COVID-19 caused MGM Resorts International to lose almost $535 million in the third quarter as the casino giant continued efforts to revive and restart its gaming operations in Las Vegas and regional markets, even as the pandemic continues to hover above the gaming industry.
In Las Vegas, for example, MGM plans to restart its entertainment attractions with seven shows along the Strip. The company has also rolled out a comprehensive health and safety program geared toward reviving its convention and meeting business, both in Las Vegas and across its casino portfolio.
MGM CEO Bill Hornbuckle pointed out some key metrics on Thursday during a conference call with analysts.
MGM’s entire portfolio in six states is now operating, he said, albeit under state-mandated health and safety programs and capacity limits set both by state regulatory bodies and through the company’s own pandemic remediation plans. MGM’s third quarter results were an improvement over its second quarter numbers, which reflected a time when many of its properties were still closed.
“The third quarter offered signs of stability and recovery driven by strength at our U.S. regional operations,” Hornbuckle said. “We remain focused on responding to the pandemic with effective health and safety protocols. We have modified our operating model to adapt to the current environment, and we are executing on our long-term growth initiatives.”
Hornbuckle cited this spring’s launch of BetMGM, the company’s sports betting arm, which is officially operated by Roar Digital, a 50-50 joint venture between the company and UK betting giant GVC Holdings. BetMGM is live in eight states with retail and mobile sports betting. Hornbuckle said the operations expect to be in 11 states by the end of the year.
“BetMGM has gained significant momentum,” Hornbuckle said. “We’re now a top three operator in every market where it is live, and revenues are publicly reported.”
Hornbuckle said BetMGM has increased its 2020 net revenue projection to between $150 million to $160 million, up from its original $130 million prediction. The company is acquiring customers through its 34 million-member player rewards program and other relationships.
Hornbuckle views sports betting as a way to recapture revenue.
During the quarter that ended Sept. 30, MGM’s overall revenues declined 66% to $1.125 billion, including a 93.6% decline in Macau, where the company’s two resorts reported just $46.9 million in revenues over the three-month period.
MGM’s Strip resorts saw revenues drop 68.1% to $481.4 million. Operational restrictions due to COVID-19 health and safety protocols limited property capacity, and the company has just a partial quarter of operations at Park MGM and The Mirage. Those factors depressed the Strip’s overall results.
As with the rest of Las Vegas, MGM – which operates large convention and meeting spaces at MGM Grand Las Vegas, Mandalay Bay, and Aria at CityCenter – had zero convention and meeting guests during the quarter.
Visitation to Las Vegas during September was up almost 11% over August, but the 1.7 million total visitors were a 51% decline from a year ago, according to the Las Vegas Convention and Visitors Authority. The market continues to suffer from a lack of airline travel, as McCarran International Airport reported 1.7 million passengers in September, a nearly 61% decline from a year ago.
For the sixth straight month, Las Vegas had zero convention attendees, but a recent loosening of capacity limits by the governor could help spur some small meetings and conferences over the next two months.
MGM’s regional properties experienced a 40.4% revenue decline, to $556.8 million, due in part to various health and safety guidelines in the states where the company operates that have depressed occupancy. Several of MGM’s regional properties were only open for part of the three-month period.
Consolidated cash flow company-wide fell 106%, for a loss of $448.9 million.
MGM’s net loss of $535 million was an eye-popping decline of 1,304% compared to the net loss of $37 million in the third quarter a year ago.
Still, MGM said it is in a much stronger financial position than it was earlier this year and now has $4.5 billion in available cash.
“In October, we opportunistically issued an additional $750 million in aggregate principal amount of senior notes at an attractive rate to further fortify our financial position,” said MGM CFO Corey Sanders.
During this week’s virtual G2E conference, Jyoti Chopra, who oversees MGM’s corporate human resources department, said the majority of the company workforce was furloughed during the pandemic. Currently, about 50% of employees have returned to their jobs.
To mitigate the furloughs, the company created an employee emergency grant fund that has to date paid over $14 million to current and former employees in need of financial assistance.
Shares of MGM Resorts closed at $21.29 on the New York Stock Exchange, up $1.19 or 5.92%. However, the company’s shares were down more than 5% in afterhours trading.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
