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MGM Resorts revenue doubles in Q3 as it announces Mirage sale plans


MGM Resorts has recorded revenue figures of $2.71bn for the third quarter of 2021, representing a 145.5% increase on the same period last year. 

The company announced during its Q3 earnings call that it is planning to sell the operations of the Mirage Resort. The business had already sold the property itself as part of an asset-light strategy.

CEO Bill Hornbuckle said: “We’re currently in the early stages of a process to sell the operations of the Mirage. Doing so will allow us to maintain our existing Las Vegas exposure while focusing on the complementary in diverse nature of our offerings in our hometown.

“I spent the early part of my career at Mirage, I have been part of that team’s opening at the property in 1989. It’s a historic property with great brand recognition and a strong customer and loyal following.”

MGM Resorts also reached an agreement during the quarter to sell spun-off REIT MGM Growth Properties – in which it holds a controlling stake – to real estate investment trust VICI Properties for $17.2bn. 

Breaking down MGM’s $2.71bn in revenue, casino revenue was the biggest contributor to the total bringing in $1.40bn – up from $690.2m in 2020. Room revenue was $490.5m, food and drink generated $416.5m, while entertainment, retail and other revenue amounted to $315.7m.

Expenses for the company were $849.9m during the quarter, down 48% from the same time last year. Casino expenses increased 73.8% to $640.0m, administrative costs totaled $623.3m, and food and drink costs came to $302.0m.

Room expenses amounted to $160.9m, while corporate expenses were $112.1m.

By location, MGM’s Las Vegas resorts were the biggest contributors to the revenue totals, generating $1.38bn. Regional operations brought in $925.1m, while MGM China added $289.1m.

MGM China’s revenue was affected by site novel coronavirus (Covid-19) outbreaks in Macau.

Hornbuckle continued: “While the latest hurdle surrounding the local outbreaks in Macau negatively impacted travel in September and most of October, the situation has now largely been contained. we’re confident in the eventual recovery in the region, and we believe we are well-positioned with respect to license renewals.”

Macau also recently closed a public consultation – which MGM Resorts took part in – whereby potential changes to the region’s casino laws were proposed. These include changes to the number of licences issued and the possibility of introducing government representatives to licensees.

“I feel good about what was said,” added Hornbuckle. “I feel good that we had an opportunity to air some of our concerns and that they were heard and listened to. And so I think it’s relatively given the environment and given what’s at stake, been progressive.”

“We’ve been there like everyone else 20 years. They’ve been fair to us to date as we have to them. And I think we’ve been good to the community and vice versa.”

Total operating income for the company was $1.89bn, improving on the $495.2m loss sustained in 2020. After accounting for non-operating expenses of $272.7m, MGM’s pre-tax income was $1.62bn.

After $282.1m worth of income tax and $12.5m of losses from other interests, net income for the quarter amounted to $1.35bn – up from the $534.7m loss suffered at the same point in 2020.

Hornbuckle said: “We’ve kicked off the quarter exceptionally strong, anchored by a great 4th of July holiday, better than pre -pandemic casino spend levels and pent-up demands for the city’s wide-scale entertainment relaunch, the 2 large crowds in the town, especially on the weekends.

“While the Delta variant impacted our group business during the quarter, we have been able to offset with a leisure and casino customers. With cases on the downswing, we have built — quickly we built momentum into October and the level of demand in the marketplace, especially on the weekends has simply been incredible.

“I continue to express my sincere pride and gratitude of the tremendous effort of our employees who are the foundation upon which we built our strategic plan and long-term vision.”

MGM was also a key component in negotiations regarding Entain’s potential sale to DraftKings, although negotiations were eventually terminated.

DraftKings had made two proposals to acquire Entain last month. The first, a £25.00 per share offer, comprising cash and stock, had been rejected by its board.

DraftKings had then returned with a new proposal of £28.00 per share on 19 September.

Based on the 585,591,361 Entain shares in issue as of 30 June 2021, this would value the business at £16.40bn (€19.23/$22.40bn).

Negotiations were complicated, however, by the existence of MGM’s BetMGM joint venture with Entain.

Hornbuckle said BetMGM expects net revenues associated with BetMGM will be in excess of $800 million for the full year. During Q3, the joint venture made a $98m loss, with MGM Resorts incurring $49m of this due to its 50% stake. BetMGM revenue for the quarter was $227m.

Hornbuckle added: “We all saw – and obviously we were an insider to a certain degree to the experience that DraftKings and Entain just went through. Time to tell where that all goes, if it goes anywhere. We enjoy our partnership, I think we’re doing well by it.

“Would they’ve been good partners as it relates to the day-to-day business activity? We’d like to do more domestically and whether we ultimately do more internationally or not with or without them I think time will tell as well. But for now, we’re going to wait and see what happens to that marketplace for a while.”