As MGM Resorts continues to diversify its business model away from physical casinos and onto internet gambling and luxury resorts, the Mirage has become a victim.
MGM Resorts sells the Mirage Resort and Casino to Hard Rock International for $1.075 billion.
On Monday night, the entertainment and hotel chain announced they would sign a long-term lease with VICI Properties Inc. for its physical location. During the third quarter results call early last month, MGM Resorts CEO William Hornbuckle said the firm was exploring a sale for The Mirage, a longtime pillar of the MGM Resorts Las Vegas Strip property.
While the old Mirage hotel tower will be renamed, Hard Rock wants to construct a guitar-shaped hotel.
According to a statement by Hornbuckle, this deal marks a significant step forward for MGM Resorts and the city of Las Vegas. When The Mirage opened in 1989, I was a member of the opening crew so I can attest to its incredible potential for the Hard Rock team.
Sales come after Las Vegas Sands decided to sell the Venetian Resort Las Vegas and the Sands Expo and Convention Center earlier this year. Apollo Global Management paid $2.25 billion to acquire Venetian’s operating firm, while VICI Properties paid $4.0 billion to acquire Venetian’s land and real estate holdings.
When Hard Rock and MGM Resorts merge, VICI will acquire the property assets, including The Mirage. During the rebranding and reconstruction process, MGM will hold onto the rights to The Mirage name and license it to Hard Rock for up to three years. Closing on the transaction is expected in the second half of 2019.
In 1989, when The Mirage originally opened, it ushered in a new era of megaresorts on the Las Vegas Strip, all of which catered to visitors searching for more sophisticated forms of entertainment. In 2000, MGM Resorts paid Steve Wynn, the founder of Mirage Resorts, more than $4 billion to acquire the Company. The adjacent Bellagio and Treasure Bay resorts were also a part of the collection.
Siegfried Fischbacher and Roy Horn, better known as Siegfried & Roy, were a German-American entertainment and magic couple that performed at the Mirage for many years using white lions and tigers as part of their act. After a tiger attacked Horn on stage in 2003, the performance, which had become one of Las Vegas’s most popular, was shut down.
The sale of the resort is the latest in a series of transactions that are taking MGM Resorts, once a major Las Vegas landholder, out of the real estate sector so that it can concentrate on operations and online gambling.
In recent years, MGM Resorts and Blackstone have completed a series of sale-leaseback transactions in which Blackstone acquires real estate ownership while MGM Resorts retains management rights. MGM’s most recognizable Las Vegas properties were involved in these transactions, including the Bellagio, MGM Grand, and CityCenter, where the Aria Resort & Casino and Vdara Hotel & Spa are located.
In September, as part of Blackstone’s $5.65 billion sale of the Cosmopolitan of Las Vegas, MGM Resorts International announced intentions to buy the operations at that property for $1.6 billion. MGM has also acquired many other recent operating agreements in the high-end gaming industry.
The casino floors of MGM Resorts’ hotels throughout the globe are increasingly being seen by the Company as an extension of internet gaming and sports betting. According to an investor presentation given in the third quarter, the firm sees itself capturing as much as a quarter of the online gaming industry in the United States.
An omnichannel client is more valuable than a single-channel consumer, Hornbuckle stated last month.
By divesting itself of real estate, MGM Resorts may broaden its appeal outside the Las Vegas area and attract more customers who prefer to play casino games without leaving their homes.
“This news represents the completion of a series of transformative deals for MGM Resorts throughout the previous few years,” said Paul Salem, chairman of the board of directors of MGM Resorts International. The Company will have a fortress balance sheet, a premier portfolio, and significant financial resources to pursue its strategic objectives following the monetization of its entire real estate portfolio, as well as the addition of CityCenter and the agreement to acquire The Cosmopolitan of Las Vegas.