Photo credit: Las Vegas Sphere website
Madison Square Garden is focusing extensive advertising, marketing and promotional efforts on its Las Vegas MSG Sphere project. That’s because it’s the most expensive venue in Nevada state history — at over $2.3 billion and counting.
David Brynes, MSG’s chief financial officer, devoted much of the company’s quarterly financial conference to presenting those efforts. The expected cost of building the sphere has increased by more than $500 million since construction began recent SEC filingsThe grand total is about $2.3 billion.
“As construction for Sphere in Las Vegas nears completion, (Madison Square Garden Company) has revised its estimate of construction costs, including core technology and ancillary costs, to approximately $2.3 billion from its previous estimate of $2.15 billion -dollars, with the increase primarily due to the overall complexity of the project,” the SEC filing said. “Actual construction costs paid as of May 9, 2023 were approximately $2.08 billion, less the $65 million we received from the Venetian Resort.”
That $2.17 billion figure received extensive media coverage in December 2022, showing how costs have continued to rise. The MSG Sphere is now the most expensive venue in the state of Nevada, well above the $1.9 billion Allegiant Stadium despite the difference in capacity. The Sphere is primarily intended to present musical experiences and not as an adapted sports arena for concerts.
When the Las Vegas Sphere project was first announced in 2021, the estimated construction cost was $1.8 billion. Prices have increased due to inflation, global supply chain issues and the overall complexity of the project. MSG says it is funding the remaining construction costs from cash on hand and cash flow from the company’s operations, which include nightclub and restaurant group Tao, New York’s Madison Square Garden and Radio City Music Hall.
Not everyone is so sure that ticket sales alone will pay off the risk for MSG. Thank goodness the entire building is one giant, ad-friendly LED screen, right? “This project is difficult to calculate with ticket sales alone, as it would require high occupancy and a large number of events to be successful,” said Brendan Bussmann, consultant for the gaming industry told The Nevada Independent about the rising cost of the project.
“Madison Square Garden obviously recalculated this as the cost of building it increased to make sure it was still working. But that could be a significant number of events for this work.”