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Cost of MSG Sphere project expected to increase before 2023 opening

Updated February 19, 2021 - 12:09 am

Executives of Madison Square Garden Entertainment Corp. aren’t sure how much the MSG Sphere at The Venetian will cost when it’s completed in 2023, and aren’t issuing any estimates just yet.

The 17,000-seat first-of-its-kind entertainment venue being built just east of The Venetian and Sands Expo Center currently has a price tag of $1.66 billion.

“This is subject to uncertainty given the project’s complexity, the more than two years remaining until the planned opening and the ongoing impact of the global pandemic,” said MSG Chief Financial Officer Mark FitzPatrick in a conference call with investors on Friday.

FitzPatrick said the company has spent $645 million on the project as of Dec. 31.

Executives say they continue to be bullish on The Sphere becoming a profit center for the company when the project is completed in 2023.

“We want to reiterate we continue to believe that the MSG Sphere will create significant long-term value for shareholders and that has not changed,” FitzPatrick said. “You’ve heard us talk before about the venue’s unique platform which will create compelling growth opportunities including events, sponsorships, hospitality and we believe it is going to translate into substantial levels of revenue and (return on investment).”

FitzPatrick said the revised timeline for completing the project could actually work to the company’s advantage as the city faces a slow recovery from the effects of the coronavirus pandemic.

“We talked about there being uncertainty due to the pandemic,” FitzPatrick said. “We also talked about the positive signs we’re seeing, including the pent-up demand for live entertainment that (CEO Andrew Lustgarten) noted.

“Overall, we’re confident the pandemic will end, we’re confident Las Vegas will return, and we’re building a venue that will capitalize on people’s intense desire to gather and take part in new experiences,” he said. “In addition to this, our extended timetable has enabled us to preserve cash in the near term. It’s also given Las Vegas time to recover, and we think that is going to work to our advantage that tourism and the convention business will be in full swing by 2023.”

MSG announced in December that it has taken over as construction manager for the project from Los Angeles-based AECOM. AECOM has transitioned from its role as general contractor to supporting MSG Sphere with a new services agreement that facilitates the company’s continued involvement through the project’s completion.

Construction crews soon will start work on lifting some of the heaviest components of the project into place. A pair of 240-ton girders were lifted into place in October to support the 13,000-ton domed roof.

The roof will have interior and exterior LED screens that will wrap around audiences inside the building, with the exterior screens providing a new visual appearance from the 360-foot sphere.

MSG Entertainment reported a net loss of $124.9 million, $5.17 a share, on revenue of $23.1 million in its second quarter that ended Dec. 31. In the same quarter a year earlier, the company reported net income of $81.3 million, $3.39 a share, on revenue of $394.1 million.

Company executives also said they were happy that New York Gov. Andrew Cuomo announced the lifting of restrictions limiting fans at arenas for games beginning Tuesday. MSG operates Madison Square Garden in New York City, and the company expects to release a plan to begin returning spectators to New York Knicks basketball games and New York Rangers hockey games.

The Review-Journal is owned by the family of Sheldon Adelson, the late chairman and CEO of Las Vegas Sands Corp. 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.

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