MGM Resorts International closed yesterday on the sale of the operations of Gold Strike Tunica to tribal CNE Gaming Holdings. The latter, a subsidiary of Cherokee Nation Business, paid $450 million for the Mississippi casino in an all-cash transaction that valued the property at 4.5 times cash flow. According to MGM, in 2022 the casino generated a $47 million profit and $98 million in cash flow.
“This acquisition is a natural evolution for our company. Building our business outside of Oklahoma is a huge step that strengthens our ability to boost the Cherokee Nation economy while also building on our reputation of being a strong community partner and industry leader,” said Chuck Garrett, president and chief executive officer of Cherokee Nation Businesses.
As far as MGM’s immediate intentions for the money, CFO Jonathan Halkyard said, “We plan to use the proceeds from this transaction to further fortify our balance sheet, deploy capital to growth opportunities, and return capital to shareholders.”
“Gold Strike is an iconic property in Mississippi and the employees there represent southern hospitality at its finest,” added CEO Bill Hornbuckle, “I wish Gold Strike well and firmly believe a bright future is ahead for this property.”
The underlying real estate is the domain of Vici Properties, which gave the Cherokee a $40 million break in the annual base-rent payment, bringing it to $730 million over the life of the agreement, according to Vici. The 2023 rent will be $40 million, part of an initial 25-year lease that has three 10-year, tenant-exercised, renewal options, potentially extending the Cherokee presence through 2078.
Gold Strike Tunica opened on August 29, 1994, and was purchased by MGM in 2005.