When a director makes a hugely expensive bomb like 2013's Johnny Depp-led "Lone Ranger," 2016's "Monster Trucks," or 2012's "John Carter," you have to wonder if they know they have a flop while making the movie. In the case of "Monster Trucks," the answer might be "yes," but most giant failures come from a lack of awareness that maybe people don't actually want to watch whatever you happen to be spending $200 million on.
Art, of course, isn't always predictable. A film isn't a guaranteed hit just because it has a big budget, a big-name cast, or because it's based on well-known intellectual property (IP).
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Failed films, however, come and go in a few weeks. Sure, there might be jokes about epic disasters like "Ishtar," Waterworld," or "Battlefield Earth," but even those are fleeting.
That's not the case, however, for a project that costs $2.3 billion and counting which sits on the Las Vegas Strip in one of the most-seen locations in the world. Even in an area where Caesars Entertainment (CZR) has an Eiffel Tower and MGM Resorts International (MGM) offers up a Statue of Liberty, the Sphere (formerly the MGM Sphere) stands out.
It looks like a spaceship that has landed in the parking lot of the Venetian, and that's not a bad thing. What just might be a problem is that costs for the venue continue to spiral while it remains a major question whether bands will actually want to play there,
Image source: MSG Sphere Las Vegas
The Sphere Sees Costs Rise Again
As costs for the Sphere have steadily increased, former parent company Madison Square Garden Entertainment (MSGE) laid off staff and worked to cut expenses. Now, the company has split Sphere off from its former parents and sold other assets in order to pay for ballooning construction costs.
"With the completion of the spin-off of our traditional live entertainment business and the sale of our interest in Tao Group Hospitality, our company has enhanced flexibility to execute its business strategy. As we approach the opening of Sphere in Las Vegas, we remain confident that this next chapter for our company will drive long-term shareholder value,” CEO James Dolan said in Sphere Entertainment's third-quarter earnings release.
That's the type of thing you have to say as a CEO, but the same press release also shared the latest negative news about the company's signature Las Vegas Strip entertainment venue.
"As construction nears completion of Sphere in Las Vegas, the Company has adjusted its construction cost estimate, inclusive of core technology and soft costs, to approximately $2.3 billion, from its prior estimate of $2.175 billion, with the increase primarily reflecting the overall complexity of the project," the company shared.
Cost Is Not the Sphere's Biggest Problem
Usually, when an artist or band tours, they use a set that can be deployed with little modification no matter what similar-sized venue they play. The Sphere does not allow for that, it requires that the performer create an entire show designed to take advantage of the one-of-a-kind venue.
That's sort of how Las Vegas residencies work in general, but most Las Vegas Strip residencies involve the artist playing a much smaller venue than they would on a tour. Lady Gaga, for example, performed in a 5,200-seat venue at Park MGM while Garth Brooks and Adele, both play at Caesars Colloseum, which seats 4,200.
All three of these artists can sell out arenas and even stadiums, but for a residency, they play smaller venues. Sphere will hold 17,500 concertgoers, and initial headliner U2 should be able to sell that out for dozens of nights, maybe even long enough to justify creating a unique show, but how many other bands could and/or would be able to do that?
Yes, Sphere will also host movies and other experiences, but the driver is supposed to be concerts, and that seems like a flawed model. There are only a handful of acts that can sell well in a single venue often enough in a single year to justify creating a show specifically for that venue.
That list may not end at U2, but it doesn't go much further than that which seems like a major planning flaw for a $2.3 billion (and counting) venue.
