Sphere Entertainment (NYSE:SPHR) executives used the company’s fiscal 2025 fourth-quarter and year-end earnings call to highlight strong momentum at its Las Vegas venue, outline expansion plans for new Sphere locations, and discuss cost discipline and balance sheet positioning across the business.
Las Vegas results and “The Wizard of Oz” performance
Executive Chairman and CEO Jim Dolan said the quarter’s results provided “continued validation of the business model behind Sphere,” pointing to Las Vegas performance and the company’s ability to pair proprietary technology with immersive content.
During Q&A, Sphere executive Jen Koester said the company has seen “Las Vegas headwinds,” but described Sphere as resilient with strong growth despite those pressures. She said management has been “aggressively” scheduling days with multiple shows (“side by sides”) to increase revenue per day, using demand forecasting based on visitor rates. Koester also said the company expects a strong convention season next year and is building a show schedule to reflect that.
Dolan noted that timing for new experiences will be driven by the goal of maximizing revenue inside the venue, suggesting the company may be cautious about disrupting a strong sell-through environment.
Expansion plans: National Harbor and Abu Dhabi
Dolan said the company is moving closer to its long-term vision of a “global network of Sphere venues.” He highlighted the announcement of a second U.S. Sphere planned for National Harbor in Maryland, near Washington, D.C. Dolan said National Harbor draws more than 15 million annual visitors and that the planned venue will have 6,000 seats.
According to Dolan, the National Harbor project will be built with support from the Peterson Companies as landowner and developer, as well as the state of Maryland and Prince George’s County. He said the project will use a mix of public and private funding, including approximately $200 million in state, local, and private incentives. Dolan said the company is working to finalize agreements and approvals and believes the venue “could be open in four years or less.”
Asked why the company chose the location, Dolan said Virginia and Maryland competed for the project, which accelerated the evaluation process. He said Sphere received “a very good offer on a really great location” and accepted it.
On financing, Dolan said there are “a lot of different ways” to fund the remainder beyond the incentives, including standalone project financing, noting that lending institutions have been “bullish” and willing to lend into Sphere projects. He also said partners can have advantages, particularly in-market partners, and referenced the broader benefit a Sphere can bring to a local business community.
Internationally, Dolan said the company has reached the “final stages of pre-construction” in Abu Dhabi and expects to share additional updates soon, including details on the site location. He also said Sphere is in active discussions with a “significant number” of domestic and international markets regarding both large and smaller-scale venues.
In response to a question on how many projects could be underway simultaneously, Dolan said investors should not be surprised to see “5 or 6” projects going on at once over the next few years, adding that the company would pursue as many as it can as long as projects are profitable and make sense.
Quarterly financial results and segment performance
Executive Vice President, CFO and Treasurer Robert Langer reported total company revenues of $394.3 million for the December quarter and adjusted operating income (AOI) of $128 million.
For the Sphere segment, Langer reported revenues of $274.2 million, up more than 60% from the prior-year period. He attributed the increase primarily to higher Sphere Experience revenue reflecting higher per-show revenues from The Wizard of Oz and an increased number of performances. Langer also cited revenue growth in concert residencies and Exosphere advertising and sponsorship, partially offset by the absence of a brand event held in the prior-year quarter and other revenue decreases.
Sphere segment AOI was $89.4 million versus an adjusted operating loss of approximately $0.8 million in the prior-year quarter, driven by revenue growth and lower SG&A, partially offset by higher direct operating expenses. Langer said direct operating expense increases were linked to higher Sphere Experience expenses due to the per-show impact of The Wizard of Oz and more performances.
For MSG Networks, Langer reported revenues of $120.1 million and AOI of $38.6 million, compared with $139.3 million in revenues and $33.7 million in AOI a year earlier. He said the results reflected an approximately 14.5% decrease in subscribers, lower affiliate rates, and the impact of amendments to MSG Networks media rights agreements with MSG Sports and certain other professional teams.
Costs, sponsorship momentum, and balance sheet update
Langer said total SG&A was $104.1 million, down $14.9 million year over year. He said the quarter included $4.6 million primarily related to executive management transition costs, compared with $12.4 million of executive transition costs and non-recurring costs tied to MSG Networks in the prior-year period. He also pointed to a company focus on cost efficiencies.
Addressing quarterly SG&A variability, Langer said the company remains “extremely focused” on cost management. He noted that fourth-quarter SG&A included executive transition costs and share-based award expenses that are marked to market based on the stock price. Excluding those items, he said SG&A was similar to levels seen during the rest of fiscal 2025. Looking ahead, he said the company would continue to pursue savings while ensuring it has the infrastructure to support expansion, and investors should expect quarter-to-quarter fluctuations from timing, mark-to-market changes, or other non-recurring expenses.
On sponsorship and advertising, Koester said Sphere is “off to a strong start” in fiscal 2026, citing year-over-year growth during CES and daily advertisers including Google, Delta, and Lenovo. She said Sphere hosted its second CES keynote in a row and debuted what she described as the first interactive game experience on the Exosphere in partnership with LEGO and Lucasfilm’s Star Wars. Koester added that the company has made progress expanding its roster of official partners, including recently announced Anheuser-Busch, and said the company is in active conversations with additional “blue-chip brands.”
On the balance sheet, Langer said that as of December 31 the Sphere business had net debt of approximately $56 million, reflecting about $477 million of unrestricted cash and cash equivalents, $259 million in convertible debt, and a $275 million term loan related to Sphere in Las Vegas. He also said the company refinanced the Las Vegas Sphere credit facility in January, extending maturity to a new five-year term ending in January 2031, improving the borrowing rate with no change in term loan balance, and adding a $275 million revolver that is currently undrawn.
For MSG Networks, Langer said net debt was approximately $128 million as of December 31, including $159 million outstanding on the MSG Networks term loan, which he noted is recourse only to MSG Networks.
Content pipeline and residency outlook
Dolan said the company expects to complete its next Sphere Experience, From the Edge, later this year. In response to a question on launch timing, he said it could debut sometime in the fourth quarter, but “could slip into the first quarter,” depending in part on the performance of The Wizard of Oz and the desire not to disrupt a strong revenue model.
Asked about the pipeline of new IP for Sphere Experiences, Dolan said the company is in discussions with other IP holders and that “every IP holder” Sphere speaks with is “incredibly enthusiastic” about adapting their content for the medium. He said the practical constraints include the pacing of the current venue’s schedule and determining the value and payback for IP owners.
On concert residencies, Dolan said the venue is “pretty much booked,” with “hardly any” availability left in 2026 and limited slots in 2027. He said the company is sticking to long weekends to match Las Vegas market patterns and is focused on pairing residencies with The Wizard of Oz so weekend visitors can attend multiple Sphere events.
About Sphere Entertainment (NYSE:SPHR)
Sphere Entertainment Co (NYSE: SPHR) is a publicly traded company focused on the development and operation of large-scale immersive entertainment venues. Established as a standalone entity in early 2023 following its separation from Madison Square Garden Entertainment, Sphere leverages cutting-edge audiovisual technologies to create next-generation concert, film and cultural experiences. The company’s flagship venue in Las Vegas showcases its core capabilities, while additional projects are in various stages of development around the world.
At the Las Vegas Sphere, Sphere Entertainment has installed one of the largest LED display surfaces on the planet, wrapping audiences in 16K resolution imagery and spatial audio powered by proprietary sound systems.
