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Home ยป Gaming Authorities Have Approved the Acquisition of Cosmopolitan Operations by MGM Resorts

Gaming Authorities Have Approved the Acquisition of Cosmopolitan Operations by MGM Resorts

    Gaming Authorities Have Approved the Acquisition of Cosmopolitan Operations by MGM Resorts

    On Thursday, the Nevada Gaming Commission approved MGM Resorts International’s purchase of The Cosmopolitan of Las Vegas operations, but not before debating whether the purchase raises any federal antitrust concerns.

    MGM Resorts has agreed to pay New York-based real estate firm Blackstone Group about $1.6 billion to acquire Cosmopolitan’s 3,000 hotel rooms, suites, 110,000 square foot casino, and other facilities.

    The closing date is set for Tuesday

    In a February filing with the Securities and Exchange Commission, MGM Resorts revealed that it manages about 36,600 hotel rooms and suites on the Strip across nine different locations.

    Chandler Pohl, an attorney representing MGM Resorts, told the commissioners that an analysis utilizing data given by the Gaming Control Board revealed that MGM Resorts will now operate 40.3% of all Strip hotel rooms after the deal.

    Among the findings Pohl gave to the Control Board members last week was the exclusion of The Mirage’s 3,044 hotel rooms from the overall tally. In exchange for $1.1 billion, the business is selling its resort operations to Hard Rock International.

    After a short Q&A session, gaming authorities expressed their satisfaction with the room count.

    Stephen Cohen, a member of the Gaming Commission, has remarked, “I believe 50% strikes the bell for [antitrust].”

    Corey Sanders, COO of MGM Resorts, has said that the company’s many Strip hotels “have their unique pricing points.”

    Gaming authorities were mainly unconcerned with the deal other than the room debate.

    Jennifer Togliatti, chair of the Gaming Commission, stated, “I have listened to and read the record of the Control Board meeting and I don’t have any issues.”

    As the landlord of Cosmopolitan, MGM Resorts has agreed to pay the property management company $200 million every year.

    Since 2014, Blackstone has been the proprietor of the Cosmopolitan, and in September of last year, it sold the property. The 8.7-acre Strip land parcel it sat on to an investment group led by the company’s real estate investment trust, which holds 80% of the partnership. The partnership paid nearly $4.1 billion for the property and the resort. Blackstone invested $1.73 billion to purchase the Cosmopolitan and another $500 million to upgrade the facility with additional restaurants and bars and renovate the hotel rooms and suites.

    Stonepeak Partners and the Cherng Family Trust are also involved (founders of the Panda Restaurant Group, which includes the Panda Express chain).

    The Cosmopolitan, according to MGM Resorts CEO Bill Hornbuckle, “has been a wonderful iconic Las Vegas property.” A little over a decade later, it was well-established.

    Through a video link from his home in Las Vegas, Hornbuckle spoke during the court, stating, “Unfortunately, I have received COVID. I’m OK to go, but I stayed in for precautions.

    Sanders informed the commission that Anton Nikodemus, CEO of Aria, who also runs the non-gaming Vdara Hotel, will be in charge of Cosmopolitan’s operations. A management team “quite similar to the structure they have today, and we do not anticipate changes” was promised, he added.

    Sanders said that some of Cosmopolitan’s rooms would continue to be made available via the Marriott International system. He told guests at the Cosmopolitan “are going to be exposed to all of MGM amenities,” while guests at the MGM resorts will have access to the facilities at the Cosmopolitan.

    Cosmopolitan’s rewards program will ultimately be combined with MGM’s rewards program.

    The topic is “currently under investigation,” he stated.

    In addition, MGM Resorts has plans to switch over the sportsbook at The Cosmopolitan from William Hill to its BetMGM division.

    Since MGM Resorts is acquiring the business, the landlord partnership was exempt from obtaining a gaming license from the relevant state authorities.

    A Cosmopolitan staff appreciation ceremony was conducted at the resort’s Chelsea theatre on Wednesday, hosted by Blackstone executives. Bill McBeath, CEO of Cosmopolitan, revealed at the end that Blackstone would be spending $27 million to give each of the 5,400 workers a $5,000 incentive.

    Hornbuckle said that the company’s treatment of staff members the day before impressed him and his colleagues.

    Blackstone, via its REIT, is the landlord of three other MGM Resorts-operated hotels on the Strip and is working toward becoming a landowner there.

    Bellagio was purchased by Blackstone REIT from casino operator MGM Resorts for $4.25 billion in a joint venture agreement that closed in 2019. MGM rents the Bellagio from the joint venture for $245 million yearly.

    The MGM Grand and Mandalay Bay were purchased by Blackstone and the real estate investment company MGM Growth Properties for $4.6 billion in 2020. Annual rent from MGM Resorts to the joint venture totals $292 million, and Blackstone owns 49.9 percent of the partnership.

    With the recent closing of its $17.2 billion acquisition of the rival REIT, VICI Properties assumed control of MGM Growth’s 50.1% interest in the joint venture.

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