Hero Zone: Where Social VR Meets Real-World Revenue -
Sphere Entertainment Co. reported second quarter results on July 30. Its Sphere segment covers the Las Vegas venue and the productions running in it. That segment took $226.4 million in the three months to June 30. The figure is up $50.8 million, or 29%, on the same quarter a year earlier. The same segment recorded an operating loss of $69.6 million. The VR Collective covered the ticket-sales side of this venue in July.
The same release reports Sphere segment adjusted operating income of $39.9 million, up $15.0 million or 60%. Adjusted operating income is a non-GAAP measure, and Sphere Entertainment defines it in the release as operating income before depreciation, amortization and impairments of property, equipment, goodwill and intangibles, cloud-computing amortization, share-based compensation, restructuring charges, merger and acquisition costs, gains and losses on business disposals, purchase accounting adjustments, and deferred compensation remeasurement.
The distance between positive $39.9 million and negative $69.6 million is $109.5 million of those charges, in one quarter. Company-wide depreciation and amortization was $84.3 million over the same three months.
The building accounts for most of that. Sphere Las Vegas cost about $2.3 billion. The company disclosed that figure in SEC filings in May 2023, after successive increases from the $1.2 billion estimate announced in 2018. Capital of that size shows up as depreciation every quarter for decades, whether or not the shows sell.
Taken on its own, the venue is improving. The Sphere segment’s operating loss of $69.6 million was $13.9 million smaller than the $83.4 million loss a year earlier. Across six months, segment revenue reached $492.3 million, up 48%. The operating loss narrowed 47% to $94.5 million. Adjusted operating income tripled to $114.2 million.
The consolidated picture moves the other way. Total revenues of $313.6 million were up 11%. The total operating loss widened by $11.1 million, or 22%, to $61.3 million. The cause sits in the other segment. MSG Networks revenue fell 18% to $87.3 million on a subscriber decline of roughly 16.5%. Its operating income dropped 75% to $8.3 million. Sphere segment costs also rose. Direct operating expenses climbed 15% to $87.7 million. Selling, general and administrative expenses climbed 30% to $125.6 million. That last increase came from mark-to-market adjustments on share-based awards as the share price rose, higher compensation, and litigation costs tied to the MSG Networks merger.
On the earnings call the same day, Executive Chairman and CEO James Dolan said he wants the company to “have five venues up or more and have another five that are under construction” five or six years from now. That target is from the call transcript rather than the release.
Yas Island has been selected for Sphere Abu Dhabi, with construction expected to be complete by the end of 2029. Plans for National Harbor continue. The company says it remains in discussion with a significant number of markets about large and smaller-scale Sphere venues.
The quarter carried 220 performances of The Wizard of Oz at Sphere. The prior year quarter carried 215 performances of Postcard from Earth and V-U2 An Immersive Concert Film. The Wizard of Oz opened on August 28 2025. It passed $400 million in ticket sales and three million tickets by mid-June 2026. Sphere Entertainment says the next production, The Rocky Horror Picture Show at Sphere, arrives in 2027. Dolan told analysts it will take under twelve months to produce, against roughly two years for The Wizard of Oz.
Event revenue fell $11.7 million on two fewer brand events, partly offset by six additional concert residency shows. Sponsorship, Exosphere advertising and suite licence fees added $10.5 million. Lance Loesberg and Jeremy Dalton walked through the same economics on The VR Collective’s immersive cinema podcast in July.
$226.4 million of quarterly revenue and a $400 million title produced $39.9 million of adjusted operating income and a $69.6 million operating loss in the same three months. The $109.5 million between the two figures is depreciation and other charges on a $2.3 billion building. Carry those two numbers into any pitch for a dome, a wraparound screen or another large-format immersive venue. A capital plan has to answer the second one. LEXRA members compare venue capital models through the association at lexra.org.
What did Sphere Entertainment report for the second quarter of 2026? Revenues of $313.6 million, up 11%, an operating loss of $61.3 million, and adjusted operating income of $50.9 million, for the three months ended June 30 2026.
How did the Sphere segment perform on its own? Revenues of $226.4 million, up 29%; an operating loss of $69.6 million, which is $13.9 million smaller than the prior year quarter; and adjusted operating income of $39.9 million, up 60%.
Why does the Sphere segment show a profit and a loss at the same time? Adjusted operating income excludes depreciation, amortization, share-based compensation, restructuring and merger costs. Those excluded charges came to $109.5 million for the segment in the quarter.
How many Sphere venues are planned? Sphere Abu Dhabi on Yas Island is targeted for completion by the end of 2029 and National Harbor is progressing. On the July 30 earnings call, James Dolan said he wants five or more venues open and another five under construction within five to six years.
How much did Sphere Las Vegas cost to build? About $2.3 billion, per company filings in May 2023, up from a $1.2 billion estimate when the project was announced in 2018.
