LAS VEGAS (KTNV) — The Sphere has officially been open for business since September and on Wednesday, Sphere Entertainment released the financial results for the first quarter of Fiscal Year 2024, which ended on Sept. 30, 2023. However, that was the day after Sphere officially opened its doors.
"Sphere's opening in Las Vegas in September represented a significant milestone, generating worldwide attention and marking the beginning of a new chapter for our Company," executive chairman and CEO James Dolan said in a statement. "We are building positive momentum across Sphere and remain confident that we are well positioned to drive long-term value for shareholders."
According to the numbers, in the first quarter of Fiscal Year 2024, which includes July, August, and September, Sphere had an operating loss of $98.4 million. Company officials said it was due to "higher depreciation and amortization, direct operating expenses, and selling, general and administrative costs". Some of the direct operating expenses included $2.1 million in costs associated with The Sphere Experience and advertising for Darren Aronofsky's show "Postcard From Earth".
During a company earnings call, Dolan said the "journey with Sphere is just beginning".
"While it will take some time for Sphere to realize its full potential, we're off to a great start," Dolan said. "Every U2 show, so far, has been sold out and in light of demand, we recently announced that we are adding 11 more shows. This will take the band's run at the Sphere into February with a total of 36 performances."
Sphere is continuing to draw the interest of other artists who could perform at the venue.
"We're having conversations with artists across a wide variety of genres," Dolan said. "We expect to host two additional residencies in the second half of this fiscal year."
Dolan also said the "Postcard From Earth" show has been selling tickets well and they're looking at possibly expanding entertainment options at Sphere.
"Through the end of October, we have grossed over $1 million in average daily ticket sales each day," Dolan said. "As we learn more about our audiences and the venue, we're already planning ways to continue enhancing the signature content category. This is the first of what will be different iterations of the Sphere experience. That includes populating the atrium with additional technology exhibits and introducing new cinematic content."
He added that Sphere started with "pretty conservative" numbers when it comes to number of shows, price per show, and price per ticket. It's something he said his time is "studying heavily now".
"The thing about the Sphere Experience is that the margin on it is really, really high because you've already invested in the building. You've already invested in the content, the creation of the content, the actual cost of running the Experience is very, very low," Dolan said. "I think we priced low to start off with. I think there's probably some pricing flexibility in that. The Las Vegas market wasn't a perfect market for us to open it. Why? Because it has an ever-regenerating marketplace of customers. Our ability to reach those people and sell the ticket and interest them in our products, that we're still refining."
The report also states that in the first quarter, Sphere made $7.8 million in revenue, which included $4.1 million in event-related revenue and $2.6 million in revenues from sponsorship, signage, and advertising on the Exosphere. Advertising on the Exosphere kicked off with the NFL's Sunday Ticket and has also included brands like PlayStation, Meta, Xbox, and Coca-Cola. Dolan said Sphere officials are also expecting a "record-setting revenue week for the Exosphere around Super Bowl in February".
This comes after Sphere officials said the company spent an additional $90 million in the fourth quarter of Fiscal Year 2023 that they weren't expecting.
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Last week, Sphere's chief financial officer Gautam Ranji resigned, which was effective as of Nov. 3, 2023.
According to a filing with the U.S. Securities and Exchange Commission, his departure was "not a result of any disagreement with the company's independent auditors or any member of management on any matter of accounting principles or practices".
The filing stated that Greg Brunner, Sphere's Senior Vice President, Controller and Principal Accounting Officer, took over Ranji's job responsibilities for the time being.
Dolan said it was a mutual decision for Ranji to leave.
"It's a new business. It's pretty challenging. I think we both came to the conclusion that it probably wasn't a great fit," Dolan said. "I will say the CFO's job at Sphere has a heavy operational component that, probably, we didn't foresee."
Channel 13 previously spoke with financial analyst Steve Budin, who said he believes the venue could be profitable soon.
"The entertainment business is very risky, but for them to recover their investment in three to five years would not surprise me at all," Budin said last month.
And Dolan agrees.
"We are already seeing Sphere's ability to inspire awe and wonder and the venue has become a landmark destination in Las Vegas but we've only just begun to scratch the surface and are excited by how much further we can take this new entertainment media in the future," Dolan said. "While you should not expect the venue to reach its full economic potential right away, our momentum is building with artists, promoters, sponsors and guests from across the globe and we remain confident in the long-term outlook for Sphere."
