Las Vegas Sphere: Launch Costs Eclipse Revenues

08.11.2023 - 21:59 / skift.com / Selene Brophy

Las Vegas likes to gamble, and the opening of The Sphere arena in September was certainly a gamble for its operator. Fresh data shared on Wednesday highlighted the risks and potential rewards.

Five years in the making, the $2.3 billion marvel stands 366 feet tall and opened with Irish rock band U2 bringing the world’s largest 16K high-resolution LED screen to life.

The Sphere Entertainment Company said the arena’s opening brought in event-related revenues of $4.1 million, supplemented by $2.6 million from sponsorship and advertising.

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The revenue was a fraction of its first quarter’s direct operating expenses, which totaled $7.8 million.

The breakdown of these expenses reveals $2.8 million in venue operating costs and $2.2 million in event-related expenditures, both directly tied to the Sphere’s operational debut.

Moreover, the direct operating costs encompassed $2.1 million related to advertising spending leading up to Darren Aronofsky’s October premiere of “Postcard from Earth,” the mainstay act at The Sphere Experience.

Analysts have raised questions about whether the revenue from events, sponsorships, and advertising can scale up to offset the substantial initial investments. Tickets for the specialized “Sphere Experience,” range from $90 to $250. U2’s performances at the venue have consistently sold out, and the band has since scheduled an additional 11 shows for January and February 2024.

Despite initial budget overruns and financial challenges at parent company Madison Square Garden Entertainment, the venue’s opening did give a 10% boost for investors.

Sphere Entertainment CEO James Dolan remained optimistic about the Sphere’s unique potential.

“We’re building positive momentum across Sphere and remain confident that we are well positioned to drive long-term value for shareholders,” Dolan said.

Kevin Bartanian, founder of Kevani, an Out of Home (OOH) media specialist company, said the Sphere was already on its way to becoming a global landmark with the publicity, or so-called earned media, it has received in a very short period. 

“You can see how it already engages positively with audiences on an emotional level worldwide,” Bartanian said. “Consumers expect to have genuine connections with brands. Iconic media destinations like the Las Vegas Sphere help create that connection.”

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While Bartanian declined to speculate on the cost of digital out-of-home campaigns for the venue, he expected the Sphere to be dominated by campaigns using creative content tied to localized events or concerts “to create energy and a synergistic moment.” 

The Sphere literally markets itself to visitors by being such a prominent landmark just off The Strip with