The Madison Square Garden Company’s MSG Sphere project in Las Vegas has joined its proposed counterpart in London in suffering delays, while the US live sports and entertainment giant’s spin-off plan is nearing competition after receiving board approval.
MSG said the widespread global effects of COVID-19 have resulted in significant impediments to construction of MSG Sphere at The Venetian that are beyond the company’s control, including disruptions to its supply chain.
As a result, the company will implement a temporary suspension of construction, with all work ceasing over approximately the next two weeks. MSG said it remains committed to building a state-of-the-art venue in Las Vegas and “looks forward to quickly and efficiently” resuming construction as soon as practicable. However, as a result of the delay, the Company said it does not expect to achieve its goal of opening the venue in 2021.
The $1.66bn (£1.34bn/€1.52bn), 17,500-seat venue is a joint project with casino operator Las Vegas Sands, and the delay comes despite Nevada being one of many US states that have allowed construction projects to continue amid the pandemic.
In November, MSG revealed that its board of directors had approved a revised plan for the proposed separation of its sports and entertainment businesses, while adding that its planned MSG Sphere arena in London was expected to open later than initially planned.
MSG said that while “significant” progress had been made on the Las Vegas project, the London arena – set to be located near the Olympic Park in Stratford – continued to move through the planning application process. MSG said it remained focused on incorporating learnings from the Las Vegas project in London and as a result it was no longer possible for the latter to open a year after the Vegas Sphere arena.
In August, MSG saw its share price take a substantial hit as it revealed operating losses for the 2019 financial year and disclosed the sizeable cost of the Sphere at The Venetian. MSG conceded at the time that there were a number of challenges connected to the facility currently under construction in Las Vegas.
In other news, MSG said its board of directors has approved the spin-off of its entertainment businesses from its sports businesses, which is expected to be completed in mid-April. Upon completion of the spin-off transaction, MSG will be a pure-play sports company and will change its name to Madison Square Garden Sports Corp. (MSG Sports), while the newly-formed entertainment company, under which the Sphere projects will sit, will be named Madison Square Garden Entertainment Corp. (MSG Entertainment).
MSG last month shed further light on the proposed spin-off, naming the intended leadership team for the new units. Andrew Lustgarten, currently MSG president, is expected to be named president and CEO overseeing all business operations for MSG Sports.
Following the completion of the spin-off, MSG’s executive chairman and CEO James Dolan is expected to serve as executive chairman of the sports company and as executive chairman and CEO of the entertainment company. In addition to serving as president and CEO of the sports company, it is anticipated that Lustgarten will serve as president of the entertainment company.
In a statement yesterday (Tuesday), Dolan said: “While our industry is currently going through a difficult period, we are confident in the enduring strength and value of our businesses. Today’s approved spin-off is the result of many months of preparation, and we believe it will set the stage for long-term success for both MSG Sports and MSG Entertainment.”
The latest news comes after Los Angeles Clippers owner Steve Ballmer last week sealed a $400m deal to acquire The Forum, furthering the NBA basketball team’s claims to deliver a new arena and removing the obstacle of legal action from MSG. Through the newly-formed CAPSS LLC, Ballmer and Clippers vice-chairman Dennis Wong agreed to purchase the Forum from MSG for $400m in cash.