James Dolan, CEO of Madison Square Garden Entertainment (MSGE), has removed two executives overseeing the construction of the MSG Sphere, a high-tech music venue on the Las Vegas Strip. Dolan planned to open MSG Sphere in 2021, but complications have pushed the opening back by two years and caused costs to skyrocket.
The New York Post got wind that Dolan had released MSG Sphere President Lucas Watson and Senior Manager of Business Operations Jenna Wolfenson. Watson joined the team in March 2022 to oversee the planning and implementation of all business-related matters for the arena. Prior t that, he served as a general manager of Cruise, a manufacturer of self-driving vehicles.
Dolan, who also owns the NY Knicks and NY Rangers, now intends to oversee the project personally to ensure no further delays or budget increases. The Sphere has repeatedly experienced massive cost overruns. Dolan says he has streamlined the organization and appointed Guy Barnett to head brand strategy and creative development.
He has also enlisted the help of David Hopkinson, the president of MSG Sports, to guide the venue. The MSG Sphere is a collaboration between MSGE and The Venetian in Las Vegas. MSGE takes its name from Madison Square Garden in New York but also owns other venues like Radio City Music Hall in Chicago, plus an assortment of restaurants and nightclubs.
New Funding Needed to Offset MSG Sphere Setbacks
Since breaking ground in 2018, MSG Sphere has faced significant delays. The company says these stem from supply chain issues caused by COVID-19, among other factors.
MSGE originally intended for the venue to open in 2021 with a budget of $1.2 billion. Now, it’s aiming for September 2023, and the costs have almost doubled. By the time the Sphere finally opens, MSGE expects to have spent $2.2 billion.
Dolan has been exploring options to raise or borrow money to cover that budget overrun. Recently, MSGE announced a plan to spin off its legacy business into a separate publicly-traded company. That would include the namesake arena, Radio City Music Hall, the Radio City Rockettes, and other live-entertainment properties. Analysts say the move could raise almost $600 million.
Meanwhile, there are rumors that Dolan is also considering offloading the Tao restaurants and nightclubs. The Tao business is valued at $524 million, and MSGE owns 67%. The sale could bring in $271 million after debts. Tillman Fertitta, the owner of the Houston Rockets and Golden Nugget Casino brand, has expressed a potential interest in Tao.
Furthermore, MSGE took out a $275 million loan from JP Morgan in December to complete construction. The company has also been searching for corporate and arena-naming sponsors, but with no success so far.
MSG Sphere Has Big Plans for Concerts & Events
The Sphere’s massive budget is understandable in light of the investments MSGE is making in technology and entertainment for the state-of-the-art venue. The 160,000 sq. ft. LED screen with a 256 million pixels resolution and 160,000 speakers with haptic infrasound are just two examples of the cutting-edge technology. The outer shell of the venue is also getting its own light show with 580,000 sq. ft. of LED screens.
To promote the upcoming opening, MSGE spent big on a Super Bowl Ad featuring U2 as the opening act. MSG Sphere will reportedly pay the band $10 million for the show. Ticketmaster already has a ticket registration page to raise awareness and excitement.
MSG Sphere won’t host quite as many live concerts per year as other music venues: between 40 and 80. However, the company plans to make up for it with other uses for the massive screens. The venue will host 400 to 500 films annually, drawing an estimated three to four million viewers. The company expects to charge up to $50 per ticket for film screenings.
Already, MSG Sphere is encountering difficulty securing the planned four to six residencies. Sources say that big-name artists have expressed concern that the technology will overshadow their music. Despite this, the company remains committed to providing a top-notch entertainment experience for all attendees.
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