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Sphere #2: Talks ongoing ‘with several markets’

Sphere Entertainment boss Jim Dolan has revealed talks are ongoing with “several” markets about constructing a second Sphere venue.

The futuristic $2.3 billion development launched in Las Vegas in September 2023 with the 40-night U2:UV Achtung Baby Live At Sphere residency, and while a proposed London replica was aborted in acrimonious circumstances, other territories such as the UAE have remained in the frame.

Speaking during the Madison Square Garden spin-off’s fiscal Q3 2024 earnings call, Dolan denied there had been any “hold-up” with the plans, but advised that building another Sphere was no simple feat.

“It’s not like building a McDonald’s; it’s complicated,” said the executive chair and CEO. “It’s a very expensive project. This will only be the second one… in the world that has been built. And so working out all the details and the construction cost and the relationships that are in there does take time.

“There has been plenty of interest over the year, but [it wasn’t] until we launched the product in late September that people really got to see what it was and began to see how it can perform.

“With all that, though, we are in discussions with several markets. We think we’re going to conclude at least one of those markets soon. How soon? I’m not going to predict, but soon. And we continue to hear from new markets too. As the Sphere becomes better known and people begin to understand the economics behind it and what it can do for our marketplace, the interest remains strong.”

“We will never have an act play the Sphere that doesn’t have something compelling up on the screen”

Dolan also appeared to confirm longstanding rumours that the Eagles would be next in line for a Sphere residency after U2, Phish and Dead & Company.

“We’re looking for the acts that are the biggest draws, and we are in discussions with a whole bunch of those,” he said. “Remember, every time an act books the Sphere, they have to create content around it. We will never have an act play the Sphere that doesn’t have something compelling up on the screen. It takes a while to do that, so we’re being too judicious about it. But the more an act plays the Sphere, like U2, the more they can monetise the content across multiple shows and therefore invest more on the content and create an even better show. That’s what we’re seeing now.

“[Dead & Company] premieres on Thursday [16 May]. And I think you’re going to find that — even if you’re not a Deadhead – you’re going to love that show. And I think the same will be true for the Eagles and for the next acts that we bring on.”

For the fiscal 2024 third quarter, the Sphere segment posted revenues of $170.4m – an increase of $169.7m year-on-year. Its operating loss of $83.5m was an improvement of $28.9 million on the prior year quarter, Event-related revenues were $34.3m, while revenues from sponsorship, signage, Exosphere advertising and suite licence fees were $32.9m. Adjusted operating income was $12.9m.

“Our early results continue to demonstrate Sphere’s potential to disrupt the traditional venue model”

“Since its October debut, the signature content category has already generated over $200 million in revenue,” noted Dolan. “That includes more than $1 million in average daily ticket sales in both the second and third quarters. These results reinforce our belief in the value of original content. And we are now developing new cinematic offerings to strengthen this core category.

“On the concert front, headline acts are seeing the advantages of performing at Sphere. U2’s 40 show run grew an audience on par with a national arena tour. Phish sold out its four nights in less than one hour. And Dead & Co. has already extended their upcoming residency.”

Sphere Entertainment reported an operating loss of $40.4m – an improvement of $61.5m compared to the prior year quarter – on revenues of $321.3m (up from $159.3m y-o-y). AOI was $61.5m, as compared to an adjusted operating loss of $18.7m 12 months previously.

“With the second consecutive quarter of robust revenues and positive adjusted operating income at the Sphere segment, our early results continue to demonstrate Sphere’s potential to disrupt the traditional venue model,” concluded Dolan. “We are encouraged by the demand for this new medium and remain confident in our future growth opportunities.”

Today (13 May), Sphere Entertainment announced it has acquired all of the remaining shares it did not previously own of 3D audio technology firm HOLOPLOT, having made its first investment into the leading global company in 2018 when the two companies partnered to develop Sphere Immersive Sound.

 


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MSG boss in ‘serious talks’ over second Sphere

Madison Square Garden (MSG) boss James Dolan is reported to be in “serious talks” to build a second Sphere venue – this time in the United Arab Emirates.

According to the New York Post, Dolan is in discussions with Abu Dhabi investors about building a replica of the $2.3 billion, 20,000-cap Las Vegas Sphere, which would become MSG’s first property outside of the US.

