No supply-chain issues reported in MSG Sphere construction
Construction crews at the MSG Sphere at The Venetian aren’t experiencing any supply-chain issues as work continues on the $1.9 billion, 17,500-seat performance venue east of The Venetian Expo.
New York-based Madison Square Garden Entertainment Corp. rebounded in its second quarter ending Dec. 31 with its first increase in adjusted operating income since the pandemic began, thanks to the return of concerts and live performances, full seasons at Madison Square Garden for the NBA New York Knicks and the NHL New York Rangers and a rise in visitation at MSG-owned nightclub venues within Tao Group and Hakkasan.
“We have a really strong team managing the project and we continue to make great progress on the construction,” said David Byrnes, executive vice president and chief financial officer of MSG Entertainment, in Wednesday’s second-quarter earnings call with investors.
“The team’s been very focused on supply chain and managing lead times since we began construction and we are continually evaluating our time lines and developing alternatives where they might be needed,” he said. “Progress-wise, remember prepandemic we had already purchased the bigger items, like the majority of the main structural steel for the project. It is all secured. Other areas like the concrete of the main structure is essentially complete.”
Byrnes said construction managers have prepared for potential problems.
“Of course, there are some uncertainties to work through regarding electronics, for example. But our team is doing all we can to manage through it in every single detail,” he said. “We’re aggressively managing every aspect of the project, we feel good about where we are and we continue to be really excited about opening the venue in the second half of 2023.”
The company reported net income of $5 million, 7 cents a share, on revenue of $516.4 million for the quarter. That compares with a net loss of $60.1 million, $1.64 a share, on revenue of $168.8 million for the same quarter a year earlier.
The company experienced some declines with the surge of the omicron variant in late December and two weeks of the company’s famed Christmas Spectacular show had to be canceled. The show attracted 400,000 people over 100 performances at Radio City Music Hall.
Andrew Lustgarten, president of MSG Entertainment, gave a progress report on the Sphere’s construction in prepared remarks for the call.
“We continue to make significant construction progress on MSG Sphere at The Venetian and remain on track to open the venue in calendar 2023,” Lustgarten said. “We are now approaching the midway point of building the exosphere, the 366-foot-tall spherical structure that surrounds the venue. The exosphere will ultimately be covered with approximately 580,000 square feet of fully programmable LED lighting, forming the largest LED screen on Earth and creating an impactful display for artists, partners and brands.
“Inside the venue,” he said, “we are building the steel framework that will support MSG Sphere’s 160,000-square-foot interior LED display plane and multilayered audio system enabling the immersive technologies that’ll make the MSG Sphere a first of its kind entertainment destination.”
Lustgarten said company officials have begun reviewing potential synergies between Tao Group, Hakkasan and the Sphere. He said the company would look at ways to connect food and beverage, purchasing, and marketing between the groups.
Meanwhile, Las Vegas Sands Corp.’s Las Vegas assets — The Venetian, Palazzo and The Venetian Expo — are on the verge of being sold to Apollo Global Management Inc., a New York-based private investment company, for $6.4 billion in a deal that is expected to close later this month.
The Nevada Gaming Control Board recommended approval of the deal last week and the Nevada Gaming Commission will consider final approval Feb. 17.
Apollo Global would assume the position of Sands on the Sphere project and no changes are expected with the construction plan.
MSGE shares, traded on the New York Stock Exchange, on Wednesday closed up $4.29, 5.9 percent, to $77.30 a share on volume of about twice the daily average. After hours, shares slid $1.31, 1.7 percent, to $75.99 a share.
The Review-Journal is owned by the family of Dr. Miriam Adelson, the majority shareholder of Las Vegas Sands Corp., which operates The Venetian and The Venetian Expo.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.