James Dolan’s plan to build futuristic orb-like entertainment amphitheaters around the globe is coming under attack.
Dolan, who owns the New York Knicks, saw support for his ambitious new project start to fizzle Tuesday after executives of his entertainment company, Madison Square Garden, said the first high-tech orb could cost half a billion dollars more than forecast.
That, combined with disappointing MSG earnings, sent shares of the Radio City Music Hall owner into their worst decline in the stock’s four-year history.
One investor was so livid, he told The Post he wants Dolan to just walk away from the costly construction project.
“We think they should scrap the sphere arenas,” a leading MSG investor told The Post.
The problems started when executives of Madison Square Garden told analysts in an earnings call Tuesday that the cost to build the first sphere in Las Vegas by 2021 ballooned to $1.7 billion, or $500 million over budget. A similar project has been proposed for London.
Analysts pushed back by asking MSG execs to give them a sense of the Las Vegas sphere’s expected returns. But they never answered the question, according to sources and a transcript of the call.
“We’re going to be taking people places where they’ve never gone before, both experiencing it visually as well as feeling it, smelling it and hearing it,” MSG president Andrew Lustgarten said in response to a pointed question about returns.
Sources say Wall Street was “upset” over the lack of answers and that concerns weren’t alleviated when MSG officials said they planned to negotiate the price down.
“We are reviewing and challenging our contractors’ estimates and assumptions. We believe as a result of this process that we will be successful in achieving significant cost reductions,” Victoria Mink, chief financial officer at MSG, told analysts.
MSG shares plunged as much as 9.7 percent before settling down 8.8 percent Tuesday, at $267.33 — marking MSG’s sharpest drop since its split from MSG Networks four years ago.
Also dragging on MSG’s shares was a wider-than-expected fiscal fourth-quarter loss of $3.08 a share — 43 cents lower than analysts surveyed by Bloomberg predicted.
Investors were also disappointed to learn that the company’s plans to spin off its Knicks and Rangers franchises are “taking longer than expected,” according to Lustgarten.
MSG declined to comment, but pointed to comments from the call, including Lustgarten telling investors that the new high-tech spheres, which will include vibrating seats and video everywhere, will be more popular than MSG or Radio City Music Hall.
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