Hornbuckle: “We remain confident in the long-term recovery of our business”
MGM Resorts lost US$1.03bn in 2020 as revenue fell 60.0% to US$5.16bn, with the majority coming from casino operations at US$2.87bn. As figures represent a 54.9% year-on-year decline, CEO Bill Hornuckle said it would continue efforts to expand its igaming activities after opting against a firm bid for Entain.
MGM Rooms brought in US$830.4m, down 65.3%, while food and beverage revenue was down 67.6% to US$696.0m and entertainment, retail and other revenue dropped 64.9% to US$519.0m. MGM made a further US$244.9m in reimbursed costs, 43.9% less than in 2019.
The operator’s Las Vegas Strip resorts continued to be its main source of revenue, despite the properties’ contribution falling 61.5% to US$2.25bn, and while its regional US operations were much more resilient, but revenue still fell 44.6% to US$1.97bn.
However, MGM China saw the steepest drop in revenue amid particularly strict travel restrictions, with revenue down 77.4%, roughly in line with the overall decline in the Macau gaming market in 2020.
Management and other operations brought in revenue of US$292.4m, down 52.3%.
MGM’s revenue included US$178m from its BetMGM online joint venture with Entain, ahead of its target of $150m-$160m, which itself was adjusted upwards from $130m. The ownership of the joint venture is split 50/50 between the operators.
MGM’s expenses for the year, meanwhile, were down 35.6% but were higher than MGM’s revenue at US$5.85bn. Casino costs fell 53.0% to US$1.70bn, while room costs were down to US$419.2m, food and beverage expenses declined to US$674.1m and entertainment, retail and other costs came to US$412.7m.
Other costs included US$2.12bn in general and administrative costs and US$1.20bn in depreciation and amortisation, though MGM also made US$1.49bn from real estate transactions, relating to the sale of its MGM Grand and Mandalay Bay properties on the Las Vegas Strip to private equity business the Blackstone Group.
As a result of this and US$42.9m in income from unconsolidated affiliates in which MGM owns a stake, MGM made an operating loss of US$642.4m, after having posted a US$3.94bn operating profit in 2019.
While BetMGM’s revenue rapidly grew, it also made an operating loss of US$124m, meaning MGM’s share of the loss came to US$62m. MGM said this reflected the “start-up nature of the business” and high marketing costs. MGM paid a further US$676.4m in interest expenses, plus US$103.3m in costs related to unconsolidated affiliates and $89.4m in other costs for a pre-tax loss of US$1.51bn.
After US$191.6m in tax benefits, MGM made a net loss of US$1.32bn, compared to US$2.85bn in profit a year prior. Accounting for losses attributable to noncontrolling interests, MGM’s final net loss was US$1.03bn, down from a US$2.05bn profit in 2019.
Bill Hornbuckle, chief executive officer and president of MGM Resorts International, said that despite the difficult year, he was confident that the operator would bounce back. “We remain confident in the long-term recovery of our business,” Hornbuckle said. “We have strengthened our operational foundation through cost efficiencies that position us for sustainable growth, as solutions to the public health crisis accelerate and restrictions continue to ease.”
Hornbuckle added that BetMGM would be a major part of this recovery plan: “We are engaged on pandemic response while staying focused on the future,” Hornbuckle said. “This includes maintaining a strong balance sheet to seize opportunities and continuing to drive BetMGM, our US sports betting and iGaming venture. BetMGM gained significant market share throughout 2020 while successfully launching in seven new states. We expect to be in 20 markets by the end of the year and are very pleased with the January launches in Iowa, Michigan, and Virginia.”
