Murren informed the MGM board of directors early this year of his decision to step aside following the expiration of his current contract, and, in light of the COVID-19 public health crisis, has vacated the position immediately to provide continuity of leadership for the company.

“We have an incredible challenge ahead. We have a talented leadership team, the best employees in the world, and a loyal customer base,” Hornbuckle commented. 

“I have every confidence that MGM Resorts will remain the global entertainment leader once this crisis is contained and it is safe to operate. I look forward to working with Paul and the entire board of directors as we plan for the future.”   

Furthermore, Murren is to be replaced as chair of the Las Vegas headquartered firm’s board of directors by Paul Salem, currently serving as a member of the MGM Resorts board and chair of the real estate committee, which is in the process of executing the asset light strategy.

“The nation is facing an unprecedented crisis, causing the travel and hospitality industry to grind to a near halt. It is clear that once the threat to the public health has subsided and we are ready to reopen our resorts and casinos, it will take an incredible effort to ramp back up,” Salem explained. 

“We believe continued steady, skilled leadership is needed in this time of great upheaval and uncertainty. Bill is one of the most experienced operators in the business and we have confidence in his ability to bring this company back online. 

“Jim Murren is an outstanding leader who transformed MGM Resorts during his 22 years. Since Jim announced his stepping down from MGM Resorts, we felt that now more than ever, continuity of leadership was of vital importance.”

Murren, who initially advised the company of his decision last month, added: “I fully support accelerating the planned leadership transition to help MGM Resorts address the rapidly changing environment. 

“I have great confidence in Bill Hornbuckle and the management team to lead MGM Resorts at this critical juncture, as we have together through numerous hardships of the past. I will continue to dedicate my efforts to help during this uncertain time, and I will be assisting the State of Nevada in its crisis response and recovery efforts.”

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Releasing its latest financial report, revenue for the quarter finished four per cent ahead at $3.18bn (2018: $3.05m), helping push full-year figures to $12.9bn, a ten per cent increase year-on-year from $11.8bn.

Consolidated operating income for Q4 saw a significant upturn from $336m to $3bn, including a $2.7bn gain related to the Bellagio real estate transaction. The sale also saw net income swing from a $23m loss to $2bn.

Consolidated adjusted EBITDAR decreased three per cent to $682m in the current quarter compared to $703m, primarily attributable to a drop in table games revenues attributable to Far East baccarat at the company’s domestic resorts and the inclusion of $24m in insurance proceeds in the prior year.

Revenue at MGM’s Las Vegas Strip resorts saw a Q4 boost of four per cent to $1.42bn (2018: $1.37bn), with a slight two per cent rise felt for the year from $5.71bn to $5.83m.

Regional operations soared 15 per cent during the quarter to $899.6m (2018: $782.3m), while on a yearly basis, including input from the Empire City Casino and MGM Northfield Park acquired properties and a full year of operations at MGM Springfield, a 21 per cent increase to $3.54bn (2018: $2.93bn) was reported.

MGM China contributed revenue of $727m in Q4, a six per cent rise from $686.7m, aiding a 19 per cent increase for the year to $2.9bn (2018: $2.44bn).

Jim Murren, chairman and CEO of MGM Resorts, who is to depart his role at the end of the current contract, explained: “During the year, our team made meaningful strides in implementing our asset-light strategy to optimise our portfolio, strengthen our balance sheet and enhance free cash flow. This strategy is best positioning MGM Resorts for the future by providing the flexibility to invest in higher return growth opportunities. 

“Following the monetisation of the real estate of Bellagio and the sale of Circus Circus Las Vegas, we continued our momentum into the first quarter of 2020 with our announcement to monetise the real estate of MGM Grand Las Vegas. 

“Our previously announced transactions are expected to provide total net cash proceeds to MGM Resorts of $8.2bn, a portion of which we used to retire $3.1bn of debt in the fourth quarter.”

Furthermore, MGM also emphasises that due to increased volatility due to coronavirus, which sees its Macau casino currently closed, as well as the market-wide weakness in Far East baccarat in Las Vegas, 2020 full year financial targets have been withdrawn.

“We have made significant changes as a company since 2018, when we announced our financial targets. We have advanced our transition to a more asset light business model and are successfully continuing to execute on our MGM 2020 plan,” said Corey Sanders, chief financial officer and treasurer of MGM Resorts. 

“While we are encouraged with the long-term outlook in most of our key segments, and are especially pleased with our underlying domestic business performance, we believe it is appropriate to withdraw our 2020 financial targets.” 

