London mayor’s rejection of Sphere costs owner $116.5m

The mayor of London’s rejection of a new Sphere in Stratford, east London has cost the owner of the Las Vegas Sphere $116.5m.

This is the non-cash expense recorded in Sphere Entertainment Co’s latest financial results, following a decision to abandon the London project in the face of political opposition.

Taking the hit in its results for the three months ended 31 December 2023, meant the Sphere business segment of the company’s activities recorded an operating loss of $193.9m.

But the Sphere business segment actually reported adjusted operating income of $14.1m, an increase of $75m on the previous quarter in which the Sphere was only open for a few days, thanks to surging income.

The underlying improvement in fortunes was primarily due to the success of The Sphere Experience, which includes Darron Aronofsky’s Postcards from Earth film.  This is shown on the world’s largest wraparound indoor LED screen and supported by the world’s largest concert grade audio system.

Revenues for The Sphere Experience reached $92.9m across 191 performances, after debuting on 6 October. Event-related revenues came in at $55.2m, including Sphere’s take of the revenue from U2 concerts and a marquee sporting event – most probably the Formula 1 Grand Pix in Las Vegas. The popularity of advertising on the venue’s Exosphere external display was largely responsible for $17.5m in revenue from sponsorship, signage, Exosphere advertising and suite licence fees.

Direct operating expenses of $67.3m were similarly spread across the Sphere’s activities. It cost $27.6m to put on The Sphere Experience, $20.4m to hold events, and $1.6m to support sponsorship, signage, Exosphere advertising and suite licence fees.

The Sphere Entertainment Co’s financial results include both its Sphere business segment and the MSN Networks sports broadcasting and streaming business. The Sphere segment had the highest sales of the two business segments, at $167.8m of the company’s total $314m in quarterly revenue, with $146.4m coming in from MSG Networks. However, MSG Networks provided $37.3m of the company’s total $51.4m in adjusted operating income.

Commenting on the Sphere’s financial performance, Sphere CEO James Dolan said: “Sphere is a next-generation medium intended to disrupt the traditional venue model. With positive adjusted operating income at the Sphere segment in our first full quarter of operations in Las Vegas, our early results are beginning to prove that thesis, and we remain confident in the global opportunities ahead.”