{"id":27651,"date":"2020-07-31T10:33:51","date_gmt":"2020-07-31T18:33:51","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=27651"},"modified":"2020-08-03T05:47:26","modified_gmt":"2020-08-03T13:47:26","slug":"mgm-the-lion-mews-aga-betrayal-by-miller","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/mgm-the-lion-mews-aga-betrayal-by-miller\/","title":{"rendered":"MGM: The lion mews; AGA: Betrayal by Miller"},"content":{"rendered":"\n
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Second-quarter results for MGM Resorts International<\/strong> are in and the company got hammered pretty badly. Las Vegas Strip<\/strong> revenues fell 90% to $151 million, regional operations dropped 90% to $89 million and Macao<\/strong> grossed a feeble $33 million, down 95%. “Expecting a long recovery” was JP Morgan<\/strong> analyst Joseph Greff<\/strong>‘s understated response. Noting that the Strip is “critical” to MGM and that “a market where state\/nation-wide COVID-19 spikes have outsized impacts on its fundamentals (particularly on 4Q20 and 1Q21 conventions and tradeshows, which have recently been cancelled and\/or delayed),” Greff pointed out that MGM’s regional operations likely do not possess the same increasingly favorable operating efficiencies that more core\/middle market consumer regional casinos possess,” citing Boyd Gaming<\/strong> and Penn National Gaming<\/strong> as exemplars. He stuck with his $17\/share price target, cheap as gaming stocks go.<\/p>\n\n\n\n

Looking for a silver lining, Greff wrote, “The good news is that MGM over the past few years has recognized the underlying value of its hard assets\/real estate and has monetized this to make meaningful improvement to its capital structure, resulting in low domestic net leverage, and importantly, a solid liquidity position. However, the only hard assets left, at least domestically, are its 50% stake in Aria<\/strong>\/City Center<\/strong> and the relatively small MGM Springfield<\/strong> in Massachusetts<\/strong>.” Not much to draw upon. On the plus side, there’s $4.8 billion cash on hand. Less sanguine, there is also $11.4 billion in long-term debt. For Greff, the quarter was a write-off: “In Macau, operations were essentially halted for the full quarter, only recently receiving some positive news with the potential reissuance of visas to Macau. In Las Vegas<\/strong>, all casinos were closed in mid-March, with a handful reopening in early June \u2014 Bellagio<\/strong>, MGM Grand<\/strong>, and New York New York<\/strong> re-opened June 4th<\/sup>, Excalibur<\/strong> on June 11th<\/sup>, and Luxor<\/strong> on June 25th<\/sup>.” Still, recovery is a 2022 proposition, with Las Vegas cash flow predicted to be 80% of last year’s and regional casinos back to 90% of 2019 levels. It’s not all bad: MGM figures it is saving $450 million in costs rendered moot by the pandemic-related shutdowns.<\/p>\n\n\n\n\n\n\n\n

“Enough in it for the Bulls but we maintain our (social) distance for now,” said Credit Suisse<\/strong> analyst Ben Chaiken<\/strong> in re<\/em> MGM. He added, “we feel as though sentiment around Vegas is bottoming, and are encouraged by the incremental cost savings.” Thanks to that $450 million savings, “MGM should be in a position to drive significant earnings growth. At this point, our only hesitancy in becoming more bullish is the risk of a recovery in Las Vegas that takes longer than simply a vaccine becoming available and administered. We see risk in the timing of a Vegas recovery given: the lag time for booking conventions\/large events, a potential sustained unwillingness to fly, and broader economic uncertainty (Las Vegas is historically quite cyclical). Management did insinuate that the conference schedule in 2Q21 and beyond was shaping up well, but we hesitate emphasizing this data point too much given significant uncertainty surrounding the virus.” Any way you shake it, recovery seems no sooner than nine months away, if that.<\/p>\n\n\n\n

