Posted on: November 10, 2022, 10:09h.
Last updated on: November 10, 2022, 10:10h.
Inflation has ballooned the cost of the MSG Sphere another $175 million to $2.175 billion, executives with Madison Square Garden Entertainment Corp. reported this week. The 17,500-seat round entertainment venue — under construction behind The Venetian Expo — is reportedly due to open on Sept. 29, 2023 with the first concert of a residency by Irish rock band U2.
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 that the company is sufficiently liquid from cash on hand and operational cash flow to complete the venue’s construction.
“We’re now in the midst of the seasonally strongest point of the fiscal year with our ‘Christmas Spectacular’ (at Radio City Music Hall), the best months coming up for our bookings business and the impact of the (NBA New York) Knicks and (NHL New York) Rangers seasons and we’re anticipating that we’ll generate substantial cash flow from our core operations which we expect to continue to utilize for MSG Sphere,” Byrnes said, adding that, once the Sphere is operational next year, the company expects to cash in on 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 really as an iconic landmark that offers tremendous opportunities for content that reaches far beyond Las Vegas,” Byrnes said. “It will be a unique and powerful platform for brands.”
Still, the news depressed MSGE’s stock $3.85, or 8.5 percent, to to $41.31 in early trading on Wednesday.
A New Company Will Run the Sphere
Also during the call, Byrnes said MSGE would form a new company made up of MSG Sphere and Tao Group Hospitality, spinning that off from its live entertainment business. Byrnes said the new company would be called MSG Sphere Corp., while the new live entertainment and media company would be called Madison Square Garden Entertainment Corp.
MSGE, which operates on a July-to-June fiscal year, reported a net loss of $44 million, $1.30 a share, on revenue of $401.2 million for the quarter ending Sept. 30, 2022. A year earlier, the company reported a net loss of $76.7 million, $2.32 a share, on revenue of $294.5 million.