80°F
weather icon Partly Cloudy

MGM 2020 plan could help bid in Japan, company executive says

Updated June 7, 2019 - 4:12 pm

Former Gov. Brian Sandoval, now the president of global gaming development for MGM Resorts International, said he believes the implementation of the company’s MGM 2020 program could help the company’s chances of landing one of three coveted gaming licenses in Japan.

Japan is a market estimated at being worth more than $25 billion a year once the resorts open in Japan in 2025.

MGM 2020 is a plan to reduce costs, improve efficiencies and position the company for growth. The multiphased program lays the groundwork for the company’s digital transformation, but also included last month’s layoff of more than 1,000 employees.

“The bottom line is if they’re aware of it, it’s about making MGM a stronger, more nimble company, and it’s actually going to benefit our work in Japan,” said Sandoval, who completed his most recent trip there last week. “I’ve been to Japan four times, and I haven’t been asked once about MGM 2020.”

The company’s MGM 2020 strategy has resulted in more than 1,000 layoffs of mostly management and mid-management employees, including 881 in Las Vegas. The program, announced days before Sandoval joined the company in January, is designed to improve cash flow by $200 million annually by the end of 2020 and an additional $100 million by the end of 2021, according to company officials. Half of the anticipated savings is being attributed to reduced labor costs.

Gaming analysts have mixed forecasts on how the layoffs may be perceived by Japanese regulators in considering MGM for an integrated resort slot.

Transparency

“When we look at MGM and try to look at it through the lens of a regulator in Japan, MGM has been very transparent and open about the process,” said John DeCree of Las Vegas-based Union Gaming. “I don’t think it would be a sticking point for a Japanese regulator.”

Chad Beynon, a Washington- based analyst with Australia’s Macquarie Group Ltd., said he agrees the company’s transparency through the process may help MGM, but the perception that layoffs could occur may be frightening.

“The thing about MGM 2020 that they’re trying to convey (is) the labor savings. … It is interesting that they’ve said they’re going to have greater efficiencies and more enhanced labor standards and it won’t affect service levels,” he said. “It certainly sounds like you’re talking out of both sides of your mouth if you’re firing 1,000 people in a service industry and you don’t think it’s going to affect any service levels.”

Beynon said Japan has been on MGM’s radar for a long time.

“Japan is something they’ve been talking about for a decade here, and they’re really focused on winning that,” he said.

Beynon said the MGM 2020 cost reductions are likely giving the company more resources to win that bid in Japan.

MGM CEO Jim Murren apologized to laid-off employees and their families late last month, but he stood behind the decision to implement the program, calling it “necessary to assure our future.”

MGM and at least eight other companies are vying for the Japanese licenses. Osaka is prized because it is likely to be the site of the first resort to open as government officials angle to link that with World Expo 2025.

If the estimates stand up, Japan would become the second-largest gaming market in the world behind Chinese gaming enclave Macau.

“We’ve stated publicly that we have an Osaka-first approach and Osaka is hosting the World Expo and the theme of that World Expo is innovation, so MGM 2020 complements perfectly the theme of the World Expo,” Sandoval said.

Front-runners

Other Las Vegas companies are interested in being licensed in Osaka, including Las Vegas Sands Corp., Wynn Resorts Ltd. and Caesars Entertainment Corp. Speaking on the condition that they not be identified, several gaming analysts said MGM and Las Vegas Sands are the front-runners in the licensing bid.

Las Vegas Sands President and Chief Operating Officer Rob Goldstein said at an analysts’ conference last week that he believes Osaka to be the only city in Japan suitable for a large-scale integrated resort with “millions” of square feet of convention space and “thousands” of hotel rooms.

Speaking in a fireside chat at Sanford Bernstein’s 2019 Strategic Decision Conference in New York, Goldstein said he believes Sands’ track record of building large-scale resorts in Singapore and Macau will give the company an edge over its competitors.

Company submissions for the coveted Japanese spots are due in the next couple of months, Beynon said. Then Japanese regulators will likely take several months — Beynon estimates six or nine — to figure out who the winner is at the local level, and then the central government has the final say.