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The board has formed a committee of independent directors to conduct the search process, which in turn is working with a “nationally recognised executive search firm to identify and evaluate appropriate candidates.

“On behalf of the entire MGM Resorts board of directors, I want to thank Jim for his years of dedication to the company and the community,” Roland Hernandez, lead independent director of the MGM Resorts board of directors, explained. “Jim has led the company through growth, transforming it into a global entertainment company with a worldwide footprint and creating value for MGM Resorts shareholders. 

“As CEO, he has spearheaded significant achievements across our properties, including the development of the CityCenter destination and has turned resorts into showcases of entertainment and sophisticated architecture. The board is focused on continuing to create long-term value for MGM Resorts shareholders. 

“The search committee, along with the entire board, will be dedicating significant attention and resources towards identifying and naming Jim’s successor. Jim will continue to lead the company during this process. We will also look to the talented management team in place to help guide the company into this next chapter.”

Murren has served as chairman and CEO since 2008, after being appointed to the roles ten years after first joining the organisation.

MGM lauds Murren as being “instrumental” in establishing professional sports in Las Vegas, as well as being involved in the building of the T-Mobile Arena and bringing the Vegas Golden Knights, the Las Vegas Aces and the Las Vegas Raiders to the city.

Further praise comes after being an “early and strong supporter of diversity, inclusion and sustainability” in Las Vegas, as well as leading Asian expansion expansion and current efforts to obtain a licence in Osaka.

“Leading MGM Resorts has been the most rewarding and fulfilling experience in my professional career,” said Murren. “It has been an honour to work with such a talented group of men and women who provide millions of guests with memorable life experiences every day all over the world. 

“We have a solid leadership team in place, and I am confident that they will work with my successor to continue the company’s trajectory of growth and expansion. Until my successor is named, I will continue to lead this company just as I always have and will remain focused on executing our strategy and am fully committed to supporting a seamless transition.”

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In a transaction valued in the region of $2.5bn, it follows the firm’s previously announced Bellagio and Circus Circus Las Vegas deals that MGM states will provide cash proceeds in the region of $8.2bn.

The joint venture, which will be owned 50.1 per cent by MGP and 49.9 per cent by BREIT, will also acquire the real estate assets of Mandalay Bay from the former, and will lease both properties to MGM Resorts for an initial rent of $292m.

The transactions are a further continuation of the MGM asset-light strategy, which sees the firm strive to become a leader within the global gaming, hospitality and entertainment sectors.

“These announcements represent a key milestone in executing the company’s previously communicated asset-light strategy, one that enables a best-in-class balance sheet and strong free cash flow generation to provide MGM Resorts with meaningful strategic flexibility to create continued value for our shareholders,” explained Jim Murren, Chairman and CEO of MGM Resorts. 

“As such, we remain determined to prudently pursue accretive opportunities related to our remaining owned real estate assets including MGM Springfield, our 50 per cent stake in CityCenter and our 55 per cent economic ownership in MGP (pro forma for the potential $1.4bn redemption). 

“Our corporate objective remains crystal clear, we will continue to monetise our owned real estate assets, which facilitates our strong focus on returning capital to our shareholders, while also retaining significant flexibility to pursue our visible growth initiatives, including Japan and sports betting.”

According to the firm, the previously completed Bellagio and Circus Circus Las Vegas transactions provided significant proceeds for deleveraging, while the continued execution of its 2020 initiatives are expected to further support balance sheet improvements.

“We are pleased to announce this partnership with BREIT, which illustrates the numerous opportunities available to grow our business and emphasises the strong institutional demand for gaming real estate assets,” said James Stewart, CEO of MGP. 

“Along with the contemplated cash redemption of $1.4bn of MGM’s operating partnership units as announced by MGM, we expect this transaction to be accretive to AFFO while allowing us to maintain pro rata net leverage of 5.6x.”

The transaction is expected to close in the first quarter of 2020, subject to certain closing conditions.

Tyler Henritze, head of US acquisitions for Blackstone Real Estate, added: “Similar to the Bellagio, owning these two premier Las Vegas assets under a long-term lease with MGM provides stable cash flow and excellent downside protection for our BREIT investors. We look forward to growing our partnership with MGM Resorts and MGM Growth Properties, a best-in-class company.”

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Publishing his thoughts via Fortune, Murren, who acknowledged the reputation of ‘Sin City’ as one of excess and non-stop entertainment, praised a growing corporate culture that displays an extension beyond “simply serving customers and growing bottom lines”.

