Strip buoys MGM, Sands

According to JP Morgan analyst Joseph Greff, second-quarter results for MGM Resorts International “were better than (very subdued) investor expectations” on the Strip and in line with anticipation about Macao. Despite weak baccarat volumes in Las Vegas, the company performed “marginally better than three to six months ago.” That includes MGM 2020, which generated $100 million in savings, not the $70 million that was expected. Table game win (Strip only) was 22% up on 7% higher wagering. Similarly, slot win rose 4% on 1% more coin-in. Non-gaming revenues rose 5%. Overseas, MGM Cotai continues to underperform, missing Wall Street projections by $12 million.

Domestically, MGM saw the following net revenues: Empire Resorts in Yonkers ($55.5 million), MGM Northfield Park ($68 million), MGM Springfield ($76 million), Borgata ($202 million, a $6 million decline), MGM National Harbor ($202.5 million, flat), Mississippi operations ($155 million, a $10 million gain) and MGM Grand Detroit ($153 million, flat). Las Vegas Strip casinos saw the following net revenue: Bellagio $338 million (an $8 million drop), MGM Grand $283 million ($28 million less than 2Q18), Mandalay Bay $241 million ($11 million off), The Mirage $154 million (a $4 million droplet), Luxor $98 million (a $5.5 million miss), New York-New York $96 million (up $3 million), Excalibur $86.5 million ($2 million more than last year), Park MGM $103.5 million (a $60 million moonshot) and Circus Circus $66 million (up $3 million). It’s interesting to note that with the exception of Park MGM, all the gains were made at MGM’s value-priced properties. Extrapolate from that what you like.

* The Strip was the saving grace for Las Vegas Sands, which saw wide revenue misses in Macao ($45 million below Wall Street consensus) and Singapore. Greff attributed the Macanese disappointment to “surprisingly soft” business from Sands’ bread and butter: premium mass-market players. Rolling-chip volume (i.e., VIP credit) was also down. The Street thought the Strip would only deliver $100 million in cash flow and Sands surprised analysts by bringing in $146 million. Greff credited this to “stronger baccarat volumes and benefits from prior room and F&B capex/refresh.” Venelazzo’s net revenue was $466 million, outstripping Greff’s projected $439 million. This resulted in “the third strongest quarterly result in the history of the property.” Baccarat was a big driver in the outcome, with a 125% (!) increase in wagering.

Conversion of Sands Cotai Central to The Londoner appears to be proceeding apace, with some revised areas coming on line next year and the whole thing finished in 2021. Sands is spending $400 million on the London Tower Suites and another $450 million on Four Seasons suites, part of a greater $1.3 billion makeover. Still, “we think there is more value and better risk-reward in WYNN and MLCO.” Gross gaming revenue was flat at $2 billion in change and rolling chip volume fell 12%. Marina Bay Singapore‘s net revenue of $688 million missed Greff’s estimated $726 million, despite improved VIP play. Room rates averaged $252/night ($11 higher y/y) and slot coin-in of $712 million represented a $29 million improvement, resulting in $60 million in revenue. Gambling brought in $151 million, overshadowed by $198 million from all other department. Sands Bethlehem exited the LVS portfolio ignominiously, with net revenues of $90 million, a $46 million miss. We’ll see how it fares in its new Wind Creek Bethlehem guise.

* Scuttlebutt has it that the Mardi Gras Tower at Harrah’s Las Vegas is closed for renovation. If true, I’m sure it needed it. The bigger question is, did Caesars Entertainment clear this with Tom Reeg beforehand?

* Ominous headline of the day: “Eldorado acquisition similar to 2007 Harrah’s deal.” God have mercy, I hope not.