Robin Leach from the Las Vegas Review-Journal stepped out from his celebrity insider role last week when he mused about MGM Resorts International buying The Cosmopolitan. Leach reports that “MGM officials were recently spotted on a lengthy tour of the garage parking facilities“ at the Cosmopolitan.
Blackstone Real Estate Group Purchases The Cosmopolitan
Rumors about the Cosmopolitan being sold have been around since the day the current owners, Blackstone Real Estate Group, purchased the Cosmopolitan from Deutsche Bank for $1.7 billion in 2014. The real estate investment company has never hidden the fact that they would eventually sell the Cosmopolitan.
Shortly after the purchase, Blackstone Real Estate Group Senior Managing Director Tyler Henritze said: “As a significant investor in the hospitality sector, Blackstone recognizes the value and potential in The Cosmopolitan as well as Las Vegas itself.”
In 2014, Union Gaming Group analyst Robert Shore told the Las Vegas Review-Journal that “A potential operator that has a large player database, experience with high-end Asian play, and managing high-end properties would be immediately accretive to the property’s performance.” MGM Resorts International would certainly fit that bill.
The Cosmopolitan Is Finally Profitable
Since purchasing the Cosmopolitan, Blackstone has made a wide range of improvements to the property. The hotel, casino, restaurants, and entertainment have all seen a change. Updates to the property by Blackstone were barely underway when the Cosmopolitan finally reported its first profitable quarter in August 2015.
This was a long time coming. The Cosmopolitan waited five years after opening to finally show a profit. This was barely over a year after the announcement that Blackstone was purchasing the distressed casino. Blackstone proved that there was revenue to be generated by the existing customer base. They’ve only helped expand that customer based on changes that have made the Cosmopolitan more friendly to mainstream customers.
Two Employees Exit The Cosmopolitan
Adding fuel to the fire of the rumored sale is the exit of two well-respected employees from the public relations department. On March 30, Amy Rossetti and Renata Follmann announced that they were no longer working with the Cosmopolitan. They started their own independent public relations agency.
If MGM Resorts International were to take over operations of the Cosmopolitan they would surely migrate public relations into their own system. Perhaps this is a sign of a pending purchase by another company or perhaps the timing was just a coincidence.
Cosmopolitan Parking Fees Being This Week With Interesting Notice
This week the Cosmopolitan will begin charging for parking. Valet parking fees begin April 18 and self-parking fees will begin May 16. You can see prices and details at cosmopolitanlasvegas.com.
The parking web page makes a special note that parking fees may be higher during special events. The largest special events on the Vegas Strip right now are happening at T-Mobile Arena which holds 20,000 people. Coincidentally, MGM Resorts International owns 50% of T-Mobile Arena.
Perhaps the Cosmopolitan wants to charge a few thousand people more to park for concerts at the Chelsea theater. Maybe this notice is forward thinking by the Cosmopolitan to head off a problem of non-customers taking parking spaces away from their customers. After all, the Vegas Golden Knights begin to play later this year.
This could just be a preview for another parking fee increase by MGM Resorts International and the Cosmopolitan is just being proactive.
More Easy Segues For The Cosmopolitan
The Cosmopolitan is the only luxury casino on the Vegas Strip with a complimentary drink ticketing system at their bars. While the system might have to be tweaked, it wouldn’t take much work for it to sync with the system that MGM Resorts International is using at some of their bars with video poker.
Another easy changeover would be to the gaming at Cosmopolitan. Blackjack, craps, and roulette wouldn’t have to change their rules much if at all, to match what MGM Resorts International currently offers at their Las Vegas casinos. Supposedly their deal with sports book operator CG Technology expires at the end of the year. MGM Resorts International could seamlessly pick up operations.
Lastly, purchasing the Cosmopolitan would fill the casino gap for MGM Resorts International between Aria and Bellagio. This could also pose a monopolistic problem. The purchase would give MGM Resort International ownership of every casino the west side of Las Vegas Blvd. from Mandalay Bay to Bellagio.
Not So Fast
There are a lot of reasons why MGM Resorts International purchasing the Cosmopolitan makes sense. Two things might stand in the way of this purchase happening.
First, the Cosmopolitan cost Blackstone $1.7 billion and they’ve could have made $200 million in upgrades. The sales price could be over $2 billion. That’s a lot of money and MGM Resorts International has a lot on their plate.
The casino operator just opened MGM National Harbor in Maryland. They have taken over operations of Borgata in Atlantic City. MGM Resorts is finishing construction on MGM Springfield in Massachusetts (opening in 2018). Finally, they’re rumored to be purchasing Sands Bethlehem.
Second, the Federal Trade Commission might have something to say about this purchase. This might be a case of one company operating too many businesses in such a close proximity. The Cosmopolitan would give MGM Resorts International 10 casinos on the Vegas Strip. That’s nearly one-third of the casinos on the Vegas Strip.
You can visit playnj.com to see how this purchase might affect MGM Resorts International taking over operations at Borgata.
