Q2 2026 Sphere Entertainment Co Earnings Call

July 30, 2026

Speaker #2: Morning. Thank you for standing by and welcome to the Sphere Entertainment Co. second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode.

Operator 3: Good morning. Thank you for standing by, welcome to the Sphere Entertainment Co. Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. I would now like to turn the call over to Ari Danes, Investor Relations. Ari, please go ahead.

Operator: Good morning. Thank you for standing by, welcome to the Sphere Entertainment Co. Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. I would now like to turn the call over to Ari Danes, Investor Relations. Ari, please go ahead.

Speaker #2: After the speakers' remarks, there will be a question-and-answer session. I would now like to turn the call over to Ari Dane's investor relations. Ari, please go ahead.

Speaker #3: Thank you. Good morning and welcome to Sphere Entertainment's second quarter 2026 earnings conference call. Today's call will begin with our executive chairman and CEO, Jim Dolan, who will provide an update on our business.

Ari Danes: Thank you. Good morning and welcome to Sphere Entertainment Q2 2026 earnings conference call. Today's call will begin with our Executive Chairman and CEO, Jim Dolan, who will provide an update on our business. Robert Langer, our Executive Vice President, Chief Financial Officer, and Treasurer, will then review our financial results for the period. After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release, it is available in the Investors section of our corporate website. Please take note of the following. Today's discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

Speaker #3: Robert Langer, our executive vice president, chief financial officer and treasurer, will then review our financial results for the period. After our prepared remarks, we'll open up the call for questions.

Speaker #3: If you do not have a copy of today's earnings release, it is available in the investor section of our corporate website. Please take note of the following: today's discussion may contain forward-looking statements within the meaning of the private securities litigation reform act of 1995.

Speaker #3: Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

Speaker #3: Please refer to the company's filings with the SEC for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call.

Ari Danes: Please refer to the company's filings with the SEC for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. On pages four and five of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income, or AOI, a non-GAAP financial measure. With that, I will now turn the call over to Jim.

Speaker #3: On pages 4 and 5 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income or AOI, a non-GAAP financial measure.

Speaker #3: And with that, I'll now turn the call over to Jim.

Speaker #4: Thank you, Ari. Good morning, everyone. For today's call, I'd like to discuss our progress in two important areas of the business: expanding the Sphere venue footprint around the world and developing a diverse slate of original content.

Jim Dolan: Thank you, Ari. Good morning, everyone. For today's call, I would like to discuss our progress in two important areas of the business: expanding the Sphere venue footprint around the world and developing a diverse slate of original content. In Abu Dhabi, we recently announced Sphere's site location on Yas Island. Construction for Sphere is now underway and is expected to be completed by the end of 2029. Here in the US, we continue to advance our plans for Sphere at National Harbor. We expect to complete an agreement for third-party financing in the near term. This funding would be in addition to $200 million in state, local, and private incentives. The contemplated structure would give us full operational control of the venue day to day. This would also allow us to consolidate the venue's financials and retain more of its economics.

Speaker #4: In Abu Dhabi, we recently announced Sphere's site location on Yaz Island. Construction for Sphere is now underway and is expected to be completed by the end of 2029.

Speaker #4: Here in the U.S., we continue to advance our plans for Sphere at National Harbor. We expect to complete an agreement for third-party financing in the near term.

Speaker #4: This funding would be in addition to $200 million in state, local, and private incentives. The contemplated structure would give us full operational control of the venue day-to-day.

Speaker #4: This would also allow us to consolidate the venue's financials and retain more of its economics. In addition, we recently filed our detailed site plan with Prince George's County as we work toward securing necessary permits.

Jim Dolan: In addition, we recently filed our detailed site plan with Prince George's County as we work towards securing necessary permits. We continue to believe the venue could be open in under 4 years.

Speaker #4: We continue to believe the venue could be open in under 4 years. We also remain in discussion with a significant number of markets regarding large and small-scale spheres.

Jim Dolan: We also remain in discussion with a significant number of markets regarding large and small-scale spheres. At the same time, we continue to focus on developing a diverse slate of original experiences. Last month, we announced a new experience, The Rocky Horror Picture Show at Sphere, which we expect to debut in 2027. Bringing this production to Sphere will expand our content slate to a new genre. It also allows us to extend Sphere Experience showings later into the evening, increasing the utilization of the venue. Meanwhile, The Wizard of Oz at Sphere has now sold nearly 3.6 million tickets for approximately $450 million in ticket sales. We also remain in discussion with IP holders for other potential Sphere Experiences. We will keep you updated on our progress. Turning briefly to MSG Networks. Yesterday, we announced the partnership making DAZN our exclusive direct-to-consumer streaming home.

Speaker #4: At the same time, we continue to focus on developing a diverse slate of original experiences. Last month, we announced a new experience: The Rocky Horror Picture Show at Sphere, which we expect to debut in 2027.

Speaker #4: Bringing this production to Sphere will expand our content slate to a new genre. It also allows us to extend Sphere experience showings later into the evening, increasing the utilization of the venue.

Speaker #4: Meanwhile, the Wizard of Oz at Sphere has now sold nearly 3.6 million tickets for approximately $450 million in ticket sales. We also remain in discussion with IP holders for other potential Sphere experiences.

Speaker #4: We will keep you updated on our progress. Turning briefly to MSG Networks, yesterday we announced the partnership-making DAZN, our exclusive direct-to-consumer streaming home. We believe both our subscribers and content will benefit from DAZN's state-of-the-art platform.

Jim Dolan: We believe both our subscribers and content will benefit from DAZN's state-of-the-art platform. We have also continued to reduce the amount of debt at MSG Networks, which was down to $116 million at quarter-end. As a reminder, that debt is non-recourse to Sphere. In summary, we are advancing plans across key areas of our business as we make headway towards our long-term vision for a global network of Sphere venues. With that, I'll turn the call over to Robert, who will take you through our financial results.

