Big news out of Nevada: In a seismic shift on the middle of the Vegas Strip, MGM Resorts sold the Mirage Hotel and Casino to Hard Rock International for $1.075 billion.
Hard Rock is owned by the Seminole Tribe of Florida, making them the first tribal operator to have a casino on the Strip.
The world-famous Mirage opened its doors in 1989 and was taken over by MGM in 2000. The company said that it expected to net $815 million from the sale, after taxes and fees. The deal is expected to close in the second half of 2022.
In separate statements announcing the deal, Hard Rock said it planned to build an iconic guitar-shaped building at the Mirage site and released an image (seen above) that showed the current high-rise rebranded as the Hard Rock Las Vegas.
Meanwhile, MGM said it would retain the Mirage name and brand, licensing it to Hard Rock royalty-free for a maximum of three years “while it finalizes its plans to rebrand the property.”
The purchase price is roughly a 17x multiple on 2019 property earnings before interest, taxes, depreciation, and amortization (EBITDA). That figure is way above what many analysts had expected. For context, Las Vegas Sands sold the Venetian earlier this year at a 9.5x multiple EBITDA.
MGM, Hard Rock Excited About Deal
“This transaction is a significant milestone for MGM Resorts, and for Las Vegas,” said MGM Resorts International CEO Bill Hornbuckle. “As part of the team that opened the Mirage in 1989, I know firsthand how special it is, and what a great opportunity it presents to the Hard Rock team.”
Hornbuckle also expressed his gratitude to the staff at the iconic resort. “I want to thank all of our Mirage employees who have consistently delivered world-class gaming and entertainment experiences to our guests for more than three decades.”
Jim Allen, chairman of Hard Rock International, was equally effusive about the deal.
“We are honored to welcome the Mirage’s 3,500 team members to the Hard Rock family,” he said. “When complete, Hard Rock Las Vegas will be a fully integrated resort welcoming meetings, groups, tourists and casino guests from around the world to its nearly 80-acre center-Strip location.”
Hard Rock acquired the naming and licensing rights for Hard Rock Hotel & Casino Las Vegas, as recently as May 2020. The idea was always to open on the Strip when the right property became available.
Enough Property in Vegas
In MGM’s recent Q3 earnings call, Hornbuckle was candid about the decision to sell.
“If you think about our portfolio, there is no better place [than the Mirage] in the context of the history of Las Vegas,” he said. “There are no better bones. It’s at the center of the Strip. But as we look at capital allocation, and we look at the notion of diversification, we have enough of Las Vegas. We think this might be the opportune time to sell an asset in Las Vegas.”
When it came to selecting which asset that would be, Hornbuckle indicated that the choice was pretty straightforward. “[The Mirage] became, for us, the obvious one. As we think about our portfolio, we think about things going forward in capital allocation. Not to discredit what’s been done there — it’s an amazing property.
“I’m excited for somebody to come in and make it their marquee property. I think the right owner could do a lot. But it just fell pretty far down in the spectrum of how much capital we’d allocate to it in any given period of time in the near future. So, we just took a strategic decision to sell it.”
