The Vegas Sphere: a $2.3B Bet on the Future of Entertainment and Advertising
In the United States, Las Vegas stands out for its array of unique and historically rich architecture and attractions. Renowned venues like the Bellagio, Mandalay Bay, MGM Grand, T-Mobile Arena, and numerous others are not only well-known nationally but also internationally.
Even recently established sites, including the Allegiant Stadium, hosting the Las Vegas Raiders in the NFL, evoke a sense of wonder for those witnessing them for the first time.
Under the same skyline, a new elephant has emerged – The MSG Sphere. This venue is poised to revolutionize the entertainment industry, further cementing Las Vegas’s enduring status as the global entertainment capital.
However, before we dive into the building, let’s take a look at the men behind all this hype – James Dolan.
From a Rock Star to an Entertainment Elephant
James Dolan had a privileged upbringing with lots of money. Interestingly, he developed a passion for sailing during his youth. He went on some remarkable adventures, including sailing a massive 70-foot, 12-man sailboat from Cape Town, South Africa, to Rio De Janeiro, Brazil.
James Dolan was really good at sailing and got deeply involved in sailing culture, which also meant a lot of drinking. He clarifies that he didn’t drink while sailing, but his partying on land raised some eyebrows. In 1993, his drinking became a problem, leading him to check into a rehab center.
In addition to his love for sailing, Dolan had a strong passion for music. After finishing high school, he initially pursued a career in professional music but eventually shifted gears.
He enrolled in college to get a communications degree. From there, he started to gain insight into the inner workings of the family business via sales positions and later an assignment to start a sports radio station in Cleveland, Ohio. Dolan started participating in the struggle for the family firm after receiving a crash lesson in everything Cablevision.
The media always depicted Dolan as some snobby rich kid. That doesn’t seem all that far from the reality; James Dolan inherited a family empire that included some of the most well-known New York companies, such as the Knicks, Rangers, Madison Square Garden, and Radio City Music Hall. He is one of the most influential people in the city, standing at the center of professional sports, major concerts, politics, and real estate.
Dolan is always into the entertainment side of the business. His pet project into this arena is Madison Square Garden (MSG). As the owner of many venues, he knows how to thrive obviously, but when it comes to sport which demands a bit more complicated management, Dolan has shown his pain point.
The Element that Doesn’t Go Well with Sport Recipe
As the owner of the Knicks, Dolan has made many mistakes, with one prominent example being the Jeremy Lin. In 2013, the Knicks were riding high after trying Jeremy Lin on for size, and it was a match made in heaven.
Despite facing a challenging beginning with limited playing time, Lin eventually found his rhythm and started performing at an All-Star level for New York. He solidified his reputation as a formidable player by scoring an impressive 38 points against Kobe Bryant’s Lakers.
Jeremy Lin became the basketball sensation, a Harvard graduate turned phenom almost overnight—capturing the hearts of New Yorkers, kids, and everyone in between. The Knicks seemed to have found a player to build a lasting dynasty around.
However, James Dolan’s decision not to sign him left fans upset, and understandably so. It appeared that Dolan might not have made the best call, and fans were frustrated with the perceived lack of strategic decision-making.
Over the last 15 years, the Knicks have made just three playoff appearances, which is notably disappointing considering they have the highest payroll in the league. The team seems to be consistently surrounded by controversy, including incidents with former players getting arrested, and fans being kicked out for chanting “sell the team” at James Dolan.
Even with the ongoing controversies, some athletes playing for Mr. Dolan’s teams see him as one of the most generous figures in the league. Henrik Lundqvist, who played for the Rangers for 15 seasons and now works with Mr. Dolan, has shared this perspective.
He said, “I saw someone who was fully committed to being sure that we had the best resources and opportunities to succeed.”
And despite Mr. Dolan’s reputation for inserting himself into the running of the Knicks, Leon Rose, the president of the basketball franchise since 2020, said he finds Mr. Dolan invested but not meddlesome.
Despite Mr. Dolan reputation with the Knicks, Leon Rose, the team’s president since 2020, sees him as involved but not overly meddlesome. “He places a lot of faith and trust in our basketball operations,” he said.
For James Dolan, sports is merely a business; his true passion lies in music. As he said in an interview with the Ottawa Citizen in 2013, “I don’t shoot basketballs, I don’t shoot pucks, I don’t install cable in people’s homes. Music is a place that goes from my mind to my hands and into my voice directly.”
James Dolan’s love of music has inspired him to undertake many things; perhaps this is why he chose to create the Sphere. But it’s just a part of a bigger picture.
Ardent Move – Place James Dolan Outside of His Father Shadow
In 2015, James Dolan started thinking about how to use over $1 billion in cash and credit under his control. Wanting to make the most of that sum, he drew inspiration from his favorite childhood story, Ray Bradbury’s “The Veldt,” where children’s imaginations are projected onto the walls of their home.
With his concept in mind – an arena featuring walls of screens capable of transporting spectators to diverse settings – James Dolan approached technologist David Dibble. Armed with a sketch of an orb-like arena on a white legal pad, James conveyed his ambition: “Let’s reinvent the live entertainment industry,” recounted Mr. Dibble.
Construction began in 2018 with an initial estimated cost of around $1.2 billion. As expenses increased, Mr. Dolan sold off assets to aid in covering the costs. Additionally, he restructured his companies to prevent investor concerns about the Sphere from negatively impacting Madison Square Garden Entertainment’s stock price.
As the Sphere neared its opening, James Dolan acknowledged that it marked one of the most significant moments in his professional life. “The entire thing is a huge bet,” he said.
