Building something that stands out on the Las Vegas Strip takes a massive investment.
A store that might be a big draw in a local mall — like the Vegas Strip Hershey Chocolate World or the similarly enormous M&M Las Vegas — is merely ordinary in Las Vegas. On a street that contains an Eiffel Tower and a Statue of Liberty, building anything that impresses tourists is simply hard.
Related: Las Vegas Strip casinos double down on unpopular pricing move
That challenge is even harder when it's not just attractions like the Bellagio Fountains or the soon-to-be-defunct Mirage Volcano, but also the resort casinos themselves.
Whether its the gaudy gold of Wynn Resorts (WYNN) -), the sheer grandeur of Caesars Entertainment's Caesars Palace, or the over-the-top nature of MGM's Luxor, a shiny take on an Egyptian pyramid, the Strip offers nothing but oversized excess.
The bar for new attractions thus has been set very high and even a huge new resort featuring massive LED displays, like Resorts World International, has been met with more of a "that's nice" than a "wow." So that makes what Sphere Entertainment (SPHR) -) has accomplished with its Las Vegas Sphere incredibly impressive.
For about $2.3 billion, roughly a billion more than budgeted, Sphere Entertainment has built something that demands people pay attention. The Sphere instantly became more than a concert/event venue: It's a giant globe covered in 1.2 million LED "pucks" that light up its surface allowing for truly impressive displays (and ad placements).
Image source: MSG Sphere Las Vegas
The Sphere hits a small problem
Sphere has been an unqualified success in a number of ways. It has transformed the Las Vegas skyline and become an attraction that any Strip visitor has to see. It has also hosted a run of mostly sold-out U2 shows as its first residency.
On Dec. 26, however, Las Vegas Locally, a popular X (formerly Twitter) account, posted pictures of the Sphere with a bright white spot. The post contained the text: "A mysterious crack has appeared on the surface of the Sphere.”
An investigation by the Las Vegas Review-Journal, however, showed that it was not a crack, but a small section of the LED pucks had stopped functioning.
A spokesperson for Sphere told the paper that the venue did not incur any structural damage,
It was a small problem that was noticeable, but did not have a meaningful impact on the operations of Sphere or any of its shows.
It did show, however, that even after its construction costs, Sphere will face significant operating challenges as it's a unique venue based at least partly on cutting-edge display technology.
What's next for the Las Vegas Sphere?
While Ultimate Fighting Championship has booked the venue for a fight card, the biggest challenge facing Sphere has been how to book artists for residencies in a huge venue that requires expensive, unique shows.
Sphere held 17,500 fans for U2's shows, and not many artists have fanbases large enough to sell out a venue that size for more than a few shows.
Caesars Entertainment's (CZR) -) Colosseum, which hosts residencies from Adele, Garth Brooks, and Rod Stewart, has 4,300 seats. Dolby Live, which features Bruno Mars and Lady Gaga, is larger at 5,200 seats.
Many of the acts that could sell out the Sphere for an extended run are big enough to consistently sell out multiple nights at a stadium. Taylor Swift, for example, could headline Sphere, as could BTS, but it makes more sense for them to bring their shows around the world to their fans.
Sphere has been rumored to have had discussions with the Eagles, who are on a never-ending final tour, and a handful of other acts, but no second residency has been announced.
During the company's fourth-quarter-earnings call, CEO James Dolan pointed out that the venue would host more than concerts.
"In addition to The Sphere Experience, we plan to host a wide variety of event types, including concert residencies," he said. "...We expect to announce additional residencies shortly, which are slated to take place later this fiscal year."
As yet that has not happened and no second residency has been signed.
The Sphere Experience opened in October. It features as a series of exhibits that "chronicle technology's impact on the development of view and potential," Dolan said.
"...It will then continue in the main venue bowl where guests will be fully immersed in a multisensory cinematic journey from Academy Award-nominated director Darren Aronofsky."
Discuss trade ideas with Hedge Fund Managers and experienced Day Traders. Get Real Money Pro now.
