MGM CEO: Las Vegas properties well positioned in “golden triangle of sports”

September 7, 2023 9:09 PM
Photo: Shutterstock
  • Buck Wargo, CDC Gaming Reports
September 7, 2023 9:09 PM
  • Buck Wargo, CDC Gaming Reports

MGM Resorts CEO and President Bill Hornbuckle said the company’s Las Vegas casino-resorts are in the garden spot to benefit from events at Allegiant Stadium, T-Mobile Arena, and the planned baseball stadium on the Tropicana site at the south end of the Strip.

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Hornbuckle was exuberant while speaking to Wall Street investors Thursday about the strength of Las Vegas tourism, looming projects in Japan and the United Arab Emirates, and the potential of getting a license in the New York City area. He appeared at the Bank of America Gaming and Lodging Conference.

Harry Reid International Airport today has 20% more airplane seats than in its history and interest in coming to Las Vegas continues to grow, Hornbuckle said.

“With the second-quarter earnings, the message is, particularly as we look at the luxury segment in Las Vegas, that it remains strong,” Hornbuckle said. “Two weeks ago, we had the highest average daily-rate booking week in our history. You’re leaning into the fourth quarter and Formula One. People are starting to get excited about the Super Bowl. We were able to capture the NBA tournament that’s going to take place during the first week of December (at T-Mobile). The signs we see are encouraging.”

Hornbuckle was especially excited about the F1 race in November that’s drawing people to Las Vegas from all over the world. He said rates are four times normal and the gaming front money is 50% above the highest in history.

“And we have seven weeks to go,” Hornbuckle said. “But that doesn’t mean we’re going to win. Anything can happen.”

Hornbuckle discussed entertainment driving tourism and spending. He said MGM has sold more than nine million tickets to its events, third only to Live Nation and AEG in the U.S.

MGM has nine properties in Las Vegas, most clustered at the south end of the Strip and is benefitting from Allegiant Stadium and its major events, T-Mobile Arena that is the home to the Vegas Golden Knights, UFC, and concerts, and the planned $1.5 billion A’s stadium slated to open in 2028

“This thing continues to marvel,” Hornbuckle said of Allegiant Stadium, home to the Las Vegas Raiders and February’s Super Bowl. “We just finished with Beyoncé there. This is in our backyard. Sixty-five percent of the people who come to this venue walk from the Strip, right where we are. We find that compelling.”

Allegiant is part of a corridor that includes T-Mobile Arena, where Hornbuckle said the Stanley Cup champion Vegas Golden Knights attract 5,000 to 7,000 Canadians midweek when their teams are playing the Knights.

“If you think about it, you can’t help but be excited by the activity all of that generates,” Hornbuckle said. “I call it the ‘golden triangle of sports.’”

The A’s domed stadium will look out at the MGM Grand over the right field and centerfield wall.

“It’s kind of hard for us to believe that if they put the (retractable) roof on (like they plan), that will be the backdrop,” Hornbuckle said, citing images that show the MGM Grand logo in the background. “Of those four corners, we have the MGM, New York-New York, Excalibur, and the stadium. That will drive 450,000 new visitors and I think that’s conservative. If the A’s keep doing what they’re doing and don’t get better, time will tell. We hope they will. They better be. We think the additional programming (in that stadium) can help in that venue and we find that exceptionally compelling.”

Hornbuckle weighed in on several other topics.

He said 70% of their revenue comes from 30% of their guests, which is why they have leaned into luxury brands. The Bellagio has a trailing 12-month cash flow of $700 million.

“It’s a meaningful number and one we want to protect. So we’ve redone all of the rooms, with the exception of the suites in the main tower that we’re doing now,” Hornbuckle said. “We’ve redone the casino and three of the restaurants and we’re working on baccarat.”

MGM has $3.5 billion in cash and with additional credit can push that to $5 billion. “We’re proud of our M&A,” Hornbuckle said. “When you take the Cosmopolitan (acquisition) and combine it with the Mirage (sale to Hard Rock International) and Gold Strike (sale in Mississippi), that was over a 40% accretive deal for us on ROI.”

In Macau, Hornbuckle talked about MGM’s market share increasing from 9.5% to just under 15% and credited marketing, added suites, and additional table games for contributing. Macau visitation in August was back to where it was in August 2019, he said.

MGM is also committed to investing $1 billion over the next decade in non-gaming amenities to lure tourists to Macau.

Hornbuckle is flying to Japan at the end of September to sign an implementation agreement and lease for their $10 billion property in Osaka that will open in 2030. The company has a 40% ownership stake.

“If you think about the marketplace, we will probably be the only casino for a very long time in Japan,” Hornbuckle said. “You have 100 million people in Japan and 19 million in Osaka alone. It’s closer to Shanghai, Beijing, and cities in northern China than Macau.”

As for their proposed New York project, Hornbuckle said they hope to submit required documentation by the end of the year.

“I’m hoping, but I don’t know, that by this time next year, we’ll have been given a license,” Hornbuckle said. “That’s a rational and reasonable expectation, but we’ll see.”

Hornbuckle said MGM is keeping its options open for a potential casino license at its planned hotel-only project in the UAE by setting aside 150,000 square feet that could be used for gaming or retail.

Former MGM CEO Jim Murren was recently named chairman of the UAE gaming authority.