Mgm Resorts International Final Report
The Company HISTORY (Appendix A) In 1967, the billionaire Kirk Kerkorian decided to start investing in Las Vegas. The first MGM Grand opens in 1973 on Las Vegas Boulevard. Five years later a second MGM Grand opens in Reno. The name MGM Grand derived from the Metro-Goldwin-Mayer movie studio where Kerkorian was the former owner. Unfortunately, in the 1980 the MGM Grand Las Vegas suffers of one of the worst high-rise fires in United States history and claims 87 lives.
Kerkorian sells his two MGM Grand to Bally manufacturing in 1986.
In 1993, the new MGM Grand opens on the Strip with 5005 rooms, the world’s largest hotel and the third largest today. On May 31, 2000, MGM Grand accomplish the largest ever merger in the industry, by paying $6. 4 billion for Steve Wynn’s Mirage Resorts, acquiring seven hotels and casinos in Las Vegas. After this merger the company’s name becomes MGM Mirage, the largest gambling company in the world. On April 26, 2005, MGM Mirage buys one of its major competitors, Mandalay Resort Group for $7.
billion. This transaction enables the company to acquires five hotels and casinos in Las Vegas and in others States. In 2006, MGM Mirage announced a joint partnership with Foxwoods Resort and Casino in Connecticut. In December 2007, the MGM Grand Macau opens as MGM Mirage first overseas property, a joint venture with Pansy Ho. In December 2009, The CityCenter opens.
The Dubai World invests $2. 7 billion to acquire 50% stake of the CityCenter project.
On June 15, 2010, MGM Mirage shareholders voted to changes its name to “MGM Resorts International”. MISSION STATEMENT: “Our mission is to deliver our winning combination of quality entertainment, luxurious facilities and exceptional customer service to every corner of the world in order to enhance shareholder value and to sustain, employee, customer and community relationships. ” GOALS MGM Resorts International is one of the world’s leading and most esteemed companies with significant properties in gaming, hospitality and ntertainment.
Its goals is to generate sustainable and profitable growth by creating and maintaining competitive advantages focusing on owning, developing, operating and strategically investing in a strong portfolio of resorts; by operating their actual resorts in a manner that highlights the delivery of excellent customer service to maximize revenue and profit; and by leveraging their strong brands and taking advantage of significant management experience and expertise.
FINANCIALS (Appendix B) 2010| 2009| 2008| 2007| 2006| Sales| $6,019,233| $5,978,589| $7,208,767| $7,691,637| $7,175,956| Net Income| -$1,437,397| -$1,291,682| -$855,286| $1,584,419| $648,264| Profit Margin| -$3. 19| -$3. 41| -$3. 06| $4. 88| $2. 25| Employees * Full-time * Part-time| 45,00016,000| 39,30013,200| CIVIC AND COMMUNITY INTERACTION The MGM Resorts Foundation’s key community investment areas are, Childhood Development, Community, Diversity and Education (Phyllis, 2010, p.
33-35).
The MGM Resorts Employee Volunteer Program was created to share the passion and talents of the employees with local nonprofit organizations serving the community’s critical unmet needs. Campaigns conducted in 2010-2011 include: Make A Difference Day, The Back to School Donation Drive, The MGM Resorts Foundation Walk-A-Thon, The KLUC Toy Drive, The Three Square Canned Food Drive (Phyllis, 2010, p. 37). To honor its employee volunteers and encourage volunteerism, MGM Resorts has created two recognition award programs: The Volunteer of the Year Award and The Shining Star Award (Phyllis, 2010, p.
2-43). MGM Resorts International got in 2010 awards and recognitions for its diversity and community services (Phyllis, 2010, p. 45-47): *
“DiversityInc Top 50 Companies for Diversity”, by DiversityInc Magazine * “40 Best Companies for Diversity” by Black Enterprise Magazine * “Corporation of the Year” and “Corporation of the Decade” by The Nevada Minority Supplier Development Council. * The Initiative Partner of the Year by The United Way of Southern Nevada. Honored by Families for Effective Autism Treatment (FEAT) of Southern Nevada.
* Hunger Hero Volunteer Award by The Gleaners Food Bank of Southeastern Michigan. EXECUTIVES & OFFICERS Name| Position| James J. Murren| Chairman, Chief Executive Officer, President and Director| Robert H. Baldwin| Chief Design and Construction Officer and Director| William J. Hornbuckle| Chief Marketing Officer| Corey I. Sanders| Chief Operating Officer| Daniel J.
D’Arrigo| Executive Vice President, Chief Financial Officer and Treasurer| Phyllis A.
