MGM lays off staff as it hopes to claw back revenue
An American casino operator is laying off almost 20,000 staff as it tries to regain its pre-pandemic form.
Calvin Ayre reports MGM Resorts is laying off 18,000 staff, with the announcement made on Friday by chief executive Bill Hornbuckle.
Mr Hornbuckle sent a memo to staff advising them on what most of them already knew: “our industry – and country – continues to be impacted by the pandemic, and we have not returned to full operating capacity.”
The specific cuts won’t be detailed until Monday, the official ‘date of separation’ under federal law for staff not recalled to work after six months’ furlough.
Investors apparently liked what they heard, as MGM’s shares are currently trading up around five per cent from Thursday’s closing price.
Mr Hornbuckle informed staff that the company would continue to pay health care benefits to affected staff until the end of September.
Laid off staff who are recalled will retain their seniority, although it remains to be seen what level of customer activity would have to be reached before any recall notices would be issued.
Earlier this month, the estate of MGM founder Kirk Kerkorian donated $2 million to a fund set up to economically support furloughed staff.
The MGM Resorts Foundation had by that point provided more than $11 million to its staff through this fund.
MGM warned last month that a “large majority” of its entertainment and sports division team would likely receive permanent pink slips due to ongoing restrictions on all events involving people assembled in large groups.
MGM has cautiously reopened most of its properties, trying to find a sweet spot between customer demand and operator supply.
Two venues – Empire City in New York and Park MGM in las Vegas – have yet to reopen, the former due to the governor’s skittishness about doing anything to undo the state’s pandemic mitigation efforts.
In July, Mr Hornbuckle said Park MGM could remain shut for the rest of the year if there was insufficient demand in Vegas.
The company re-opened the Mirage on Thursday and Mr Hornbuckle said Thursday that Park MGM could open on October 1 if the Mirage hits its September targets.
Revenue reports from major casino markets such as Nevada and Atlantic City show operators’ fortunes have risen sharply since the end of the COVID-19 shut downs, but remain well below monthly averages.
Much of the public remains skittish about congregating indoors, while the casinos have been forced to operate with significantly reduced capacity, 50 per cent in Nevada and 15 per cent in Michigan.
Media mogul invests in MGM Resorts
A media mogul has purchased a near $1 billion stake in MGM Resorts.
CNN Business reports that the stake was purchased by Interactivecorp (IAC), a conglomerate run by media mogul Barry Diller.
The amount purchased amounts to about a 12 per cent interest in the Las Vegas-based global casino and hotel giant.
Shares of MGM Resorts surged nearly 15 per cent on the back of the news, while IAC’s stock was down about two per cent.
IAC has been actively shaking up its portfolio in recent months.
The company completed its sale of Match shares last month after announcing plans to do so in December.
It also agreed in December to buy Care.com, a company that helps people find caregivers and housekeepers, for $500 million.
IAC also owns digital content brand DotDash and video tools firm Vimeo.
But the MGM Resorts investment could be Diller’s boldest move yet.
He said in a press release the new IAC has a healthy balance sheet and “its opportunistic zeal intact.”
“We are energised and excited to make this investment in MGM,” he said, adding that IAC is particularly interest in “an area that currently comprises a tiny portion of its revenue – online gaming.”
IAC chief executive officer Joey Levin added: “MGM Resorts presents a unique opportunity for IAC to own a meaningful piece of a pre eminent brand in a large category with immense potential,” noting IAC plans to be a “minority investor and long-term strategic partner.”
MGM Resorts chairman Paul Salem noted that IAC can help MGM continue to grow its digital gaming and sports betting businesses.
Big casino companies like MGM and rivals Wynn Resorts and Las Vegas Sands have struggled this year as the coronavirus pandemic led to a slowdown in travel to Las Vegas and Asian gaming mecca Macau.