The MSG Sphere at The Venetian will cost between $1.2 billion and $1.7 billion, and the venue, once complete, is expected to be busier than Madison Square Garden in New York.
The price tag was disclosed for the first time Tuesday during MSG’s fourth-quarter earnings call. The project has been under construction just east of The Venetian for nearly a year.
In Tuesday’s conference call, MSG President Andrew Lustgarten gave new details about Sphere programming, saying he expects it to become the company’s most-used MSG venue, a portfolio that includes Madison Square Garden and Radio City Music Hall in New York.
“Las Vegas is one of the world’s top entertainment destinations, with over 40 million visitors annually, many of whom are looking for new experiences, and we’re going to give it to them. MSG Sphere will be an entirely new platform, unlike anything we’ve ever seen,” Lustgarten said.
With concerts, award shows and product introductions, Lustgarten said, the Sphere aims to create “original attractions that showcase the venue’s state-of-the-art technology and run multiple times a day, year round.”
“In addition to events, MSG Sphere’s groundbreaking platform will create unprecedented opportunities for companies to engage with a very valuable audience, which we anticipate translating into meaningful high-margin sponsorship revenue for the company, and we’ve said from the beginning, we believe the MSG Sphere will reimagine the live experience, redefine the venue model and become a valuable long-term asset for our company,” he said.
The structure will have interior and exterior screens the size of three football fields and a state-of-the-art sound system that will enhance the quality of performances.
The venue, scheduled to open in 2021, will be 360 feet tall and 516 feet wide and will connect to The Venetian and the Sands Expo and Convention Center via a 1,000-foot pedestrian bridge.
The company estimates the project cost at $1.2 billion while general contractor AECOM estimates $1.7 billion. Talks are underway to resolve the difference.
AECOM, which built T-Mobile Arena in Las Vegas, Mercedes-Benz Stadium in Atlanta and the USTA Billie Jean King National Tennis Center in Queens, New York, was hired in June to build the 17,500-seat, sphere-shaped building on 18 acres.
Las Vegas Sands Corp. spokesman Ron Reese said the cost of Sphere construction will not affect the company, which operates The Venetian, Palazzo and the Sands Expo and contributed the site as part of its partnership with MSG.
“We think the general contractor’s estimate is too high and, as part of the contractual process, are reviewing and challenging our contractor’s estimates and assumptions,” Madison Square Garden Company Chief Financial Officer Victoria Mink said during a conference call with investors. “We believe, as a result of this process, that we will be successful in achieving significant cost reductions.”
The AECOM estimate was part of the contractual process of setting the incentive benchmark for establishing the general contractor’s fees.
Investors showed their disapproval, with MSG’s stock price plunging $26.10, or 9 percent, to $267.33 a share on volume 10 times the daily average.
During the call, executives reiterated plans to spin off the company’s professional sports teams, the New York Knicks of the NBA and the New York Rangers of the NHL, to help finance costs.
“We remain confident that this separation would better highlight the unique value of the Knicks and Rangers franchises,” Lustgarten said. “This equity stake will be used to help fund our growth plans and for other corporate purposes and would also be available for potential tax-free exchange for entertainment company shares.”
He said the spinoff, subject to league and regulatory approvals, is expected to occur in the first quarter of 2020.
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.