Speaker #4: We have also continued to reduce the amount of debt at MSG Networks, which was down to $116 million a quarter end. As a reminder, that debt is non-recourse to Sphere.

Speaker #4: So, in summary, we are advancing plans across key areas of our business. As we make headway toward our long-term vision for a global network of Sphere venues, and with that, I'll turn the call over to Robert, who will take you through our financial results.

Speaker #5: Thank you, Jim. And good morning, everyone. For Q2, we generated total company revenues of $313.6 million and adjusted operating income of $50.9 million.

Robert Langer: Thank you, Jim, and good morning, everyone. For Q2, we generated total company revenues of $313.6 million and adjusted operating income of $50.9 million. Our Sphere segment generated revenues of $226.4 million, an increase of nearly 30% compared to the prior year period. This growth was mainly driven by The Sphere Experience, primarily reflecting higher per-show revenues for The Wizard of Oz at Sphere. As Jim mentioned, The Wizard of Oz at Sphere is performing well as it nears its one-year anniversary. We also continue to work on both The Wizard of Oz 2.0, an enhanced version of the production, as well as on From The Edge. Turning back to our results for the quarter, we also saw revenue growth in Exosphere advertising, sponsorship, and suite license fees, and concert residencies. This was partially offset by the impact of fewer brand events held at Sphere year-over-year.

Speaker #5: Our Sphere segment generated revenues of $226.4 million, an increase of nearly 30% compared to the prior year period. This growth was mainly driven by the Sphere Experience, primarily reflecting higher per-show revenues for the Wizard of Oz at Sphere.

Speaker #5: As Jim mentioned, Wizard of Oz is performing well as it nears its one-year anniversary. We also continue to work on both Wizard of Oz 2.0 and the enhanced version of the production, as well as on From the Edge.

Speaker #5: Turning back to our results for the quarter, we also saw revenue growth in Exosphere advertising, sponsorship, and suite license fees, and concert residencies. This was partially offset by the impact of fewer brand events held at Sphere year over year.

Speaker #5: Second quarter adjusted operating income for our Sphere segment was $39.9 million. As compared to 24.9 million in the prior year quarter, this reflected the increase in revenues partially offset by higher SG&A expenses and direct operating expenses.

Robert Langer: Q2 adjusted operating income for our Sphere segment was $39.9 million as compared to $24.9 million in the prior year quarter. This reflected the increase in revenues, partially offset by higher SG&A expenses and direct operating expenses. The increase in direct operating expenses includes the impact of The Wizard of Oz at Sphere, mainly a result of higher per-show expenses. This was partially offset by lower expenses from brand events and other cost decreases. SG&A expenses for Q2 were $125.6 million, an increase of $29.2 million. This increase includes the impact of mark-to-market adjustments for certain share-based compensation awards driven by the appreciation in the company's stock price during the quarter. I would also note that we cash-settled over half of these awards during the quarter. Therefore, all else being equal, the mark-to-market impact will be lessened in future periods.

Speaker #5: The increase in direct operating expenses includes the impact of the Wizard of Oz at Sphere mainly a result of higher per-show expenses. This was partially offset by lower expenses from brand events and other cost decreases.

Speaker #5: SG&A expenses for the second quarter were $125.6 million. An increase of 29.2 million. This increase includes the impact of more-to-market adjustments for certain share-based compensation awards.

Speaker #5: Driven by the appreciation in the company's stock price during the quarter. I would also note that we cash settled over half of these awards during the quarter.

Speaker #5: Therefore, all else being equal, the mark-to-market impact will be lessened in future periods. Turning to MSG Networks, the segment generated $87.3 million in revenues and $11 million in AOI in the second quarter.

Robert Langer: Turning to MSG Networks, the segment generated $87.3 million in revenues and $11 million in AOI in Q2. This compares to $107.1 million in revenues and $36.5 million in AOI in the prior year period. These year-over-year results reflect an approximately 16.5% decrease in subscribers as well as a decrease in advertising revenue. These results also reflect the impact of retroactive adjustments for the 2024-25 season recorded in the prior year's Q2, related to amendments for media right agreements with MSG Sports and certain other professional teams. Turning to our balance sheet, as of June 30th, our Sphere business had approximately $534 million of unrestricted cash and cash equivalents, $259 million in convertible debt, and a $275 million term loan related to Sphere in Las Vegas. At MSG Networks, as of June 30th, net debt was approximately $98 million.

Speaker #5: This compares to $107.1 million in revenues and $36.5 million in AOI in the prior-year period. These year-over-year results reflect an approximately 16.5% decrease in subscribers, as well as a decrease in advertising revenue.

Speaker #5: These results also reflect the impact of retroactive adjustments for the 2024-25 season, recorded in the prior year second quarter. Related to amendments for media rights agreements, with MSG Sports and certain other professional teams.

Speaker #5: Turning to our balance sheet, as of June 30, our Sphere business had approximately $534 million of unrestricted cash and cash equivalents, and $259 million in convertible debt.

Speaker #5: And the $275 million term loan related to Sphere in Las Vegas. At MSG Networks, as of June 30, net debt was approximately $98 million.

Speaker #5: As Jim mentioned, this included $116 million outstanding on the MSG Networks term loan, which again is debt that is recourse only to MSG Networks. And with that, we'll now open the call for questions.

Robert Langer: As Jim mentioned, this included $116 million outstanding on the MSG Networks term loan, which again, is debt that is recourse only to MSG Networks. With that, we'll now open the call for questions.

Speaker #1: We will now begin the question-and-answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, please press star 1 again.

Operator 3: We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of David Karnofsky with JP Morgan. Your line is open. Please go ahead.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of David Karnovsky with JPMorgan. Your line is open. Please go ahead.

Speaker #1: We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device.

Speaker #1: Please stand by while we compile the Q&A roster. Your first question comes from the line of David Karnofsky with JP Morgan. Your line is open.

Speaker #1: Please go ahead.

