With a growing economy in the U.S., casinos are ready to get back to pre-recession numbers, but some think MGM Resorts International needs to tread lightly with their larger than life plans. Leading up to the big crash of 2008, many companies were simply over-investing in larger-than-life projects financed by heavy debt loads which ultimately spelled their demise due to low visitation and gaming numbers in the years following.
MGM, who gets most of their revenue from the U.S., unlike Las Vegas Sands, who has a portfolio diversified throughout Asia, finds themselves taking on a massive debt load to finance several new and large projects. MGM, who brings in more U.S. revenue than any other casino company, is gambling on the market continuing to grow.
The two newest projects for the company stateside are National Harbor in Maryland, set to open 2016 and a massive project in Springfield, Massachusetts, which should begin construction this year. The Maryland project will be located right outside of Washington D.C., and contain 1.7 million square feet and house roughly 4,000 slot machines.
MGM is also expanding in China, with another resort set to open in Macau in 2016. Investors are urged to be wary as this growth comes at the cost of massive debt, $12.9 billion to be exact. That number is the highest in the industry behind Caesars, and nearly 30% more than Las Vegas Sands. MGM was burdened with $11.7 billion in debt by the end of 2014, with $1.3 billion of the debt maturing in 2015. MGM said that some of the new debt raised at the end of 2014 will be use for paying this year’s debt expense.
