The Sphere National Harbor project is progressing towards construction following the Prince George’s County Council’s unanimous endorsement of a resolution granting $200 million in tax incentives to this immersive entertainment venture.
During a council meeting on Monday (July 27), local officials sanctioned the establishment of the National Harbor Extraordinary Development District in Oxon Hill. This area, covering roughly 14 acres directly north of the MGM National Harbor casino resort, allows Sphere Entertainment Co. to access $200 million in tax credits.
The law stipulates that Sphere Entertainment must invest a minimum of $500 million into an immersive entertainment facility featuring at least 3,000 seats and advanced display systems incorporating 4D visual effects along with “spherical LED screens.”
Defense of Tax Incentives for Wealthy Investors
Sphere Entertainment, led by the affluent Dolan family, which owns several renowned venues including Radio City Music Hall, Madison Square Garden, and theaters in Chicago and Beacon, is at the center of this initiative. James Dolan, known for owning the NBA’s Knicks and NHL’s Rangers, possesses considerable wealth, raising questions among some Prince George’s County residents regarding the necessity of these tax breaks.
Local officials have justified the tax increment financing (TIF) strategy as a sound investment that promises significant economic returns.
An independent economic impact analysis conducted by Ernst & Young (EY) supports this position, estimating that Dolan’s $1 billion Sphere National Harbor will contribute over $1.3 billion annually to the county’s economy once operational, and create 7,100 jobs combined of both full- and part-time positions.
According to EY, Sphere National Harbor is projected to generate $43.1 million in annual tax revenue for the county, which includes $12.7 million from property taxes, $29.5 million from admission and amusement taxes, and $900K from individual income and payroll taxes.
“My team has successfully crafted a deal that safeguards the interests of the residents of Prince George’s County while simultaneously encouraging a significant corporation to establish such an iconic venue here,” stated County Executive Aisha Braveboy in January. “Let’s just say we had competition, with other states becoming involved.”
The original 300-acre development of National Harbor also benefited from a TIF arrangement. The county issued TIF bonds to support the vital infrastructure needed for this vast mixed-use area, which, alongside MGM National Harbor, features the Gaylord National Resort & Convention Center and the Capital Wheel.
Understanding TIF Financing
Prince George’s County is not allocating $200 million from its general funds to assist Sphere Entertainment in building Sphere National Harbor. Instead, the county will issue bonds to the company, which will be repaid through future tax revenues generated by Sphere National Harbor.
This approach essentially signifies that the county is wagering on the success of Sphere National Harbor.
In contrast, Sphere National Harbor’s predecessor, Sphere Las Vegas, faced challenges; the COVID-19 pandemic escalated construction expenses to $2.3 billion. Since its opening in 2023, Sphere Las Vegas has operated at a deficit as it manages the significant expenses incurred during its launch.
However, Sphere Entertainment is steadily moving towards profitability, with Sphere Las Vegas contributing approximately $20 million annually in property taxes to Clark County.