“The rationale is clear: Large, successful companies have a significant impact on the lives of their employees, communities, and the world—and they have a duty to do right by each,” Murren writes. 

“That’s especially true in Las Vegas, where the Strip’s biggest operators—MGM Resorts, Caesars Entertainment, Wynn Resorts, Las Vegas Sands—are the driving force for the economy and some of the largest employers in Nevada.”

One example illustrated is that of a number of Las Vegas’ top attractions, identifying the fountains of Bellagio and Caesars Palace’s as well as the iconic Venetian as prime examples of sustainable water programs, initiated by each parent company, that save millions of gallons a year for a city situated in the Mojave Desert.

Similarly lauding efforts to utilise renewable sources of energy and reduce environmental impacts, Murren also highlighted programs to support local livestock farms in addition to a growing commitment to responsible gambling programs and employees volunteer work.

Emphasising MGM’s own commitments via the roll-out of its own social impact and sustainability vision last year, Murren ends by calling for those in the city to work together and unify efforts: “While Las Vegas companies have individually done tremendous work to fuel the city’s social, economic, and sustainable transformation, there’s no telling what we could do under a single, unified banner. Imagine a citywide strategy leveraging our resources to collectively do the most possible good. 

“I hope that moving forward, we can start a new conversation about complementing each other’s efforts and making the most meaningful impact possible for our economy, our communities, and the planet we all share.

“I’m excited about what we can collectively accomplish, and I couldn’t be prouder of the Strip’s role in exporting the best of Las Vegas across the country and around the world.”

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$850m

MGM Resorts International and MGM Growth Properties have announced the completion of transactions to acquire Empire City Casino, located in Yonkers, New York.

MGM Resorts acquired the property for approximately $850m, with the company agreeing to pay an additional $50m if Empire City is awarded a license for live table games on or prior to December 31, 2022.

Following the purchase MGP secured the developed real property from MGM for in the region of $625m, and leased it back to an MGM subsidiary that is to undertake daily operations.

Jim Murren, chairman and CEO of MGM Resorts, commented: “We are pleased to welcome the 1,200 employees at Empire City Casino to the MGM Resorts family.

“Over the past three years, we have established a meaningful presence in the northeast with Borgata in Atlantic City, MGM National Harbor in Maryland, and MGM Springfield in Western Massachusetts.

“With this new addition to the MGM Resorts portfolio, we have now gained a foothold in the high-density New York City region, and we look forward to leveraging the MGM platform to maximise value in this evolving marketplace.”

2024

Japan’s Wakayama Prefecture has announced further details of its integrated resort plans, should it win one of up to three licenses that are set to be issued by the country’s central government, report Asian news outlets.

The confident region, one of only three to confirm its interest in being a host thus far alongside Osaka and Nagasaki Prefecture, has earmarked Wakayama Marina City as its preferred site.

Chosen due to its established infrastructure, its location in close proximity to the Kansai International Airport, in addition to tourist spots such as the Shirahama Hot Springs and the Koyasan World Heritage Site, was also praised.

Wakayama is reported to have set aside $1.8m in next year’s budget for related costs, including IR research and wider financial concerns, with it estimated that an additional four million visitors will be attracted per year, bringing $2.75bn as a result.

It is intended that a grand opening will commence in 2024, alongside Osaka which is widely expected to be successful in its bid to host an IR.

51

Paddy Power Betfair has announced that it has secured number one position in the “fast growing regulated online Georgian market,” via the purchase of a 51 per cent stake in Adjarabet for an initial cash consideration of £101m.

The organisation has also agreed a further stipulation, under the terms of which it expects to acquire the remaining 49 per cent after a period of three years, at a valuation equivalent to seven times of 2021 EBITDA.

In a media statement Paddy Power Betfair released further details of its latest deal: “This acquisition provides the group with exposure to two attractive, fast-growing, regulated markets.

“The online Georgian market is estimated to have grown at a CAGR of 40% from 2016 to 2018 to an estimated £180m of gross gaming revenue, with the nascent Armenian market providing a further growth opportunity.

“We believe that the combination of the market-leading brand and local operational expertise with Paddy Power Betfair’s technology, and leading sports capabilities, positions Adjarabet very well to capitalise on this opportunity.”

1

Las Vegas headquartered Caesars Entertainment has announced plans to debut its first non-gaming hotel in the United States, which is to be located in the Arizona city of Scottsdale.

Falling under the organisation’s new Caesars Republic brand, the four star property is to be developed by HCW Development and operated by Aimbridge Hospitality, with Caesars licensing its brand, in addition to advising on design elements and integrating its total rewards loyalty network.

