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The Super Bowl descends on Las Vegas this week, and Sin City’s newest venue is out with its second quarter financial results. Sphere Entertainment reported revenue of $314 million, which included Sphere ($168 million) and MSG Networks ($146 million).
The Sphere opened in September, and the SEC filing is the first full three-month window into how Jim Dolan’s $2.3 billion place makes money. U2’s sold-out Sphere residency and touting the world’s largest spherical building are getting the most attention, but it’s The Sphere Experience—which includes the immersive production, Postcards from Earth, directed by Darren Aronofsky, which is generating most of the revenue right now. The multi-sensory show earned more than $1 million in average day ticket sales and generated $92.9 million in total revenue for 191 performances during the quarter. Tickets start at $69, but go much higher for better seats and preferred times.
By comparison, event-related revenue was $55.2 million, which represented revenue from concerts and, to a lesser extent, one “marquee sporting event,” the Formula One race in November. Most of the ticket revenue goes to U2, while Sphere takes a cut of the concessions and merchandise. U2 have extended their residency multiple times and will end in early March. Phish and Dead & Co. recently announced upcoming multi-night performances at the Sphere following U2’s stint.
Exosphere sponsorship, signage, advertising and package license fee revenues were $17.5 million in the quarter, with advertising campaigns for Exosphere, Sphere’s programmable LED exterior, the main driver in this segment. On Sunday, Sphere Entertainment and the NFL announced a partnership for custom Super Bowl content created by Sphere Studios to be shown on the Exosphere during Super Bowl week. The Sphere will also be featured in CBS’ coverage of the Super Bowl.
While business at Sphere is booming, the picture isn’t as bright at MSG Networks, where revenue fell 8% in the quarter and 9% in the first six months of the fiscal year. Distribution revenue was down again as total subscribers fell 11.5%. But while the Bally Sports bankruptcy case plays out in court, MSG is showing that major regional sports networks can still be a profitable business. MSG generated $34.2 million in operating income for the three months, up 3% from a year earlier due to lower costs.
Last month, MSG Networks and YES Network announced a new joint venture, Gotham Advanced Media and Entertainment (GAME), which will see the New York-based RSNs leverage their business expertise in streaming services and begin offering operational support to third parties.
The Sphere segment reported an operating loss of $194 million for the quarter, but an “adjusted” profit of $14.1 million, which the company believes is a better reflection of the current business and uses 300 words to define it. The biggest adjustment was a $116.5 million non-cash impairment charge related to the company’s decision in November to end its pursuit of the Sphere development in London.
“Sphere is a next-generation environment designed to disrupt the traditional on-premises model,” Dolan said in a statement. “With positive adjusted operating income in the Sphere segment in our first full quarter of operations in Las Vegas, our early results are beginning to prove this point, and we remain confident in the global opportunities ahead.”
Shares of Sphere rose 2.8% in early trading on Monday to $36.40.
