Circus Circus Is Not MGM’s Cash Cow

MGM Resorts entered into a sales agreement for Circus Circus with Phil Ruffin today. The sale price is $825 million.

One misconception that always seems to surface when Circus Circus hits the news that it was some sort of cash cow for MGM Resorts. That simply is not accurate.

Circus Circus last in MGM Resorts Las Vegas operating income

In fiscal year 2018, Circus Circus generated $43,592,000 in operating income, according to SEC filings. When accounting for depreciation and amortization, that number becomes $62,626,000.

The operating income placed it dead last under the MGM Resorts Las Vegas umbrella, excluding Park MGM, which saw its operations partially shutter during the transition from Monte Carlo. This rank is typical when compared to previous years.

All other MGM Resorts properties generated at least $38 million more in operating income than Circus Circus in fiscal year 2018. Here is the full list, rounded to the nearest million:

  • Bellagio: $405 million
  • MGM Grand: $305 million
  • Mandalay Bay: $174 million
  • New York-New York: $113 million
  • Mirage: $94 million
  • Excalibur: $91 million
  • Luxor: $81 million

MGM Resorts only owns 50 percent of Aria. The company posted its share of the operating income was $138 million from that resort.

Each of the company’s Las Vegas properties performed similarly when using EBITDA as the metric. The next closest to Circus Circus, excluding Park MGM, was $49 million higher.

The only other casino owned by MGM Resorts that earned less cash from operations in 2018 that was open the entire year was Gold Strike in Tunica. The difference was only $500,000. Gold Strike’s casino floor is half the size of the one at Circus Circus.

Gold Strike’s property is less than a quarter of the size of Circus Circus. It has about 2,600 fewer hotel rooms.

Circus Circus is comparable in size to other Las Vegas properties

Circus Circus is home to 3,764 hotel rooms. By comparison, Bellagio has 3.933 rooms. The average number of hotel rooms per property under the MGM Resorts umbrella is 3,880.

The casino floor at Circus Circus is 95,000 square feet. The average within the company in the Las Vegas market is 111,000.

Circus Circus has 1,221 slots. The company average in the market is 1,230. Circus Circus does land in last place with its 36 table games.

The 102-acre parcel that is a part of the Circus Circus property ties it for second place in acreage within the company in Las Vegas. MGM Grand also sits on 102 acres. Mandalay Bay has a 124-acre parcel.

This puts its operation size around average within the company. However, its financial results place it at the bottom of the company.

This all puts into perspective what the return on assets at Circus Circus is when compared to other properties in the MGM Resorts portfolio. It is far from a cash cow and that is probably why MGM Resorts was shopping it..

Hopefully, Phil Ruffin has a plan that improves its financial performance in the future.

 

 

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