Casino-resort operator MGM Resorts International (MGM - Free Report) recently sealed the joint venture deal with AEG, one of the leading sports and entertainment presenters in the world, to set up a sports arena in Las Vegas. The project is worth about $350 million. Per the deal, which was announced in Mar 2013, a high-end 20,000-seat indoor sports and entertainment facility will be set up at the popular Las Vegas Strip.
Construction work for the arena, which will serve as a venue for boxing matches and other sporting events, entertainment shows and special events, will begin in summer 2014 with its opening slated for spring 2016. The upcoming sports facility will be located between New York-New York and Monte Carlo.
The project will also feature new retail shops, dining and entertainment offerings, especially at the New York-New York and Monte Carlo properties, which should boost guest occupancy at both the resorts.
The latest deal, which is to be financed with equity contributions from each of the partners as well as privately-funded third-party financing, also marks a diversification from MGM’s age-old casino business. Given, its dominant position in arena development and management, AEG also makes a strategically fit partner.
We believe this new venture will further enhance the presence of the MGM brand in the highly competitive Las Vegas Strip. MGM presently boasts nine casino hotels in the Las Vegas Strip namely Bellagio, MGM Grand, Mandalay Bay, The Mirage, Luxor, New York-New York, Excalibur, Monte Carlo and Circus Circus. In fact, MGM’s entry to the world of boxing, sports, concerts and other events will help the entire Las Vegas market garner considerable footfall and revenues.
MGM Resorts currently retains a Zacks Rank #2 (Buy). Other players in the casino gaming industry, which look attractive at current levels include Boyd Gaming Corp. (BYD - Free Report) , Monarch Casino & Resort Inc. (MCRI - Free Report) and Las Vegas Sands Corp. (LVS - Free Report) , all carrying a Zacks Rank #2.