Casino events

MSG Sphere cost swells by $175 million to $2.175 billion

Posted: November 10, 2022, 10:09 a.m.

Last update: November 10, 2022, 10:10 a.m.

Inflation has pushed the cost of the MSG Sphere from $175 million to $2.175 billion, Madison Square Garden Entertainment Corp executives reported this week. The 17,500-seat round entertainment venue – under construction behind The Venetian Expo – is set to open on September 29, 2023 with the first concert of a residency by Irish rock band U2.

MSG sphere
The MSG Sphere, premiering in September 2022, is set to open September 29, 2023 with the first date of a U2 residency. The Irish rock band are scheduled to play six non-consecutive Friday and Saturday nights, for 12 shows in total.

During MSGE’s fiscal first quarter earnings call, officials also blamed global supply chain pressures and the overall complexity of the construction project for the budget overrun. But executive vice president and chief financial officer David Byrnes said he was confident the company had enough liquidity from available cash and operating cash flow to complete construction of the site.

“We are now in the middle of the most seasonal point of the fiscal year with our ‘Christmas Show’ (at Radio City Music Hall), the best months ahead for our booking activity and the impact of the (NBA New York ) Knicks and (NHL New York) Rangers seasons and we anticipate that we will generate substantial cash flow from our core businesses which we expect to continue to use for MSG Sphere,” Byrnes said, adding that once Sphere will be operational next year, the company expects to benefit from new sponsorships for what will be the largest LED screen in the world.

“The Exosphere will be covered with 580,000 square feet of fully programmable LED panels, which will be seen not only by the millions of people who live in and visit Las Vegas and come to our events, but truly as an iconic landmark that offers enormous opportunities for content that goes far beyond Las Vegas,” Byrnes said. “It will be a unique and powerful platform for brands.”

Still, the news sent shares of MSGE down $3.85, or 8.5%, to $41.31 in early trading on Wednesday.

A new company will lead the sphere

Also on the call, Byrnes said MSGE would form a new company made up of MSG Sphere and Tao Group Hospitality, separating it from its live entertainment business. Byrnes said the new company will be called MSG Sphere Corp., while the new live entertainment and media company will be called Madison Square Garden Entertainment Corp.

MSGE, which operates in a July-June fiscal year, reported a net loss of $44 million, $1.30 per share, on revenue of $401.2 million for the quarter ending 30 September 2022. A year earlier, the company reported a net loss of $76.7 million, $2.32 per share, on revenue of $294.5 million.