Stated to tap “into the unique pulse of each host city,” Caesars stressed that no two Republic entity’s are to be exactly alike, with “everything from the décor to the culinary offerings inspired by local traditions and taste-makers”.

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32

Brazilian democrat, Paulo Azi, has submitted a bill which calls for the authorisation of 32 casinos across the country, according to Games Magazine Brazil.

The legislation, if passed, will allow a public bidding procedure to grant a 30 year licence to different states. Jurisdictions with a population of 15 million or less would be permitted to open one casino, while states with populations between 15 million and 25 million would have two.

São Paolo is set to be the only state that will be authorized to open three casinos due to its 45 million inhabitants. Minas Gerais, Rio de Janeiro and Bahia would qualify for two casinos while 23 other states could have one each.

$1bn

The Philippines could set to be the recipient of huge investment, relating to the construction of a duo of casinos in the southeast Asian country.

This is courtesy of PH Resorts Group Holdings, previously known as Philippine H20 Ventures, and a subsidiary of Udenna Group owned by Chinese-Filipino businessman Dennis Uy, who has pledged to invest $1bn to build two casinos in the Philippines, with the first planned to be located on Mactan Island in Cebu and the other in Clark Freeport Zone.

The company will sell P18.48bn of shares next month and spend in the region of $665m to complete the build of The Emerald, an integrated resort and casino on a 13.5-hectare site in Punta Engaño, Mactan Island, Cebu.

Furthermore, the company also released further information regarding its Clark Freeport Zone proposition, where PH Resorts has set aside $276.6m for the construction of Clark Resort.

2020

MGM Resorts International has re-emphasised its commitment to growth through its previously announced 2020 initiative, which the organisation hopes will deliver an adjusted EBITDA uplift of $300m across its domestic resorts.

Striving to to further reduce costs, improve efficiencies and position the company for growth, the Las Vegas headquartered firm has also emphasised a commitment to the latter point, with one of three integrated resorts licences in Japan very much on the radar.

Jim Murren, chairman and CEO of MGM Resorts International, addressed the company outlook moving forward: “Looking ahead, we remain highly focused on our strategic priorities, including maximising the performance of our premier properties, driving consolidated free cash flow growth and successfully executing MGM 2020 – our recently announced plan dedicated to improving efficiencies, reducing costs, and investing in key technologies to position the company for further profitability.

“Through MGM 2020, we are reinvesting in our business, and we expect to begin to see the financial benefits in the back half of 2019.

“We also remain committed to targeted growth opportunities, such as sports betting and the pursuit of an integrated resort in Japan. Importantly, we will continue to prudently allocate capital, with a focus of returning excess cash to shareholders.”

29

The European Casino Association has welcomed its 29th member, as the group also outlines an “ambitious three-year strategy” to develop leadership, exchange and development of best practices, across a variety of key issues affecting the land-based casino industry.

Gaining approval at the ECA’s recently held general assembly was the City of Dreams Mediterranean, Cyprus’ first integrated casino-resort, with the Melco Resorts and Entertainment owned property passing strict membership requirements whilst also signing up to the association’s code of conduct.

Scheduled for its grand opening in 2021, the €550m development is expected to become an integral contributor to the island’s tourism, with early forecasts approximating an added 300,000 tourists to Cyprus, whilst also creating in the region of 6,5000 jobs.

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The company has stressed a commitment to creating a more sustainable future, while striving to make a bigger difference in the lives of its employees, guests and communities where it operates.

This includes setting goals to bolster diversity and inclusion, donating millions of meals and continuing to offer scholarship and educational opportunities for employees and their families.

MGM has set four strategic priority areas, namely fostering diversity and inclusion, investing in community, caring for one another and protecting the planet, driven by a commitment to the UN sustainable development goals.

“As a company with a global presence and more than 80,000 employees worldwide, MGM Resorts recognises our responsibility extends beyond simply serving our customers and growing our bottom line,” explained Jim Murren, MGM Resorts chairman and CEO.

“Focused on what matters elevates and builds upon our work and investments in responsible leadership and provides a roadmap for making the most meaningful, enduring impact possible.

“I am proud of the long-held values that have always guided how our organisation addresses societal needs, and I am honoured to lead MGM Resorts as we embark on this mission.”

Furthermore, MGM has also stipulated a number of commitments to achieve by 2025, related to its people practices, sustainable business operations and global supply chain network.

These include reaching one million volunteer hours through its employee program, donating five million meals, awarding 600 post-secondary scholarships to children of employees and reducing carbon emissions.

