MGM Resorts International eliminated 254 positions companywide Thursday and will have another round of layoffs in the coming weeks, according to a memo to employees from Chairman and CEO Jim Murren.
The memo, first reported by the Vital Vegas website, said the positions were being eliminated as part of the casino giant’s MGM 2020 program, a company-wide cost-cutting and efficiency effort that includes $100 million in reduced labor costs. MGM executives said the plans would lead to an additional $300 million in cash flow by 2021.
“We need to create a company that is streamlined, nimble and empowers leaders,” Murren wrote. “I want to unleash innovation and support dynamic new ideas, we need a new way of operating.”
Murren wrote the positions being eliminated are part of a “comprehensive change that is meant to be transformative.”
A spokesman for MGM did not return an email message requesting comment on the memo. It was unclear if the jobs are all in Las Vegas. Published reports said the positions were in management and are non-union employees.
MGM 2020 was formally announced in January. The company said the initiative would lead to “a more centralized organization to maximize profitability and, through key investments in technology, lay the groundwork for the company’s digital transformation to drive revenue growth.”
Since the plan was announced, several high-profile company executives announced their departure under a buy-out program, including Chief Financial Officer Dan D’Arrigo and Senior Vice President Alan Feldman, who will transition into an advisory role.
Murren said in the memo the changes would “will be completed in the coming weeks when the implementation of a new operating model concludes.”
It was unclear how many more positions would be eliminated in the next round of cuts.
MGM Resorts is considered the largest employer in Nevada with roughly 77,000 employees. The company operates nine resorts on the Las Vegas Strip, including MGM Grand, Mandalay Bay, New York-New York, Bellagio and The Mirage. MGM owns 50 percent of the CityCenter complex and manages the development, which includes that Aria resort. The company has corporate offices both within several properties and off-site.
MGM Resorts has been under fire from activist hedge funds and investors wanting to see the stock price boost in value. Activist hedge funds, including Starboard Value and Canyon Capital Advisors, have built small positions in MGM Resorts since last year.
In January, the company formed an “ad-hoc” committee of the MGM board to evaluate the company’s real estate portfolio and “make recommendations.” The three independent board members – John Kilroy Jr., Keith Meister and Paul Salem – would work with management to assist in the evaluation. MGM said the three have “extensive real estate and financial markets experience.”
Meister, the managing partner and chief investment officer of hedge fund Corvex Management, was appointed to the MGM board in early January. Corvex acquired 3 percent of the company.
In 2015, MGM Resorts formed MGM Growth Properties, a publicly traded real estate investment trust. Nearly all the company’s resort-casinos are owned by MGM Growth and the operations are leased back to the casino operator. MGM Resorts owns 70 percent of MGM Growth and Murren said efforts are under way to reduce those holdings to below 50 percent.
MGM Resorts still owns real estate associated with the Bellagio, MGM Grand and Circus Circus in Las Vegas and MGM Springfield in Massachusetts.
Shares of MGM Resorts closed at $27.75 in trading on the New York Stock Exchange Thursday, down 4 cents or 0.14 percent. The company’s stock price has fallen some 12 percent since August.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
