MGM Resorts International (MGM - Free Report) recently inked an agreement with AEG - one of the leading sports and entertainment presenters in the world - to set up a high-end 20,000-seat indoor sports and entertainment facility at the popular Las Vegas Strip. The new arena would serve as a venue for boxing matches and other sporting events, entertainment shows and other special events.
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. The upcoming sports facility will be located between New York-New York and Monte Carlo.
We believe this new venture will further enhance the MGM brand in the highly competitive Las Vegas Strip. 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.
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.
MGM Resorts currently retains a Zacks Rank #3 (Hold). Other players in the casino gaming industry, which look attractive at current levels include Boyd Gaming Corp. (BYD - Free Report) , International Game Technology (IGT - Free Report) and Melco Crown Entertainment Limited , all carrying a Zacks Rank #2 (Buy).