MGM is a company synonymous with world-class entertainment and gaming, so it’s little surprise to see its MGM Resorts International subsidiary capture one of the trendiest, upscale venues on the Las Vegas Strip. The Cosmopolitan of Las Vegas has been one of the most exciting, contemporary additions to the Las Vegas skyline in recent years – and now it’s under MGM ownership.
MGM Resorts International confirmed it had formally closed a takeover deal worth $1.625bn to the Cosmopolitan’s parent company, Blackstone Capital, who have owned the complex since 2014. Bill Hornbuckle, president and CEO of MGM Resorts, described the buyout as a “big moment” for the brand, with the Cosmopolitan having already cemented itself as “one of the Strip’s premier resorts”.
What makes The Cosmopolitan stand out on the Strip?
The Cosmopolitan stands out as a 21st century addition to the Las Vegas Strip. With a state-of-the-art design, this mid-Strip resort looks nothing like the iconic casino resorts elsewhere along Las Vegas Boulevard. This alone has enticed a different demographic to stay at this unique luxury resort hotel, with millennials and Gen Z tourists often preferring the Cosmopolitan and the neighbouring Aria resort to some longer-standing hotels nearby.
The experience-led resort boasts multiple entertainment options, including The Chelsea’s live events venue and the now-iconic Marquee Dayclub and Nightclub. There’s also an indulgent selection of bars and eateries for visitors to explore – and that’s before they’ve even touched base with the gaming options on the casino floor. Hornbuckle said that MGM was keen to enhance the resort’s “already strong results” by delivering their “extensive and exclusive amenities” that only MGM can offer.
MGM has its collective fingers in many pies throughout the gaming and entertainment industry. It’s also forging ahead in the newly regulated iGaming industry across the US. Its BetMGM brand is licensed in 22 US states already since the repeal of the PASPA Act in 2018. As you might expect from an industry-leading brand, its user experience is second to none, with highly intuitive casino software. It’s also ranked in OddsChecker’s top five for the most competitive welcome offers across all active operators in the US online casino scene. It’s a scene which is increasingly competitive, with a host of established iGaming brands from Europe making the move across the Atlantic, alongside several American brands inspired by sports betting and daily fantasy sports (DFS) services.
MGM Resorts has also made moves in the iGaming market to buy additional existing operators. A $607m deal to buy European iGaming brand LeoVegas is ongoing, which would see MGM purchase all the company’s share capital. The theory behind this transaction is to enable MGM to increase its exposure in regulated and licensed iGaming markets across Europe and beyond. Its BetMGM product is currently supplied in the US as part of a joint collaboration with UK firm Entain.
Cosmopolitan agreement said to be a multi-billion-dollar deal
However, its deal brokered for the Cosmopolitan in September 2021 is one of its most intriguing moves in recent times. Under the terms of the agreement, MGM will own the operations of the resort, while the real estate assets will continue to be owned by Blackstone Real Estate Income Trust (BREIT), Stonepeak Partners, and Cherng Family Trust. MGM has a 30-year lease agreement with the asset’s owners, which are spread across three ten-year terms. The firm is due to pay $200m a year in ground rent, which will rise between 2%-3% per year. Consequently, the total value of the lease deal could be worth more than $5.6bn to the resort’s owners. Blackstone notified its investors that the deal was its most profitable sale of an individual real estate asset of all time, according to Forbes.
Although this sounds like a significant sum for MGM to pay out, the company revealed that the Cosmopolitan yielded more than $1bn in net revenue for its 2021-22 financial year, ending March 31, 2022. Such an established entertainment and gaming brand as MGM would not commit to a long-term deal like this lightly. Hornbuckle believes the Cosmopolitan to be an “ideal fit” for the MGM portfolio, which spans 31 casino resorts and hotels throughout the US, Japan, and Macau.
