Sphere’s U2 Shows Reaches $30M In Revenue, But Debt Funding Plan Results In Stock Tumble

Sphere’s U2 Shows Reaches $30M In Revenue

As reported by Billboard Boxscore, U2’s series of 17 performances, which commenced in September at the Sphere, amassed a staggering sum of almost $110 million in ticket sales. Sphere Entertainment, as disclosed in the SEC filing, recorded a total revenue of $30.7 million from these shows until November 30. Simultaneously, Sphere Entertainment’s original content, “Postcard from Earth” by Darren Aronofsky, contributed significantly, generating around $44.5 million from 111 showings.

The inaugural U2 performance at Sphere took place on September 29, 2023, marking the beginning of an extended series lasting several months. Due to overwhelming demand, an additional 15 shows have been incorporated into the schedule for January, February, and March 2024, raising the total planned performances by the band to 40.

In the SEC filing, Sphere Entertainment disclosed its intention to raise funds by issuing $225 million in convertible senior notes maturing in 2028. Purchasers will also have the option to acquire an extra $33.75 million in notes.

The company plans to utilize a portion of the proceeds from this notes sale for capped call transactions, aiming to mitigate the potential dilution of common stock resulting from debt conversion into equity. The remainder of the funds will be allocated to general corporate purposes, including capital for Sphere-related growth initiatives.

As of the beginning of the quarter on September 30, Sphere Entertainment held $433.5 million in cash, including $123 million from advance ticket sales. The company’s total debt at the quarter’s outset amounted to approximately $1.2 billion, with $932.3 million attributed to debt under the MSGN Credit Facilities. Under the terms of the MSGN deal, the company is obligated to make $103.1 million in quarterly amortization payments between September 30, 2023, and October 11, 2024.

Following the announcement of the debt offering, Sphere Entertainment’s stock experienced a temporary decline of nearly 20% in trading. Although it rebounded slightly, the shares concluded the market day with a 15.5% decrease, settling at $28.41.

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