Can the Las Vegas Sphere actually make money?

Las Vegas has always been home to excess — from high rollers at casinos to flashy shows to the iconic Bellagio fountains. What could possibly attract more attention? 

Try a gigantic orb encrusted with video screens, both inside and out, that offers 360 degrees of pure entertainment. Since September of 2023, the Sphere has been the shiny new object in the eyes of prospective tourists.

But less than two years in, the Sphere is a money pit that even U2, members of the Grateful Dead, Darren Aronofsky, and the Eagles haven’t been able to make profitable. Since its parent company, Sphere Entertainment, started breaking it out as a separate unit in the middle of 2022, the Sphere has seen a staggering $1.18 billion total operating loss.  

On Thursday, Sphere Entertainment’s beaten-down stock jumped as the company negotiated its way out of the collateral damage of a potential bankruptcy of one of its units. But the question remains: can the Sphere actually make money? 

The Sphere sits in a complex web of companies whose fates can only be told together, run by a businessman notably despised by much of New York City for the way he runs his businesses. 

There’s Madison Square Garden Sports Corp., a publicly traded company that manages pro sports teams. Madison Square Garden Entertainment is a holding company that manages all of the arenas. And there’s Sphere Entertainment, which runs the Sphere and the MSG TV networks. James Dolan is the CEO of all three.

Dolan gained fame as he took over Cablevision from his father, Charles, who founded the company. In 1999, Dolan also took the reins of some of Cablevision’s best assets: the New York Knicks and the New York Rangers. Cablevision, after some of its MSG-related assets were spun off, was eventually sold to European telecom giant Altice, though Dolan kept control of many of the entertainment assets via spin-off. Since he took them over, the Knicks and Rangers have mostly toiled in mediocrity, though their valuations have ballooned — they’re worth $7.5 billion and $3.5 billion, respectively, according to Forbes. 

The Sphere hasn’t had the same run of luck. It cost Dolan more than $2 billion to build the enormous indoor amphitheater experiment, where visitors can watch concerts and films akin to IMAX, engulfed in sights and sounds. The biggest draw is concerts, but residencies aren’t as long as on a normal Vegas stage, and the overhead is quite large. Multisensory corporate engagements don’t have quite the same draw as getting high and seeing Jerry Garcia’s ghost come to life all around you.

How can this popular tourist attraction that sees millions of visitors a year not be profitable? On the surface, one might consider the Sphere a success. Big famous bands sell out, there are hundreds of shows a year, and surely they sell enough soda in the lobby. But they don’t have live music every single day of the year, and U2 isn’t an infinite resource. 

What really does the Sphere in are its operating costs, suite licensing not getting to where the company wants it to be, and advertising costs. It’s one thing to attract boomers to see classic rock bands; it’s another to regularly convince families of four from the Midwest to shell out hundreds of dollars with parking charges and food.

Concert tickets for the immersive attraction “Postcard from Earth” have dropped from $119 a ticket to $99. 

“It’s the first time we’ve done it, and we’ve learned, and we’re getting better at it,” Dolan said. “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, you know, program it, etc. But that’s just not the case.” 

He also followed that up by assuring music fans and investors: “You like the Eagles? You are going to see a lot of Eagles for a while.” Thank GOD, am I right? (That’s a joke, by the way.)

“Original immersive productions, such as ‘Postcard From Earth,’ have not been previously pursued on the scale of Sphere, which increases the uncertainty of our operating expectations. To the extent that our efforts do not result in viable shows, or to the extent that any such productions do not achieve expected levels of popularity among audiences, we may not generate the cash flows from operations necessary to fund our operations,” Sphere financial documents read. 

Not enough shows, not enough tickets sold, not enough for each ticket, too much for some tickets in particular, high operating costs — it doesn’t seem to matter what the issue is, since the Sphere loses money every single quarter, like clockwork. Poor management or too much of the Eagles, you be the judge.

If you were concerned Dolan and co. would spend good money after bad, don’t worry: plans are in place for “mini-Spheres” in other cities with fewer LED displays and smaller musical acts. Abu Dhabi is also getting its own Sphere, but no timetable has been announced for its development as of yet.

Dolan, during an earnings call, had this to say about monetizing the Sphere:

“We’re focusing on optimizing our operating model to maximize revenue while enhancing the guest experience. To that end, we continue to refine our strategy for the Sphere Experience, including show count and pricing. I do think there is a structural issue and we’ve been busy working on it. I think we’re making a lot of progress. At the same time, we’re also learning about the product itself and how our advertisers can use it best.”

The other main issue for Dolan’s empire is Madison Square Garden Networks, a unit of the Sphere that’s suffering its own set of problems: cord cutting, regional sports networks’ revenue falling, heavy indebtedness, etc. MSG Networks did just negotiate a deal to knock down some of the mountain of debt it had coming due, likely saving the unit from the specter of bankruptcy that had been hanging over it. Of course, that will also trickle through to a cut in rights fees that the Knicks and Rangers get.

Problems for Sphere Entertainment are many, which is why the stock is down nearly 30% over the past year despite its run-up today. But don’t worry, maybe Harry Styles can save the day! If not, fans might need to settle for Dolan’s vanity project, a band called JD & the Straight Shot.

Jared Russo is a writer from New York who spends his days online covering the tech industry, ranting about sports, and playing video games.