Speaker #3: Hi, thank you. Jim, with 'Wizard of Oz,' can you discuss how you see the progression of attendance from launch until now in terms of seasonality, and maybe getting past that initial period of demand?

David Karnofsky: Hi. Thank you. Jim, with Wizard of Oz, can you discuss how you see the progression of attendance from launch until now in terms of seasonality and maybe getting past that initial period of demand? How does that inform your view of the show from here as you lap the anniversary and look to put enhancements into the experience? Thank you.

David Karnovsky: Hi. Thank you. Jim, with Wizard of Oz, can you discuss how you see the progression of attendance from launch until now in terms of seasonality and maybe getting past that initial period of demand? How does that inform your view of the show from here as you lap the anniversary and look to put enhancements into the experience? Thank you.

Speaker #3: And then how does that inform your view of the show from here as you lap the anniversary and look to put enhancements into the experience?

Speaker #3: Thank you.

Speaker #4: Hi, David. How are you doing? Yeah. The show has performed very, very well. And it is subject to, as basically everything in Vegas is, the seasonality.

Jim Dolan: Hi, David. How are you doing? Yeah. The show is performing very well.

Jim Dolan: It is subject to, as basically everything in Vegas is, the seasonality, and we are in the middle of the summer, which is definitely the low season for it, but it is still doing very well. I anticipate we could run Wizard of Oz for a long time and do very well with it. Our plans really are to come out with the new version of Wizard of Oz sometime, we hope in December. Excuse me, September, not December. Then, of course, in March, to add in Rocky Horror Picture Show, which will give us the ability to service families in the daytime and then, a more adult audience in the evening. I think that is going to work very well.

Speaker #4: And we're in the middle of the summer, which is definitely the low season for it. But it's still doing very, very well. And I anticipate we could run Wizard of Oz for a long, long time.

Speaker #4: And do very well with it. But that's—our plans really are to come out with the new version of Wizard of Oz sometime, we hope, in December.

Speaker #4: Excuse me, September, not December. And then, of course, the in March to add in Rocky Horror Picture Show, which will give us the ability to serve as families in the daytime and then a more adult audience in the evening.

Speaker #4: And I think that's going to work very well. But look, I always look at—if you take a look at the show "O" in Las Vegas, right, which has been running now for over 30 years, and it doesn't seem like the appetite for that show has really diminished at all.

Jim Dolan: Look, if you take a look at the show, O in Las Vegas, which has been running now for over 30 years, it does not seem like the appetite for that show has really diminished at all. I think that Wizard of Oz could easily go 10 years, playing in other spheres, occasionally playing in Vegas, et cetera. I think there is always going to be an audience for that product, and that is one of the reasons that we picked it was because it is so universally loved, and it has tremendous legs. We will have some fun modifications and additions that we will make for 2.0, including that you are going to go for a ride with a witch and new kinds of flying monkeys. I think you are going to see that the product remains robust in its demand.

Speaker #4: And I think that Wizard of Oz could easily go 10 years. Playing in other spheres, occasionally playing in Vegas, etc., I think there's always going to be an audience for that product.

Speaker #4: And that's one of the reasons that we picked it was because it's so universally loved, and it has tremendous legs that the and we'll have some fun modifications and additions that will make during for 2.0, including that you're going to go for a ride with a witch.

Speaker #4: And new kinds of flying monkeys so I think you're going to see that the product remains robust in its demand and if I can make more Wizard of Oz's I definitely would.

Jim Dolan: If I could make more Wizard of Oz's, boy, I definitely would.

Speaker #3: Thank you.

David Karnofsky: Thank you.

David Karnovsky: Thank you.

Speaker #1: Your next question comes from the line of Stephen Laschik with Goldman Sachs. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Stephen Laszczyk with Goldman Sachs. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Stephen Laszczyk with Goldman Sachs. Your line is open. Please go ahead.

Speaker #5: Hey, guys. Thanks for taking the question. Jim, you mentioned Rocky Horror represents a different genre of content for the Sphere. It also gives you the opportunity to show content on a different schedule compared to what you've historically shown with Oz.

Stephen Laszczyk: Hey, guys. Thanks for taking the question. Jim, you mentioned "Rocky Horror" represents a different genre of content for the Sphere. It also gives you the opportunity to show content on a different schedule compared to what you've historically shown was. I was wondering if you could maybe talk a little bit more about this, how investors should think about the role of complementary IP within the broader content strategy, as well as the opportunity it could afford you to increase show count over time at the Sphere.

Speaker #5: Add, I was wondering if you could maybe talk a little bit more about this, how investors should think about the role of complementary IP within the broader content strategy, as well as the opportunity it could afford you to increase show count over time at the Sphere.

Jim Dolan: Look, the "Rocky Horror Picture Show," I think it's going to be a smash. Just take a step to the left. It's a little like movie theaters in a way, in that the content fits the daytime and what time you're showing it, et cetera. The whole business equation, the strategy here is to create reusable content that goes from Sphere to Sphere, et cetera. Nobody in Abu Dhabi has seen "Rocky Horror Picture Show." I'm wondering how they're going to like that. The "Wizard of Oz," and the same thing is true of National Harbor, et cetera. As we continue to build out Spheres, our ability to create and monetize content also increases.

Speaker #4: Look, the Rocky Horror Picture Show, I think, is going to be it. I think it's going to be a smash. Just take a step to the left.

Speaker #4: And but the it's a little like movie theaters in a way. In that you're the content fits the daytime and what time you're showing it, etc.

Speaker #4: But the whole business equation that the strategy here is to create reusable content that goes from Sphere to Sphere, etc., and nobody in Abu Dhabi has seen Rocky Horror Picture Show.

Speaker #4: I'm wondering how they're going to like that. And the Wizard of Oz and the same thing is true of National Harbor, etc., so as we continue to build out Spheres, our ability to create and monetize content also increases.

Speaker #4: And I really would like to get ahead of that as much as we can before the openings of these venues, because I just think it will make their results even more robust.

