Mirage sale to Hard Rock: Approved by Nevada Gaming Commission

December 16, 2022 2:53 PM

Mirage sale to Hard Rock: Approved by Nevada Gaming Commission

Photo: Hard Rock International (courtesy)
  • Buck Wargo, CDC Gaming Reports
December 16, 2022 2:53 PM
  • Buck Wargo, CDC Gaming Reports
  • Nevada
  • Commercial Casinos
  • Tribal Gaming

The Seminole Tribe of Florida, through its Hard Rock International subsidiary, will be the first tribal operator on the Las Vegas Strip after the Nevada Gaming Commission Friday approved its acquisition of the operations of the Mirage from MGM Resorts International.

The $1.075 billion transaction is slated to close on Monday December 19. Under the deal, Hard Rock will enter a long-term lease agreement with VICI Properties that starts at a base rent of $90 million a year. MGM will provide support to Hard Rock for 120 days.

Hard Rock plans a multi-billion investment and transformation of the Mirage, including a new guitar-shaped all-suite tower at the front of the property along the Las Vegas Strip that will make over the former Steve Wynn property that opened in 1989. The guitar is expected to be similar to the one at the Seminole Hard Rock Hotel & Casino in Hollywood in south Florida.

Jim Allen, chairman of Hard Rock International and CEO of Seminole Gaming representing the Seminole Tribe of Florida, told the Commission that they’d scouted locations on the Strip “for quite some time.” The purchase was announced in December 2021.

“We’re not just going to put a brand on the facility, change the carpet, install our rewards program, and say, ‘Come to Hard Rock Las Vegas,’” Allen said. “We had that opportunity countless times and looked at many locations here in Nevada. When the opportunity to purchase the Mirage came about, it was appealing to us —the size of the parcel, located on the 50-yard line of the Strip. The question was, could we create something iconic?”

Allen said they want to take the property to the “next level” as an entertainment destination. They recognize that the Mirage was a catalyst for the development of the Strip as an integrated resort when they looked at its transformation from the existing volcano attraction.

“We look at ourselves as an entertainment company and we look at this as the premier location on the Las Vegas Strip,” Allen said. “While we’re very respectful of the legacy of the volcano, we recognize that it is part of the Mirage of the past, and we will not be continuing to operate the volcano once we commence construction. In its place will be the guitar-shaped hotel.”

The guitar hotel will have its own entrance, casino area, and restaurants and will connect to the main complex.

The existing 3,000 rooms won’t be merely renovated; they’ll be completely gutted. Allen called it a “monumental step,” but after doing forensic studies on the building, they want it to be operational for several more decades. The old and new towers will house between 3,600 and 3,700 rooms. The villas will remain and be upgraded.

Hard Rock applied to Clark County for a guitar of 998 feet in height, but it’s expected to be approved at between 600 and 700 feet, Allen said. That will determine the number of rooms.

“Six hundred feet, 700 feet, whatever it ends up to be, the building is going to be very cool,” said Commission Chair Jennifer Tagliatti. “I really love it.”

The casino, restaurants, and public areas will also be gutted and rebuilt.

The casino will nearly double in square footage, from
94,000 to 174,000. Slot machines will increase from 836 currently to 2,000. The number of table games will go from 51 to 212. That will increase the number of gaming jobs.

Some 83,000 square feet in convention space will be added to the 200,000 square feet in place, including a new ballroom for high-end events. Theater seats will be bumped from 3,278 to 6,265 and restaurants will go from 18 to a minimum of 21 under the rebuild.

“The design of the building has certainly progressed the last eight months or so, but there have been some questions about when all this will start and finish,” Allen said. “It’s important to say on the record 100% that we’re not closing the building. There seems to be some confusion about that.”

Allen said they’ll look at the construction schedule and the economy and will evaluate what makes the most sense in about 18 months.

“The last thing we want is for 3,500 employees to have uncertainty. As I’ve mentioned, we have extended the Beatles’ LOVE show.”

The design and construction drawings should be done sometime next summer. It will take three to four months to bid the drawings. Construction will take about 30 months and a lot of that can be done in conjunction with the operations today, Allen said.

It’s projected to be a multibillion-dollar project and Allen said Hard Rock has the option to fund that itself or work with VICI or any other REIT that’s interested.

“We’ve been approached by three other REITs that would like to talk to us about it,” Allen said. “But we certainly have an existing relationship with VICI.”

Hard Rock is well positioned to serve Las Vegas. Its database in Florida shows more than $700 million in gaming revenue coming to Nevada every year.

“Now having a property in Las Vegas that we can direct our customers to has been part of the business plan for quite some time,” Allen said.

The Hard Rock operates 13 casinos in the U.S. and Canada with two other openings on the way in Virginia and Ontario, Canada. Its brand is active in 70 countries around the world, approaching 300 locations. The company more than 50,000 employees.

A year ago, the San Manuel Band of Mission Indians acquired the Palms just off the Strip. The Mohegan Sun of Connecticut has operated the casino at the Virgin Hotels Las Vegas since 2021.