MGM Buying Empire City Casino for $850 Million

MGM Resorts, owner of the MGM Grand casino in Las Vegas and 28 casinos around the country, has agreed to purchase the Empire City Casino in Yonkers and racetrack for $850 million.

MGM Resorts is purchasing the facility with its real estate investment trust MGM Growth Properties (MGP).  MGM Resorts and MGP have entered into an agreement whereby MGP will acquire the developed real property associated with Empire City from MGM Resorts and lease it back to a subsidiary of MGM Resorts, after which a subsidiary of MGM Resorts will operate the property.

Empire City sits on a 97-acre property and serves a potential 16 million gaming customers in southern New York. It is located 15 miles from Times Square in Manhattan. Offering gaming, racing, dining, and entertainment, Empire City features over 5,200 of the latest slots and electronic table games, multiple dining outlets, and both live and simulcast horse racing.

“Our vision for this property has always been to develop it into one of the world’s greatest entertainment destinations,” said Tim Rooney, Sr. President and CEO of Empire City. “We have been a partner of New York State and its communities for forty-six years, and it was important to us that we identify an entity that could build on the strong foundation we have established and bring our vision to fruition. We are confident we have found that in MGM Resorts, one of the premier gaming entities in the world.”

The Rooney family, which has owned Empire City Casino and Yonkers Raceway for nearly five decades, has developed the property into one of the most successful gaming operations in the country. Empire City boasts the sixth largest gaming floor in the country, welcomes nearly eight million visitors annually, and is supported by over 1,200 employees representing 13 unions.

“We are excited to announce the addition of Empire City to the MGM Resorts portfolio,” said Jim Murren, Chairman and CEO of MGM Resorts International. “This acquisition represents an excellent opportunity to further solidify our presence on the East Coast, and in particular, expand our reach into the high-density New York City region. We believe this transaction enhances our free cash flow profile and presents attractive future opportunities for the Company, and we look forward to welcoming the Empire City team and guests to the MGM Resorts family.”

MGM Resorts will pay total consideration of approximately $850 million, subject to customary working capital and other adjustments, including the refinancing of Empire City’s outstanding debt, which is expected to be approximately $245 million at the time of closing. MGM Resorts expects that approximately $260 million of the remaining consideration will be in the form of MGM Resorts common stock. Furthermore, MGM Resorts has agreed to pay additional consideration of $50 million if Empire City is awarded a license for live table games on or prior to December 31, 2022 and MGM Resorts accepts such license by December 31, 2024.

“With Empire City’s approximately 40 percent share of gross gaming revenues in the market, we believe there are significant opportunities for MGM Resorts to further drive growth,” said Dan D’Arrigo, Executive Vice President and Chief Financial Officer of MGM Resorts International. “We believe the transaction will be value-accretive within its first year of closing, with incremental revenue synergies expected to support growth in 2020 and beyond.”

For the last twelve months ended March 31, 2018, Empire City reported approximately $230 million in net revenues and approximately $70 million in Adjusted EBITDA.

The deal gives MGM Resorts a presence in the New York metro area. The company also owns the Borgata in Atlantic City and MGM National Harbor near Washington DC. It is also building a casino in Springfield, MA that will open later this summer. MGM Resorts is best known for the MGM Grand, Bellagio, Mandalay Bay, Mirage and Luxor hotels in Las Vegas.