- Another operator confirms Q3 was a disaster in Las Vegas
- MGM took a $256 million charge and $93 million in write-downs related to decision to withdraw from New York casino race
- CEO admits to Las Vegas pricing gaffes
Shares of MGM Resorts International (NYSE: MGM) faltered in after-hours trading Wednesday after the company reported a third-quarter loss due in large part to weakness at its Las Vegas Strip casino hotels and one-off charges related to its decision to pull out of the New York City casino competition.
The Bellagio operator generated revenue of $2 billion on the Strip, down from $2.1 billion a year earlier, on earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) $601 million. Year-earlier EBITDAR was $731 million. Weakness on the Strip where MGM is the largest operator was widely expected after rival Caesars Entertainment (NASDAQ: CZR) sank today following a downbeat third-quarter report in which Strip softness was the primary culprit.
Further hampering MGM’s September quarter results was a non-cash goodwill impairment charge of $256 million and $93 million worth of non-cash write-downs stemming from the company’s decision to no longer pursue a license to convert Empire City Casino in Yonkers, NY to a traditional casino.
MGM ‘Lost Control of the Narrative’
Reasons abound for slumping visitation to Las Vegas this year with President Trump’s trade tariffs stymying international visitation and high unemployment in California — the largest domestic feeder market to the casino center — among the reasons 2025 will be a forgettable year for Strip operators.
However, MGM hasn’t helped itself. Already saddled with a reputation for nickel-and-diming customers, that situation really came to light in the second quarter – another period of dismal Las Vegas results for the company – amid reports of $26 bottles of water at the Aria. For the bad press that generated, MGM didn’t learn its lesson over the summer months.
When we think about pricing and things that got everyone’s attention, whether it’s the infamous bottle of water, where a Starbucks coffee Excalibur cost $12, shame on us,” said CEO Bill Hornbuckle on a conference call this evening. “We should have been more sensitive to the overall experience at a place like Excalibur to those customers. You can’t have a $29 room and a $12 coffee.”
He acknowledged MGM “control of the (pricing) narrative” during the summer months, adding the company has evaluated its pricing strategies and corrected some of the prior gaffes.
MGM Not Leaving New York
When MGM said it was exiting the New York casino competition, it was one of the most stunning announcements in years in the industry, particularly because Empire City was widely viewed as one of the leaders to land one of three licenses.
Obviously, MGM’s withdrawal is good news for Bally’s, Hard Rock, Resorts World New York, but Hornbuckle said the company isn’t abandoning Yonkers.
“We have been and continue to be a proud partner of the city of Yonkers and the State of New York,” he said on the conference call. “We remain committed to operating the property in its current format and believe it will continue to enjoy success serving customers in the Yonkers and surrounding communities.”
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