Updated August 14, 2020 - 2:05 pm
Executives with Madison Square Garden Entertainment Corp. on Friday reiterated their commitment to building the MSG Sphere at The Venetian and said when the entertainment industry returns from the COVID-19 slowdown, it will “come back roaring.”
Company President Andy Lustgarten, in a fourth-quarter earnings conference call, gave additional details of its slowed construction schedule on the first-of-its-kind 17,000-seat entertainment venue being built east of The Venetian.
A skeleton crew remains in the construction area and is maintaining the site.
“People will need to feel safe — consumers, artists and our employees — but once that happens, and we believe it will, the market will come back roaring, and our view has not changed,” Lustgarten said in response to an inquiry about the return of the entertainment industry. “We believe the Sphere is going to be the most-utilized venue in our portfolio in terms of events. We think the attractions business is going to play multiple times a day, year-round, which is a key part of our strategy.”
He said that though the company has offered to refund tickets to entertainment and sporting events — its sister company owns the New York Knicks NBA team and the New York Rangers NHL team — about 80 percent of patrons have hung onto their tickets, planning to attend rescheduled events. That’s what gives Lustgarten confidence that entertainment will come back strong.
With owning Madison Square Garden and its Hulu Theater, the company has Radio City Music Hall and the Beacon Theatre in New York and the Chicago Theatre in Chicago.
It expects the Sphere to outperform those venues with daily programming on the massive 160,000-square-foot wraparound screen, headliner performances and an easily accessible site near the Sands Expo and Convention Center for corporate presentations. New renderings of the Sphere interior have been added to the company’s website.
Lustgarten called Las Vegas “one of the best if not the best entertainment market in the world” when asked how the company’s venues in Las Vegas, New York and Boston would bounce back. MSG also owns The Tao Group, which operates nightclub venues in Las Vegas, Los Angeles, New York and Chicago with a planned opening in Connecticut in December.
The company slowed construction of the $1.66 billion MSG Sphere in April, pushing back the opening date of the sphere-shaped building to 2023.
Lustgarten and Executive Vice President and Chief Financial Officer Mark FitzPatrick explained how MSG Entertainment is managing financing for the Sphere project.
“We revised our processes and our construction schedule and now have resumed work on a lengthened timetable enabling us to better preserve cash in the near term,” FitzPatrick said.
The company expects that in its 2021 fiscal year, it will spend about half of what it previously anticipated spending.
The company began laying off most of its entertainment-oriented employees in late March and last week cut many of its corporate support jobs, saving $100 million.
“Through June 30, project-to-date construction costs incurred approximately $453 million, which includes nearly $70 million of accrued costs that were not paid as of June 30 and is net of $65 million received from Las Vegas Sands (Corp.),” FitzPatrick said.
The company has $1.244 billion cash on hand and little debt, with terms of a $34 million credit loan extended to 2024. With owning most of its major assets and recently selling the Forum in Inglewood, California, for $400 million, the company holds 1.3 million shares of DraftKings and 3.2 million shares of Town Square Media stock.
The company has reduced its cash burn rate from $35 million a month in early stages of the pandemic to $25 million a month today.
Madison Square Garden Entertainment shares, traded on the Nasdaq exchange, fell 4.4 percent, $3.16, to close Friday at $68.20 a share in light trading.
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson. Las Vegas Sands operates The Venetian. The Sphere is a project by Madison Square Garden and Las Vegas Sands Corp.