Fresh off a hotly rumored sale of its Las Vegas crown jewels, Bellagio and the MGM Grand, MGM Resorts International is reportedly close to selling Circus Circus to Kansas billionaire Phil Ruffin.
The Las Vegas Review-Journal reports that MGM and Ruffin, who owns the TI farther south on the Las Vegas Strip, reached a handshake agreement in September on a deal, which includes land on the southwest corner of Las Vegas Boulevard and Sahara Avenue known as the Las Vegas Festival Grounds.
If the rumor proves true, it will be the second time the two parties have shaken hands. The first was in 2009, when MGM was reeling from the global financial crisis and desperate to complete CityCenter, and Ruffin took the TI𑁋then known as Treasure Island𑁋off the company’s hands for $746 million.
Ruffin also owns around 50 percent of Trump International in Las Vegas and has expressed interest in acquiring a Strip property from Caesars Entertainment, which sold the off-strip Rio last week and may be looking to unload more Las Vegas assets under new owners Eldorado Resorts.
Much as it was a decade ago, MGM is motivated on several fronts. Anxious to raise funds for a megaresort in Japan and under pressure from activist investors to cut costs and monetize the real estate under its last four wholly owned casinos, the company is reported close to a deal with private equity giant Blackstone for Bellagio and the Grand. That sale, coupled with a sale of Circus Circus, would leave only the new Massachusetts casino, MGM Springfield, which is under a right of first offer with the company’s majority-owned REIT, MGM Growth Properties, the owner of the rest of the MGM portfolio.
Terms of a deal with Ruffin had not been disclosed at press time, although Macquarie Securities analyst Chad Beynon estimates the 3,767-room Circus Circus known for its indoor Adventuredome amusement park and the only RV park on the Strip could be worth between $850 million and $950 million, describing it as a cash cow that belies its 50-plus years.
Beynon notes that from 2015 to 2017, Circus Circus posted the fastest percentage growth in average daily room rate and cash flow among MGM’s Strip properties.
It generated $17.7 million in cash flow in the second quarter on $65.9 million in net revenue, with an average daily room rate of $88, up from $81 year on year, and an 87 percent occupancy rate.
“It’s not glamorous, but a lot of Las Vegas isn’t glamorous,” UNLV gaming expert David Schwartz told the Review-Journal.
It also sits on around 60 acres that could become a lot more valuable with mega-projects like Resorts World Las Vegas, the Drew Las Vegas, the refurbished, rebranded Sahara and the Las Vegas Convention Center expansion set to transform the North Strip.
“There’s a lot of upside to the property,” Schwartz said. “I think it’s really poised for revival.”
Brendan Bussmann, a partner at industry researchers and consultants Global Market Advisors, agreed. “It’s an opportunity to start a resort from the ground up. There is a tremendous desire to have an asset on the Las Vegas Strip.”
Circus Circus’ endurance as one of the Strip’s great value-oriented and family-friendly offerings dates back to 1968, when Caesars Palace founder Jay Sarno opened it with a gaming floor situated beneath a replica of a giant circus tent where acrobats would swoop above the blackjack tables and slot machines in live performances.
“Circus Circus was Sarno’s tribute to his and everyone’s childhood dream of running away to the circus,” said UNLV Associate Professor Michael Green.
In the 1990s, it became a flagship of gaming entrepreneur William Bennett’s publicly traded Circus Circus Enterprises, which later morphed into Mandalay Resort Group and ultimately was acquired by MGM.
“Circus Circus didn’t invent the idea that you welcome families, but they found the niche and they stayed in the niche,” Green said. “Now, it’s a money-making son of a gun.”