“These are serious talks with Abu Dhabi. They keep going back and forth,” a source told The Post.

A Sphere spokesperson declined to comment on the report, which noted that the UAE capital has emerged as a frontrunner after negotiations apparently stalled with Saudi Arabia and South Korea.

The UAE’s second most populous city after Dubai, Abu Dhabi gained the 18,000-cap Etihad Arena in 2021, which has upcoming shows with the likes of Andre Rieu and Scorpions.

Wireless Festival, meanwhile, attracted 25,000 fans to Etihad Park on Yas Island for its Abu Dhabi debut in March, while November’s Abu Dhabi Grand Prix’s Yasalam After-Race Concerts starred Foo Fighters, Shania Twain, Tiësto, Chris Brown and Ava Max.

The brainchild of Dolan, the futuristic Sphere features a 160,000 sq. foot LED display inside the main venue, which wraps up, over and around the audience for a fully immersive experience in cutting-edge 16K x 16K resolution. The concept launched in Las Vegas at the end of September with the 40-night U2:UV Achtung Baby Live At Sphere residency, which runs until March 2024.

American rock band Phish are the next major act to be confirmed and will deliver a four-show run from 18-21 April, while the Post reported last month that Beyoncé was in talks over a potential residency, with Bon Jovi, Paul McCartney and Lady Gaga also rumoured to be in consideration.

Sphere Entertainment said it was focusing on the “many forward-thinking cities that are eager to bring this technology to their communities”

Speaking to Variety earlier this year, MSG executive chair and CEO Dolan said it was “definitely a big part of the business plan, to build more Spheres all over the world”. “And by the way, different-size ones too – probably not much bigger than the one in Vegas, but we’ve actually gone through already architectural drawings and designs for smaller Spheres for smaller markets,” he added.

However, Sphere Entertainment said last month that it was focusing on the “many forward-thinking cities… eager to bring this technology to their communities” after its long-held plans for a 21,500-cap London spin-off were refused.

London Mayor Sadiq Khan rejected the proposals on the basis they “would result in an unacceptable negative impact on local residents”, but levelling-up secretary Michael Gove has since ordered a six-week pause as he considers whether to call in the application for the development.

In a broadside at Khan, a Sphere spokesperson alleged “the entire five-year planning process was hijacked by the Mayor and his bogus last-minute report”.

“Londoners should be dismayed that they are not going to benefit from this groundbreaking project, and others looking to invest in London should certainly be wary,” continued the statement. “Moreso, everyone should be alarmed by how easily the government’s established process was tossed aside by one politically motivated official.

“Mr Gove’s action, although commendable, still appears to us to be more of the same, and we cannot continue to participate in a process that can be so easily undermined by political winds. As we said previously, we will focus on the many forward-thinking cities.”

 


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MSG’s London Sphere plans ‘moving forward’

Madison Square Garden (MSG) Entertainment boss James Dolan says the company’s controversial MSG London Sphere scheme is “moving forward”.

MSG’s futuristic $2.3 billion Sphere at The Venetian in Las Vegas, US, launched to rave reviews last Friday with U2’s U2:UV Achtung Baby Live At Sphere residency, but progress on a proposed London replica has been slow.

But speaking to Variety, MSG executive chair and CEO Dolan insists the development – along with other potential spinoffs outside North America – is “still very much moving forward”.

“That is definitely a big part of the business plan, to build more Spheres all over the world,” he adds. “And by the way, different-size ones too – probably not much bigger than the one in Vegas, but we’ve actually gone through already architectural drawings and designs for smaller Spheres for smaller markets.”

Plans for the 21,500-cap UK venue, which would become MSG’s first property outside of the US, were first announced more than five years ago and were approved in principal by the London Legacy Development Corporation (LLDC) in March last year, despite objections from various parties.

However, AEG called on levelling up secretary Michael Gove to block the proposal earlier this year. Gove issued a holding direction to the LLDC, meaning the organisation and London mayor Sadiq Khan are prevented from signing off the plans before Gove rules on whether they need to be “called in” for further scrutiny.

If given final approval, the Sphere will be located in Stratford, east London, four miles from AEG’s The O2 (20,000-cap) in North Greenwich. AEG is a longtime critic of the scheme, having voiced concerns over its proximity to The O2 and – according to a 2019 investigation by The Times – creating a residents’ group in opposition.

