- MGM Resort is reportedly in talks with Penn Entertainment for the acquisition of M Resort in Henderson, Nevada.
- Penn recently said it will be spending $206 million to double the capacity of M Resort.
- MGM employs an ‘asset-light’ strategy and prefers to focus only on running the hotel and casino operations of casino resorts.
MGM Resorts may be interested in acquiring the M Resort Spa Casino in Henderson, Nevada.
Could MGM Resorts be kicking the tires at M Resort, we asked rhetorically, despite knowing the answer, as we’re pretty sure you now do, too?
— Vital Vegas (@VitalVegas) December 30, 2022
According to an article posted at casino.org, sources revealed that MGM Resorts is involved in negotiations with Penn Entertainment for the sale of the said property. The talks are said to be in the early stages but sources say that the discussions have been constructive.
Penn Selling M Resort Would Be Interesting
Penn Entertainment selling M Resort is an interesting prospect. First, Penn included M Resort among four properties involved in an $850 million investment project. The company said that it would spend $206 million to add a second tower with 384 rooms. The expansion will effectively double the existing size of M Resorts.
Second, if Penn does indeed sell M Resort, it would further be diluting its Las Vegas footprint after recently completing the sale of Tropicana to Bally’s Entertainment. Selling M Resort would mean that Penn Entertainment will only have one Nevada venue left – Cactus Pete’s Resort Casino in Jackpot.
Any deal involving M Resort would mean the sale of its operations only. That’s because the real estate assets of the property are owned by Gaming and Leisure Properties, which leases it to Penn Entertainment which runs the operations of the casino. This fact makes M Resort a viable target for MGM if ts is indeed hungry to acquire a Nevada property.
MGM’s Asset-Light Strategy
In recent years, the sale of casinos in the United States has become a more complicated transaction. That’s because most of the physical assets of US casinos are owned by Real Estate Investment Trust ( REIT ) companies while leasing them to casino operators. If you look at the Las Vegas Strip’s current landscape, for example, REIT company VICI Properties is essentially its landlord.
In the past few years, MGM has sold the land and buildings of its casinos to become a mere ‘tenant’ and focus on hotel and casino management, also known as the operations side of the gambling business. MGM officials refer to this as an ‘asset-light strategy’ and if it is indeed planning to acquire M Resort, it would fit right into that company strategy.
MGM Resorts completed its purchase of the Cosmopolitan from the New York-based real estate conglomerate Blackstone Group for $1.63 billion last May 17th. Again, that acquisition was only for the operations of Cosmopolitan. Shortly before Christmas 2022, MGM also completed the sale of the operations of The Mirage to Hard Rock International for $1.075 billion in cash so it does have the financial muscle right now.
Casino Sale is a Complicated Transaction
MGM Acquiring M Resort looks like a simple transaction. MGM would only add the letters ‘GM’ to M and the letter” to Resort to change M Resort to MGM Resorts. But in real life, it’s more complicated than that.
Casino sales will take a while, likely years to get completed. Given due diligence, customary closing, and regulatory approvals will take time so we may not hear anything official about the rumor of MGM acquiring M Resort. There’s also a chance that the parties don’t reach an agreement so we also could end up not hearing anything at all.
2023 is just two days old and here we are with the first juicy gossip of the year. As reported by Scott “Vital Vegas” Roeben, news linking MGM to M Resort is purely rumor for now. And it’s worth noting that in the gambling industry, there are always more rumors than done deals so we will have to wait and see how this on evolves, or not. <p.
