Blackstone Sells Cosmopolitan Operations to MGM Resorts

"At MGM Resorts, CEO & president Bill Hornbuckle said, “The Cosmopolitan brand is recognized around the world for its unique customer base and high-quality product and experiences, making it an ideal fit with our portfolio and furthering our vision to be the world’s premier gaming entertainment company. We look forward to welcoming The Cosmopolitan’s guests and employees to the MGM Resorts family.”

This sounds like a take on the same "We listened and we're giving (screwing) our cutomers (out of) what that want. I have some status at MGM because of my local play but I've always felt like the oldest guy in the place when I game at Cosmo. Maybe that's just me.

 

Who was going to buy this for 7 B and run it on its own?

 

they can plan for what the future program will be, but absolutely no way can they see any customer data; that's clearly an anti-trust violation. They also can't tell them how to run their business pre close.

Odds are pretty high on this time frame that Cosmo won't be integrated day 1 into MGM's systems/player's club. 6 months is a tight turnaround for that.

 

We have never really heard any desire to sell from MLife on Strip. And the need to sell is lessened when you can get most of the capital out with the REIT model

I agree Cosmo will likely feed better into the surrounding MLife joints now

 

No hard and fast rule, but Resorts World and the small size of Cosmo probably helps a lot here

 

It will be interesting to see what happens with McBeath, he was an MGM guy for several years, opened up Aria, left a couple years later of his own accord when MGM was under Murren. And then ended up a few years later at Cosmo.

 

Here's a guess:

pile of money and a private jet home

Given it is a PE owner, he probably had a deal to get paid out upon sale that looks pretty good at this price point. You know the deal when you go to work for a Blackstone.

 

With the arena and stadium down there i can't see MGM giving up any of those south strip properties.

 

I'm like yourself, and mainly an MLife/Cosmo player, but not going to try guessing what any of them are doing. Just going to play as I see fit, and whatever happens, happens.

I'm just going to enjoy being back in Vegas, and can evaluate how I approach further trips once the takeover is done.

I'm lucky that after December, my next trip isn't until June 2022, so that is one upside of infrequent visits.

 

Blackstone seemed just fine with it for quite a while. Plenty of other asset sales lately with existing management/operations left in place as a pure real estate transaction. Clearly no buyer was willing to dump the full price just for the asset and future cash from ops, so they did what they needed to do to get the max cash today.

Also, I wouldn’t expect the usual pre-close operational slash and burn to be quite an pronounced given Blackstone’s continued stake, but you’re crazy if you don’t think operations are usually significantly adjusted in the interim period between announcement of sale and actual turnover to new owner/operators. I’ve been a part of several conversions, it’s bad.

 

Yeah, Exit Award Agreements and other contracts are online.

 

A voice of reason!

 

Better quote that!

It'll likely be another 40 years before anyone suggests I'm one of those

 

they're always fine until they get an exit at the price they want.

The buyers here were extremely likely to be experienced operators, so it always made sense that the deal was likely to result in management change.

It doesn't make sense for Blackstone to do much cost cutting; MGM will have its own plans for how they want to integrate. They'll mostly leave it be. It's more that you cut back on the initiatives and new hires/changes. E.g. don't bother with putting in that new timekeeping system when we'll be putting in the MGM system in nine months.

 

I'm referring to when MGM picked up Mandalay Resorts and CET (the Harrahs) got Planet Ho. Since then the strip has grown with both Sands and Wynn adding a hotel along with Resorts world. With all of the revenue they provide to the county and state, they'd have to seriously cross the line for the hammer to fall.

 

it also depends upon the willingness of the Federal government or the state gaming commission to prosecute such a case.

 

which shows he had a $1 M mandated investment with profit rights

 

The regulators always hit the locals on these deals (this one excluded for obvious reasons). There are 5 local casinos and every time one of these big Vegas deals is announced there is a change of ownership at at least one of the local casinos. Owning 3 of the 5 around here never works, they may let you own 2 but if your parent company buys up someone else and that puts a 3rd local one under your control, they step in an make you sell one.

 

a little birdie told me that the regulatory part is already a given / slam dunk

 

As a person who likes to bounce around multiple casinos I kind of like this.
I seeded and stayed at Cosmo a few times. The room was awesome and the casino was nice but being tied to a single casino made me go back to CET at that time.

I have recently re-seeded MLIFE but my offers have not changed yet. (only about 35 days ago) so if Cosmo becomes an option that includes multiple casinos it will go back on my List.

Hopefully they will comp me fountain view Terrance rooms like Cosmo does