MGM Resorts Won’t Buy, Sell Casino Properties, Chairman Says
MGM Resorts International chairman and CEO Jim Murren said last week that his company doesn’t plan on acquiring any of the regional casino properties that might become available once the historic $17.3 billion cash-and-stock merger between Eldorado Resorts and Caesars Entertainment Corp. gets underway, the Las Vegas Review-Journal has reported.
That Eldorado-Caesars move, which brought together two rival giants in the industry, sent shockwaves through the casino world when it was announced last month. There’s no doubt there was some consideration among industry insiders that other rivals, such as MGM Resorts and Wynn Resorts, might now be looking at ways to keep to pace.
For MGM Resorts’ upcoming role in the ever-changing equation, the company intends to stay the course with the MGM 2020 corporate restructuring plan announced earlier in the year, Murren said in delivering the company’s second-quarter earnings, according to the Review-Journal report. That means it also doesn’t plan on selling any casino properties, at least before it’s done studying this new economic climate.
MGM 2020 Focuses on Optimization
According to a company press release, MGM 2020 is a company-wide business optimization plan intended to leverage a more centralized organization, with a goal of maximizing company profits. The restructuring initiative includes a heavy investment in technology with an aim toward improving its digital footprint.
"We are building on the strong foundation that we have solidified over the past few years, to deepen our efficiencies and achieve sustained growth and margin enhancement," Murren said when the plan was announced. "MGM 2020 is intended to further transform the way we operate and leverage the most effective operational architecture for our company."
In short, MGM 2020 is all about reducing costs, improving efficiencies and positioning MGM Resorts, and its investors, for better growth and higher revenue, according to the release.
MGM Grand and Bellagio Future Unclear
The future of two iconic MGM Resorts-operated brands still remains unclear and won’t become less murky until later this year.
The company might be unloading two of its most popular Las Vegas properties, the MGM Grand and the Bellagio, in an effort toward boosting the company’s stock price. While that move hasn’t happened yet, it appears some of the company’s efforts to boost stock value has already been a success.
Company shares rose as much as 7.9% to $31.68 on Friday which was the most in almost four years after the company reported better-than-anticipated revenue earnings.
And according to the Review-Journal, if the hotels are sold, they would be in the hands of MGM Growth Properties, MGM’s affiliated real-estate investment trust. MGM would lease the properties back and still manage the resorts.
That the two iconic casinos might be sold off isn’t a given either. According to a Bloomberg report, Murren expects to release the company’s findings on what avenue to take in regards to the MGM Grand and Bellagio by the fall.
“We have a lot of options in front of us, actually very creative and interesting options,” Murren said. “We also know that our real estate is undervalued in the marketplace.”
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