MGM makes a deal with the Las Vegas Strip and sells another casino
Finding the right combination of properties on the iconic Las Vegas Strip has been an ongoing challenge for MGM Resorts International (MGM) – Get the MGM Resorts International Report and rival Caesars Entertainment (CZR) – Get the report from Caesars Entertainment Inc.. Both companies need the right balance of value, mid-tier, and upper-tier distributed properties to best serve their customers’ needs.
It’s a problem that has both companies tinkering with their Las Vegas holdings. Caesars plans to sell the Flamingo (though it might still end up operating it) and will turn its bland Bally casino into its Horseshoe brand – a name the company associates with a player-friendly concept.
MGM has been even more active, selling the Mirage to Hard Rock International (which plans to build a Guitar Hotel on part of the site) and acquiring The Cosmopolitan – a fancier, upscale property. This agreement was recently concluded.
“This is a great time for our company and for the Las Vegas Strip. The Cosmopolitan of Las Vegas has already established itself as one of the top resorts on the Strip with an iconic brand, well-curated experiences and a loyal customer base. “, said MGM. Resorts CEO Bill Hornbuckle in a press release.
The company has been a little vague about its plans for The Cosmopolitan, but Hornbuckle has given some clues.
“We look forward to enhancing The Cosmopolitan’s already strong results by providing their guests with access to the extensive and exclusive amenities and other benefits that only MGM resorts can provide,” he added.
Now, with its Las Vegas Strip lineup taking shape, MGM has turned its attention to its regional properties.
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MGM sells another casino
In addition to its Las Vegas Strip properties, MGM has casinos and hotels around the world, including a number spread across the United States. The company has reached an agreement to sell Gold Strike Tunica’s operations in Mississippi to Cherokee Nation Entertainment Gaming Holdings for $450 million in cash.
In 2021, Gold Strike reported net income of $81.1 million. The physical property on which the casino is located is owned by VICI Properties (VICI) – Get the report from VICI Properties Inc., owner of MGM for several properties. With the sale of Gold Strike, MGM’s rent will drop by $40 million a year and Cherokee Nation will enter into its own lease agreement.
After the sales, MGM expects net cash proceeds of $350 million.
“Gold Strike is a wonderful property with a bright future ahead of us. Strategically, however, we have decided to focus on one-resort Mississippi – Beau Rivage – and dedicate more time and resources to continue driving success. of this leading, world-class resort and casino,” MGM CEO Bill Hornbuckle said in a press release.
Open since 1994, Gold Strike was purchased by MGM in 2005. The property rises 32 stories, making it a standout site in Tunica where “the iconic property is one of Tunica’s most recognizable buildings and towers over all other structures,” according to MGM. “When it was built, the Golden Tower was considered the tallest building in Mississippi.”
The transaction is expected to be finalized in the first half of 2023.