MGM in the box seat for Osaka
MGM Resorts’ status as the front runner to be the first casino operator to open an integrated resort in Japan was cemented after Wynn Resorts said it was no longer interested in competing for a licence in Osaka, Nasdaq reports.
The city is expected to become the first to issue a licence in Japan.
Since Las Vegas Sands also withdrew from contention, as did Melco Resorts & Entertainment, it increasingly looks as though the licence is MGM’s for the taking.
There will ultimately be three licences issued in Japan when the process is complete.
Tokyo, Yokohama and Osaka are expected to become hosts, but because Osaka will be the site of the World Expo in 2025, it is likely to be the first to be given the green light to ensure the casino has the best chance of being operational in time.
As many as eight companies originally vied for the right to build an integrated resort – a comprehensive entertainment complex, including a casino – but just three remain: MGM, Galaxy Entertainment and Genting Group.
Many of the operators seeking a licence have said they expect to spend upward of $10 billion to build a resort in Japan.
That’s more expensive than money invested in Las Vegas or Macau, but even that figure might be conservative.
Las Vegas Sands president Robert Goldstein told analysts on the casino’s earnings conference call that he saw that figure as a baseline.
“I think $10 billion is the starting point. And I don’t think anybody’s going to do it for less than $10 billion, unless you’re going to do something subpar,” Mr Goldstein said.
He sees $12 billion as closer to reality, and believes it should serve as a gut check for the industry to really consider whether it can get the appropriate return for investors by spending that kind of money.
Fitch Ratings recently said upward of $15 billion might be needed.
MGM in talks to sell Circus Circus
Casino and hospitality giant MGM Resorts International is reportedly in talks with real estate tycoon Phil Ruffin about a potential sale of its Circus Circus property.
Casino Buzz reported in September that Bloomberg said there are unconfirmed sources that MGM officials are already planning to sell the property to Phil Ruffin.
Bloomberg reports that, an accord to sell the resort could be announced as part of a larger transaction involving the company’s real estate portfolio, which also includes the Bellagio and the flagship MGM Grand.
For Ruffin, the would not be his first deal with MGM, he bought the Treasure Island casino from MGM for $746 million in 2009.
MGM had sold the Treasure Island casino to raise funds for its promising city centre project.
MGM has been trying to cut its operational costs and has also confirmed its plans for a Japanese casino in Osaka prefecture.
Earlier in May, MGM, in its bid to minimize costs, announced that they would be cutting at least 1000 jobs across the US.
MGM is also planning to invest about $9 billion in the Osaka casino project in Japan.
The company has said that its casino project will generate employment to the tune of 15,000 jobs.
They will also channel the investment through at least 10 local companies.
MGM partnered with Oryx, a local Japanese company to contend for a casino licence in Japan.