The chief executive of gaming giant MGM Resorts International said Friday signs are pointing toward an economic turnaround for its Las Vegas hotel-casinos, but any profits will go toward eliminating the $13 billion in long-term debt the company accumulated during the downturn.
MGM Resorts Chairman and Chief Executive Officer Jim Murren said paying down debt has become the primary mission of the company, which operates 10 Strip resorts, including the giant CityCenter development.
"As the parent of MGM Resorts, we are extremely focused on deleveraging this company," Murren said in an interview following a ceremony celebrating the 10th year of the company's corporate diversity initiative. "We know we have a lot of tools at our disposal, but (paying down debt) is our absolutely overarching objective."
One tool that won't be used is the sale of any hotel-casino within the MGM Resorts portfolio, other than the previously announced plan to sell its 50 percent stake in Atlantic City's Borgata resort. Murren said it was "extremely unlikely" that an MGM Resorts' Strip property or one of the company's casinos in Detroit or Mississippi would be sold.
"The time to consider that action has come and gone," Murren said. "We're in a different place from a year ago. We're now in a much stronger financial position. We have so many other tools available to use for deleveraging purposes."
Murren hinted that some of the proceeds from a planned initial public offering on the Hong Kong Stock Exchange later this year might be used to pay down corporate debt. On Monday MGM Resorts filed documents for the potential listing. The company plans to back the shares with the MGM Grand Macau, which is owned with Hong Kong businesswoman Pansy Ho in a 50-50 joint venture partnership.
Having the MGM Grand Macau has helped the company's business on the Strip. Macau, Murren said, has stimulated visitation to Las Vegas, especially for rival casino operators Wynn Resorts Ltd. and Las Vegas Sands Corp., which have properties in China.
Murren said that high-end baccarat play has helped keep many Strip casinos afloat the past year. With the addition of Aria, CityCenter's centerpiece hotel-casino, Murren said, MGM Resorts controls roughly 50 percent of the baccarat market.
On the Strip, gamblers have wagered more than $5.3 billion on baccarat through July, about 33 percent more than a year ago, figures from the Nevada Gaming Control Board show.
"Setting aside hold percentage, the underlying business is expanding," Murren said. "Baccarat was the only glimmer of light operationally in 2009. We're getting double-digit increases in the drop. I expect that to be pretty robust throughout 2010 and frankly, into 2011 also."
Murren predicted that MGM Resorts' Strip properties will start seeing an increase in convention business during October, saying that several groups are already booked.
"We can say with a fair degree of confidence that October looks like a very good month for Las Vegas," he said.
Murren's comments followed a presentation to about 500 people at Aria marking the 10th year of what many in the gaming industry have considered to be the groundbreaking program for local corporate diversity.
In the 10 years it has been operating the initiative, which is headed by company board member Alexis Herman, MGM Resorts has spent more than $1 billion with certified minority- and women-owned businesses that supply the company. In addition, about $1.5 billion has been spent with minority- and women-owned contractors, including about $700 million during the construction of CityCenter.
"It has become more important than ever, particularly in today's recessionary economy, that we foster an inclusive culture of excellence aligned with our business mission," said Herman, a former U.S. secretary of labor under President Clinton. "As a result, we have emerged as a more cohesive, more productive and more effective company."
About 61 percent of the MGM Resorts' 62,000 employees are minorities. In management, about 44 percent of supervisors are women, and 36 percent are minorities.
Murren said the company is proud of those figures.
"We didn't set out 10 years ago with a number in mind," Murren said. "This shows the opportunity. But with as much as we have done, we can do better."
Murren said MGM Resorts will always announce annually the results of its corporate diversity programs because the company needs to be held accountable.
"Having a report card is valuable and I think it shows leadership and it might inspire other companies," Murren said.
Contact reporter Howard Stutz at firstname.lastname@example.org or 702-477-3871.