A complete year of operating the Sphere failed to boost business for Sphere Entertainment in the third quarter, as revealed during the company’s earnings call on Tuesday. Sphere Entertainment CEO James Dolan addressed investors, sharing insights into the company’s Q3 performance.
Sphere reported revenue of $127.1 million for the quarter ending Sept. 30, a drop from $151.2 million and $170.4 million in the two preceding quarters. Events such as the initial Eagles concerts and the Sphere’s inaugural live sports event, UFC 306, generated $40.9 million in revenue, a decline from $58.4 million in the second quarter. Furthermore, the company’s operating losses surged to $125.1 million, up from a $98.4 million loss in the same period last year.
During the earnings call, Dolan candidly expressed the challenges of getting the Sphere fully operational. “I wish that the day we lit it up that we knew exactly how to run it, exactly how to sell it and exactly how to program it, et cetera, but that’s just not the case,” he admitted. He was specifically referring to the Exosphere, where ad revenue had weakened after a strong start. Dolan’s comments reflected the broader difficulties faced in various aspects of the Sphere’s operations.
“That’s just part and parcel of starting something new,” Dolan continued. “It’s the first pancake. It’s the first time we’ve done it, and we’ve learned and we’re getting better at it. And I do think also that there are seasonal issues that come into play.”
In response to the earnings report, Sphere’s stock fell approximately 8% on Tuesday, although it remains up 15% compared to the previous year, propelled by an October rally following the announcement of plans for a second Sphere in Abu Dhabi. The proposed UAE expansion helped soothe investor concerns about the Sphere’s scalability, which had been questioned after plans for a second Sphere in London were shelved last November. New venues are seen as essential to the company’s growth, with Wolfe Research highlighting that each new property could add up to $700 million in value.
“We definitely want to build in multiple places,” Dolan assured investors. “We’ve built an organization that can handle the construction of multiple Spheres at the same time. And so yes, we’re still moving.”
Dolan refrained from delving into specifics about potential future locations for the Sphere or additional upcoming events in Las Vegas beyond those already announced. However, he did reveal that interest from artists was high, indicating a crowded schedule for the fall.
“You like the Eagles?” he asked David Joyce of Seaport Research Partners with a hint of humor. “You’re going to see a lot of Eagles for a while.”
Post-call, the New York Post disclosed that Dolan had terminated the Sphere’s partnership with the Oak View Group (OVG), a private equity firm planning to construct Las Vegas’ first NBA arena. The partnership, announced last September, was intended to focus on selling and managing naming rights, sponsorships, and partnerships at the $10 billion, 20,000-seat facility.
