A Surprising Case Study for Your Small Community Venue: The Sphere in Las Vegas

I often think about scale when it comes to small community arts. Market sizes often dictate what a community can support and what arts producers can create. However, during my time running arts organizations in small communities, I have often been asked why my organization can’t produce, present, or support something that constituents experienced in another community. These inquiries typically can’t be fulfilled because the comparison community benefits from some or all of the following; a larger population, greater wealth, a broader tax base, more robust corporate philanthropy, and a greater number of local foundations. Despite these differences, such comparisons to larger more wealthier communities can be reframed to a small community organization’s advantage. Sometimes, the challenges faced in the arts are not solely about scale but reflect broader systemic and structural issues in how we conduct arts activity in America.

I currently manage a performance venue in a smaller community. The Academy Center of the Arts in Lynchburg, VA (population 79,720) is quite different from managing a venue like the Sphere in Las Vegas, NV (population 641,903, plus significant tourism) in terms of size and scope. However, the Sphere offers valuable lessons about the financial realities of operating a live performance venue of any size.

The Vox podcast Today Explained explored the financial challenges of the Sphere, which boasts a seating capacity of over 18,000 and is currently selling out concerts while screening three movies a day during non-performance times. Writing an article that examines the Sphere’s financial struggles can provide valuable perspective on the financial realities faced by venues in smaller communities like ours.

The Appearance of Success

The Sphere in Las Vegas stands as a marvel of modern engineering and a groundbreaking leap in immersive entertainment. While vastly different in scale, the same can often be said of many small community performing arts venues. Whether they are renovated historic theaters or newly constructed facilities, these projects demand significant community investment and resources. The Sphere’s cutting-edge 16K resolution screen, 4D effects, and innovative architectural design promise a unique, one-of-a-kind experience for audiences—much like the intimate and impactful experiences offered by small community venues on a more modest scale. Over the past year, The Sphere has achieved remarkable attendance figures, cementing its reputation as a premier entertainment destination. Similarly, the Academy Center of the Arts in Lynchburg, Virginia, has seen impressive success, including highlights such as:

Concert Attendance: In 2024, the Sphere sold approximately 1.3 million concert tickets, generating a record-breaking gross revenue of $420.5 million—the highest annual gross for any venue in Billboard Boxscore’s 50-year history. This mirrors our work at the Academy that has seen record breaking attendance for an arts organization in our region and an operating budget larger than any organization in Central Virginia ($4.8 million dollar operating budget). 

High Profile Artists: A U2 residency, running from September 29, 2023, to March 2, 2024, featured 40 shows, attracted 662,532 attendees, and grossed an impressive $244.5 million. Similarly, the Academy has successfully brought renowned artists to Lynchburg with a consistency that was previously unattainable. Performers such as Wynton Marsalis, Tedeschi Trucks, and Leslie Odom have graced the stage, with individual show grosses reaching tens of thousands of dollars. 

Alternative Programming: The Sphere hosted its first live sports event, UFC 306, on September 14, 2024. The event was sold out with an attendance of 16,024, generating ticket sales revenue of $22 million and setting records for both the UFC and the venue. Diversity of programming is also occurring at the Academy with commercial success with events such as The Price is Right Live, Wheel of Fortune Live and Cirque De Canines and a robust residency and performance partnership program with local cultural organizations. 

However, beneath the dazzling surface lies a stark economic reality: the Sphere and the Academy exemplify how difficult and financially precarious it is to operate a live performance venue.

The High Costs of Booking Artists

One of the primary challenges for the Sphere is the exorbitant cost of securing world-class talent. The venues rely on high-profile performances featuring famous artists, such as U2 and The Tedeschi Trucks, to draw audiences and to maintain a strong brand. However, these performances come at a steep price:

Artist Fees: Artists who fill an 18,000 capacity venue per night often command tens of millions of dollars for extended engagements. For example, U2’s residency incurred production costs of approximately $10 million per show, alongside the band’s performance fees and profit-sharing agreements.

At the Academy, booking high-profile artists can range from $35,000 to $100,000 for a single-night engagement—an exceptionally high cost for a small community venue. This financial burden often drives ticket prices higher, which can limit accessibility for the community.

Custom Productions: The Sphere’s technology demands bespoke content, forcing artists to create unique performances specifically tailored to its immersive environment. This increases the overall production expenses, as standard touring setups cannot be adapted without significant modification. 

For smaller community venues, the size of a venue’s stage and its limited equipment inventory can mean additional expenses for touring artists that demand specific production needs. This is often the case for theatrical touring productions. Additional equipment and adjustments to the performance space may be required and it is the financial responsibility of the venue to fulfill these production’s needs. 

Scarcity of Talent: Only a select few artists possess the global appeal necessary to fill the Sphere’s 18,000-seat capacity consistently. This limited pool of talent means intense competition with other venues in Las Vegas and around the world, further driving up costs. 

For the Academy, we are reliant on who is passing through the region on tour as well as have the notoriety to command the community's attention. Even when these artists are identified, we are competing to book the artists with venues in similar size markets within a 60 mile radius like Charlottesville, VA and Roanoke, VA. 

Revenue Limitations of Live Performance Venues

Despite the Sphere’s potential to draw large crowds, its business model is hampered by the inherent limitations of live performance venues, just like ours in Lynchburg:

Fixed Capacity: The Sphere’s seating capacity caps its maximum revenue per event. Even with premium ticket pricing ranging from $600 to $1,000 for the best seats, there is only so much income to be generated from a single performance. 

