The company that is building the 20,000-seat MSG Sphere at the Venetian plans to spin off its live entertainment divisions to focus on its Sphere and Tao Hospitality Group operations.
Madison Square Garden Entertainment Corp. first announced plans to explore the fallout on Thursday, then clarified details during its fourth-quarter earnings call on Friday. There is no timeline for making a spin-off.
In his call with industry analysts, company executives said the Sphere project was less than a year away from completion and the construction cost estimate had dropped from $1.87 billion. dollars to $2 billion.
“With respect to MSG Sphere, our project construction costs through June 30 were approximately $1.53 billion, which includes approximately $190 million in accrued costs that have not been paid as of June 30 and are net of the $65 million received from The Venetian,” David Byrnes, executive vice president and chief financial officer of MSG Entertainment, said on the call.
The money received from the Venetian occurred when Las Vegas Sands Corp. owned the strip complex.
Executives cited inflation and higher costs associated with supply chain issues for the higher estimate.
The company said its newly listed spin-off company would oversee MSGE’s entertainment and sports booking business, which includes concerts, family shows and special events; the Radio City Rockettes and Christmas Spectacular presentations; arena license with the NBA’s New York Knicks and NHL’s New York Rangers; and MSG Networks, the broadcast arm that handles NBA and NHL games and other sports content.
MSG Entertainment will oversee MSG Sphere, the first of which is being built in Las Vegas and is expected to become a franchise; controlling interest in Tao Hospitality Group, which comprises 15 locations in Las Vegas, including Tao, Hakkasan, Marquee and Lavo branded locations; a one-third stake in the new company; and most of the company’s cash.
Byrne said the process of hiring Sphere staff would unfold in the coming months.
“As we’ve noted over the past few quarters, we’ve seen an increase in Sphere-related operating costs, and that’s primarily in content development, including headcount as we build this team,” said he declared.
“And then, as we look to the year ahead, we expect the Sphere-related headcount to increase, both for continued content development and to ensure the venue is staffed. appropriate prior to opening which again we are striking distance This will include staffing of areas such as venue management, security, food and beverage teams, merchandise teams , whatever you think to be ready to open the site in the second half of 23. »
Byrne did not confirm other current partnerships and which artists he has approached for performances. There have been unconfirmed reports that Irish rock band U2 have a residency, making them the first performers there.
“Now that we’re in that time frame, we should soon be able to start sharing positive news about sponsorships, corporate partnerships, starting to announce the first artist to play the Sphere and so on.” , did he declare. “And while we don’t have anything more to say today, we look forward to sharing more in the months ahead and as we get closer to opening.”
A partnership that has been confirmed is with the motor racing operators of the Las Vegas Formula 1 Grand Prix in November 2023. The course will bring cars close to the building, and video of the race is expected to be shown on the screen building exterior.
Creative content that is produced in MSG’s studio in Burbank, Calif., which the company calls “Big Dome,” will power the shows held throughout the year in the building.
“As you know, we’re working hard with creators, artists, technologists and visionaries to bring the future of entertainment and immersive experiences to life at Sphere,” said Byrne. “The studio has an ultra-high resolution indoor LED screen. It’s a quarter scale of the full resolution MSG Sphere display plan that will be in Vegas.
The announcement from MSG’s board of directors regarding the proposed spin-off of the company was made after the market closed on Thursday. The shares, traded on the New York Stock Exchange, rose after the market opened on Friday. The stock closed Friday up $2.21, 3.5%, at $64.91 per share on volume 5½ times the daily average.
After hours, the shares rose 29 cents, 0.5%, to end at $65.20 per share.
The Review-Journal is owned by the Adelson family, including Dr. Miriam Adelson, majority shareholder of Las Vegas Sands Corp., and Patrick Dumont, president and chief operating officer of Las Vegas Sands.