NOTE: This story has been updated to reflect that former Gov. Brian Sandoval was speaking broadly about the MGM 2020 initiative and its impact on the company’s chances to win a gaming license in Japan.

The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

Don't miss the big stories. Like us on Facebook.
Business Videos
Daytime fireworks mark the opening of Encore Boston Harbor
The opening of the $2.6 billion Encore Boston Harbor in Everett, Mass. included a three-minute fireworks show launched by Fireworks by Grucci Sunday, June 23, 2019. (Rick Velotta/Las Vegas Review-Journal) @RickVelotta
Elaine Wynn talks about the opening of Encore Boston Harbor
Elaine Wynn, co-founder and largest shareholder of Wynn Resorts, talked during opening festivities of the $2.6 billion Encore Boston Harbor in Everett, Mass. Sunday, June 23, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
People line hours ahead of opening for Encore Boston Harbor
Guests arrive as much as 17 hours early for the 10 a.m. opening of the $2.6 billion, 671-room resort in Everett, Mass. Sunday, June 23, 2019. (K.M. Cannon/Las Vegas Review-Journal) @reviewjournal.com
Crews working 24/7 to complete Circa downtown - VIDEO
Owner Derek Stevens goal is to open the doors to the 1.25 million-square-foot project by December 2020. (Michael Quine/Las Vegas Review-Journal)
Golden Knights Marc-Andre Fleury sells Las Vegas home - VIDEO
Golden Knights goaltender Marc-Andre Fleury has sold his custom home Southern Highlands home in Las Vegas for $2.3 million.
Las Vegas Strip resorts slow to welcome Alexa, Google Home Hub
Alexa, where are you? Smart home and hospitality technology was big at CES in early January. Amazon and Google promoted their voice-activated speakers Alexa and Google Home Hub. Hospitality executives have called the speakers the industry’s future. Yet for all the hype, the revolution is unfolding at a cautious pace on the Strip as well as in other major U.S. hospitality markets. Hotels are focusing their consumer-facing technology investments on adding streaming capabilities, like Netflix, and enhancing their mobile apps, a December report by Hospitality Technology showed. Voice-enabled technology is 10th on that priority list.
What is MGM 2020
MGM Resorts International announced its MGM 2020 plan in January, The plan would improve cash flow by $200 million annually by the end of 2020 and an additional $100 million by the end of 2021. 1,070 jobs were cut as part of the cost-cutting initiative. 881 of those were Las Vegas employees, mostly in management or mid-management positions. Jim Murren
What is MGM 2020
MGM Resorts International announced its MGM 2020 plan in January, The plan would improve cash flow by $200 million annually by the end of 2020 and an additional $100 million by the end of 2021. 1,070 jobs were cut as part of the cost-cutting initiative. 881 of those were Las Vegas employees, mostly in management or mid-management positions. Jim Murren
Find next-level experience
One minute, you’re just trimming hedges and shooting the breeze with your neighbor. But then he brings up Vegas and you’re thinking about the incredible meals, world-class hotels, pools inside of pools and unparalleled entertainment. You’re thinking about iconic artist residencies like Aerosmith. Priorities take shape. Vegas first, lawn and everything else, second. Just like that, Vegas Changes Everything. (Visti Las Vegas/Youtube)
Vegas Changes Everything
A weekend getaway is nice for anyone, but a weekend getaway in Vegas ... that’s a next-level experience with shows, clubs, spas and more. With a chance to see iconic artist residencies like Gwen Stefani, you might just find yourself going from pushing your child on a swing, to pushing back a birthday party. See how Vegas Changes Everything. (Visit Las Vegas/YouTube)
How much do Las Vegas casino CEOs make?
Las Vegas gaming CEOs made anywhere between $1 million and $24 million last year, according to company filings with the U.S. Securities and Exchange Commission. ((Las Vegas Review-Journal)
30-year-old Rio needs a little TLC
Nearly 30 years after the Rio opened, the red and blue jewel that helped catapult Las Vegas to a new level with its buffet and nightclub has lost its status along with its shine.
The latest on the Drew Las Vegas - VIDEO
Eli Segall recounts his tour of the Drew Las Vegas, formerly the Fontainebleau, on the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
