MGM Resorts posted a net loss of $113.7m in Q4 2011, better than the $139.2m loss in Q4 2010, but a disappointment considering the improved performance at its 10 Las Vegas Strip properties, including the Bellagio, MGM Grand and CityCenter. Revenue per available room (revpar) rose from $98 to $111, and occupancy rates rose 3% despite a rise in the average daily room rate from $118 to $129. CEO Jim Murren credited the city’s revived convention business with leading MGM’s recovery, adding that the “other aspects of our business are catching up. Gaming is coming back in Las Vegas. Our table play is improving nationally and internationally. Our slot business has been really, very strong.”
Overall Q4 revenues were up 55% to $2.3b, but expenses rose even higher (57%). MGM China’s Macau operation saw net revenues rise to $719m from $570m, although that 26% bump was less than the Macau casino average of 33.4%. With increased competition from Sands Cotai Central’s launch in April, some analysts expect MGM Macau will continue to underperform the overall Macau market in 2012. Murren hopes Macau’s government eventually approves MGM’s application to build its own Cotai casino property, on which the company is prepared “to spend $2.5b because we think the markets are going to be there for us, and our brands work in China.” Better hope so: at year-end, MGM’s debt level stood at $13.6b.
Murren is confident that online poker will eventually contribute to MGM’s bottom line, even if he can’t say exactly when it will happen. Speaking to investors, Murren continued to back a federally regulated system, and helpfully suggested strategies for Congress to follow. “Several pieces of legislation need to be passed, and [online poker] could be associated with any one of those … I do believe it will be passed this year, but that’s my opinion.”
That opinion isn’t quite in lockstep with Boyd Gaming CEO Keith Smith. (Boyd is MGM’s domestic partner in the online poker joint venture three-way with bwin.party.) In a call with investors following Boyd’s Q4 earnings report earlier this week, Smith described the prospects of federally regulated online poker as “a little further off than we had hoped … while we believe federal legislation is profitable, we will consider entering the market on a state-by-state basis if that’s how the issue plays out.” Murren was a little more certain about this fallback position. “We would certainly be involved with that. We’re prepared … We vastly prefer the federal option for any number of reasons: Uniformity of regulation, taxation, strengthening of crime prevention. But we can’t speak for the federal government.”
Murren also shed a little more light on its hush-hush plans to merge gaming with social media. Speaking to CNBC, Murren described the venture as “Farmville meets Las Vegas. I think this is the year where the gamers are going to start merging with the gaming industry, and you’re going to see ‘Farmville on the Strip.’” Wow… Zynga CEO Mark Pincus is often accused of ripping off other game designers, but the accusations are usually made by people other than Pincus. Points to Murren for his willingness to waive his fifth amendment rights on self-incrimination.