Building Costs for MSG’s Las Vegas Sphere Keep Going Up
The company reported costs increased another $125 million, bringing the total now to $2.3 billion.
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.