$550 million sale of Tao Group to help fund MSG Sphere’s completion
The New York-based developer of the nearly $2.2 billion MSG Sphere has sold its majority ownership of Tao Group Hospitality for $550 million to help pay development costs for the Strip entertainment venue expected to open in September.
The sale of Tao by Madison Square Garden (MSG) Entertainment, announced Monday, was hinted at in January when the company hired investment group Goldman Sachs to explore a possible transaction.
Tao Group is a worldwide company with 80 locations in 20 markets. In Las Vegas, the operations encompass 17 restaurants, nightclubs, day clubs and pool lounges, including Tao Nightclub and Tao Asian Bistro at The Venetian, Hakkasan at MGM Grand, and Beauty & Essex at The Cosmopolitan of Las Vegas.
Tao, which has venues in London, Singapore and Dubai, also operates 32 New York City restaurants.
In a brief statement, MSG Entertainment said the sale of its 66.9 percent interest in Tao to Cyprus-based Mohari Hospitality is expected to close in May. MSG Entertainment expects to receive approximately $300 million in net cash proceeds.
As a part of the transaction, Tao Group will enter into a multiyear agreement with MSG Entertainment for ongoing consulting, marketing and support services at New York City’s Madison Square Garden and the MSG Sphere.
“Tao Group has grown from an innovator in nightlife to a leader in premium lifestyle and hospitality,” Mohari Managing Partner J. Allen Smith said in a statement from the company.
In January, a research analyst said any funds from the sale of Tao would be directed toward completing the Sphere, which has seen its construction costs steadily increase and now has a price tag larger than the $1.9 billion Allegiant Stadium, even though the venue’s capacity is one-third the size of the 65,000-seat home of the Las Vegas Raiders.
The Sphere is expected to open in September — five years after its groundbreaking — with a performance by legendary rock band U2. MSG Entertainment said last week that shows produced for the venue would be dubbed “Sphere Experiences” and produced by artists in collaboration with the company’s Burbank, California-based studios.
The initial show launching in October will be “Postcard from Earth,” a one-hour presentation that will be shown multiple times per day.
The Sphere includes a 580,000-square-foot exosphere with an outdoor programmable LED screen that will be installed by the end of April. Inside the planned 17,500-seat venue, a 160,000-square-foot interior LED display will wrap around the audience for what MSG executives have termed an “immersive visual environment.”