Madison Square Garden Entertainment (MSGE), which is developing the $2.17 billion MSG Sphere entertainment venue on the Las Vegas Strip, has reportedly enlisted the help of Goldman Sachs to pursue the sale of its 67 percent stake in hospitality giant Tao Group, with the idea of using the funds to help finance the Sphere project after costs have ballooned over the last year.
The potential sale was first reported by the New York Post, which estimated the value of the holdings to be in the neighborhood of $275 million.
Tao Group operates restaurants, clubs and lounges in Dubai, London, Singapore, New York City and Las Vegas. The company’s Las Vegas portfolio includes the Venetian’s Tao Nightclub and Asian Bistro, MGM Grand’s Hakkasan nightclub and the Cosmopolitan’s Beauty & Essex restaurant.
Representatives from MSGE declined comment to the Post.
Paul Golding, an entertainment analyst for Macquarie Securities, said in a note to investors that he agrees with the thought that “if Tao is up for sale, this may be motivated by capital needs to complete the Sphere.”
Golding added, however, that if the sale does happen and MSGE parts with one of its biggest assets, it “puts a lot of pressure on the project” to deliver a good return, and quickly.
On paper, the numbers make sense, as the venue’s costs have grown by some $300 million, around the same value as the Tao stake. The original price was estimated at $1.8 billion in 2021, but has grown substantially due to supply chain hiccups, technical difficulties in construction and more recently, inflation.
Upon completion, the Sphere is expected to feature an exterior LED screen spanning 585,000 square feet and an interior screen spanning 160,000 square feet. The company plans to use the exterior screen for advertising purposes during off times.
The venue will have a seating capacity of 17,500, and will be used for concerts, performances and select sporting events such as combat sports.
