MGM’s overall revenue in the three months ending March 31 fell 5% to $2.2b while profit tumbled 61% to $66.8m. However, MGM pointed out that a $160m favorable litigation settlement at its partially owned City Center Las Vegas property in the same period last year had unfavorably skewed the year-on-year comparisons.
Revenue at MGM’s wholly owned domestic properties inched up 2.5% to $1.62b, with all Vegas properties except the Monte Carlo showing year-on-year gains, despite a 6% fall in table game volume. Revenue per available room was up 8% in Vegas and the US division’s adjusted property earnings rose 24% to $485m, with margins of 30%, the highest since 2007.
Things were less rosy in Macau, where the MGM China joint venture reported revenue down 26% to $469m and operating income down more than one-third to $47m. Main floor table game revenue was down 8%, while VIP revenue was down 41% as turnover dropped by one-third and hold fell 0.3 points to 3%.
MGM’s 50% stake in Atlantic City’s market-leading Borgata casino continued to pay off handsomely, with MGM’s share of the quarterly take rising nearly two-thirds to $19.5m.
The aforementioned 50% stake in City Center resulted in a net loss of $9.1m. In April, City Center sold off the property’s shopping plaza, The Shops at Crystals, from which MGM will book a $540m gain in its Q2 report.
MGM CEO Jim Murren (pictured) called Q1 an “exceptional” period, primarily for “completing significant strategic achievements.” These included the $1.2b initial public offering of MGM Growth Properties, the company’s new real estate investment trust (REIT), which allowed the company to offload $4b in long-term debt.
Murren told Bloomberg News that MGM had a “monster quarter” at its Vegas operations and said April had been equally strong. Murren also talked up the new T-Mobile Arena, MGM’s joint venture with Anschutz Entertainment Group (AEG), which opened April 6. Murren claimed the venue had attracted over 100k visitors in its first three weeks, more business than the MGM Grand Garden did in all of 2015.
As for Macau, Murren predicted that 2017 – when the new MGM Macau resort is set to open – will be “up in the market,” in part due to momentum from the new properties that rivals Las Vegas Sands and Wynn Resorts plan to open later this year. That said, Murren said he was “glad that I’m a Las Vegas-based company these days because it’s good here. A few years ago that wasn’t the case, but I like it now.”