Jim Dolan: I really would like to get ahead of that as much as we can before the openings of these venues, because I just think it will make their results even more robust.

Speaker #5: Great. Thank you.

Stephen Laszczyk: Great. Thank you.

Speaker #1: Your next question comes from the line of Brandon Ross with LightShed. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Brandon Ross with LightShed. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Brandon Ross with LightShed. Your line is open. Please go ahead.

Speaker #3: Thanks for taking the questions. Jim, regardless of the seasonality and whatever it is that's impacting Oz now, I think we can all agree it's been a pretty massive hit and the concert calendar in Vegas is already really full.

Brandon Ross: Thanks for taking the questions. Jim, regardless of the seasonality and whatever it is that's impacting "Oz" now, I think we can all agree it's been a pretty massive hit, and the concert calendar in Vegas is already really full. With that in mind, can you take a step back and talk about what the growth levers are for the Las Vegas Sphere, specifically in 2027 and beyond? Thanks.

Speaker #3: So, with that in mind, can you take a step back and talk about what the growth levers are for the Las Vegas Sphere specifically in 2027 and beyond?

Speaker #3: Thanks.

Speaker #4: Sure. The you're right about concerts, right? As I've said in previous calls, right, that we're not shy of demand from artists to come play the Sphere.

Jim Dolan: Sure. You're right about concerts. As I've said in previous calls, that we're not shy of demand from artists to come play the Sphere. We have some great artists coming up, which I'm not going to tell you their names today. The whole strategy, the business strategy behind the creation of Sphere is utilization of the venue. That's where we look at the growth to come. Madison Square Garden runs approximately 200 and something events a year. It is hamstrung by the fact that you have to load in, you have to load out. It's different shows, but of course, the Garden does very well. When we created Sphere and created the business model around it was all about increasing utilization and increasing utilization through our owned IP and our own content. We're going to continue to pursue that.

Speaker #4: And we have some great artists coming up, which I'm not going to tell you their names today. But the whole strategy, the business strategy behind the creation of Sphere is utilization of the venue.

Speaker #4: And that's where the growth will that's where we look at the growth to come, right? Madison Square Garden, right, runs approximately 200 and something events a year.

Speaker #4: And the it is hamstrung by the fact that you have to load in, you have to load out. The it's different shows. But of course, the garden does very created Sphere and created the business model around it, it was all about increasing utilization and increasing utilization through our owned IP and our own content.

Speaker #4: The so I mean, we're going to continue to pursue that. I don't think that we have refined the model to the point where we've maximized the revenue potential there.

Jim Dolan: I don't think that we have refined the model to the point where we've maximized the revenue potential there. I think we have new products, that some of which we haven't talked about and won't talk about at this point. That will increase the utilization. That's where I think the growth will come.

Speaker #4: And I think we have new products that some of which we haven't talked about and won't talk about at this point. The that will increase the utilization.

Speaker #4: And that's where I think the growth will come, so.

Speaker #3: Great. Thank you very much.

Brandon Ross: Great. Thank you very much.

Speaker #1: Your next question comes from the line of Matt Condon with Citizens Bank. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Matt Condon with Citizens Bank. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Matt Condon with Citizens Bank. Your line is open. Please go ahead.

Speaker #6: Thank you for taking the question. Jim, in terms of original content, do you have the capacity to take on additional projects? And has the time to market gotten shorter since the development of the Wizard of Oz?

Matt Condon: Thank you for taking the question. Jim, in terms of original content, do you have the capacity to take on additional projects? Has the time to market gotten shorter since the development of "The Wizard of Oz"? Just relatedly, how many Sphere experiences could we expect to be playing in the venue by the end of 2027?

Speaker #6: And just relatedly, how many Sphere experiences could we expect to be playing in the venue by the end of 2027?

Speaker #4: Okay. That's a good question. The first part of it was really about how quickly we make and how efficiently we make it. And we are definitely getting faster and becoming more efficient as Rocky Horror, right, is a good example.

Jim Dolan: Okay. That's a good question. The first part of it is really about how quickly we make, how efficiently we make it, we are definitely getting faster and becoming more efficient. "Rocky Horror" is a good example. "Wizard of Oz" really took two years to make, "Rocky Horror Picture Show" is going to take less than 12 months. We're getting better at it, particularly when it comes to the use of AI, the production techniques that we developed for "Wizard of Oz." I expect that we'll be able to create more content at a less expensive and more efficient fashion. That will bode well, of course, for Vegas, but for the other Spheres. How many will we have by the end of 2027? It's just a guess, Matt, but I'd say three to four.

Speaker #4: I mean, Wizard of Oz really took two years to make. And Rocky Horror Picture Show is going to take less than 12 months. And we're getting better.

Speaker #4: The particularly when it comes to the use of AI, and the production techniques that we developed for Wizard of Oz. So I expect that we'll be able to create more content at a less expensive and more efficient fashion, and that will bode well for, of course, for Vegas, but for the other spheres.

Speaker #4: How many will we have by the end of '27? The it's just a guess. Matt, but I'd say three to four.

Speaker #6: Great. Thank you so much.

Matt Condon: Great. Thank you so much.

Speaker #1: Your next question comes from the line of Ryan Siegel with Craig Hallam. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Ryan Sigdahl with Craig-Hallum. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Ryan Sigdahl with Craig-Hallum. Your line is open. Please go ahead.

Speaker #7: Hey, good morning, guys. Jim, on National Harbor, can you explain why you think the optical model is advantageous versus a traditional franchise model? And then, second to that, if you have interest in pursuing a similar structure for future Spheres, and if there could be situations where you’d maybe pursue multiple different operating models?

Ryan Sigdahl: Hey, good morning, guys. Jim, on National Harbor, can you explain why you think the opco model is advantageous versus a traditional franchise model? Second to that, if you have interest in pursuing a similar structure for future Spheres, and if there could be situations where you'd maybe pursue multiple different operating models?

Speaker #4: Okay. Well, look, I'll answer part of this; Digger will answer the other part of it. Do we think that National Harbor is the optimal model?

