In what the company is somewhat rhetorically labelling a “growth program” MGM Resorts International plans to cut its U.S. staff to save US$100 million by 2020. The savings potentially imply 2,000 job cuts with most of the layoffs expected to be managers or higher, although the company said some union jobs could be eliminated.
In a statement, MGM released last week the company said the layoffs are part of a program to boost operating cash flow. The group anticipates an adjusted annual increase in EBITDA of US$300m, consisting of US$200m by the end of 2020 and another $100m by the end of the following year.
The company also plan to centralise operations and invest in technology and have called the program MGM 2020, an initiative that it says will “leverage a more centralised organisation to maximise profitability through key investments in technology.”
Back in May MGM Resorts said it planned to boost operating cash as much as 39 per cent to US$3.9 billion by 2020, in part through cost-cutting and investments in digital technology. Last weeks’ announcement laid out how the company plans to get there.
MGM Resorts operate 18 casinos in the U.S., (or will do by the end of this month) with the majority on the Las Vegas Strip, making centralisation a logical move. Caesars Entertainment Corp., the largest U.S. casino operator by properties, is more centralised than MGM.
MGM Resorts is coming to the end of an aggressive investment cycle that saw it spend more than US$6 billion to build three casinos and an arena. The company said it expects to reallocate some of its annual capital expenditures to technology.
One area ripe for cost-cutting through the help of technology is promotional expenditures. Casino operators have historically spent a significant portion of their budgets trying to attract players. They still spend a significant amount on direct mail and have had little cross-communication between the casino floor, hotels, restaurants and other amenities. New technology will enable operators to collect more data on consumers and better target promotions, including through mobile apps, potentially cutting costs and improving revenue – an area the Australian market appears to be far more advanced with due to the registered clubs market and their membership-based organisations.
CAESARS NAMED OFFICIAL SPONSOR FOR NFL
In the first-ever national casino sponsorship deal for the USA National Football League, Caesars Entertainment has been named Official Casino Sponsor. The arrangement is timely with the NFL playoffs in full swing in the lead up to the Super Bowl on February 4.
The sponsorship is a multi-year deal in which Caesars will provide unique experiences for NFL fans by using its casino properties. They will range from celebrity chefs to premier music artists and a wide range of other entertainments.
In return, Caesars has the right to use NFL trademarks in the US as well as in the UK to promote its properties and to market its image at major NFL events, including the Super Bowl and the NFL Draft.
Said Mark Frissora, president and CEO of Caesars Entertainment: “Combining the league’s 180 million fans with our 55 million Total Rewards loyalty programme members will expose millions of people to the exclusive and year-round opportunities at our properties.”
Caesars has nearly 40 properties in 13 states under the Caesars, Harrah’s, Horseshoe and Bally’s brands. Seven NFL teams – Atlanta Falcons, Baltimore Ravens, Chicago Bears, Indianapolis Colts, New Orleans Saints, Oakland Raiders and Philadelphia Eagles – already have marketing “relationships” with Caesars properties.
Those partnerships, along with the new league deal, are for the casino category only and do not include sports betting, daily fantasy or hotels/resorts.
Sources: Las Vegas Review-Journal, Intergame, CDC Gaming Report