MGM CFO Halkyard Says F1 Broke Vegas Records, Sees More Share Buybacks

Posted on: November 29, 2023, 02:38h. 

Last updated on: November 29, 2023, 08:15h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

The November 18 Las Vegas Grand Prix, Formula One’s (F1) first visit to Sin City in four decades, delivered for Strip operators as the event represented the highest-grossing weekend in the history of MGM Resorts International (NYSE: MGM).

Jonathan Halkyard, chief financial officer (CFO) of the largest Strip operator, confirmed as much on Tuesday at the Bank of America Leveraged Finance Conference. The F1 race topped the 2019 CES tradeshow as the best weekend in the history of MGM’s Strip properties.

So when you think about other events that have happened in Las Vegas over the years, and the scale of our company, that’s quite something to have a record weekend on what was otherwise the slowest weekend of the year,” said Halkyard.  “It met our expectations in terms of casino volume, food and beverage, and most importantly, the guests and our employees, I think, had a very good experience during the long weekend.”

Acknowledging that there was “a lot of friction” that irritated locals in the months leading up to the event, Halkyard added that the Las Vegas Grand Prix was so potent in terms of revenue generation that November 2023 is likely to be the best November on record for MGM’s Las Vegas hotel revenue.

Halkyard Says MGM Capital Deployment to Focus on Growth

In discussing the operator’s balance sheet and plans for capital spending, Halkyard added that MGM’s transformation to an operating company structure is largely complete, meaning deployed capital will largely be directed to growth initiatives.

He told conference attendees that MGM is eyeing expansion of its Empire City Casino in Yonkers, NY and that some capital will clearly be directed to a planned integrated resort in Osaka, Japan.

We have been repaying debt. We’ve been deploying the capital that we realized from those real estate sales to repurchase shares. We’ve repurchased over 1/3 of the company’s shares in the last 2.5 years,” Halkyard noted.

Buybacks have been MGM’s preferred method of shareholder rewards for several years now, and when the operator announced third-quarter earnings earlier this month, it said it will repurchase up to another $2 billion worth of its shares. The CFO also noted it’s possible the Bellagio operator could issue high-yield debt in the future, “but it’s more likely that the capital will be allocated to growth and then some additional share repurchases.”

BetMGM Comments

Halkyard briefly discussed the BetMGM structure, which is 50% ownership by MGM with the other half controlled by increasingly embattled Entain (OTC: GMVHF). He gave an arguably tepid endorsement of that partnership.

We have three Board seats. Entain has three Board seats. It certainly — is always a good thing when the business is performing well like BetMGM has, but our focus at MGM is to make BetMGM as successful as possible,” observed the MGM CFO.  “And I think that’s not to speak for them, but I think that Entain’s interest as well.”

Those comments arrived against a backdrop of activist investors circling Entain, and with the Ladbrokes owner dealing with stock downgrades as some analysts and investors speculate the UK-based company’s missteps could invite unwanted takeover advances, potentially from MGM, or force Entain to consider remedies for its BetMGM stake. BetMGM holds an investor day on December 4.