Madison Square Garden Plans For London and Las Vegas Venues
Our Group CEO, Patrick Reid, explores Madison Square Garden’s plans for London and Las Vegas venues, commenting on the US’s strong track record of exporting live entertainment experiences to the UK and Europe, and discusses the revenue model for such venues.
Madison Square Garden is making the boldest move in its history – moving the brand outside the U.S. for the first time. The company has just given details of its next-generation venues that will be known as MSG Spheres. It first intentional venue will be in London, following plans for a similar large-scale, state-of-the-art, music and entertainment arena in Las Vegas. This will stir competition with MSG’s U.S. rival AEG, which operates the British capital’s O2 venue, among others.
MSG Spheres will all have a distinctive spherical shape and a programmable exterior that can serve as a digital showcase for brands, artists, events and partners. The interiors will have the largest and highest-resolution media display on earth, a spherical camera system and adaptive acoustics. In London, a planning application is likely to be made by the end of this year.
Preliminary plans for the Nevada MSG Sphere show scalable capacity of more than 18,000 seats, all of which will be in front of the stage, and as many as 5,000 standing. The London venue is expected to have similar capacity, while final details are still being developed by Populous architects.
A lot is at stake. First, the U.K. live music market alone is more than $1.5 billion a year, and the new venue is intended to increase that. Second, the extra venues may force live acts to choose between the two concert companies and venues – the O2 in London, or Madison Square Garden in New York?
MSG paid £60 million (about $8.5 million) for the five-acre site in Stratford, East London. It is situated right next to the Westfield Stratford City shopping mall that attracts 45 million visitors a year.
For rail transport, Stratford already has the Central and Jubilee lines on the underground and a London Overground station for fast connections with the Eurostar and central London. The transport links will get even better with the £14.8 million CrossRail (Elizabeth Line) project, which is scheduled to open by 2019.
The London venue is also the location of London’s Cultural and Education District in Olympic Park, which will include the new branches of Victoria & Albert Museum, Sadler’s Wells theatre, University of the Arts London, and UCL (University College London).
AEG, which runs the O2, SSE Arena, Hammersmith’s Eventim Apollo and events in Hyde Park and Victoria Parks, said that it does not in principle oppose a new venue, though it points out that the planned hall will be near to existing Olympic Park venues and close to its own O2.
Apart from Madison Square Garden itself and The Theatre at Madison Square Garden, MSG also runs Radio City Music Hall and Beacon Theatre in New York. Its venues elsewhere are in Chicago, Inglewood, California and Boston (The Chicago Theatre, the Forum and the Wang Theatre respectively.) MSG also owns and operates sports teams, including the New York Knicks and the New York Rangers.
Industry reaction has been pouring in.
“A business like Madison Square Garden does not come to market like London unless it feels that there is a huge business opportunity,” Luke D’Arcy, President U.K. at Momentum Worldwide, said in an interview. (His company works with brands such as American Express AXP +0.4%, UPS, and Microsoft on sponsorship events and experiential work, handling $4 billion worth of assets worldwide.) “We believe there is room for another major player here. We are likely to get a premium-quality venue, reflected in the lineup of the acts, but also in the acoustics, the lighting, the seating and the catering — everything that you would expect if you got on a plane and went to New York. Madison Square Garden has a cachet, a rich history and pedigree to trade off. It will give something like the O2 a run for its money.”
Other venues have suffered from poor transport links sometimes – the O2 has faced disruption on the Jubilee line or from services stopping for the night while many fans are trying to get home; Wembley is in North London – not ideal for all fans – and at Twickenham “you can be walking an hour back or sitting in cars for an hour,” D’Arcy said.
London’s other major rock venues include Alexandra Palace and Brixton Academy, while it has lost some much-loved, medium-sized venues such as the Astoria.
“The U.S. has a great track record in exporting its live entertainment experiences to the U.K. and Europe - Disneyland and theme parks being the original mass-experience export model,” Patrick Reid, Group CEO of Imagination, said in an interview. His agency’s clients include Ford, Jaguar Land Rover, Shell and Major League Baseball.
“The specifics of profit and revenue sharing are well-guarded secrets,” Reid said. “But it is estimated that as much as 5% of ticket sales value goes to the venue holder, so for example if Wembley hosts a concert by Bruce Springsteen, with average ticket prices of £150, the revenue could reach as high as £675,000 per night through ticket sales alone, excluding food and beverage licenses or sales and other services.”
According to figures by The Creative Industries website, the U.K. music business has an estimated economic contribution — also known as Gross Value Added, or GVA — of more than £4.4 billion, with more than £1 billion from more than 30 million live tickets sold each year for concerts and festivals.
The MSG plans have been welcomed by both London Mayor Sadiq Khan and the U.K.’s Secretary of State for Digital, Culture, Media and Sport, Matt Hancock.
MSG research, carried out by Sound Diplomacy, has found that London has fewer large arenas relative to population size than other major cities, including Paris, Berlin, Madrid, and New York. MSG also quotes EY research saying that the London project will support approximately 4,300 jobs during construction and then 3,200 jobs annually, contribute £2.7 billion to the British economy over the initial 20 years of operations, and generate additional revenues of more than £50 million every year for local businesses.