“Since we have the experience of building the first one, it won’t be as expensive as the first one”

MSG has suggested that London has an “undersupply” of dedicated large entertainment venues compared with cities such as Berlin, Paris, Madrid and New York. The capital’s next biggest indoor spaces are the 12,500-cap OVO Arena Wembley and the 10,400-cap Alexandra Palace.

The construction costs of the “next generation” Vegas project escalated to $2.3 billion (€2.1bn) – leading some observers to query whether subsequent venues would be too expensive to build (the estimate for the London development was widely reported as £800m, pre-pandemic).

“We have a fully developed construction design and construction company that has a lot of experience building all over the world,” he says. “And since we have the experience of building the first one, it won’t be as expensive as the first one.”

Dolan expects the Vegas Sphere to be profitable despite costs running almost double its original $1.2bn budget.

“Yes, I absolutely expect it to be profitable,” he says. “Will it generate enough profits to justify the capital that was put into it? I think so, but it remains to be seen. I mean, so far, the biggest hurdles in that is making sure that you have a product that the consumer is going to want. And what I’ve seen of our product, I think we have that.

“And then it comes down to marketing and selling tickets and generating revenue and sponsorships, and that all looks like it’s on a very good trajectory. We’re already seeing worldwide interest from other countries that are talking to us about building [Spheres] for them.”

The London project was back in the headlines this week, with the Evening Standard reporting that developers had offered locals blackout blinds to make up for the glowing images they would be broadcasting via the structure’s external LED panels. Officials gave the green light to its digital advertising display plans in January 2023.

 


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Sphere Entertainment posts 2023 financials

James Dolan’s Sphere Entertainment has posted revenue of US$573.8 million (€531m) and an operating loss of $273m for the 2023 financial year ahead of next month’s launch of its next-generation Las Vegas venue.

The Madison Square Garden (MSG) spin-off encompasses the first Sphere venue – the 17,500-seat/20,000-cap Sphere at The Venetian in Las Vegas – as well as MSG Networks MSG Networks and Tao Group Hospitality businesses.

For the fiscal 2023 fourth quarter, Sphere Entertainment reported revenues of $129.1m, plus an operating loss of $70.3m and an adjusted operating loss of $59.8m.

Its Q4 results included the spin-off of approximately two-thirds of the firm’s traditional live entertainment business plus the sale of its 66.9% majority interest in Tao Group.

“Our company completed a number of transactions this past year, including the live entertainment spin-off, that have supported our growth plans,” says executive chairman and CEO Dolan. “As we look ahead to our next chapter with the opening of Sphere in Las Vegas, we are confident that our company is well-positioned to generate long-term value for shareholders.”

The Sphere segment reported revenues of $0.7 million and direct operating expenses of $1.1m for Q4, which reflected “advertising and marketing costs related to Sphere in Las Vegas”. An operating loss of $95.2m was reported for the quarter – up $2.8m on the prior year quarter – primarily reflecting the increase in selling, general and administrative expenses.

“Throughout fiscal 2023, we saw robust demand for our portfolio of live entertainment offerings”

The venue is set to open on 29 September with U2’s residency, U2:UV Achtung Baby Live At The Sphere, which elicited a million ticket request registrations for its on-sale.

MSG Sphere will introduce the first 16K screen that wraps up, around, and behind the audience, and also boasts Sphere Immersive Sound and 4D technologies. In May, Sphere increased the estimated construction cost of the venue to $2.3 billion.

Last week, the separate MSG Entertainment business reported revenues of $851.5m for fiscal 2023, up 30% on the pandemic-impacted previous year. It also reported operating income of $105m, and adjusted operating income of $175m.

MSG Entertainment includes New York City’s 20,000-cap Madison Square Garden, The Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre and The Chicago Theatre, along with the firm’s entertainment and sports bookings business and long-term arena licence agreements with the NBA’s New York Knicks and NHL’s New York Rangers. The statement notes the company sold its controlling interest in Boston Calling Events in December 2022.

“Throughout fiscal 2023, we saw robust demand for our portfolio of live entertainment offerings,” adds Dolan. “Looking ahead, we see this momentum carrying into fiscal 2024 and believe we are well positioned to generate ongoing growth and value creation for shareholders.”

 


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