dollars in sales with tickets averaging between $1,200 to $1,500 apiece.
On March 30, Madison Square Garden Entertainment finalized plans to spin off its live entertainment business, and launch a new company called Sphere Entertainment Co. that included the Sphere venue, as well as its MSG’s sports television network MSG Networks and Tao Group Hospitality. Shortly after, the company sold its majority interest in Tao Group to Mohari Hospitality for about $300 million.
As of Tuesday, the Sphere Entertainment Co. had over $230 million in cash available, according to the SEC filing, thanks in part to the Tao Group sale, as well as $65 million in funds in a delayed draw term loan facility with Madison Square Garden Entertainment Corp. The recently spun-off company reported revenues of $363.3 million for its first quarter as Sphere Entertainment Company — a 3% increase of $10.8 million as compared to the same business sectors in prior year quarter. The company reported a 1.1% decrease in operating loss to $70.3 million and a 2.1% increase in adjusted operating income to $19.4 million.
LONDON — Madison Square Garden’s plan for a “next generation” 21,500-capacity concert venue in London won another key endorsement this week when a planning committee approved the development, despite strong objections from residents and rival live events company AEG.
On Tuesday, the London Legacy Development Corporation (LLDC) granted MSG a 25-year advertising license subject to a five-year review. Now, London Mayor Sadiq Khan needs to approve the project — called MSG Sphere London — before work can begin. In rare instances, government ministers can also intervene and suspend planning applications.
New York-based Madison Square Garden Entertainment (MSG) first submitted plans for the venue in March of 2019. Since then, the company has encountered sustained opposition from councilors and residents who are concerned it will blight the area with noise and light pollution.
MSG is proposing to build the arena on a five-acre plot of land in Stratford, East London, adjacent to the Olympic Park and would be located just five miles away from the 20,000-capacity The O2 arena, the U.K.’s top grossing venue, which is operated by AEG.
The MSG Sphere in Las Vegas, under construction.
Courtesy Photo
The design of the MSG Sphere London mirrors the spherical crystal ball design of the MSG Sphere at The Venetian in Las Vegas — due to open later this year at a cost of $1.8 billion — and measures 90 meters (295 feet) tall by 120 meters (394 feet) wide. Its exterior will be covered in a programmable skin of more than one million LED lights, which will primarily be used for showing videos and advertising.
The LLDC had provisionally approved the venue last March, but the committee still needed to sign off on several aspects of the planning process, including MSG’s strategy for managing the Sphere’s controversial advertising display.
The proposed arena still doesn’t have a price tag, and MSG said in its most-recent quarterly earnings, filed in November, that there is no “definitive timeline” for its construction.
Opponents of the venue are calling on Khan to block the development. AEG says it was “dismayed” by the committee’s decision to give MSG Sphere London the go ahead.
“We call on the Mayor of London to uphold his election promise to do what’s best for Londoners, including the residents of [the London Borough of] Newham who are having this huge development forced on them, by directing refusal of the planning application,” AEG says in a statement.
AEG says MSG Sphere London’s LED illuminated exterior “was conceived for the heart of Las Vegas” and is “at a wholly unprecedented scale for London and totally out of keeping with the surrounding area.”
Campaign group StopMSGSphere, who spoke at Tuesday’s meeting, and several local councilors have urged the Khan to quash the development, which would be MSG’s first venue outside of the United States.
Following the ruling, a spokesperson for MSG — whose portfolio includes New York’s Madison Square Garden, Radio City Music Hall and the Forum in California — said the company ”remains committed to bringing MSG Sphere to London” and promised the venue would create “thousands of jobs and [generate] billions of pounds for the local, London and U.K. economy.”
MSG says it will provide blackout blinds to homes located within 150 meters (492 feet) of the new London arena and will run a telephone line for residents to register any complaints.
Should it get the go ahead, MSG Sphere London will be one of the U.K.’s biggest indoor concert venues with a scalable capacity of up to 17,500 seated, or 21,500 with a mixture of seated and standing. That exceeds the U.K.’s two biggest existing arenas, London’s The O2, which has a maximum capacity of 20,000, and Manchester’s AO Arena, which holds up to 21,000 people.
Construction is currently underway in Manchester on what will be the U.K.’s biggest indoor music venue, the 23,500-capacity Co-op Live being developed by the Oak View Group, which counts Harry Styles as an investor. It is set to open in December.
MSG Sphere, the long-awaited, globe-shaped venue under construction in Las Vegas, has been promised to revolutionize the concert-going experience. Before it even opens, however, MSG Sphere is transforming the corporate structure of its creator.
On Monday, MSG Entertainment announced new plans for an upcoming spin-off that will separate MSG Sphere, the next-generation music venue being built in Las Vegas, from the rest of its live music business.
The latest version of the proposed transaction results is a pure-play music company under the corporate name MSG Entertainment that includes venues such as Madison Madison Square Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre and The Chicago Theatre. MSG Entertainment would also include the entertainment and sports booking business, the Radio City Rockettes and the Christmas Spectacular production, and long-term arena license agreements with New York Knicks and New York Rangers, which play their home games at Madison Square Garden.
The first iteration of the spin-off paired the live music business with MSG Networks, a regional sports network that carries live games of the Knicks, Rangers, New York Giants, New Jersey Devils, New York Islanders and Buffalo Sabres. That would have put the company’s two most mature divisions under one roof, separate from MSG Sphere and Tao Group Hospitality, the operator of restaurant and nightlife properties. MSG Entertainment would, however, combine the financially risky Sphere project with the more stable revenues of MSG Networks, which generated $608.2 million of revenue and $131 million of operating profit in the year ended June 30, 2022. The new plan “is optimal for maximizing shareholder value, while providing both companies with enhanced strategic and financial flexibility to drive long-term growth,” the company said in a statement.
The new spin-off plan puts MSG Networks with MSG Sphere and Tao Group Hospitality. The spin-off company will take the name MSG Sphere Corp and “would have enhanced flexibility to execute its business strategy and pursue global growth opportunities,” executive chairman and CEO James L. Dolan said in a statement.
The proposed transaction would be structured as a tax-free spin-off to all MSGE shareholders. Owners of MSGE Class A and Class B shares would receive a pro-rata distribution expected to amount to about a two-thirds economic interest in MSG Entertainment, the live entertainment company. The parent company, MSG Sphere, would retain approximately a one-third interest in MSG Entertainment.
The $1.8 billion MSG Sphere at The Venetian is slated to open in 2023 with a U2 residency. The spherical venue will provide a multi-sensory experience of audio and visuals for 20,000 standing spectators or 17,500 seated guests. It includes 160,000 square feet of video viewing space and an exterior exosphere with programmable LED technology.
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