Jim Dolan: Okay. Well, look, I'll answer part of this. Dinger will answer the other part of it. Do we think that National Harbor is the optimal model? I don't know. It's the model that works for National Harbor. The idea here is to build as many of them as quickly as we can. That helps the overall business strategy. Now I'm going to let Dinger talk about what we're thinking about with National Harbor.

Jim Dolan: Okay. Well, look, I'll answer part of this. Digger will answer the other part of it. Do we think that National Harbor is the optimal model? I don't know. It's the model that works for National Harbor. The idea here is to build as many of them as quickly as we can. That helps the overall business strategy. Now I'm going to let Digger talk about what we're thinking about with National Harbor.

Speaker #4: I don't know. Look, it's the model that works for National Harbor. But the idea here is to build as many of them as quickly as we can, right?

Speaker #4: Because that helps the overall business strategy. Now, I'm going to let Digger talk about what we're thinking about with National Harbor.

Speaker #7: Sure. As Jim mentioned, as we look at the overall expansion strategy, we analyze several financing structures. We see a number of benefits for what we call a build to suit and lease back structure for National Harbor.

[Company Representative] (Sphere Entertainment): Sure. As Jim mentioned, as we look at the overall expansion strategy, we analyzed several financing structures. We see a number of benefits for what we call a build-to-suit and leaseback structure for National Harbor, similar to a sale leaseback, but it's really build-to-suit because it's new construction. First, the third-party partner that would fund the total construction of the venue. While that third party will own the venue, we will enter into a long-term lease and have day-to-day operational control of the venue, which we think is really important given our business in Las Vegas and leveraging off of our whole management team and operational structure. We'll also fully consolidate the National Harbor results on our financials. I think most importantly, this type of financing will enable us to retain more of the AOI and also the potential upside in the future.

Digger Granville-Smith: Sure. As Jim mentioned, as we look at the overall expansion strategy, we analyzed several financing structures. We see a number of benefits for what we call a build-to-suit and leaseback structure for National Harbor, similar to a sale leaseback, but it's really build-to-suit because it's new construction. First, the third-party partner that would fund the total construction of the venue. While that third party will own the venue, we will enter into a long-term lease and have day-to-day operational control of the venue, which we think is really important given our business in Las Vegas and leveraging off of our whole management team and operational structure. We'll also fully consolidate the National Harbor results on our financials. I think most importantly, this type of financing will enable us to retain more of the AOI and also the potential upside in the future.

Speaker #7: Similar to a sale lease back, but it's really build to suit because it's new construction. First, the third-party partner that would fund the total construction of the venue.

Speaker #7: While that third party will own the venue, we will enter into a long-term lease and have day-to-day operational control of the venue, which we think is really important given our business in Las Vegas and leveraging our whole management team and operational structure.

Speaker #7: We'll also fully consolidate the National Harbor results on our financials, and I think most importantly, this type of financing will enable us to retain more of the AOI and also the potential upside in the future.

Speaker #7: And I think, lastly, as Jim mentioned, as we look at other structures, it could be a combination. It could be a franchise strategy. It could be the build-to-suit.

[Company Representative] (Sphere Entertainment): I think lastly, as Jim mentioned, as we look at other structures, it could be a combination. It could be a franchise strategy, it could be the build-to-suit, it could be a minority equity investment. It could also include debt structures. We really look at each one individually and look to maximize our returns.

Digger Granville-Smith: I think lastly, as Jim mentioned, as we look at other structures, it could be a combination. It could be a franchise strategy, it could be the build-to-suit, it could be a minority equity investment. It could also include debt structures. We really look at each one individually and look to maximize our returns.

Speaker #7: It could be a minority equity investment. It could also include debt structures. So we're really looking at each one individually and look to maximize our returns.

Speaker #4: I think the thing about these structures is that A, we're looking to go fast and build as many as we can. And by utilizing multiple structures, our availability of capital the it's not unlimited, but it's quite robust.

Jim Dolan: I think, the thing about these structures is that, A, we're looking to go fast and build as many as we can. By utilizing multiple structures, our availability of capital, it's not unlimited, but it's quite robust. That really helps us move the strategy along.

Speaker #4: So that really helps us move the strategy along.

Speaker #7: If I may ask one quick follow-up on that— I mean, you own Vegas. MSG owns the Garden. They've benefited from value appreciation of the real estate of the property.

Ryan Sigdahl: If I may ask one quick follow-up on that.

Jim Dolan: Yes.

Ryan Sigdahl: You own Vegas. MSG owns The Garden. They've benefited from value appreciation of the real estate of the property. There's a ton of IP in the Spheres. I guess, why not self-finance this if you want to operate it and keep control of it?

Speaker #7: There's a ton of IP in the Spheres. I guess, why not self-finance this if you want to operate and keep control of it?

Jim Dolan: We don't rule that out. I think you have to look at each project. Look, if we were to build a Sphere here in New York, I think the likelihood is we'd want to own it, maybe in conjunction with MSGE. The thing is that our goal, as I said before, is to go fast and to build as many as we. You got to take that into mind when you look at the structure. As many as I can build, I'm going to build. The capital is there. The goal is going to be the goal. It's going to be to go fast, right? I really want five, six years from now, have five venues up or more, and have another five that are under construction. If we can figure out how to construct them faster, which we are working on all the time, right?

Speaker #4: We don't rule that out, right? I think you have to look at each project, right? I mean, look, if we were to build a sphere here in New York, I think the likelihood is we'd want to own it.

Speaker #4: Maybe in conjunction with MSGE. But the thing is that our goal, as I said before, is to go fast, right? And to build as many as we— you’ve got to take that into mind when you look at the structure.

Speaker #4: As many as I can build, I'm going to build. The capital is there, right? And the goal is going to be the goal. It's going to be to go fast, right?

Speaker #4: I really want five years from now to be five, six years from now, have five venues up or more, and have another five that are under construction.

