Sphere Entertainment Co. has taken an important step toward its intended future of hosting concerts and events at multiple Sphere venues outside of the original Las Vegas location.
On Friday (July 25), the company’s Sphere Entertainment Group, the division behind the Sphere venue in Las Vegas, finalized a franchise agreement, and other contracts, with the Department of Culture and Tourism — Abu Dhabi (DCT), related to the construction and operation of Sphere Abu Dhabi, according to a Monday (July 28) SEC filing. When the parties first announced their intentions to work together in 2024, the planned building was described as “echoing the scale of the 20,000-capacity Sphere in Las Vegas.”
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Sphere currently makes money through concerts, corporate events and The Sphere Experience, which shows immersive motion pictures on the 160,000-square-foot, wraparound video screen. Learning how to hold multiple events per day allows Sphere to maximize usage of the state-of-the-art, $2.3 billion building. But considering the venue had a $143 million operating loss in 2024, a franchise model is vital for the company’s long-term health. “This year, the biggest opportunities are the nuts and bolts of how well we operate the business. That is going to provide a boost,” Sphere Entertainment Co. CEO James Dolan said during the company’s March earnings call. “Longer term, the expansion of more Spheres is what is going to deliver the most [return].”
The just-signed 25-year franchise agreement gives DCT the right to build and operate additional Sphere venues in the Middle East and North Africa for a period of 10 years after the opening of Sphere Abu Dhabi. Additionally, DCT has the option to extend the franchise agreement up to two 10-year renewal periods. Sphere Entertainment Group has also granted DCT licenses for Sphere’s technology, patents, trademarks, The Sphere Experience content and “other ancillary content.” The Sphere Experience content includes Postcard from Earth by Darren Aronofsky; V-U2: An Immersive Concert Film about U2’s inaugural residency at Sphere; and a new version of The Wizard of Oz that opens on Aug. 28.
DCT will pay Sphere Entertainment Group a franchise initiation fee for the right to build the venue and royalties for use of its intellectual property. The remainder of the franchise fee will be paid off upon execution of the agreements and installment payments leading up to the opening of Sphere Abu Dhabi. DCT, which will fully fund the building’s construction, will also pay an ancillary content royalty and fees for “pre-construction and construction-related services to DCT.” Before Sphere Abu Dhabi opens, the two parties will enter into an operational services agreement, which calls for Sphere Entertainment Group to provide “agreed upon operational services” to DCT.
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