The same is true for the Academy. We only have 800 seats in our historic theatre and when we price tickets for our smaller market, Lynchburg doesn’t have the community wealth to support extraordinarily high ticket prices. Unlike streaming platforms or recorded media, which can scale revenue indefinitely, live events are constrained by physical space and audience size. It doesn’t matter where a live performance event occurs, this will be the case in any sized market and venue. 

Scheduling Constraints: The Sphere’s immersive, high-tech productions require extensive preparation and rehearsal time, reducing the number of events it can host annually. 

The Academy isn’t often closed up because of production preparations but it does have a number of scheduling conflicts. Like many small community venues, it isn’t just a national touring stop but it is also a community center which plays hosts to a number of third party organizations (whose rental revenue has a higher net return than national touring acts). The Academy has limited open dates to offer national touring artists. 

Revenue Streams: The Sphere relies heavily on ticket sales, concessions, and merchandise to generate income. While VIP packages and premium experiences can boost earnings, these are insufficient to offset the massive overhead costs unless the venue operates at near-capacity consistently. 

At the Academy, concessions can boost revenue, but their performance varies significantly depending on factors like the timing of the event (weekday vs. weekend) and the type of performance (rock show vs. string quartet). Additionally, small community venues typically generate limited merchandise sales because their brand is not nationally recognized.

Non-profit organizations in smaller communities often rely on VIP experiences as donor benefits—such as open-bar lounges or meet-and-greets—rather than using them as add-ons to generate additional event revenue. That said, there is a valuable revenue stream available to non-profit cultural institutions that for-profit venues like the Sphere cannot access: philanthropic giving. Providing VIP treatment for donors is a worthwhile investment, and I would strongly encourage its use in this way.

This year, the Academy was unable to secure naming rights for our historic theatre from the local corporate community. In a small community with a limited corporate presence and relatively modest company sizes, the cost was likely the primary barrier. Interestingly, the Sphere has also been unable to secure corporate naming rights for its venue. While I cannot confirm the reason, I suspect that cost is also a significant factor.

Securing naming rights would help diversify our revenue streams and support ongoing facility expenses. However, if the corporate community isn’t interested in this opportunity, greater pressure is placed on existing revenue sources to keep the venue financially solvent.

Competition: Las Vegas is home to numerous entertainment venues, including Allegiant Stadium and T-Mobile Arena, which offer more flexibility in hosting a variety of events. These venues have lower operating costs and fewer technical constraints, making them more appealing to many artists and promoters. 

In Lynchburg, we have competitors similar to ourselves in other markets but we also have unique circumstances occurring in the communities of Rocky Mount, VA, where the town government almost fully subsidizes their venue and in Charlottesville, VA where Red Light Entertainment exists. Red Light Entertainment, a commercial concert promoter, runs many of their Charlottesville venues at a loss because of their financial stake in the real estate surrounding their venues. The activity in their venues raises the value of their properties and so the solvency of the venues themselves is less of a concern. 

Operational Challenges and Financial Instability

The Sphere’s financial challenges are compounded by its significant construction costs and ongoing operational expenses. Originally budgeted at $1.2 billion, the venue’s final construction cost ballooned to $2.3 billion, resulting in substantial debt. Currently, Sphere Entertainment carries nearly $1.4 billion in liabilities, including $829 million due imminently. 

Fortunately for the Academy, we completed our $30 million construction project without incurring debt. However, this is not the case for many small community construction or renovation projects. There is often a naïve belief that a venue’s operations will generate enough revenue to cover debt service. If there is one takeaway from this discussion, it should be that excess working capital is rare for live performance venues. Debt service can become an insurmountable burden for most small community performance facilities.

The Sphere provides a stark example of the financial challenges venues face. In the fiscal quarter ending June 30, 2024, the Sphere reported an operating loss of $104.5 million, contributing to a total loss of $480 million over the past year. These staggering losses highlight the financial realities of running performance venues and underscore my point.

A Broader Lesson in Live Venue Economics

Here lies the irony: The Sphere, a multibillion-dollar marvel on the Las Vegas Strip, serves as an excellent case study for small community arts organizations struggling to operate live performance venues. Though the scale of the challenges differs, the core issues—narrow margins, dependency on limited revenue streams, and the constant need to attract audiences—are universal.

Small venues face these same pressures, albeit on a smaller budget. Whether it’s securing marketable talent, managing limited seating capacity, or finding ways to diversify revenue streams, the struggles remain eerily similar. The Sphere’s experience reminds us that, even with the best technology and record-breaking attendance, the live performance business model is inherently fragile and on a knife’s edge. It demands constant innovation, careful financial planning, and, perhaps most importantly, community wide support. 

So how does the Sphere handle all of the debt and financial losses they have accrued? Well, much like those of us in the non-profit sector it is through a form of patronage. Charles Dolan (who passed away while I was writing this article) was the owner of the Sphere. His family’s net worth of $5.5 billion dollars allowed the Sphere to withstand financial loss in the short term. With Dolan’s passing and the ongoing losses the venue endures, it will be interesting to watch what happens to the venture next.

If you are involved in a small community performance venue construction project or are running a small community venue, I encourage you to share this with your donors, board members, and public officials. By examining the Sphere’s financial woes, small community arts organizations can glean valuable insights: balancing artistic ambition with financial sustainability is a challenge, and no one should enter such a project naively and no venue leader should be held to uneducated and unrealistic standards by their community leaders and stakeholders. The lessons from this high-tech behemoth reinforce the importance of “eyes wide open” adaptability and creative problem-solving in keeping live performance venues thriving—whether in the heart of Las Vegas or in your small town.