Sphere Entertainment (NYSE: SPHR) CEO James Dolan has reportedly terminated a partnership with a private equity firm that aimed to bring an NBA team to Las Vegas, a move believed to be motivated by concerns over potential competition with the Sphere venue.
According to the New York Post, Dolan has decided to dissolve the September 2023 agreement between Sphere and the private equity firm Oak View Group. This decision comes as Oak View Group collaborates with Rio Hotel & Casino on a $10 billion, 20,000-seat NBA arena, which could host events that might rival those at the Sphere.
In September, Dolan and Oak View announced a partnership under the name Crown Properties Collection. The financial firm was tasked with securing a naming rights partner for the Sphere, aiming for $40 million in annual payments. While this figure aligns with what corporations pay to have their names branded on major arenas like Dolan’s Madison Square Garden in New York City, the Sphere remains without a partner. Two unnamed sources revealed to The Post that Dolan recently turned down a $30 million bid for the Sphere’s naming rights.
Dolan has not publicly addressed the reasons for ending the partnership with Oak View Group, but the motivation may be clear: fears of intensified competition for the Sphere. Las Vegas already hosts numerous venues for large-scale events, creating a highly competitive environment. Additional properties could drive up costs for attracting top acts, posing a challenge for Sphere.
Despite hosting high-profile concerts by U2 and the Eagles, as well as the successful “Postcard From Earth” series, analysts have expressed concerns about Sphere’s ability to consistently draw big-name events. These concerns have been heightened following the company’s third-quarter earnings report, which showed a larger-than-expected loss and led to a 6.97% drop in shares, with trading volume more than twice the daily average.
Adding to the competitive landscape, Oak View CEO Tim Leiweke revealed last month at the VenuesNow conference that he was in discussions about bringing the ABBA Experience, currently in London, to the Las Vegas NBA arena. Sources informed The Post that the tribute to the Swedish pop band could be easily adapted for the Sphere. Given ABBA’s worldwide popularity, Leiweke’s comments might have influenced Dolan’s decision to end the partnership with the private equity firm.
The NBA has yet to officially announce expansion plans, and the league has not added new teams in two decades. However, it is widely anticipated that when expansion occurs, Las Vegas and Seattle will be leading contenders to secure new franchises.