In interviews, those are intimate with him expressed that the Sphere is a bold gamble, positioning him outside of his father’s shadow.
“This is something he has done,” said Joe Lhota, a former senior Madison Square Garden executive who is on the board of the Sphere’s parent company. “It’s not something he inherited — it is him bringing his vision to life. It is totally, 100 percent his vision.”
Instead of simply collecting checks from the Dolan family empire, James Dolan is actively taking risks to create something remarkable.
The Sphere, at first glance, appears as a giant LED ball, but its engineering and development go beyond what meets the eye. It’s an effort to change how we enjoy live events and advertising.
MSG Sphere – Reimagine Live Entertainment and Advertising
Standing at a towering 366 feet high and stretching 516 feet wide at its widest point, the venue is the world’s largest sphere. It features groundbreaking technology that redefines today’s entertainment experience.
The MSG Sphere is Las Vegas’s most expensive entertainment arena with a staggering construction cost of $2.3 billion to build, mostly during the pandemic, with the sheer force of Mr. Dolan’s legendary stubbornness propelling it to completion, albeit two years late and $1 billion over budget.
The MSG Sphere’s exterior features an impressive 580,000 square feet of programmable lighting, creating a captivating visual experience similar to SoFi Stadium’s LED canopy. Inside, visitors are immersed in a new realm with the world’s largest and highest-resolution wraparound LED screen at 160,000 square feet, rivaling the excitement of an IMAX seat for Avatar 2.
The audio system, considered the world’s most advanced concert audio system, utilizes 3D audio beam-forming technology by Holoplot, transmitting sound through thousands of distinct beams from its 164,000 speakers, ensuring optimal audio for every seat.
An infrasound haptic system adds a tactile dimension, allowing the audience to feel the bass while preventing sound spillage. The venue incorporates 4D elements like scent and wind, providing a unique experiential journey.
With a capacity of 17,500 seats (expandable to 20,000 standing), nine levels, VIP clubs, and 23 suites, the MSG Sphere promises an unparalleled entertainment experience, complete with a versatile stage and potential for legendary after parties.
The venue’s mission, as stated by Andrew Shulkin of MSG Sphere Studios, is to break the glass ceiling on innovative storytelling, utilizing its vast capabilities to tell the biggest stories on the biggest canvas.
The venue is expected to host live performances, concerts, award shows, sporting events, corporate events, esports tournaments, and even advertisements on its exterior LED display.
The Sphere was scheduled to open in 2021, but construction efforts were stalled due to COVID-19. That’s why the venue was opened in September 2023, with Irish rock band U2 as its first performer.
Aided by viral clips and ongoing media attention, the residency is expected to generate approximately $270 million over 18 dates. However, despite being a substantial amount, it falls short of covering the massive capital expenditures associated with the project.
James Dolan had to take a page out of the teleguide playbook and opt for advertising dollars. Possessing the most visually striking structure globally, the Sphere allowed them to command a premium.
Advertising for just one day on the Sphere required a hefty payment of $450,000. This fee included collaboration with MSG’s extensive team of over 300 designers and was anticipated to generate approximately 4.7 million daily impressions through both in-person and social media views.
Certain products are exceptionally well-suited for advertising on the Sphere. For instance, if you sell a spherical product, such as items related to tennis or basketball, it has the potential to go viral. This additional monetization angle becomes crucial in making the substantial investment in constructing the Sphere financially viable.
Lessons from a Man with Fire in His Belly – Be a Monopoly and Own Your Content
James Dolan is known for his “aggressive” and “petty” characteristics, always be surrounded with controversies. However, it doesn’t mean that he isn’t a real deal, we can learn many things from him and his family. Even if what you’re currently involved in isn’t as grand as the Sphere, there are still valuable lessons from the Dolan family that you can apply to your own life and business.
Be a Monopoly
A monopoly can be created through a variety of strategies, including regulatory capture, network effects, elite branding, proprietary technology, and economies of scale. After Chuck Dolan sold out Sterling Information to Time Warner, he had a good opportunity to be the only cable provider in New York and Long Island. He chose the path of regulatory capture, understanding its power from his tie-ups at Sterling.
This lesson extends to the Sphere. The Sphere is a combination of proprietary technology and elite branding. Currently, there’s nothing else like it in the world. Until there is, James Dolan has the biggest attention grabber globally.
The Sphere is covered in this lesson. The Sphere combines superior branding with in-house technologies. There’s nothing else like it in the world right now. James Dolan has been enjoying the hype of this massive venue.
In a world flooded with endless online content, there’s a growing trend of people willing to pay more for real-world experiences, which, by nature, are limited and scarce.
Own Your Content
According to James Dolan, when a musical act performs at Madison Square Garden, ticket sales can hit around $5 million per night. However, the company’s share is relatively smaller, typically around $600,000 to $700,000. He also highlighted the ongoing competition for bookings. Plus, he said, once you own Madison Square Garden, “how are you going to beat that?”
James Dolan emphasized that the key to enhancing the economics of the venue business is owning the content—maintaining control over as many aspects of the operation as possible. His inspiration for this approach was the “Christmas Spectacular” performed annually by the Rockettes at Radio City Music Hall.
The Rockettes and Radio City Music Hall enjoy a harmonious synergy. With ownership of both by the Dolans, they can extract additional value compared to the Rockettes being a touring group. James Dolan is incorporating this synergy into his strategy for the Sphere by creating exclusive content that he fully owns and can showcase in the Sphere indefinitely.
In its yearly seven-week run, the event “pushes over a million people into the building,” he said. “Because we own both sides of the equation, all of the revenue comes to us, and that sustains Radio City Music Hall.”
