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The Nevada Gaming Commission today approved Penn National Gaming's move to acquire the M Resort -- a process that began last year when Penn bought the resort’s debt, worth some $1 billion -- from lenders for $230.5 million. The vote was 5-0.
M Resort CEO Anthony Marnell III will continue to run the property with General Manager Jody Lake. No significant changes will be made in management, while the property’s roughly 1,400 employees should experience no disruption in their jobs, Marnell said.
The resort, which opened in March 2009 when the economy was plummeting, already has benefited by tapping into Penn National’s customer database of 2.2 million people, Marnell said.
The marketing relationship enabled the resort to rent an additional 1,324 room nights in the first quarter compared with a year ago, increasing occupancy by 3.8 percentage points to 86.3 percent, executives said.
M is mailing marketing pieces to about a half million of Penn National customers, Marnell said. The property's convention business also is improving, executives said.
M will be debt-free once the acquisition is consummated, as the debt purchased by Penn will go away, they said.
First quarter revenue at the resort rose $600,000 to $39.8 million from a year ago and pre-tax earnings rose $1.7 million to $6.2 million. The latter figure, a key performance indicator, represents earnings before interest, taxes, depreciation and amortization.
Commissioner Dr. Tony Alamo asked Marnell how long he would stay on at the resort after having lost his equity investment.
Marnell said he had a five-year commitment on paper but is committed to long term improvement at the property. He said he is negotiating with Penn for an equity position in the resort.
“This was never really about the money,” he said. “It’s about creating something unique … I’m excited about it and I’d like to see the vision finished.”
Alamo said Marnell should not be blamed for losing the property he built to the bank.
“This was not an operational issue for you … you guys created a heck of a property out there,” Alamo said. He commended the property for its uninterrupted payments to vendors and for the continued employment of its workforce.
Pennsylvania-based Penn National is a rarity in the recession: It is flush with cash and pursuing numerous casino acquisitions around the country. The company, which has long sought to add a major Strip casino to its national portfolio, also is nosing around Las Vegas for future acquisition opportunities.
Including M Resort, Penn will have 18 casinos and racetracks in North America.