This week, in conjunction with the opening of Park MGM, the parent company rolled out the red carpet for Wall Street analysts. “While there were no major announcements/surprises, we felt management put forth 
a thorough effort to better articulate its vision,” wrote Deutsche Bank‘s Carlo Santarelli. While most of the talk focused on stock repurchases, there was some discussion of softer convention business from Microsoft and CON-AGG. “Management noted that the goal today is not necessarily to expand the mix of convention, but to improve the quality of the mix,” Santarelli observed. As for cap-ex reinvestments, “Management noted that Bellagio could use some TLC, while MGM Grand can be re-oriented, and the south end of the Strip could be ‘re-imagined.'”
JP Morgan‘s Joseph Greff gave MGM Resorts International a favorable notice, writing, “We think MGM did a credible job at its investor day, laying out the framework for attractive, incremental capital return over the next three years and positioning the company well for future, competitive growth projects (like a Japan integrated resort), given its 
recent accomplishments … MGM also did a credible job of laying out a case for future consistent growth on the LV Strip (professional sports teams, E-sports, buildout of strip convention/group capacity, and targeted returns), and we see reason to be optimistic here, as this represents ~65% of MGM’s [cash flow] and is a key driver of investor sentiment.”
MGM leadership sees Raiders Stadium as a major growth driver, expecting 40-plus events a year and 450,000 “incremental visitors” (and guess who’s in the best geographic position to reap them?). The company also foresees a trickle-down benefit from the expansion of the Las Vegas Convention, not to mention 
a more direct one by connecting it to both Sands Expo Center and Mandalay Bay Event Center with the planned Las Vegas Monorail extension. In addition to ‘reorienting’ the MGM Grand rotunda, the company will spend $180 million on the Aria convention center and $130 million on the MGM Grand Convention Center. It expects an approximately 15% ROI on these as well as on $550 million Park MGM. (MGM deserves props for cost-containment on the latter.) While it looks for a buyer for Hard Rock Rocksino, MGM will be booking revenue from the Ohio slot champ. As slow-to-start MGM Cotai, management is taking a patient view, laying out a series of incremental steps toward complete fruition of the megaresort.
Wynn Resorts CEO Matt Maddox couldn’t be bothered to meet with the Morgan analysts but CFO Craig Billings brilliantly pinch-hit for him. Takeaways: Encore Boston Harbor is roughly on pace and budget ($2.5 billion), high-end room rates on the Las Vegas Strip aren’t subject to volatility, “Macau’s premium mass market is humming and Wynn Palace has opportunity to further profitably grow its market share there – it views 
Wynn Peninsula as market share maintainer” and “the board refresh is still ongoing … with a lot of changes made in a short period of time and a complete overhaul of the board perceived to be in the best interest of shareholders.” The latter is the most newsworthy announcement, as this is the first we’re hearing about a “complete overhaul” of the directorship, Maddox having been a stay-the-course man. Greff continues to believe an Elaine Wynn share sale is “eventual” but we respectfully disagree, seeing how she’s become the shot-caller at the company.
Santarelli had dinner with unnamed Wynn execs and came away impressed: “From a big picture perspective, we continue to view shares as attractive and see continued momentum in Macau, coupled with 
continued free cash flow growth, an ever improving balance sheet, and some potential catalysts, as reasons to remain bullish here.” He’s bullish on Encore Boston Harbor, despite noting that we’ll have to wait until late summer for a Massachusetts Gaming Commission determination of its fate. But he sees a clearer path with Steve Wynn out of the way.
As for Wynn Paradise Park, Santarelli remains something of a skeptic, writing, “we don’t get the sense that additional capital spend on the Wynn West land or beyond the current plans for Paradise Park is a near term event.” Instead, the focus is on Japan, where Wynn is huddling with its joint-venture partners and preparing for a request for proposals. “We expect partnerships to be important … given the lack of junkets, which puts a premium on direct relationships.” You said it, Carlo.
