A full year of operating the Sphere didn’t lead to more business for Sphere Entertainment (NYSE: SPHR) in the third quarter, the company revealed during its earnings call Tuesday.
Sphere revenue was $127.1 million in the quarter ended Sept. 30, down from $151.2 million and $170.4 million in the previous two quarters.
Revenue from events such as the first few Eagles concerts and the orb’s first live sports event, UFC 306, added up to $40.9 million. But that’s down from $58.4 million in the second quarter.
Operating losses for the quarter were now $125.1 million, compared to a $98.4 million loss in 2023’s third quarter.
“I wish that the day we lit it up that we knew exactly how to run it, exactly how to sell it and exactly how to program it, et cetera, but that’s just not the case,” Sphere Entertainment CEO Dolan told an investor during the call.
He was specifically addressing the Exosphere, whose ad revenue softened during the quarter, after a strong start last year. However, he may as well have been speaking about any aspect of the Sphere’s operation.
“That’s just part and parcel of starting something new,” Dolan said. “It’s the first pancake. It’s the first time we’ve done it, and we’ve learned and we’re getting better at it. And I do think also that there are seasonal issues that come into play.”
Investor Reaction
Sphere stock was down about 8% today. However, it’s still up 15% compared to last year, mostly due to an October rally that followed its announcement of plans for a second Sphere in Abu Dhabi.
The Sphere’s UAE expansion allayed investor concerns about the Sphere’s scalability, following the rejection last November of its plans for a second Sphere in London. (New venues are crucial to the Sphere Entertainment investment thesis because, as Wolfe Research recently noted, the company can add up to $700 million in value for each new property that opens.)
“We definitely want to build in multiple places,” Dolan said on the call. “We’ve built an organization that can handle the construction of multiple Spheres at the same time. And so yes, we’re still moving.”
Dolan refused to get into specifics as to where the next Sphere might end up, or about anything coming up at the Las Vegas Sphere other than what’s already been announced.
However, he did say there was enough interest from artists that “we’re struggling with how to squeeze everybody in through the fall … who signed up.”
“You like the Eagles?” he jokingly asked David Joyce of Seaport Research Partners. “You’re going to see a lot of Eagles for a while.”
After the call, the New York Post leaked the news that Dolan had ended the Sphere’s partnership with the Oak View Group (OVG), the private equity firm that plans to build Las Vegas’ first NBA arena. The partnership was to have focused on selling and managing naming rights, sponsorships and partnerships at the $10 billion, 20,000-seat arena.
The Post reported that Dolan’s move responded to the OVG abandoning plans to build its arena four miles south of the Las Vegas Strip and targeting the Rio’s parking lot instead, placing the new venue in direct competition with the Sphere for concert headliners.
The post SPHERE & LOSING IN LAS VEGAS: Losses Mount for James Dolan’s Orb appeared first on Casino.org.
