With financial results at an all-time high, there seems to be little for MGM Resorts International to worry about: the operator reported 2Q24 revenue of $4.3 billion. Yet the Formula 1 Las Vegas Grand Prix, scheduled for November 23, will be important to the operator’s fourth quarter.
“Although we could argue that that revenue goes against labor increases or insurance and a bunch of other things, the real issue with Formula 1 is it’s off to a soft start as compared to last year, when we had a lot advance bookings,” said MGM Resorts President and CEO Bill Hornbuckle. “A lot of our ADRs are down if you look at what we’re charging, 50% give or take. It doesn’t feel soft in gaming, which is one of the most important pieces, but it feels soft. It just doesn’t have meaning with the big three, in this case Aria, the Cosmopolitan, and Bellagio. So the overall impact, we’ll see. I’m hoping it fills later and we could yield back up again. I think it’s worthy enough and we’re concerned enough to make a point of distinction between this year and last.”
Financial projections “depend greatly on our performance during F1,” said MGM Chief Financial Officer Jonathan Halkyard. “That’s not the only thing going on; a lot of things are driving the business in the fourth quarter. But that was an important driver of our performance last year. So I would say kind of carving out that risk for the moment, we feel very good about the 3rd and the 4th quarters and their ability to grow, but just realistically, the fourth quarter does depend on the performance of the F1 event.”
The operator’s sports betting through BetMGM received a boost last week with the acquisition of Tipico.
“We also recognize the importance of having an owned sport- betting platform to further highlight our brands and generate more cross-sell opportunities,” said MGM Resorts Interactive President Gary Fritz. “We took a large step forward toward achieving technical independence with the purchase of Tipico.”
Halkyard was also bullish on MGM properties in Macau. “We continue to have best-in-class properties with leading market share, providing steady free-cash-flow generation in Macau.”
A plan to connect the Bellagio with the Cosmopolitan and Aria is also in the works. But the Formula 1 race hangs over the operator.
“We’re far from giving up,” Halkyard said. “As it sits today, ticket sales are soft and therefore room sales are soft. What I would say is we’ve heard from other markets and it’s fairly consistent from year one to year two. There’s a lot of hype for it. This will be a good weekend for us compared to an average normal weekend.”