James| Executive Vice President ;amp; Special Counsel—Litigation and Chief Diversity Officer| Aldo Manzini| Executive Vice President and Chief Administrative Officer| John McManus| Executive Vice President, General Counsel and Secretary| William M. Scott IV| Executive Vice President—Corporate Strategy and Special Counsel| Robert C. Selwood| Executive Vice President and Chief Accounting Officer| Rick Arpin| Senior Vice President—Corporate Controller| Alan Feldman| Senior Vice President—Public Affairs| James A. Freeman| Senior Vice President—Capital Markets and Strategy| Shawn T.
Sani| Senior Vice President—Taxes| BOARD OF DIRECTORS Name| Position / Company| James J. Murren| Chairman of the Board, Chief Executive Officer, President and Chairman of Executive Committee| Kirk Kerkorian| Founder, Senior Adviser and Director| Robert H. Baldwin| Chief Design and Construction Officer, Director, President of Project CityCenter and Chief Executive Officer of Project CC LLC| Alexis Herman| Independent Director / Dell Inc. | Roland Hernandez| Independent Director / Vail Resorts Inc.
| Anthony Mandekic| Independent Director / Tracinda Corp. William Bible| Independent Director / MGM Reosrts International| Willie Davis| Independent Director / MGM Reosrts International| Melvin Wolzinger| Independent Director / MGM Reosrts International| Rose Mckinney-James| Independent Director / Employers Holding, Inc. | Daniel Taylor| Independent Director / MGM Reosrts International| Burton Cohen| Independent Director / MGM Reosrts International| PRODUCTS / MARKET SEGMENTS MGM Resorts International has several properties in gaming, hospitality and entertainment essentially situated in Las Vegas.
The principal market segments of the Las Vegas gaming market are leisure travel; premium gaming customers; conventions, including small meetings, trade associations, and corporate incentive programs; and tour and travel. A list of their different Hotels, Casinos and Resorts and the target customers for each of them is proposed in the tab below.
Name – Location| Target customers| Bellagio – Las Vegas, Nevada| Upper class customers| MGM Grand – Las Vegas, Nevada| Upper class customers| Mandalay Bay – Las Vegas, Nevada| Upper class customers| The Mirage – Las Vegas, Nevada| Upper class customers|
Luxor – Las Vegas, Nevada| Middle- to upper-middle-income customers| New York-New York – Las Vegas, Nevada| Middle- to upper-middle-income customers| Monte Carlo – Las Vegas, Nevada| Middle- to upper-middle-income customers| Excalibur – Las Vegas, Nevada | Value-oriented and middle-income customers| Circus Circus – Las Vegas, Nevada| Value-oriented and middle-income customers| Circus Circus – Reno, Nevada| Value-oriented leisure traveler and the value-oriented local customera| Gold Strike – Jean, Nevada| Value-oriented leisure traveler and the value-oriented local customers| Railroad Pass –
Henderson, Nevada| Value-oriented leisure traveler and the value-oriented local customers| MGM Grand – Detroit, Michigan| Local and regional gaming customers| Beau Rivage – Biloxi, Mississippi| Local and regional gaming customers| Gold Strike – Tunica, Mississippi| Local and regional gaming customers| CityCenter (50%) – Las Vegas, Nevada| Upper class customers| MGM Grand (50%) – Macau, China| Local and regional upper class customers| The following table presents details of MGM Resorts International net revenues: | Net Revenue in 2010| Sales Mix in 2010| Casino revenue:| $2,442,927| 37%| * Table games| $827,274| 12%| * Slots| $1,540,738| 23%| * Other| $74,915| 2%| Non-casino revenue:| $4,209,834 | 63%| * Rooms| $1,300,287| 20%| * Food and beverage| $1,339,174| 20%| * Entertainment, retail and other| $1,210,903| 18%| * Reimbursed costs| $359,470| 5%| Total Net Revenue (Before promotional allowances)| $6,652,761| 100%| LEGAL ENTANGLEMENTS
On October 29, 2008, MGM Mirage had to stop a $5 billion project in Atlantic City and sells its 50% share on the Borgata Hotel and Casino because the New Jersey gambling regulators denied MGM Mirage’s suitability to operate casinos in New Jersey. They believed that Pansy Ho, the partner of MGM Mirage in the MGM Grand Macau could operate the hotel and casino with the influence of her father. In fact Stanley Ho is often accused of relations with Chinese organized crime. RISKS MGM Resort International is facing some risks related to their business: * Current and future economic and credit market conditions could reduce the ability to service or refinance their indebtedness. *
A failure to compete effectively with the important competition. * The cost of compliance or failure to comply the extensive regulations.
* Extreme weather conditions or climate change may cause property damage. Not enough geographically diversified because their major gaming resorts are concentrated on the Las Vegas Strip. * Decreasing ability to manage risk in partnerships or joint ventures (CityCenter and MGM Macau). * Rise in energy prices. * Failure to collect credit from a large portion of customers. * The insurance coverage may increase and may not be adequate to cover all possible losses.
