Published on: November 12, 2024, 06:55h.
Last updated on: November 12, 2024, 07:18h.
Sphere Entertainment (NYSE: SPHR) CEO James Dolan has reportedly terminated a deal with a private equity firm collaborating to bring an NBA team to Las Vegas due to concerns about potential competition with the Sphere venue.
The New York Post reported today that Dolan decided to scrap a September 2023 agreement between Sphere and Oak View Group because the equity firm is collaborating with Rio Hotel & Casino on a $10 billion NBA arena that could potentially compete with the Sphere.
Last year, Dolan and Oak View announced a deal named Crown Properties Collection, where the firm was to find a naming rights sponsor for the Sphere with the goal of securing $40 million in annual payments.
Despite the standard pricing for arena naming rights, Dolan rejected a $30 million bid for Sphere naming rights recently, as reported by The Post.
Reasons for Concern
The exact reasons for dissolving the Oak View partnership are unknown, but the potential competition for the Sphere venue is a valid concern for Dolan.
Las Vegas already has numerous venues capable of hosting major events, which are the Sphere’s main focus. More competing properties could lead to increased prices for owners and promoters to attract top performers.
The Sphere has seen success with hosting concerts by U2 and Eagles, as well as the “Postcard From Earth” series. However, analysts have noted a lack of consistent major events at the venue.
These concerns are magnified following the company’s disappointing third-quarter earnings report, leading to a significant drop in shares.
ABBA Potential
In addition to competition, Dolan may also be concerned about potential threats to the Sphere from events like the ABBA Experience. Talks of bringing the popular show to the Las Vegas NBA arena could have influenced Dolan’s decision to end the partnership with Oak View Group.
While the NBA has not officially announced expansion plans, Las Vegas and Seattle are believed to be leading contenders for new franchises when the time comes.