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Difficult Year at MGM- Murren

Discussion in 'Casino Industry & Development' started by smartone, Oct 20, 2019.

  1. smartone

    smartone VIP Whale

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  2. Viva Las Vegas

    Viva Las Vegas Ramblin' Gamblin' Man

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    I hope the layoffs he implements will allow a substantial compensation increase for Jim in future years. His employees will no doubt eagerly embrace doing more with less for Dear Leader, in light of the fact his compensation fell to 355 times the average MGM worker in 2018.
     
    First Ever Leap Year Day Vegas Trip! Viva Retirement!!!
  3. Init2winit

    Init2winit Low-Roller

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    Isn’t leaseback a short term benefit? Long term it will cost far more to continue the leaseback.
     
  4. pressitagain

    pressitagain VIP Whale

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    Technically.... yes. I this situation....no.

    They need to clean off a pile of debt to EVEN stand a chance in Japan.
     
  5. UKFanatic

    UKFanatic The Arbiter of Taste Caviar Kid

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    Meh. We don't have enough information, nor a crystal ball to the future, to say. If the apply the proceeds toward debt reduction at a higher rate, then its a no brainer. Or if the free cash flow allows them to invest in future revenue generating improvements or projects (e.g., Japan) that exceed the cost of the leasebacks, then its a great move. Its too simple and too soon to say the leasebacks are a good or bad move. There is definitely risk and reward with the move
     
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  6. Count de Monet

    Count de Monet Low-Roller

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    Investments are always measured against alternatives. Time will tell but any executive must justify their existence by making bold moves to enhance shareholder value.
     
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  7. Vegas24_7

    Vegas24_7 Degenerate

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    Not sure if this is the right thread to say this but I used to be a very loyal MGM player based on the generous comps and rewards I got from my play. I guess their slow dive on financial troubles started making them reduce rewards like no more limo rides, less food and amenities comps, and overall less service in the span of the last 10 years. I basically stopped staying at their hotels where my status is now the lowest tier (Pearl I think) but I stopped caring. That article the OP posted is a good read to see what financial position they are in. I hope that one day they return to what they were in the early 2000's.
     
  8. downhiller2010

    downhiller2010 Tourist

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    Yes, if they have an interest rate that is higher than the cap rate on the leaseback, it should make this deal worthwhile.
     
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  9. Jackpot Johnny

    Jackpot Johnny Wynn Fan

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    Mr. Murren’s background is investment banking, and that’s been a good thing for MGM. He kept MGM from going completely belly up in the 2008 crash, but MGM has labored under the burdens from those years and Cityplace ever since. MGM’s outlook for shareholders and the remaining employees has improved over the past few years, but that, unfortunately, is a progression from bad to mediocre. Working for a distressed or underperforming company has never been great, but the key execs who save a company from calamity have always been very well paid, in any industry.
     
  10. hammie

    hammie VIP Whale

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    This concept of using a REIT to unlock shareholder value is the flavor of the day, it was started by Penn Gaming when they spun off Gaming and Leisure Properties. Caesars did it with VICI. But in the case of MGM Growth Properties, the spinoff is 74% owned by MGM, so in this situation, doesn’t it have to be consolidated back into MGM’s books? I can see this being one reason for selling Bellagio to Blackstone and not MGMGP.

    This has been successful with Walgreens, they own just 10% of their stores and lease out the remainder of its 9000 locations.

    I realize MGM needs to sell assets to get borrowing capacity to make a move to Japan, but its almost like selling the trophy property because you can (hopefully) create a new one.

    By the way, I found it pretty funny that Brian Sandoval donated $250 to this publication and MGM gave $900,000 towards independent journalism.
     
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  11. lithium78

    lithium78 VIP Whale

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    MGM and CET's woes are due to Common Core Math. Young people understand how probability works now. :p
     
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  12. LvBlitzforce

    LvBlitzforce Low-Roller

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    Karma is a btch...
     
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