Speaker #4: And if we could figure out how to construct them faster, which we are working on all the time, right, we'd do that too.

Jim Dolan: We'll do that too.

Speaker #7: Helpful. Thanks, guys.

Ryan Sigdahl: Helpful. Thanks, guys.

Speaker #1: Your next question comes from the line of Peter Henderson with Bank of America. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Peter Henderson with Bank of America. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Peter Henderson with Bank of America. Your line is open. Please go ahead.

Speaker #7: Good morning. First, let me congratulate you on the next championship, Jim. And then on Sphere, can you just provide some can you just provide some color on the progress of expansion discussions?

Peter Henderson: Good morning. First, let me congratulate you on the Knicks championship, Jim. Then on Sphere, can you just provide some color on the progress of expansion discussions? Do you think there's a possibility that there's another expansion announcement coming in 2026? Or is it more likely to be a 2027 event? Thank you.

Speaker #7: And do you think there's a possibility that there's another expansion announcement coming in 2026, or is it more likely to be a 2027 event?

Speaker #7: Thank you.

Speaker #4: Well, I'll answer the second part of it first. Yes, I'm hopeful. I think it's very possible we'll have another—we'll have another announcement this year.

Jim Dolan: Well, I'll answer the second part of it first. Yes, I'm hopeful. I think it's very possible we'll have another announcement this year. We're in pretty serious discussions with a couple of different marketplaces, et cetera. Yes, if it's not by the end of this year, certainly by Q1, I'll be disappointed if we don't have another one by. Looking at my people, telling them we don't have another one to announce by Q1. What was the first part of the question?

Speaker #4: We're in pretty serious discussions with a couple of different marketplaces, etc. And so, yes, I think we can get—I think we could, if it's not by the end of this year, certainly by the first quarter. I'll be disappointed if we don't have something.

Speaker #4: Have another one by looking at my people telling them this. We'll have another one to announce by first quarter. So but and what was the first part of the question?

Speaker #7: No, I was just congratulating you on the next championship. I know on the previous call you were concerned about SGA. You didn't have to worry about him.

Peter Henderson: No, I was just congratulating on the Knicks championship. I know on the previous call you were concerned about SCA. You didn't have to worry about him.

Speaker #4: All right. All of you New York-based analysts, etc., I will give you a little sound bite on the next, right? We're going to have the most fun season as fans that we've ever had in my ownership, right, with the Knicks this upcoming the team is coming back pretty much intact.

Jim Dolan: All right. All you New York-based analysts, et cetera, I will give you a little soundbite on the Knicks, right? We're going to have the most fun season as fans that we've ever had in my ownership, right, with the Knicks this upcoming. The team is coming back pretty much intact. You know who they are now. You know each one of those personalities. You're going to be with them on every dribble, every basket, every free throw, et cetera. It should just be a lot of fun. If it turns out really well, we'll do another parade somewhere in New York.

Speaker #4: You know who they are now. You know each one of those personalities. You're going to be with them on every dribble, every basket, every free throw, etc.

Speaker #4: And it should just be a lot of fun. And if it's turns out really well, we'll do another parade somewhere in New York.

Speaker #7: Awesome. Looking forward to it. Thank you.

Peter Henderson: Awesome. Looking forward to it. Thank you.

Speaker #1: Your next question comes from the line of Peter Sapino with Wolf Research. Your line is open. Please go ahead.

Operator 3: Your next question comes from the line of Peter Supino with Wolfe Research. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Peter Supino with Wolfe Research. Your line is open. Please go ahead.

Speaker #6: Good morning. I wondered if you would update us on your capacity to develop new spheres and play the various consulting or principal roles that you would play in new spheres whether they'd be franchised or owned.

Peter Supino: Good morning. I wondered if you would update us on your capacity to develop new Spheres in play, the various consulting or principal roles that you would play in new Spheres, whether they'd be franchised or owned. The bottom line is, can you still support the simultaneous development of five or six Spheres, which I think was your vision in the past? The second question just relates to National Harbor. Could you sort of take us on a history lesson of how your thinking about financing National Harbor has evolved? When we started, I think it was likely to be a version of a franchised arrangement, and now it sounds like a principal structure. I'm wondering what you learned on that journey and what we can extrapolate to the future. Thanks.

Speaker #6: The bottom line is, can you still support a simultaneous development of five or six spheres, which I think was your vision in the past?

Speaker #6: And a second question just relates to National Harbor. Could you sort of take us on a history lesson of how you're thinking about financing National Harbor has evolved?

Speaker #6: And we started, I think, it was likely to be a version of a franchise arrangement, and now it sounds like a principal structure. I'm wondering what you learned on that journey and what we can extrapolate to the future.

Speaker #6: Thanks.

Speaker #4: Wow. Was there a question in there? I think you want to add this one?

Jim Dolan: Wow. Was there a question in there? Dinger, do you want to answer this one?

Jim Dolan: Wow. Was there a question in there? Digger, do you want to answer this one?

Speaker #6: Yeah. Yeah. No problem. Look, in terms of expansion and the ability to work on five to six spheres simultaneously, as we said in prior calls, we had the capacity to do that.

[Company Representative] (Sphere Entertainment): Yeah. No problem. Look, in terms of expansion and the ability to work on five to six Spheres simultaneously, as we said on prior calls, we have the capacity to do that. We have an in-house development and construction team that, as Jim mentioned, is not only working on the current ones we have. In Abu Dhabi, we consult on that build because they're obviously constructing it and building it, but we have a consulting team internal that's working on it because it's such a bespoke venue. Obviously, National Harbor, our team will be building that, and we think they can obviously take on another two, three, four over the coming year and a half. As Jim mentioned, to have five Spheres opened in five-plus years is our goal. To have other ones in construction at that time, we think we have the capacity to do that.

