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![\"Scott](\"https:\/\/www.casino.org\/vitalvegas\/wp-content\/uploads\/2021\/07\/author-logo-lg-88x88.png\"){kind=logo}
<\/a>\n <\/div>\n<\/p><\/div>\n<\/p><\/div>\nSphere at Venetian released its financial results for the fiscal quarter ending June 30, 2024, and it\u2019s ugly.<\/p>\n
During the three month period (April to June, 2024), Sphere lost $104.5 million. For the fiscal year ending June 30, 2024, Sphere lost a jarring $480 million.<\/p>\n
Apparently, you can\u2019t make money by building a $2.4 billion IMAX movie theater. Let\u2019s dive in, shan\u2019t we?<\/p>\n Sphere Entertainment Co. is a public company, so we get to go all up inside their business at the end of each quarter.<\/p>\n Public companies have lots of ways of spinning their results, but ultimately, the numbers don\u2019t lie.<\/p>\n Here\u2019s a news release with Sphere\u2019s financial results<\/a> for \u201cfiscal 2024 fourth quarter,\u201d as the kids say.<\/p>\n For the fiscal 2024 fourth quarter, the Sphere reported revenues of $151.2 million, which sounds awesome without any context. The context comes a few paragraphs later in the Sphere\u2019s news release: \u201cFiscal 2024 fourth quarter selling, general and administrative expenses of $102.1 million increased $11.8 million, or 13%, as compared to the prior year quarter, primarily due to higher employee compensation and related benefits and, to a lesser extent, higher professional fees.\u201d<\/p>\n A giant red flag, \u201cselling, general and administrative expenses of $102.1.\u201d This reeks of poor management, and you don\u2019t even have to read between the lines. It\u2019s right out there in plain sight.<\/p>\n Caution: The follow-up may cause nausea, dizziness or disorientation. From the news release, \u201cFiscal 2024 fourth quarter operating loss of $104.5 million increased by $9.3 million, as compared to the prior year quarter.\u201d<\/p>\n In other news, Sphere generated about $15 million from advertising fees in fiscal 2024 fourth quarter. Again, that doesn\u2019t sound too bad if you\u2019re cherry-picking fun facts. Ultimately, though, Sphere aspired to making $100 million-plus a year from its \u201cExosphere.\u201d<\/p>\n MSG thinks it\u2019s going to get \u201cfar beyond $100 million\u201d a year in Sphere ad revenue. Related: Is The Onion writing LinkedIn job postings now? pic.twitter.com\/ehucWsjdKQ<\/a><\/p>\n \u2014 Vital Vegas (@VitalVegas) March 23, 2023<\/a><\/p>\n<\/blockquote>\n We are not a math expert, but the $15 million in ad revenue is 40% off of projections.<\/p>\n There\u2019s no denying Sphere has made a splash in Las Vegas. It\u2019s a must-see for visitors, and the showings of \u201cPostcard from Earth\u201d are packed multiple times a day. Sphere says \u201cPostcard\u201d generates more than a million dollars a day on average.<\/p>\n Movies, though, even at more than $100 a ticket, aren\u2019t a viable business plan for a venue that cost $2.3 billion to build. Sphere has a really, really big nut.<\/p>\n There are more movie in the works, including an $80 million version<\/a> of \u201cWizard of Oz,\u201d but that\u2019s not going to address the elephant in the room.<\/p>\n We really need to find another metaphor because that whole \u201celephant in the room\u201d thing is sort of body shaming, up with which we will not put. \u201cEight hundred pound gorilla in the room\u201d is also not very kind. We\u2019re trying to get across is there\u2019s something pretty obvious in the room but everyone\u2019s avoiding it and nobody\u2019s talking about it. The \u201cCriss Angel in the room,\u201d let\u2019s say.<\/p>\n What, you thought just because we know Criss Angel now we can\u2019t poke fun? Do you know this blog at all?<\/p>\n See, Sphere needs to refinance their primary tranche of debt by Oct. 11, 2024. The amount is a whopping $850 million.<\/p>\n \u201cTranche\u201d comes from the word \u201cslice.\u201d A \u201ctranche of debt\u201d refers to a portion of a debt obligation that is divided and sold separately, often with varying levels of risk and return.<\/p>\n It\u2019s likely Sphere will get its refinancing deal done, but it\u2019s rare for a company to wait so long to do so. We\u2019re told most companies don\u2019t like to get within a year of when the debt is due in case the credit markets seize up.<\/p>\n Lots of red-flaggery going on here.<\/p>\n Is there hope for the Sphere? While several of the financial trends are slowly moving in the right direction (less losing is the new winning), it\u2019s a little like saying they\u2019re moving the deck chairs on the Titanic twice as fast.<\/p>\n Sphere really needs to up its concert game to have even a remote chance of success. The A-list residencies just haven\u2019t materialized, so the venue is relying on niche acts and movies and that one UFC event in September 2024.<\/p>\n When and if it does get big acts, Sphere can\u2019t keep giving all the revenue to the performers. U2 got 90% of the box office during its residency.<\/p>\n The Sphere experience itself is great, and we highly recommend it.<\/p>\n Everyone\u2019s rooting for this new Vegas landmark to succeed, but there\u2019s a reason we dubbed it the \u201cBankruptcy Bulb.\u201d There\u2019s a reason the venue\u2019s owner, James Dolan (technically, his family, but he\u2019s the Executive Chairman and Chief Executive Officer<\/a>), and his Madison Square Garden Entertainment Corp., peeled Sphere off as its own financial entity.<\/p>\n If you saw \u201cFuriosa: A Mad Max Saga,\u201d and we hope you didn\u2019t because it\u2019s terrible, remember what happened with Furiosa\u2019s arm? It was sacrificed in order for her to escape. More earnings calls should include this reference.<\/p>\n Feel free to substitute a Merle reference if you\u2019re a \u201cWalking Dead\u201d fan.<\/p>\n If you\u2019re more of a real life drama person, Google Aron Ralston and \u201c127 Hours.\u201d He\u2019s the one who relinquished his right arm after being trapped by a boulder hiking in Utah\u2019s Bluejohn Canyon in 2003. Fun fact: In brothels, customers whose courtesans cancel their appointments are referred to as \u201cBluejohns.\u201d<\/p>\n Anyway, we love you, Sphere. As they say in financial analysis circles, get your shit together.<\/p>\n<\/p><\/div>\n![\"\"](\"https:\/\/www.casino.org\/vitalvegas\/wp-content\/uploads\/2024\/08\/sphere_losses-845x563.jpg\"\/)
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