Visitors to the Las Vegas Strip have a lot of people and companies competing for their attention. On the street level, you have to navigate a sea of showgirls, superheroes, shirtless firemen, and police officers, as well as various children’s characters including Mickey Mouse and the puppy from “Paw Patrol.” 

Those people hawking photos for money are only the beginning. You also have to deal with men handing out strip club flyers, cults trying to give you beads, wannabe rappers selling CDs, street musicians, and homeless people asking for money.

Related: Popular Las Vegas Strip event returns after long hiatus

When you move beyond the street level, the Las Vegas Strip has some of the most impressive buildings in the world. Caesars Entertainment (CZR) has its spectacular Palace and a faux Eiffel Tower drawing people to its Paris Las Vegas resort Casino.

Rival MGM Resorts International offers its own Statue of Liberty at New York, New York, a take on an Egyptian pyramid at Luxor, and a giant version of Medieval Times with Excalibur. Those are just some of the more audacious buildings as properties like Wynn, the Venetian, Bellagio, and others are stunning without being ostentatious.

But, among all of these world wonders, the new Las Vegas Sphere has managed to become the visual star of the Las Vegas Strip. It’s an incredibly impressive site as the building serves as one giant screen and it has been used for everything from entertainment to advertising.

The Las Vegas Sphere, however, even with a high-profile U2 residency, shows from Phish, and an upcoming run from Dead & Company remains a money pit.

The Sphere shows improvement

Sphere Entertainment (SPH) , a spinoff of Madison Square Garden, that’s run by James Dolan, whose family controls the New York Knicks and Rangers, has been a huge money loser. Construction costs ran roughly $1 billion over its initial budget and while its U2 residency was a hit, the company has struggled to come up with a business model that makes money. 

“For the fiscal 2024 third quarter, the company reported revenues of $321.3 million, an increase of $159.3 million, as compared to the prior-year quarter. In addition, the company reported an operating loss of $40.4 million, an improvement of $61.5 million as compared to the prior year quarter, and adjusted operating income of $61.5 million, as compared to an adjusted operating loss of $18.7 million in the prior year quarter,” the company shared in its third-quarter earnings report.

The venue continues to lose money, but Dolan sees a lot of positives.

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“As you know, Sphere was built with the idea of disrupting the traditional venue model. We saw this thesis begin to play out in the December quarter. Today, we reported results for our second full quarter of operations in Las Vegas. And while it is still early days, we’re pleased with our progress and remain optimistic about our vision for this new medium,” he said.

What’s next for the Las Vegas Sphere?

The challenge facing Sphere is that all of its existing entertainment options have been successful. U2’s residency was a huge hit while Phish sold out its four shows quickly. Dead & Co. has already extended its residency and the “Postcard from Earth” movie/experience has been successful as well.

“For the third quarter, Sphere welcomed nearly 1 million guests to more than 270 events. This event volume once again far exceeded the world’s busiest venues. It also drove robust revenue and positive adjusted operating income for the Sphere segment for the second consecutive quarter. These results were led by The Sphere Experience featuring Postcard from Earth,” Dolan added.

That show has averaged $1 million in average daily ticket sales in both the second and third quarters. 

“These results reinforce our belief in the value of original content. And we are now developing new cinematic offerings to strengthen this core category,” he shared.

The problem is that despite all of this success, the venue still loses money but Dolan believes that can be fixed by adding revenue opportunities. That includes adding concerts, and new experiences. It could also include a new opportunity that does not include selling tickets.

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“What we put on the Sphere, right, garners attention around the world, not just the advertising but the art and the other things that we do on there,” Dolan said. “We think that there’s more to do with the Exosphere. We think that we’ll be able, this year, probably this summer, to be able to add an audio component that goes along with the Exosphere, which will make, of course, the medium even more attractive.”

Sphere Entertainment stock closed on May 10 at $39.26, about double its 52-week low.