Digger Granville-Smith: Yeah. No problem. Look, in terms of expansion and the ability to work on five to six Spheres simultaneously, as we said on prior calls, we have the capacity to do that. We have an in-house development and construction team that, as Jim mentioned, is not only working on the current ones we have. In Abu Dhabi, we consult on that build because they're obviously constructing it and building it, but we have a consulting team internal that's working on it because it's such a bespoke venue. Obviously, National Harbor, our team will be building that, and we think they can obviously take on another two, three, four over the coming year and a half. As Jim mentioned, to have five Spheres opened in five-plus years is our goal. To have other ones in construction at that time, we think we have the capacity to do that.

Speaker #6: We have an in-house development and construction team that, as Jim mentioned, does not only work on the current ones we have. In Abu Dhabi, we consult on that build.

Speaker #6: They're obviously constructing and building it, but we have a consulting team internal that's working on it because it's such a bespoke venue. Obviously, National Harbor, our team will be building that.

Speaker #6: And we think they can obviously take on another two, three, four over the coming year and a half. So, as Jim mentioned, to have five spheres opened in five-plus years is our goal.

Speaker #6: And to have other ones in construction at that time, we think we have the capacity to do that. With respect to your question on National Harbor and financing, I think we did answer that before.

[Company Representative] (Sphere Entertainment): With respect to your question on National Harbor and financing, I think we did answer that before. Look, the sale leaseback structure that we're talking about, we think is the right one for National Harbor. With Abu Dhabi, the franchise model was the right one. Obviously, they are funding and they'll own the entire Sphere in a market that's across the globe from us. We have a great partnership with them, and we'll have franchise fees and royalties associated with it. As we mentioned, it'll be market by market. I think domestically, you'll see much more of a probably owned or a sale leaseback with a full operational control. Internationally, it'll depend on the market. Depending on whether it's in the Middle East, it's different. We might look at it differently in Asia versus Europe.

Digger Granville-Smith: With respect to your question on National Harbor and financing, I think we did answer that before. Look, the sale leaseback structure that we're talking about, we think is the right one for National Harbor. With Abu Dhabi, the franchise model was the right one. Obviously, they are funding and they'll own the entire Sphere in a market that's across the globe from us. We have a great partnership with them, and we'll have franchise fees and royalties associated with it. As we mentioned, it'll be market by market. I think domestically, you'll see much more of a probably owned or a sale leaseback with a full operational control. Internationally, it'll depend on the market. Depending on whether it's in the Middle East, it's different. We might look at it differently in Asia versus Europe.

Speaker #6: Look, to sell leaseback structure, that we're talking about, we think is the right one for National Harbor. With Abu Dhabi, the franchise model was the right one.

Speaker #6: Obviously, they are funding, and they'll own the entire Sphere in a market that's across the globe from us. We have a great partnership with them, and we'll have franchise fees and royalties associated with it.

Speaker #6: So as we mentioned, it'll be market by market. I think domestically, you'll see much more of an probably owned or a sale leaseback with a full operational control.

Speaker #6: And internationally, it'll depend on the market. Depend on whether it's in the Middle East. It's different. We might look at it differently in Asia versus Europe.

Speaker #6: So we'll take each one, and again, as we mentioned before, from a financing perspective, it's all going to depend upon having the maximum ROI.

[Company Representative] (Sphere Entertainment): We'll take each one, and again, as we mentioned before, from a financing perspective, it's all going to depend upon having the maximum ROI.

Digger Granville-Smith: We'll take each one, and again, as we mentioned before, from a financing perspective, it's all going to depend upon having the maximum ROI.

Speaker #4: Yeah. In terms of the capacity to build, right, it's interesting to sort of look at, is the difference between National Harbor and Abu Dhabi, right?

Jim Dolan: Yeah. Look, in terms of the capacity to build, right? What's interesting to sort of look at is the difference between National Harbor and Abu Dhabi, right? What we're doing in Abu Dhabi is basically our design, right? We're helping oversee the construction process, but there is a general contractor there, right? As there are general contractors all around the world, right? Our ability in terms of accessing that part of the build, right, we're relying on the whole construction marketplace, which, I think It's robust. It's fine.

Speaker #4: What we're doing at Abu Dhabi is that it's basically our design, right, and we're overseeing the helping oversee the construction process. But there is a general contractor there, right, the as there are general contractors all around the world, right?

Speaker #4: So our ability, in terms of accessing that part of the build, right, we're relying on the whole construction marketplace, which—I mean, I think it's robust.

Speaker #4: I mean, it's fine. We should—if we had three or four spheres under construction, I would anticipate we'd have different general contractors, right? Different local contractors, etc.

Jim Dolan: If we had three or four Spheres under construction, I would anticipate we'd have different general contractors, different local contractors, et cetera, and we'd be matching. The choke point for us going from Vegas to other Spheres has been the design work, and the whole pipeline of going from materials to construction to labor, et cetera. That's what we've been working on, actually, consistently since we opened up Sphere. We've settled down the model pretty well to things like a tech stack, right? It's the same tech stack in Abu Dhabi as it is in National Harbor, as it was in Vegas, and it will be similar, the same tech stack. Once you know how to do it and you've got the design for it, et cetera, you can go faster. That's where we're focused on.

Speaker #4: And we'd be matching our— the choke point for us, right, going from Vegas to other Spheres, has been the design work, right, and the whole pipeline of going from materials to construction to labor, etc.

Speaker #4: And that's what we've been working on actually consistently since we opened up Sphere. So we've settled down the model pretty well to things like a tech stack, right?

Speaker #4: It's the same tech stack in Abu Dhabi as it is in National Harbor, as it was in Vegas. And it will be similar the same tech stack.

Speaker #4: So once you know how to do it, right, and you've got the design for it, right, etc., you can go faster. And that's where we're focused on.

Speaker #6: I think it's worth revisiting the question on National Harbor. There's a consensus among investors or at least a view that the strategy at National Harbor initially was to bring in an equity partner.

