[Disclosure: I own MGM MIRAGE stock.]
This afternoon we got word that the FTC unanimously approved the merger between Strip heavyweights MGM MIRAGE and Mandalay. More info from the LV Sun: here.
How do I feel about it? Unlike many other Las Vegas visitors, I welcome the merger.
When MGM Grand bought Mirage Resorts I was a bit sad, mostly because the four Las Vegas Mirage properties really had a special feel to them and Wynn is clearly a top notch operator. Looking back on it now, the Mirage properties have changed. Some of the changes are good (Bellagio Spa Tower) and some are a bit scary (Treasure Island). Word is more changes are coming, specifically for The Mirage.
I see this one differently. MGM MIRAGE and Mandalay are both companies that are exceptionally well run. I see a lot of opportunity to get a lot of out the relationship that will be created between say, The Mirage and Mandalay Bay. Getting comp credits for my stay and play at The Mirage to head to Mandalay restaurants sounds good.
Am I worried about decreased competition? Not really. There will always be independent operators like Wynn and Adelson (Venetian) to offer a balance. I don't play at the low end of the market so I am less worried about the 'little guy' player. I see a real benefit for the mid-level and high end player here. I like the additional choices this merger will bring me as a customer.
As a shareholder I love it. Mandalay has been making more money in the last year than they ever have before. It's almost amazing. The combined company will have a hell of a lot of debt but also a lot of cash flow...
The most important aspect of the deal? Real estate. By buying Mandalay they get access to some of the best development and redevelopment sites left on the Strip. Between empty lots near Mandalay Bay, across from Luxor, behind NYNY and the concept of redeveloping Excalibur and/or Circus Circus in the next 10 years, they are setting themselves up to succeed financially.
So, the last thing they have to do is get clearance from the Nevada gaming authorities, the Nevada Gaming Commission and Nevada State Gaming Control Board. I can't see regulators standing in their way, this is great for the State.
Oh, and they have to sign the check.