MGM Resorts returns to profit in 2021 as revenue rockets 87.5%

MGM Resorts International returned to profit in 2021 after the easing of novel coronavirus (Covid-19) restrictions led to a resurgence in its properties’ performance.

Revenue for the 12 months to December 31, 2021 amounted to $9.68bn (£7.14bn/€8,47bn), up 87.5% from $5.16bn in the previous year.

As Covid-19 controls were rolled back across the US, more customers were able to visit MGM’s casinos in 2021, as well as make use of other on-site facilities such as hotels, shops, bars and restaurants.

As such, casino revenue increased 86.8% year-on-year to $5.36bn, while rooms revenue was up 103.5% to $1.69bn.

Food and beverage revenue jumped 99.9% to $1.39bn and entertainment, retail and other revenue was up 94.6% to $1.01bn. MGM also noted $226.1m in reimbursed costs.

Breaking this down by geographical performance, MGM’s operations on the Las Vegas Strip in Nevada generated $4.74bn in revenue, a rise of 110.9% on the previous year.

Revenue from regional operations also climbed 72.5% to $3.39bn, while MGM China revenue was up 84.4% to $1.21bn and management and other operations revenue 16.2% to $339.8m.

Looking back over the year, MGM began 2021 by withdrawing its interest in making a bid to acquire Entain. MGM had submitted a proposal for an all-stock deal in January 2021, which valued Entain at approximately $11.00bn, but this was rejected by Entain, saying that it “significantly undervalued “the business.

MGM said that after careful consideration and reflection, it opted against a revised bid, or making a firm offer.

Later in 2021, DraftKings submitted a proposal for a stock-and-cash deal to acquire Entain, with its revised proposal valuing the business at $22.40bn. At the time, MGM said that it had no intention of selling its stake in BetMGM, which it runs as a joint venture with Entain.

DraftKings in October confirmed it would not be following up its interest in acquiring Entain.

Other developments in 2021 included MGM in September taking over operations of The Cosmopolitan in Las Vegas, after private equity giant Blackstone told the property for $5.65bn. MGM paid $1.63bn to operate the casino, while Cherng Family Trust, Stonepeak Partners and Blackstone Real Estate Income Trust (BREIT) now own the property.

Also in September, the Japanese prefecture of Osaka selected a consortium led by MGM and financial services business Orix - the only bidders in the process - to build an integrated resort in the prefecture. In its bid documents, MGM and Orix said the initial investment in the project would come to JPY1.8trn.

Later in the month, MGM also announced the closing of its purchase of Infinity World Development Corp's 50% interest in CityCenter Holdings for $2.12bn. CityCenter Holdings – a project from MGM and Infinity World – owns the CityCenter Las Vegas development, which includes the Aria resort, Vdara hotel and the residential Veer Towers.

In addition, shortly after the year-end, MGM announced it would launch a reimagined and rebranded loyalty rewards programme, which it claims will offer “unprecedented” access and new benefits to guests at its properties across the US. The program went live on February 1.

“The strategic milestones we achieved in 2021 position us for further success in 2022, and we remain excited about our long-term opportunities including: leading the US sports betting and igaming market through BetMGM, pursuing disciplined geographic expansion such as the Japan integrated resort, and reinvesting in our core business to drive sustainable growth,” MGM president and chief executive Bill Hornbuckle said.

“As part of these efforts, we are proud to have recently launched our new loyalty program, MGM Rewards, which offers an enhanced and further streamlined experience to millions of our members worldwide."

In terms of spending for the year, total operating costs amounted to $7.49bn, a year-on-year increase of 28.0%. After including $84.8m in profit from unconsolidated affiliates, MGM's operating profit came to $2.28bn, compared to a $642.4m loss in 2020.

Financial expenses of $816.9m meant pre-tax profit reached $1.46bn, a significant improvement on the $1.51bn loss posted at the end of the previous year.

MGM paid $253.4m in income tax but also received $46.0m in profit from non-controlling interests, meaning net profit for the year amounted to $1.25bn, compared to a $1.03bn loss in 2021.

Turning to the fourth quarter, MGM closed 2021 with a record performance. Revenue was up 104.6% on 2020 figures at $3.08bn.

Casino revenue in the three months to 31 December hiked 63.7% to $1.58bn, room revenue jumped 235.9% to $636.1m, food and beverage revenue 259.6% to $515.0m, entertainment, retail and other revenue 273.7%% to $369.6m, while reimbursed costs totalled $8.3m.

Operating costs increased 44.7% to $2.68bn, while after accounting for an $8.0m loss from unconsolidated affiliates, operating profit was $368.8m, compared to a $363.6m loss in Q4 of 2020.

Financial expenses were $221.6m, leaving a pre-tax profit reached $147.2m, up from a loss of $562.9m in 2020. Income tax payments totalled $31.2m and after including $14.9m in profit from non-controlling interests, net profit for the quarter was $131.0m, compared to a $447.6m loss in 2021.

“Our record fourth quarter results are a testament to our talented team across the globe, our sharpened focus on operational efficiency and the proven resiliency of demand for the service and experiences that we provide at MGM Resorts,” Hornbuckle said.