MSG Sphere builder unfazed by report of Las Vegas Sands assets sale
The company building the $1.66 billion MSG Sphere at The Venetian isn’t concerned about reports that its partner, Las Vegas Sands Corp., is considering the sale of real estate assets.
New York-based Madison Square Garden Entertainment Corp. is developing the high-tech, 17,500-seat entertainment venue east of The Venetian and the Sands Expo & Convention Center.
Last month, Sands confirmed that it was in “very early discussions” to sell its Las Vegas assets but added that “nothing has been finalized.” Since then, analysts have speculated that any sale could involve a real estate investment trust and that the company would be operationally unchanged.
In response to an analyst’s question in a conference call with investors Monday, MSG Entertainment President Andrew Lustgarten said, “Sands has been a great partner and I can’t speculate on what’s going to happen with the business, but I can tell you that the ground lease has no change of control” regarding the business ownership.
The comment was made during MSG Entertainment’s first quarter 2021 earnings call covering the period ending Sept. 30. The call primarily addressed the company’s efforts to battle through COVID-19 and the financial measures taken to keep its multiple entertainment venues secure.
For the quarter, the company reported revenue of $14.4 million, a decrease of 92 percent compared with the prior-year quarter. The company had an operating loss of $126.6 million compared with an operating loss of $68.1 million in 2019.
The company recently completed a $650 million debt financing in the form of a five-year senior secured term loan, strengthening its liquidity position. In addition, Madison Square Garden Sports Corp., its sister company, recently terminated its $200 million delayed draw term loans with MSG Entertainment, which removed a potential near-term obligation for the company.
During the call, executives reiterated the planned calendar year 2023 completion of the Sphere project and noted that the anticipated delivery of vaccines to the public flows well with company timelines to restart entertainment. Lustgarten said he expects the entertainment industry — and specifically Las Vegas’ industry — will come back strong when health and safety requirements are met.
“We’re definitely bullish on Las Vegas,” he said.
In its slowed pace, Sphere construction workers are focusing on some of the heaviest material lifts for the project with 240-ton girders placed in recent weeks and a 13,000-ton domed roof coming early next year. Earlier in the fall, about 300 workers were on the project.
While the MSG Sphere will be the dominant company entertainment venue for Las Vegas, the company also operates New York’s Madison Square Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, Beacon Theatre and The Chicago Theatre.
Executives said they’re enthused with patrons embracing shows and entertainers booking more new concerts and events and that calendars are among the strongest in company history.
“We remain encouraged by the continued engagement from artists and fans, and expect our business to return quickly when we are able to safely re-open our venues,” Executive Chairman and CEO James Dolan said in a release.
MSG Entertainment shares, traded on the New York Stock Exchange, were up 80 cents, 1 percent, Monday to $80.25 apiece in volume about half the daily average.
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson. The MSG Sphere at The Venetian is a project by Madison Square Garden and Las Vegas Sands Corp.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.
