Madison Square Garden is focusing huge amounts of advertising, marketing, and promotional efforts on its Las Vegas MSG Sphere project. That’s because it’s the costliest venue to build in the history of the state of Nevada—at over $2.3 billion and rising.
MSG Chief Financial Officer David Brynes spent much of the company’s quarterly financial call dedicated to outlining these efforts. The expected cost to build the sphere has grown more than $500 million since construction started, and according to recent SEC filings, the total is in the neighborhood of $2.3 billion.
“As construction nears completion of Sphere in Las Vegas, [Madison Square Garden Company] has adjusted its construction cost estimate, inclusive of core technology and soft costs, to approximately $2.3 billion, from its prior estimate of $2.15 billion, with the increase primarily reflecting the overall complexity of the project,” the SEC filing reads. “Actual construction costs paid through May 9, 2023, were approximately $2.08 billion, which was net of $65 million received from The Venetian Resort.”
That $2.17 billion figure was widely reported in the media in December 2022, showcasing how costs have continued to rise. The MSG Sphere is now the costliest venue in the state of Nevada, well above the $1.9 billion Allegiant Stadium despite the capacity difference. The Sphere is built primarily to showcase music experiences, rather than being an adapted sports arena for concerts.
When the Las Vegas Sphere project was first unveiled in 2021, its estimated cost to build was $1.8 billion. Prices have risen due to inflation, issues with the global supply chain, and the overall complexity of the project. MSG says it is funding the remaining construction expenses from cash on hand and cash flow from the company’s operations, which include the Tao nightclub and restaurant group, New York City’s Madison Square Garden and Radio City Music Hall.
Not everyone is so sure the gamble is going pay off for MSG based on ticket sales alone. Thank goodness the entire building is one giant advertiser-friendly LED screen then, right? “With ticket sales alone, it is hard to make the math work on this project which would require a high occupancy and a rich volume of events to make it pencil out,” gaming industry advisor Brendan Bussmann told The Nevada Independent about the project’s expanding costs.
“Clearly, Madison Square Garden has done the math on this as costs have risen through construction to make sure it still pencils out. But that could be a significant number of events to this work.”