Question of the Day - 10 December 2023

Not so far, but it looks like it will be by the end of the year.

Caught between a runaway construction budget -- it cost more than Allegiant Stadium and seats nearly 75% less people -- and a slow start to ad generation and touring-act bookings beyond the U2 residency, the Sphere launched from a crawl, but is definitely picking up steam.

Sphere Entertainment lost $98.4 million in its first quarter of operations, though that encompassed all of two days of business, with the first U2 concerts on September 29 and 30, just before Q4 began on October 1. The $2.3 billion venue generated $4.1 million in event revenue and $2.6 million from advertising and suite licensing. 

The latter number caught our attention. The advertising potential of the Sphere is impressive; its iridescent skin costs $450,000 a day to rent. Week-long ad space is a comparative bargain at $650,000.

Once the F1 grandstands are dismantled, another revenue source will be parking. There are only 300 spaces in Sphere's lots and they're expensive, currently in the $50-$125 range, depending on the event. So there's not much potential there that we can see. Still, it's income.

As a concert venue, its potential is somewhat challenging, especially in a competitive town that already hosts the likes of Adele, Kelly Clarkson, Katie Perry, Lady Gaga, Bruno Mars, Usher, and Christina Aguilera at traditional venues on a regular basis. Beyond U2, the only act to sign up and for four shows only has been Phish, though the jam band has a Grateful Dead-like following that's sure to fill all 18,000-plus seats, plus floor space, for all four shows. Dana White, CEO of UFC, has also booked an event in late September and the National Hockey League will hold its 2024 Draft there in late June, but that's about it so far. 

Beyoncé, hot off her “Renaissance” tour and concert film, is rumored to be interested in a residency. But the superstar wants (not unreasonably) the same $10 million budget that U2 got. We're keeping our eye on that development -- as well as the rumor that Paul McCartney has been approached. The scuttlebutt is that the stars seem to be a bit intimidated by the screen, which, if you've seen images from the U2 performances, you can well understand:  ant people performing under the huge hiking boot of the largest digital display on Earth.

Still, in an SEC filing as we were working on this answer, Sphere Entertainment listed $30.7 million in revenue from 17 U2 performances, averaging $1.8 million per concert. Even more impressive is the $44.5 million from 111 screenings of Darren Aronofsky's enormous movie Postcard from Earth, averaging roughly $400,000 per showing. To us, that will be the main consistent money maker. The night we went, thousands did fill the arena, with many many thousands more waiting for the next show as we exited. It's unclear if, after the novelty wears off and the shocking ticket prices ($99-$249 for the two-hour "Sphere Experience," including the 50-minute movie) settle in, Postcard from Earth can sustain its early momentum, but hey, they can always lower the prices.

Combined, U2 and the movie earned $75 million through November 30 and Sphere Entertainment claims the arena will be profitable in the fourth quarter. So as we said at the top, it isn't at the time of this writing, but it could very well be in a matter of weeks.