MGM has also furthered a commitment to enhancing its focus on embracing humanity and protecting the planet, by signing onto the United Nations Global Compact.

This calls on companies to align strategies and operations with universal principles on human rights, labour, environment and anti-corruption and take actions that advance societal goals.

In a letter to the secretary-general, Murren stated: “MGM Resorts International is committed to joining the United Nations Global Compact…We express our intent to enhance our focus on these principles in our company. We also commit to advancing the broader goals of the UN, particularly the sustainable development goals.”

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The Las Vegas headquartered firm entered two deals earlier this month, this first of which concerned the sale of the Bellagio property to Blackstone Group for $4.25bn before Treasure Island owner Phil Ruffin entered a definitive $825m agreement to acquire Circus Circus.

Speaking on a conference call following the publication of its latest financial report, it was said that its flagship MGM Grand could the next Las Vegas Strip casino to be offloaded.

Proceedings from any potential sale would be used to reduce debt as well as reinvest in further opportunities worldwide, including Japan’s impending integrated resort scene. 

Jim Murren, chairman and CEO of MGM Resorts, explained: “We recently announced two significant transactions, which form part of our broader asset-light strategy and the shift in our business model away from a capital-intensive real estate business towards a developer, manager and operator of leading gaming, hospitality and entertainment properties. 

“We entered into an agreement to sell Circus Circus Las Vegas for consideration of $825m and entered into an agreement with Blackstone Real Estate Income Trust that values the real estate of Bellagio at $4.25bn, representing a purchase price multiple of 17.3x rent. 

“We expect that the agreements to sell Circus Circus Las Vegas and to monetize the Bellagio real estate assets will provide us with net after tax cash proceeds, including expected debt breakage costs, of $4.3bn, a majority of which will be used to fortify our balance sheet and then return capital to shareholders.”

Unveiling its financial performance for the third quarter MGM saw revenues hit $3.31bn, a nine per cent increase from $3.02bn, with the company’s casino segment rising 13.4 percent to $1.66bn (2018: $1.46bn).

Operating income decreased 42 per cent compared to the prior year as it finished at $238.3m (2018: $410.9m), with adjusted EBITDA boosted 14 per cent to $814m (2018: $716m).

Maintaining optimism for the period ahead, Murren concluded: “I am excited about the prospects for our business as we enter 2020. We expect the combination of a healthy Las Vegas market and successful implementation of MGM 2020 to drive EBITDA and free cash flow growth.  

“Simultaneously our asset light transition will generate significant proceeds from real estate monetisation that can be used to strengthen our balance sheet, meaningfully reduce our shares outstanding, and invest in select growth initiatives.  

“Our increased profits spread across fewer shares outstanding will result in enhanced free cash flow per share and generate meaningful value for our shareholders.

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Representing a continuation of the execution of the latter’s asset-light corporate strategy, the $825m purchase price will comprise $662.5m paid in cash and a $162.5m note due in 2024.

The transaction is expected to close in the fourth quarter of 2019 subject to customary closing conditions, including receipt of necessary regulatory approvals. 

MGM expects to record a third quarter impairment charge of approximately $220m in connection with this transaction.

“MGM Resorts has engaged in an exhaustive process to evaluate its owned real estate and remains committed to executing its asset-light strategy in a measured way that maximises value for its shareholders,” noted Jim Murren, chairman and CEO of MGM Resorts. 

“The company expects to utilise the proceeds from this transaction to enhance its capital allocation strategy and complement its strategic and operational flexibility.”

MGM acquired Circus Circus Las Vegas in connection with its Mandalay Resort Group purchase 14 years ago, with the property, which originally opening in 1968, home to the 5-acre Adventuredome indoor amusement park and boasts 2,300 employees, 10-acre RV park and 37-acre festival grounds.

Ruffin added: “Circus Circus has anchored the north end of the Las Vegas Strip for over 50 years, and I am excited to add it to my casino portfolio. 

“I have tremendous respect for Jim Murren and the MGM team, and my relationship with them goes back to my friendship with Kirk Kerkorian and continues to this day.”

The latest activation of MGM’s asset-light strategy follows MGM and Blackstone real estate investment trust have entered a new joint venture that sees the latter secure the applicable assets of Las Vegas’ Bellagio for $4.25bn.

The company still retains several Las Vegas-based real estate assets including MGM Grand, MGM Springfield, a 50 per cent stake in CityCenter and its 68 per cent economic ownership in MGM Growth Properties.

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