MGM Resorts Year End (2010) report

The MGM Year End Results were released today. The older Vegas strip properties still dropping by 4% in revenue, which is not bad. No properties had an operating loss (including Circus Circus).

City Center is bleeding on all sides: Aria, Vdara, Mandarin Oriental, Crystals, Residences, and Development and Administration. Aria is a distant third behind Bellagio, and the MGM Grand, and is just barely ahead of Mandalay Bay. Aria Casino alone lost $200 million last year. City Center had an operating loss of $900 million.

MGM Resorts is bringing in slightly less gaming revenue from the entire company (including overseas, Detroit, and Vegas).
In comparison Wynn Resorts (with the opening of Encore Macau) went from bringing in far less in gaming revenue to significantly more than MGM Resorts.

Gaming $$	2010	2009	change
MGM Resorts	$2,442,927	$2,618,060	-6.7%
Wynn Resorts	$3,245,104	$2,206,829	47.0%
Sands Corp.	$5,533,088	$3,524,798	57.0%

While Wynn Resorts does not approach the non-gaming revenue of MGM Resorts, unlike MGM, Wynn does make a profit.

Quote: pacomartin

City Center had an operating loss of $900 million.

How much would it cost to close the whole thing and just let it sit there till the economy improves. How can they survive losing 900 million a year.

Yeah tell that to all the people that would be out of a job if that happened

Quote: NicksGamingStuff

Yeah tell that to all the people that would be out of a job if that happened

So in your experience, businesses that are losing hundreds of millions a year stay open for the employees? Never heard that one before..

Quote: EvenBob

How much would it cost to close the whole thing and just let it sit there till the economy improves. How can they survive losing 900 million a year.

I think that is a good question. I would say that the accumulated lawsuits, interest payments, depreciation of the property, local real estate taxes would be worse than $900m (for Aria). I don't think it is possible to completely shut down City Center since many condos have already been sold.

A few years ago I wrote an extensive research paper that suggested some of the Downtown Casinos would simply shut their doors. I mean they wouldn't sell the place since they could not get very much, but they would be better off simply paying their real estate taxes and minimal power to maintain the buildings rather than run the place at such a huge loss. Part of the analysis concluded that it was impossible to lay off enough people, or make enough expense reductions to return to profitability given this low revenue. The article was in the LV Business Press.

My prediction partly came true. The Western, the Plaza, and Binions shut down their hotels. I understand that Plaza is down to 300 slot machines and no table games. Fitzgerald's shut down their steak house to only 3 days per week. It is difficult to get hot food at night now. The slot only casinos, Mermaids and Bayou, closed their doors completely at night.

Keep in mind, when I wrote the report I only had data through FY2007 available. The business model was worse than I predicted. Notice that G&A expenses actually went up in the depression, as some costs such as interest actually went up. They were able to cut department expenses by letting people go and shutting down some bars, etc.

$millions	1990		2006	2007	2008	2009	2010
Gaming	$642		$642	$624	$590	$548	$508
Rooms	$107		$232	$185	$194	$152	$136
Food	$102		$158	$157	$156	$147	$138
Beverage	$48		$61	$64	$60	$65	$65
Other	$50		$99	$69	$60	$60	$59
Revenue Total	$949		$1192	$1100	$1060	$972	$906
Cost of sale	$85		$85	$83	$81	$78	$72
Expense: Department	$487		$579	$569	$554	$525	$504
Expense: General & Admin	$354		$387	$384	$393	$423	$403
Expenses Total	$926		$1051	$1036	$1028	$1026	$979
Net income (loss)	$24		$141	$65	$32	$(54)	$(74)

Keep in mind that this is not a corporate balance sheet, but the amalgamation of several different companies. The Boyd Casinos and El Cortez are solvent. Other casinos like Stratosphere with it's huge debt load, and Plaza with declining revenue are worse off.

From a Motley Crew posting:

By Travis Hoium

The sell signs have been out for months at MGM Resorts. Las Vegas gaming revenue has remained at depressed levels, competitors continue to take share in Las Vegas, and the company is seriously considering blowing up one of its newest hotels at City Center.

Billionaire investor Kirk Kerkorian has seen enough and announced that he's sold 20 million shares in the company. Of course, the market didn't like that and sent shares tumbling 13% earlier this week

Quote: FleaStiff

From a Motley Crew posting:

By Travis Hoium

The sell signs have been out for months at MGM Resorts. Las Vegas gaming revenue has remained at depressed levels, competitors continue to take share in Las Vegas, and the company is seriously considering blowing up one of its newest hotels at City Center.

Billionaire investor Kirk Kerkorian has seen enough and announced that he's sold 20 million shares in the company. Of course, the market didn't like that and sent shares tumbling 13% earlier this week

Motley Fool... I think Motley Crew is a band.

It's kind of funny to think that they would post such a dire prediction after MGM published one of the most positive quarterly reports in years. While the long term indebtedness is overwhelming, it seems like the sky is falling prediction would have been made a year ago,

Sometimes I wonder why Ceasars Inc. is investing $500m in Project Linq . I means are they going to attract new visitors to Vegas? Will people pay more to stay at the IP? That's a lot of money to try and kill Fremont Street.

It seems to me that they should save their money and purchase some or all of the properties when MGM Resorts goes bankrupt. Why do project Linq if you can purchase the Mirage for a $1 billion? Sooner or later MGM Resorts will have to sell!

New front for Imperial Palace

Quote: pacomartin

Motley Fool... I think Motley Crew is a band.

They came way after my time, but for the record . . .

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Quote: pacomartin

New front for Imperial Palace

Neat!

BTW they're calling their overgrown Ferris wheel "the High Roller." Now, wasn't that the name of the roller coaster atop the Stratosphere Tower?

Quote: Nareed

BTW they're calling their overgrown Ferris wheel "the High Roller." Now, wasn't that the name of the roller coaster atop the Stratosphere Tower?

Yes, the "High Roller" was the name of the roller coaster that closed on December 30, 2005. I guess imaginative names are in short supply.

Downtown Vegas grossed last year(rented out 2.82m rooms all year)
$138m in food ($48.84 per room)
$65m in beverages($23.11 per room)
$58m in retail and entertainment( $20 per room)
$508m in gaming ($40.45 table games & $134.38 slot revenue per room)
$135m in rooms ($48 per room

So what do you think about Ceasars investing $500m in project Linq? Are they hoping to grab a piece of that huge amount of money from downtown Vegas?

Quote: pacomartin

So what do you think about Ceasars investing $500m in project Linq? Are they hoping to grab a piece of that huge amount of money from downtown Vegas?

Beats me. But it'd be a nice place to have on the Strip. And the soon-to-be-former Imperial Palace on that sketch should be built like that, or rebuilt, for no other reason than it's beautiful.