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MSG corporate restructuring won’t affect MSG Sphere project

The Madison Square Garden Company will spin off its entertainment business from its sports business to conserve cash for a second MSG Sphere project in London.

The restructuring move, detailed in the company’s Friday earnings conference call, will have no effect on the MSG Sphere at The Venetian project.

“We are now pursuing a full spin-off of our entertainment business from our sports business,” MSG Vice President Gregg Seibert said during the company’s conference call with investors. “As a result of this new structure, the Entertainment company will not retain any equity interest in the Sports company. We believe that the Entertainment company will have sufficient financial flexibility to pursue its venue expansion plans without the need for the retained interest. As a result, we think this new structure makes the most sense for our shareholders.”

Originally, the company envisioned the entertainment company keeping a stake in sports.

MSG’s Sports company owns the New York Knicks basketball team and the New York Rangers hockey team. Both teams play in Madison Square Garden.

The move was made because the planning application and design process in London is taking longer than expected.

Executives initially had hoped the London Sphere would open a year after the Las Vegas project. But executives said the new time frame will give London designers an opportunity to learn from the construction project in Las Vegas.

The MSG Sphere at The Venetian, a first-of-its-kind, 17,000-seat entertainment venue under construction just east of The Venetian, Palazzo and Sands Expo & Convention Center, is expected to become the most utilized entertainment venue in the Madison Square Garden portfolio when it opens in 2021.

The sphere-shaped building with massive video screens in the interior and on the exterior will be 366 feet tall — about 100 feet shorter than the Palazzo tower at The Venetian — and 516 feet wide at its broadest point.

It’s being built on 18 acres off Sands Avenue between Manhattan Street and Koval Lane and will be connected to The Venetian and Palazzo at the Sands Expo & Convention Center with a 1,000-foot pedestrian bridge.

A new Las Vegas Monorail stop has been financed and is planned near the corner of Sands Avenue and Koval Lane.

“We expect MSG Sphere to change how we think about the entertainment experience — which is why we anticipate the Las Vegas Sphere becoming the most highly utilized venue in our portfolio,” MSG President Andy Lustgarten said during the conference call.

Lustgarten listed four reasons why he expects the Las Vegas venue to be a success.

“First, as a leader in live entertainment, we’ve directly experienced the growing demand for immersive, shared experiences,” he said. “Unlike any other venue that exists today, MSG Sphere will be uniquely suited to deliver on this trend.

“Second, we believe Las Vegas … as one of the world’s top entertainment destinations with over 40 million visitors annually … is the ideal market to introduce the first MSG Sphere.”

Lustgarten also credited the company’s partnership with Las Vegas Sands as an “extremely beneficial relationship for both companies as we help drive each other’s business.”

He also said the company has assembled a team of experts to take the venue to another level with design, construction, ticketing, sponsorships and suite sales.

The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson. The Sphere is a project by Madison Square Garden and Las Vegas Sands, which owns and operates The Venetian and Palazzo, as well as the Sands Expo & Convention Center.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

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