Peter Supino: I think it's worth revisiting the question on National Harbor. There's a consensus among investors, or at least a view, that the strategy at National Harbor initially was to bring in an equity partner, and that today, the strategy focuses on bringing in debt financing and owning all of the equity. Is that perception among investors inaccurate?

Speaker #6: And that today, the strategy focuses on bringing in debt financing and owning all of the equity. Is that perception among investors inaccurate?

Speaker #4: Look, yeah. I mean, I think that if you're looking at a cookie-cutter approach, right, so how we fund these things, I'm telling you that we're not going to use a cookie-cutter approach.

Jim Dolan: Yeah. I think that if you're looking at a cookie cutter approach to how we fund these things, I'm telling you that we're not going to use a cookie cutter approach. We're going to look at each project. I love the idea of having local investors. They add to the overall think tank of each one of those projects. If you can find one that's strategic for you, like for instance, in National Harbor, they're not an investor, but we're right by the convention center and the hotel casino complex, et cetera. That's strategic. Getting strategic investors helps, too. We're focused on getting as many of these started and built, and we are by no means wed to just one method of financing. We're going to keep looking at and taking advantage of whatever works best for that particular project in terms of financing.

Speaker #4: Right? We're going to look at each project. I mean, I love the idea of having local investors, right, they add to the overall think tank of each one of those projects, right, and if you can find one that's strategic for you, right, I mean, like for instance, in National Harbor, right, the they're not an investor, but we're right by the convention center and the hotel casino complex, etc.

Speaker #4: And that's strategic. So getting strategic investors helps too. We're focused on getting as many of these started and built and we're not we are by no means tied wed to just one method of financing.

Speaker #4: We're going to keep looking at and taking advantage of whatever works best for that particular project in terms of financing. So looking at it and say, well, they're only doing it this way, that's definitely not the case.

Jim Dolan: Looking at it and say, Well, they're only doing it this way, that's definitely not the case. We're going to be as efficient and as strategic with our capital as we can be, as we always have been as a company.

Speaker #4: The we're going to be as efficient and as strategic with our capital as we can be as we always have been as a company.

Speaker #5: Thanks, Peter. Operator, we have time for one last caller.

Ari Danes: Thanks, Peter. Operator, we have time for one last caller.

Speaker #2: Thank you. Your next question comes from the line of David Joyce with Seaport. Your line is open. Please go ahead.

Operator 3: Thank you. Your next question comes from the line of David Joyce with Seaport. Your line is open. Please go ahead.

Operator: Thank you. Your next question comes from the line of David Joyce with Seaport. Your line is open. Please go ahead.

Speaker #1: Thank you. You had nice growth in the sponsorship signage and exosphere revenue line. What were some drivers there and could you give us your thoughts on the momentum and the next few quarters outlook?

David Joyce: Thank you. You had nice growth in the sponsorship signage and Exosphere revenue line. What were some drivers there, and could you give us your thoughts on the momentum and the next few quarters outlook? Thanks.

Speaker #1: Thanks.

Speaker #4: I'm passing that one to my chief operating officer. Jen.

Jim Dolan: I'm passing that one to my chief operating officer. Jen?

Speaker #7: Thanks, Jim. Thanks, David. So, as you mentioned before, we did have significant growth in this category this quarter, and we’re really seeing the business continue. I think, in addition to the growth opportunity in terms of venue utilization, we also see the Exosphere and sponsorship business as a true growth driver for us in the next few quarters, as well as into next year.

[Company Representative] (Sphere Entertainment): Thanks, Jim. Thanks, David. As you mentioned before, we did have significant growth in this category this quarter. We're really seeing the momentum in this side of the business continue. I think in addition to growth opportunity in terms of venue utilization, we also see the Exosphere and sponsorship business as a true growth driver for us in the next few quarters as well as into next year. Large brands like Verizon coming in on the World Cup, or Adobe coming in to do a takeover when they were in Vegas for their multi-day summit. We've got a very strong pipeline of official partnerships in the works, and what that means is we'll continue to secure more multi-year sponsorship deals.

Jennifer Koester: Thanks, Jim. Thanks, David. As you mentioned before, we did have significant growth in this category this quarter. We're really seeing the momentum in this side of the business continue. I think in addition to growth opportunity in terms of venue utilization, we also see the Exosphere and sponsorship business as a true growth driver for us in the next few quarters as well as into next year. Large brands like Verizon coming in on the World Cup, or Adobe coming in to do a takeover when th ey were in Vegas for their multi-day summit. We've got a very strong pipeline of official partnerships in the works, and what that means is we'll continue to secure more multi-year sponsorship deals.

Speaker #7: Some of the things that we continue to drive the growth is we've got big brands coming in, spending dollars with us for impactful moments.

Speaker #7: So, large brands like Verizon coming in on the World Cup or Adobe coming in to do a takeover when they were in Vegas for their multi-day summit.

Speaker #7: We've got a very strong pipeline of official partnerships in the works. And what that means is we'll continue to secure more multi-year sponsorship deals.

Speaker #7: So I think we remain on track in growth for '26. And I think we've got good potential of pipeline deals for '27 to continue to drive growth.

[Company Representative] (Sphere Entertainment): I think we remain on track in growth for 2026, and I think we've got good potential of pipeline deals for 2027 to continue to drive growth.

Jennifer Koester: I think we remain on track in growth for 2026, and I think we've got good potential of pipeline deals for 2027 to continue to drive growth.

Speaker #2: We have reached the end of the Q&A session. I will now turn the call back to Ari for closing remarks.

Operator 3: We have reached the end of the Q&A session. I will now turn the call back to Ari for closing remarks.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Ari for closing remarks.

Speaker #5: Thank you all for joining us. We look forward to speaking with you on our third-quarter earnings call. Have a good day.

Ari Danes: Thank you all for joining us. We look forward to speaking with you on our Q3 earnings call. Have a good day.

Operator 3: This concludes today's call. Thank you for attending. You may now disconnect.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Q2 2026 Sphere Entertainment Co Earnings Call

Request DemoDemo

Sphere Entertainment

Earnings