* Present or future claims against them. The Executive PERSONAL James J. Murren is actually Chairman and CEO of MGM Resorts International where he has a salary of $2 million per year and by including his bonus and stock options his remuneration can reach the $14 million per year.
He is 49 years old and has been married to Heather for 20 years. In his early life, he attended the Roger Ludlowe High School in Fairfield, CT. Mr.
Murren received his bachelor of arts degree in art history ;amp; urban studies from Trinity College in 1983. CAREER PATH * After he graduated, Mr Murren worked for 10 years in Wall Street as a Managing Director and Co-Director of Research for Morgan Grenfell. * And then for 4 years as Director of Research and Managing Director at Deutsche Bank. * In 1998, he joined MGM Mirage as Executive Vice President and Chief Financial Officer. * On December 30, 1999, Mr.
Murren was named President and Chief Financial Officer. On August 2007, he became the President and Chief Operating Officer. * On December 1, 2008, he was elected Chairman of the Board of Directors and Chief Executive Officer. CIVIC / AWARDS CONNECTION James Murren is very active in the community. Along with his wife, they founded the Nevada Cancer Institute, a non-profit institution dedicated to providing a comprehensive cancer research center to the State of Nevada and he is a member of its Board of Director.
He is also a trustee of the University of Nevada-Las Vegas Foundation and a member of the Board of Fellows for Trinity College. He has been a developer in the area of corporate diversity through MGM’s hotels. Mr.
Murren is currently a member of the Board of Directors of Delta Petroleum; a Colorado based independent energy company engaged in the exploration for, and the acquisition, development, and production of natural gas and crude oil. The Public Education Foundation honored him with its “2010 Education Hero Award” for significant contributions to advancement of quality public education in Southern Nevada (Phyllis, 2010, p. 46).
ANALYSIS MGM in the start was a visionary company guided by a successful businessman as Mr. Kerkorian who strongly believes about the potential development of Hotels ;amp; Casinos. In fact, MGM was the major company who develops and made Las Vegas one of the most touristic city in the world.
Today, MGM Resorts International as one of the world’s leading company in gaming, hospitality and entertainment can count on its history to succeed in the near future. However to reach its goals, I believe that the company need to change the strategy by developing and creating new properties outside Las Vegas and Nevada. In fact, I think that MGM had focused too much this past decade on investing in resorts in Las Vegas by constructing or buying them in the same time and in the same area.
Which I Think wasn’t a great idea because the several resorts are today competing each other and also the hotels and casinos are getting old (except the new ARIA and Vdara, where MGM has just 50%), so they are loosing market share against competitors who have brand new hotels like Wynn/Encore or The Venetian/The Palazzo.
By changing their name to “MGM Resorts International” they are maybe looking to underline the brand’s global scope and amplified the non-gaming strategy, which I think can be successful for them due to their worldwide-recognized name. According to their financial data, I believe that MGM have the financial history and the management structure to achieve their goals. This can be accredited to their CEO James Murren who thanks to his background and experience with financial market, kept the company from failure during the Recessions in 2008 and 2009. Mr.
Murren can also be recognized as a strong leader in job creation and green investment. In fact, the new CityCenter that opened in December 2009 represented the largest green project ever undertaken in the nation’s history and the America’s number one creator of new jobs during the recession.
I believe that James Murren is a great CEO for the company especially in the financial interests.
References Bloomberg Businessweek. MGM Resorts International, Board Members.
Retrieved from http://investing. businessweek. com/research/stocks/people/board. asp? ticker=MGM:US MGM Resorts Foundation. Foundation. Retrieved from http://www.
mgmresortsfoundation. com/pages/voice. asp MGM Resorts International. Mission Statement. Retrieved from http://www.
mgmresorts. com/default. aspx Phyllis, J. (2010). MGM Resorts International. 2010 Annual Diversity & Philanthropy Report.
Retrieved from http://www. mgmresorts. com/company/diversity. aspx Reuters. MGM Resorts International, People.
Retrieved from http://www. reuters. com/finance/stocks/companyOfficers? symbol=MGM The Wall Street Journal. James Murren. Retrieved from http://topics. wsj.
com/person/M/james-murren/1166 U. S. Security and Exchange Commission. MGM Resorts Internatonal 10-K Report. Retrieved fromhttp://www. sec.
gov/Archives/edgar/data/789570/000095012311019786/p18354e10vk. htm#P18354toc University of Nevada Las Vegas, Center for Gaming Research. MGM Resorts International Company Profile. Retrieved from http://gaming. unlv.
edu/abstract/fin_mgm. html APPENDIX A: History of MGM Resorts International APPENDIX B: Financial Data APPENDIX C: James Murren, Chairman & CEO
