New Details Emerge About Bellagio And Grand Sale

By Ben Hamill - September 20 2019

New Details Emerge About Bellagio And Grand Sale

Speculations have been rife following the industry’s first whiff of MGM’s plans involving the selling off of its flagship Bellagio and MGM Grand casino and entertainment venues some months ago. A recent Bloomberg report alleges that the casino group has entered into pre-sale discussions with Blackstone Group Inc. and estimates the selling price to be in the region of $7 billion.

Bloomberg’s sources were however not able to confirm any further details pertaining to the discussions, and its anyone’s guess whether the deal will actually materialise or not. Shameless thumb sucking can never be completely ruled out until such time as what a formal announcement has been made by either party to the alleged discussions.

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Freeing Up Cash Resources

Even so, the suspicion that MGM is looking to sell two its most celebrated casinos in an attempt to free up the necessary cash to fund the development of a potential venue in Osaka, Japan, is more than plausible.

According to Bloomberg’s sources, MGM will continue to operate both casinos, what with the deal being part of a leaseback agreement. What this basically comes down to is that MGM will sell the actual real estate on which the casinos are located to Blackstone, but that it will retain ownership of the going concerns. In this event, the “seller” essentially becomes the tenant and they “buyer” the landlord leasing the property to the tenant.

In order to successfully continue the race for one of only 3 IR Resorts to be constructed in Japan; and a race in which MGM happens to be one of the front-runners; the casino group will have to cough up at least $10 billion. And according to gaming analyst Brian Egger, MGM Resorts has already managed to get together the remaining $3 million.

Japan Would Be Game-Changing

When Bloomberg ran the initial July report about the possibility of MGM entering into a lease-back agreement involving the Bellagio and Grand, the suspicion was voiced that major shareholder Starboard Value LP was the main driver behind the motion to sell.

Whether or not this is the case is still not known for sure, but what is by now public domain information is the fact that MGM did as far back as January form a 3-person committee tasked with investigating the various possibilities of extracting more and better value from the group’s real estate investments.

If MGM were to be successful in its Japan licence application attempt, it will most certainly be a game-changer for the group.

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