MGM launches efficiency drive to achieve 2020 vision

4 January 2019

Las Vegas-headquartered casino operator MGM Resorts International has announced a major restructuring programme as it looks to increase earnings by $300m (£236.7m/€263m) by 2021.

The MGM 2020 plan will see the operator look to centralise a number of business functions to maximise profitability, and invest in technology to drive revenue growth.

By doing so, MGM aims to increase earnings before interest, tax, deprecation and amortisation by $200m by the end of 2020, then by an additional $100m by the end of 2021.

The operator explained that it had centralised company-wide functions and focused on developing operational expertise to ensure its business units followed best practice guidelines over the past two years.

Going forward, it will look to build on these initiatives to boost profitability. It said around half the $200m in additional adjusted EBITDA will be generated through layoffs, with a further 25% coming from shifting certain functions to other parts of the business, and the final 25% from revenue optimisation.

"Today, we are taking the next step in our evolution as an organisation,” chairman and chief executive Jim Murren explained. “We are building on the strong foundation that we have solidified over the past few years, to deepen our efficiencies and achieve sustained growth and margin enhancement,”

"MGM 2020 is intended to further transform the way we operate and leverage the most effective operational architecture for our company.”

Murren explained that 2020 vision was an extension of its Profit Growth Plan, launched in August 2015. The business had already exceeded the initial targets set out in the plan, he added.

The operational efficiencies set out in the 2020 plan would be complemented by investment in technology, with MGM to reallocate a portion of its annual capital expenditure budget to a number of technology projects in the coming years. This will see the operator invest in data, pricing, digital and loyalty programme enhancements, through which it aims to achieve the additional $100m in adjusted EBITDA growth by the end of its 2021 financial year.

“We had a solid finish to the year in 2018, and as we look to 2019 and beyond, we remain confident in the ramp of our newly opened properties MGM COTAI, MGM Springfield, Park MGM and NoMad Las Vegas,” Murren said.

“We will enter two attractive markets in New York and Ohio. We will continue to work toward cementing MGM Resorts as the leader in sports, following the milestones achieved in 2018 with GVC and the professional sports leagues,” he continued. “We remain focused on pursuing an integrated resort opportunity in Japan. MGM 2020 reinforces our commitment to increasing margins and maximising profitability."