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Jimmy Dolan is finally getting credit as a visionary. The problem, however, is that artists are not always great at turning excellence into profits. Dolan, son of Cablevision founder Charles Dolan, is behind the Sphere, an orb-shaped arena in Las Vegas composed of a video screen shell. The Sphere cost $2.3bn to construct. It opened last year with an acclaimed U2 residency. But for its recently completed fiscal year, it still lost $500mn on revenue of $500mn.
That is not so bad for a venue still finding its footing and that wants to establish more locations around the world. But the other half of its listed parent, Sphere Entertainment, is in trouble. Madison Square Garden Networks, the pay-TV channel that broadcasts the games of the New York Knicks and New York Rangers (separately owned by Dolan), is suffering from the ills facing traditional television networks.
An $850mn loan maturity has hit this month. Sphere last week said it was negotiating with JPMorgan Chase and other lenders — whose only collateral is strictly MSG Networks, not the broader Sphere corporation — over terms of what the company described as a “workout”. The lenders could take a haircut while some combination of MSG Networks, Sphere, Dolan and outside investors cash out the remaining debts. The Knicks are primed for their best season in a generation and the aesthetic triumph of Sphere is well-earned by Dolan. Now he needs to make the maths work.
Dolan has two other public companies, one that owns his sports teams and another which produces live entertainment at Madison Square Garden and Radio City Music Hall.
But Sphere itself has a market cap of just $1.6bn with total group debt of also $1.6bn and nearly $600mn of cash. Against the MSG subsidiary’s $850mn of debt, the TV business generated just $140mn in 2024 operating profit. Dolan has complained that the record-setting 11-year, $76bn TV contract that the National Basketball Association just signed has hurt local broadcasters such as his.
Given its plans for global expansion, Sphere’s hope is that the Vegas venue can attract enough lucrative traffic through concerts and in-house immersive experiences to fill the space most nights. This week it announced a deal to license its IP to developers in Abu Dhabi, who will pay for the construction and buildout themselves.
But Las Vegas traffic has been lighter than expected, noted Morgan Stanley analysts. The venue could, they reckon, generate $300mn of standalone annual cash flow in five years. Nearly $1mn a day is impressive but would only cover operating and creative expenses.
With Sphere’s financial hurdles, Dolan’s architectural artistry may need to be enough to persuade global investors to write checks in tribute.
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