Growing in Macau, prospering at home
At the annual J.P. Morgan Gaming, Lodging, Restaurant and Leisure Management Access Forum, held this month in Las Vegas, MGM Resorts Chairman and CEO Jim Murren was upbeat about the gaming company’s future.
Murren took over MGM Resorts in 2008, at the start of the downturn that would prove once and for all that gaming is not recession-proof. The company’s massive $8.5 billion CityCenter development was still under construction, and many analysts were concerned that MGM would have a hard time remaining solvent.
Six years later, MGM’s stock price “is nearing levels unseen by investors since before the recession,” according to the Las Vegas Review-Journal. Shares are up roughly 104 percent in the past 12 months. In addition, the company has refinanced its $13 billion in long-term debt to lower interest rates and extend maturities.
Analysts are pleased. “MGM has the most upside potential of any gaming operator in our coverage,” Macquarie Securities’s Chad Beynon told the Review-Journal. Union Gaming analyst Robert Shore said he remains “highly constructive” when it comes to the company’s financial outlook.
The company is in growth mode. MGM has some $5 billion in new gaming and nongaming developments in Las Vegas and Macau, and recently won approval for its $1 billion casino resort at National Harbor near Washington, D.C., which Murren says “will be the most profitable commercial casino outside of Las Vegas.”
If MGM wins the lone gaming license in western Massachusetts, it will have a unique opportunity to cross-market its Vegas properties in the eastern United States. It also may return to Atlantic City, a jurisdiction it was compelled to abandon in 2010, when New Jersey regulators forced MGM to choose between its AC stake and its Macau partner, Pansy Ho.
“I expect to be relicensed in New Jersey,” Murren said. “I feel we have laid out a case that is effective, complete and a has very compelling point view as to why we should be found as a qualified operator.”
In addition, some industry observers say MGM may be well-positioned to land a gaming license in Japan.
Despite the uptick, the downturn is never far from Murren’s mind.
“It would be wrong to say we have forgotten how difficult it was. It’s something that is seared in our minds,” Murren said. “We’ve had some wins as a company; but because we experienced such a harrowing time, it tempers our enthusiasm and keeps us from getting overconfident.”