Pinball Hall of Fame to move near south Strip
Operators of the Pinball Hall of Fame have been approved to build a new, larger arcade near the south edge of the Strip on Las Vegas Boulevard near Russel Road. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
National Hardware Show underway Las Vegas
The National Hardware Show kicked off Tuesday at the Las Vegas Convention Center (Mat Luschek / Review-Journal)
Caesars for sale?
Caesars Entertainment Corp. has been swept up in takeover speculation since the company’s share price tumbled last year amid disappointing earnings and concerns over a recession. Amid the decline, hedge funds scooped up shares. Billionaire activist investor Carl Icahn began buying shares of Caesars as early as January. Icahn acquired nearly 18 percent by mid-March. In February Icahn called on the Caesars board to study a sale as a way to boost shareholder value.
Las Vegas home prices
Las Vegas home prices grew fastest among major markets in February for the ninth straight month. But amid affordability concerns, the growth rate has slowed down. Southern Nevada prices in February were up 9.7% from a year earlier, according to the latest S&P CoreLogic Case-Shiller index. The last time Las Vegas' price growth fell below 10% was in September 2017, S&P Dow Jones Indices reported.
Free Parking Coming To Wynn
Free parking will come to the Wynn and Encore resorts on May 1, 2019. (Mat Luschek / Review-Journal)
Founding Venetian employees talk about 20 years at the Strip resort
The Venetian, which opened May 3, 1999, is celebrating 20 years on the Las Vegas Strip. Seven original employees talk about opening the luxury resort and working there for two decades. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Circa aiming for December 2020 opening
The 1.25-million-square-foot property will have 44-stories and 777-rooms. It will also have a separate nine-story, 1,201-space parking garage.
Boxabl official explains the building concept
Boxabl business development manager Galiano Tiramani shows off a room built by his company. (Blake Apgar/Las Vegas Review-Journal)
TI/Mirage Tram reopens
The tram that shuttles guests between TI and Mirage reopened this week after being closed for much of 2018.
Las Vegas Convention Center expansion taking shape
Renderings and actual footage show how the Las Vegas Convention Center is evolving.
Former Starbucks CEO Howard Schultz at Las Vegas convention
Former Starbucks CEO and potential presidential candidate Howard Schultz spoke at the Epicor Insights user conference at Mandalay Bay Convention Center Wednesday, April 17, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Drew Las Vegas to open in the second quarter of 2022
The 67-story Drew Las Vegas is slated to open in the second quarter of 2022 at the north end of the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
NAB Day 1 (Time Lapse)
NAB kicked off at the Las Vegas Convention Center on Monday, April 8, 2019. (Mat Luschek / Review-Journal)
National Association of Broadcasters Show shows 1mm thick 8K TV with 22.2 channel digital sound
Japan’s NHK Science & Technology Research Laboratories booth featured a 1mm thick 8K TV system used in conjunction with a 22.2 channel digital sound system at the National Association of Broadcasters Show at the Las Vegas Convention Center. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Nevada shoppers react to Smith’s no longer accepting Visa credit cards
On March 1, Smith’s announced that it would no longer be accepting Visa credit cards at any of its 142 supermarkets, including the 45 in Nevada.
Massachusetts Gaming Commission asks how long Wynn executives knew about misconduct
Business reporter Rick Velotta gives an update on the adjudicatory hearing on the suitability of Wynn Resorts to retain its gaming license in Massachusetts.
Henderson app developer part of Startup in Residence
Henderson based developers of the app On Point Barricade are taking part in Startup in Residence, a North America program dedicated to pairing tech companies with governments. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
THE LATEST
Thousands seek compensation tied to Las Vegas shooting, MGM says

In a lawsuit against an insurance company, MGM Resorts International said more than 4,000 people are seeking compensation for claims related to the shooting. MGM is disputing any liability, and is “vigorously defending itself in all of the cases,” it said in the lawsuit.