Mia Gardner | 17 Jan 2020
The move is not unprecedented, and also not too surprising for those following the financial ins and outs of the industry. MGM Resorts is only selling the properties, and not the business housed within them. Blackstone will own the buildings and act as landlords for the casino operator, who will be allowed to continue running the gambling sites and the hotels. It’s a win-win situation considering that the well-known operators were in need of an injection of cash into their business.
The MGM Resorts shareholders demanded that the company liquidate assets in 2019, and have been putting increasing pressure on the board of the group. It was decided that the best move would be to offload some of their land-based assets in the Las Vegas market. In October last year, the company started this process by selling their Circus-Circus Casino Resort. This was bought by American businessman and resort owner, Phil Ruffin.
The next step was to sell off the Bellagio Hotel and Casino property to Blackstone, while maintaining operating rights for the casino and the hotel. The deal was done for 4.25 billion dollars, of which Blackstone has paid 2.5 billion dollars so far. The asking price for the MGM Grand Casino Resort is not yet known, but it appears that the deal is set to go through.
Blackstone must’ve done the research and decided that MGM Resorts is still a good deal, despite the casino group’s shares falling slightly by 0.5 percent since the sale of the first property to the equity firm. There is also a question of wavering customer loyalty, which has led to the need for the operator to sell off properties and liquidate some assets.
One of the main concerns regarding players and guests to the Las Vegas operations is the incredibly high fees that guests are charged to stay at the resorts. Despite the change in ownership of the properties, these fees are not likely to change as MGM Resorts is still in charge of operations.