Casino operator MGM Resorts International saw its Q3 revenue rise 9.2% to $2.46b, but poor margins resulted in the company recording a $31.8m loss for the three months ending Sept. 30. On the plus side, that’s significantly less than the $181.2m MGM lost in Q3 2012. On the minus side, it’s hard to turn a profit when you have to fork out $184m just to cover the interest on your total $13b debt load (second only to Caesars Entertainment’s $23.8b). Worse, that interest payment is expected to hit $210m in Q4. (Happy holidays!) MGM shares shed 6% of their value on the news.
MGM’s wholly owned US properties reported revenue of $1.55b (up slightly from $1.49b) and earnings of $350m (up from $324m). On the digital front, MGM CEO Jim Murren (pictured right) told analysts that MyVEGAS, the company’s social casino game on Facebook, would launch a mobile app next week. Murren claimed MyVEGAS was “becoming an extremely interesting customer acquisition tool” in the US.
The MGM China operation in Macau – in which MGM holds a 51% stake – saw revenue rise 22% to $808m and earnings up 25% to $191m. VIP table game turnover rose 28%, while mass market tables and slots win rose 31% and 4% respectively. MGM President Grant Bowie told analysts that the renovation and expansion of MGM China’s Supreme Lounge – an exclusive area catering to high-margin, high-value customers – would be completed in 2014. Bowie said the area was (for the moment) focused on premium slots, not gaming tables. Bowie also discussed the perils of relying on a roster of Asian gambling whales, noting that MGM had enjoyed a good run in the first half of the year, but “that tends to set up a bit of a cycle” leading to “a longer period between visits.”
As for MGM’s 50% stake in Atlantic City’s Borgata casino, the company expects New Jersey regulators will approve MGM’s relicensing application in Q1 2014. When that happy day comes, MGM will finally be able to get its hands on its share of Borgata revenue – currently around $110m – being held in a trust account. That account will also hold MGM’s share of the revenue from its New Jersey online gambling joint venture with Boyd Gaming (who own the other half of the Borgata) and Bwin.party digital entertainment. However, until the relicensing is approved, MGM won’t have “a seat at the table” in guiding the joint venture’s operations.