“Given the Kentucky Derby<\/strong> is scheduled to run on September 5th<\/sup>, we are increasingly cautious on the turnout of premium ticketing guests,” reports JP Morgan analyst Daniel Politzer<\/strong> after palavering with Churchill Downs<\/strong> execs. After all, Kentucky<\/strong> bars are closed through August 11 and restaurants are operating at restricted capacity, as Coronavirus shows little sign of abating. “We fully expect the Derby to run (zero spectators is still a worst case scenario),” wrote Politzer, adding that he was lowering his cash-flow projection to $60 million. Why? General admission will probably be down 90%, premium ticketing 65%, sponsorships 35% and 15% less will be wagered. CHDN is pulling its horns in on several fronts, putting expansion of Rivers Casino Des Plaines<\/strong>, a historical-racing pavilion at its signature track and a casino\/hotel\/garage enlargement of Miami Valley Gaming<\/strong> all on ice.<\/p>\n\n\n\n

American Gaming Association<\/strong> to casino employees: Drop dead. In a wholly gratuitous intervention on behalf of Sen. Mitch McConnell<\/strong>‘s HEALS Act<\/strong>, AGA prexy Bill Miller<\/strong> noted that it would contain “Liability protection for businesses from COVID-19 exposure claims” like those the Culinary Union<\/strong> is pursuing against Caesars Entertainment<\/strong>. Got sick on the job because of your employer’s lax safety measures? Tough shit. Miller would remove any legal remedy. “We heard across all gaming segments that this relief measure is critical for our industry to reopen and stay open,” Miller wrote. And employees who suffer Covid-19<\/strong> or even die from it? They’re expendable, it seems. Shame on the AGA.<\/p>\n\n\n\n

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In the space of 24 hours the Sahara<\/strong> was rumored to be closing later this year, a report that Alex Meruelo<\/strong>‘s people categorically, forcefully and wholeheartedly denied. One of their reasons for denouncing the rumor<\/a> mongering was that it would discourage customers. But today comes news that the Golden Nugget<\/strong> just sacked half of its chefs. If that doesn’t connote desperation, the Nugget is holding a “sidewalk sale” of logo merchandise tomorrow at Style & Trend<\/strong>. Get a piece of Tilman Fertitta<\/strong>‘s imperiled empire.<\/p>\n\n\n\n

Jottings<\/em><\/strong>: As long as we’re reeling, Nevada<\/strong> sports books haven’t posted a loss since 2013 … until last month. They swung from $16,587,000\u00a0in win in June 2019 to a deficit of $483,000. An absence of futures bets on NFL football was blamed<\/a> … August 26 is new, rumored reopening date for The Mirage<\/strong>. A patron reports on Vegas Message Board<\/em> that their August 20-23 reservation was canceled and they were bumped to Aria<\/strong>. We’d call that trading up … While the Three Affiliated Tribes of Fort Berthold Indians<\/strong> recently picked up a piece of Las Vegas<\/strong> for nifty price, it doesn’t look like the off-Strip land is casino-destined. The tribes told the Las Vegas Review-Journal<\/em> the move is strictly speculative … Speaking of speculation, Cordish Gaming<\/strong> will be pursuing<\/a> a Pennsylvania<\/strong> satellite casino near the Ohio<\/strong> border. The site was dibbed for Mount Airy<\/strong> but the latter couldn’t come up with the development capital … Now that Rick Heidner<\/strong> is out of the picture, Hawthorne Race Course<\/strong> in Illinois<\/strong> has been OK’d for slot machines, table games and sports betting. $400 million worth of construction lies ahead by CEO of Gaming Kevin Kline<\/strong> promises “a lot of people may have expected us to simply put some slot machines and tables into our existing facility, but we’re going to substantially raise the bar on the Chicagoland<\/strong> casino experience,”<\/p>\n","protected":false},"excerpt":{"rendered":"

Second-quarter results for MGM Resorts International are in and the company got hammered pretty badly. Las Vegas Strip revenues fell 90% to $151 million, regional operations dropped 90% to $89 million and Macao grossed a feeble $33 million, down 95%. … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[249,60,244,176,56,274,70,151,51,14,287,283,67,58,62,112,245,207,71,69,95,111,254,54,243,9,20,38],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/27651"}],"collection":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/comments?post=27651"}],"version-history":[{"count":1,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/27651\/revisions"}],"predecessor-version":[{"id":27652,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/27651\/revisions\/27652"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=27651"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=27651"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=27651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}