MGM Resorts International‘s third quarter was “better than expected” if you were J.P. Morgan analyst Joseph Greff and “disappointing” if you are Deutsche Bank‘s Carlo 
Santarelli. It’s a matter of how MGM performed relative to analyst forecasts. While the Las Vegas Strip properties arrived $42 million below Greff’s prediction, including an $18 million miss on table hold, he cited several extenuating circumstances, including construction disruption at Mandalay Bay and Monte Carlo. Santarelli was unforgiving, although MGM only missed his cash-flow projection by $31 million. He wrote, “unfortunately, the goodwill built up in the Strip margin story likely took a hit with this print. While disruptions were present, including construction and table hold, the result … is rather difficult to ignore.”
Santarelli conceded some praise to MGM for a 6% increase in revenue per available room, though he noted some weakness in the lower-end (Excalibur). Noting that many of the disruptions were one-time events, Greff concluded that MGM would have been in line with his estimates otherwise. Casino revenue was down 4%, F&B was up 9% and CityCenter cash flow lagged the pace. (But Mississippi and Detroit properties did as well as expected.)
Santarelli conceded that Strip net-revenue numbers were slightly above his projection, crediting room revenues, and the performances of Mandalay Bay and The Mirage, although the latter was 7% down. In Macao, a 34% increase in mass-market winnings offset a 19% VIP decline. At $214 million, MGM Grand Paradise healthily exceeded an expected $178.5 million. Greff was also pleasantly surprised by the numbers coming out of China, noting that MGM exceeded the Macanese average for mass-market growth.
* Caesars Entertainment was pushed a step closer to bankruptcy when, according to a Bloomberg News source, debtholder Perry Corp. walked out on restructuring 
talks. The sticking point reportedly was Perry’s unwillingness to extend a nondisclosure agreement. Caesars confirmed, without identifying Perry by name, that it had lost a negotiating partner. It downplayed the nature of the information Perry wanted to disclose, calling it “outdated and materially different terms and information than proposals now being considered.”
Five other term-loan holders remain at the bargaining table with Caesars. As Fitch Ratings analyst Alex Bumazhny put it, the event “reconfirms that there are a lot of moving parts and getting a deal done would be a laborious process if at all possible.” On a separate front, second-lien debtholders have filed default notices against Caesars, documents the company says it is reviewing.
* “I have no inside information, but it seems to me they are trying to get out of the deal or get better terms,” said casino consultant Paul Girvan, of the Innovation Group, of the bizarre feud between Gaming & Leisure Properties Inc. and Cannery Casino Resorts. In a sadomasochistic move, Cannery is countersuing to force GLPI “to ensure that the transaction closes by the contractually agreed deadline of Nov. 13, 2015, and that [GLPI] complies with its contractual obligations to use best efforts to receive applicable gaming approvals” to purchase The Meadows Racetrack & Casino.
GLPI contends that The Meadows’ performance has been “strikingly and disproportionately worse” than other casinos in the region. GLPI CEO Peter Carlino may have no one but himself to blame for this mess, having signed a purchase agreement without looking at The Meadows’ actual revenue figures, which would have shown the racino to be on pace to gross $41 million, not the $53 million-$55 million he thought.
Carlino bought a cat in a sack, as the saying goes, and now has no one to blame but himself for the shotgun wedding from which he’s trying to extract himself, to say nothing of a $10 million consulting agreement he’s trying to evade. It would appear that GLPI was in a hurry to cut a deal and stepped into a bear trap. It’s hard to blame The Meadows for concealing information that would have queered the deal. But what are the chances that GLPI will go through with the purchase as agreed to? By trying to force GLPI to the altar, Cannery may come away with a much smaller dowry.
