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From Nevada to the East Coast and beyond, the empire of properties controlled by casino juggernaut MGM Resorts International is in the midst of a major evolution.
On the Strip, MGM is building an entertainment promenade and an arena that could one day host a professional hockey team. In Maryland, Massachusetts and Macau, the company is spending billions of dollars to construct new resorts.
As it has shifted attention to these projects, MGM has sold — or begun to sell — its interest in four smaller casinos in Nevada. And the company has signaled that’s thinking strategically about the future of its entire real estate portfolio, indicating that a big announcement could come later this year.
Recent attention about MGM’s real estate has focused on the Mirage, after rumors surfaced at the end of July that the company would sell the property. But when the subject arose during MGM’s latest quarterly earnings conference call on Tuesday, CEO Jim Murren said “the Mirage is not on the market.” He said there’s a lot of interest in MGM’s real estate, and that he has taken meetings with any “qualified” potential buyer for years, but the Mirage is not being actively shopped around.
He did not, however, rule out the possibility that the Mirage could be sold at some later point.
In an interview after the conference call, Murren said he can’t be certain about what will happen with the resort in the future. “What I can say with certainty is that we view the Mirage as we do every other property here in Las Vegas: equally in terms of its value, growth prospects and our confidence in the management,” Murren said. “For some observers, the Mirage would be a more logical candidate for sale than other properties. I don’t view it that way at all.”
While the Mirage’s fate remains uncertain, what is clear is that MGM wants to boost the value of its real estate. Murren said on the conference call that the company thinks its assets are worth more than the market values them, so it’s considering “various great strategic options” to close that gap.
One of those options is likely for MGM to adopt a real estate investment trust structure, as other casino companies have done or considered doing. But selling the Mirage isn’t out of the picture.
“At the end of the day, for the right offer, everything is for sale,” said Union Gaming Group analyst Chris Jones. “If someone comes knocking at the door with a giant bag of cash, it would be difficult for MGM to ignore that.”
Regardless of what happens with the Mirage, MGM will overhaul another one of its Strip properties: the Monte Carlo. The company announced in July that it will build a new 5,000-seat theater there — and that’s just the beginning.
MGM’s upcoming arena and entertainment promenade, the Park, sit between the Monte Carlo and New York-New York, which MGM also owns. Murren said that after the Park project began moving forward, MGM did “a number” of studies and focus groups and found that the Monte Carlo brand did not resonate with customers as well as other MGM properties did.
Murren previously has not ruled out a possible name change for the Monte Carlo. Now, he said “a name change is almost a certainty.” MGM is evaluating the resort’s non-gaming amenities to determine what the rebranded Monte Carlo could look like, he said.
The new theater should open at the end of next year, and details about the rest of the Monte Carlo’s future will likely emerge a while before that.
MGM is working on big projects elsewhere, too. Next year, the MGM National Harbor casino is set to open in Prince George’s County, Md., just outside Washington, D.C. The MGM Cotai should open in Macau next year as well. The company also plans to open the MGM Springfield in Massachusetts, although the opening has been delayed until 2018.
MGM has even expressed an interest in building a casino in Atlanta.
At the same time it is expanding in some locations, MGM has withdrawn from others. Earlier this year, MGM completed its sales of the Gold Strike in Jean and the Railroad Pass in Henderson. In July, the company announced it was selling the Circus Circus Reno and its half-ownership of the Silvery Legacy in Reno.
All of those casinos fell under MGM’s control when it acquired Mandalay Resort Group in 2005, a seminal transaction that also gave the company (then called MGM Mirage) control of Mandalay Bay, Luxor, Excalibur and the Circus Circus in Las Vegas.
“It’s not so much that we felt like the growth opportunities are more or less in those properties — it’s the allocation of management’s time,” Murren said. “It’s just as difficult to run Circus Circus Reno as it is to run Circus Circus Las Vegas.”
It made sense for MGM to sell those smaller casinos as long as they went to the right buyer, Murren said.
For UNLV associate history professor Michael Green, the sales made sense in the context of MGM’s record.
“MGM tends to go big: big buildings, big projects, big ideas,” Green said. “And while the Silver Legacy and Circus Circus certainly are big Reno properties, in the overall MGM scheme of things, I’m not sure they fit in that well.”
In MGM’s future development plans, Green also saw traces of Kirk Kerkorian, the company’s founder who passed away in June. Kerkorian had a reputation for visionary ideas, having famously built the world’s largest hotel three times over.
Kerkorian, Green said, “did not sit on his hands,” and it appears that MGM isn’t, either.