How Do They Make Money?

I went to Vegas two weeks ago.

"Did you go to the Sphere?"

Yeah, I did. It was cool. Now let's figure out how they make money because they're planning on making more and the stock is trading below it's book value.

Link to annual report

## What makes up the Sphere's Holdings?

They have two segments:

• Sphere

• MSG Networks

Sphere consists of... the Sphere. As well as their production studio, based in Burbank, CA (fun fact, they have a quarter sized Sphere there called "Big Dome" for testing)

MSG Networks consists of the Company's regional sports and entertainment networks (MSG Network and MSG Sportsnet).

MSG Network serves the New York Designated Market area as well as other portions of NY, NJ, CT, and PA. They have exclusive live local games for the Knicks, NBA, NY Rangers, NY Islanders, NJ Devils, Sabres, and NHL, NFL, NY Giants, and Buffalo Bills.

How the Sphere makes money (kinda obvious)

And then this is how MSG Networks makes money:

Sphere made up 48% of revenue, and MSG Networks made up 52% of revenue (surprising)

The Sphere's revenue SCREAMED up this year (makes sense, first year in full operation.. the Sphere officially opened on September 29, 2023.). It's still losing $61M in operating losses.

MSG Networks revenues were down 7%, and Net Income was down 16%

Overall I can see why the stock is so cheap. There is definitely risk here, and it's entirely dependent on the Sphere's ability to create a repeatable and scalable business model as more Spheres are constructed. The key will be seeing if that business model will prove out or not.

Overall feeling slightly bearish at this stage of research.