Las Vegas Sphere’s CFO Quits as Company Posts $98.4 Million Loss
The Sphere, Las Vegas’ newest eye-catching attraction, has posted a $98.4 million loss for the fiscal quarter, which would be expected given it only recently opened. What isn’t expected is the simultaneous departure of CFO Gautam Ranji.
As reported by the Las Vegas Sun, the Sphere reported an operating loss of $98.4 million for the last fiscal quarter ending September 30, which is not wholly unexpected given the venue only opened its doors on September 29, especially since it cost a whopping $2.3 billion to construct.
The mammoth attraction started with a residency of U2 and has also begun showing filmmaker Darren Aronofsky’s Postcard From Earth as part of its Sphere Experience show. But even with so short a time in operation, the revenue for the quarter included $4.1 million from ticket sales — which includes two sold out U2 shows — and $2.6 million from suite licensing and advertising on the outside of the Sphere.
While these numbers may not be a concern on their own, the sudden and unexpected departure of Sphere’s chief financial officer Gautam Ranji may be. According to the New York Post, Ranji quit abruptly after a bout of “yelling and screaming” with the Sphere’s billionaire CEO James Dolan.
While the filing says that his exit was “not a result of any disagreement with the company’s independent auditors or any member of management on any matter of accounting principles or practices, financial statement disclosure or internal controls,” the New York Post cites a source with knowledge of the situation that Ranji quit midway through a meeting with Dolan and a group of other senior Sphere executives, the point of which was partly to prepare for the quarterly earnings presentation.
The supposed “yelling and screaming” came from Dolan, not Ranji, who was said to have gotten up “calmly” and left the room in response and promptly giving his notice to the company’s general counsel.
In its published financial documents, the company expects revenues to fall to $117.3 million, down 71% from a year ago. Additionally, the company does warn that without significant cash flow in 2024, it would not have the means to successfully operate. That said, it doesn’t believe this to be an issue but due to the unique nature of the Sphere’s value proposition — the company says there isn’t anything like it that can accurately serve as a benchmark for comparison — it is unable to provide any guarantees.
“Our primary sources of liquidity are cash and cash equivalents and cash flows from the operations of our businesses. The Company’s uses of cash over the next 12 months beyond the issuance date are expected to be substantial,” the financial documents read.
“Our ability to have sufficient liquidity to fund our operations and refinance the MSG Networks Credit Facilities is dependent on the ability of Sphere in Las Vegas to generate significant positive cash flow during Fiscal Year 2024. Although we anticipate that Sphere in Las Vegas will generate substantial revenue and adjusted operating income on an annual basis over time, there can be no assurance that guests, artists, promoters, advertisers and marketing partners will embrace this new platform.
“Original immersive productions, such as Postcard From Earth, have not been previously pursued on the scale of Sphere, which increases the uncertainty of our operating expectations. To the extent that our efforts do not result in viable shows, or to the extent that any such productions do not achieve expected levels of popularity among audiences, we may not generate the cash flows from operations necessary to fund our operations.”
While this language may be phrased as such strictly for legal reasons, there at least is some level of uncertainty in the business’s success.
Not only is the Sphere a wholly new type of theater, the camera equipment that was used to capture the footage shown in it is, too. The 18K Big Sky Camera that was developed by the Sphere is a technical marvel with significantly more resolution than is typical of any filmmaking equipment and requires 12 people just to use it.
Image credits: MSG Sphere
