MGM Resorts International is another regulatory step closer toward its acquisition of the operations of The Cosmopolitan of Las Vegas for $1.6 billion and company executives are excited about its synergies with the adjacent CityCenter.
The Nevada Gaming Control Board Wednesday recommended approval of the deal with the Blackstone Group – part of a larger $5.65 billion deal in which investors would own the real estate underneath and MGM would pay $200 million in a year in rent as part of a 30-year contract.
The formal licensing will now go to the Nevada Gaming Commission on May 19. MGM COO Corey Sanders told the board the sale of the property announced in September is expected to close at the end of May.
“We’re extremely excited by the acquisition,” CEO Bill Hornbuckle told the board. “It’s something that you can’t help but look at CityCenter (across Harmon Avenue) when it was first envisioned and created and, I think wanted to be, needed to be, and should be a part of that complex. We have been interested in that for some time and the marketplace has afforded us finally that opportunity to do it.”
Hornbuckle called it a “great property that’s well branded and well run. They have taken it from a meager beginning to a powerhouse in Las Vegas.”
The 3,000-room Cosmo opened in December 2010, a year after Aria in CityCenter.
Hornbuckle said for The Cosmo to be able to join the MGM portfolio and the market segment it brings to the company is “extremely compelling.” He said it’s not a property that MGM owns in context to the Las Vegas market.
Sanders said assuming gaming regulators approve the transaction, The Cosmo will be transitioned into the MGM by reporting to Anton Nikodemus, the COO and President of Aria.
“We think there are opportunities between those two properties based on experiences and the type of properties that have two great leadership teams there,” Sanders said. “The property will have its own management team similar to how they operate today.”
Sanders said some of the back-of-the-house functions, such as information technology and accounting, will eventually be consolidated into MGM when the systems are compatible.
Cosmo employees will also have opportunities at other MGM properties in Las Vegas, regionally and internationally, Sanders said. Some may take roles in corporate areas as well.
“We have more than 5,300 job openings in MGM Resorts, but we’re not concerned about absorbing them,” Sanders said. “We do not expect any impacts to The Cosmopolitan of Las Vegas employees. They will keep their titles, pay, and benefits.”
As for the customers, Sanders said it will be a win for them. Cosmo customers will be able to enjoy MGM amenities, including restaurants, entertainment, nightclubs, and the Shadow Creek golf club. MGM customers will have the opportunity to enjoy The Cosmo’s amenities.
MGM is in the process of integrating its loyalty program into the Cosmo. Sports betting will take time with William Hill the current sportsbook operator. “The integration of BetMGM into the Cosmopolitan, we would expect to happen 90 days after the acquisition,” Sanders said.
Hornbuckle told the board that Las Vegas is well positioned in its recovery since COVID-19 shuttered the industry for more than two months in 2020. The weekends have been strong and retail business has picked up tremendously.
“Programming at Allegiant Stadium and other activities that we’ve seen has been additive,” Hornbuckle said. “We just hosted the NFL Draft so there’s a lot of excitement in the community. We look forward to Formula 1 and the Super Bowl.”
About 20% of MGM’s mix is group business and Hornbuckle said they are now 90% of where they want to be and need to be through the balance of 2022, Hornbuckle said.
With the Federal Reserve raising interest rates Wednesday, Hornbuckle said they like everyone else will watch how that impacts the economy over the next two months and the rest of the year.
“We still have great optimism in Las Vegas and at our regional properties that the market will be resilient,” Hornbuckle said.
