ATLANTIC CITY — The pending sale of Boyd Gaming’s 50 percent stake in Borgata Hotel Casino & Spa to MGM for $900 million is a sign that companies are still interested in the resort despite its recent struggles, a casino analyst says.

The deal shows that large gaming companies, such as Las Vegas-based MGM, are excited about the city’s future, said Michael J. Pollock, managing director of casino-research firm Spectrum Gaming Group. In early June, Boyd announced it would sell its 50 percent stake in Borgata to the casino giant.

“It’s a vote of confidence to have an entity like MGM make a deal like this,” Pollock said. “A deal like this might prompt others to take a look at the city. I think that MGM sees the future of Atlantic City as an East Coast entertainment destination.”

Purchasing the remaining 50 percent of Borgata was a key part of the company’s business plan, said John McManus, executive vice president and general counsel for MGM Resorts International. When the sale is finalized, Borgata will become the company’s 11th asset, McManus said.

“MGM wants to be part of the solution, and we recognize that Atlantic City has had its challenges with threats from other markets and the economy,” McManus said. “We think that Atlantic City is headed in the right direction. I think there are a lot of efforts underway to diversify the offerings of the city. We are very supportive of that.”

The deal reflects the business value of the casino and not just the value of the property. Still, a tax court judge slashed Borgata’s assessment from $2.2 billion to $880 million in 2013 when he ruled the assessments failed to reflect the contraction of the Atlantic City gambling market. Borgata is currently billed $29 million per year for property taxes based on its assessed value and will likely be locked in at a similar amount.

The company is looking at different projects for the land surrounding Borgata, McManus said.

“In Las Vegas, we have not been building hotel/casinos but rather entertainment venues,” McManus said. “Those are the things that we are looking at. I don’t want to lead anyone on that we are going to build another casino.”

As part of the deal, MGM will gain access to Boyd’s gaming customer data base. MGM will integrate its immense customer-loyalty program, M life Rewards, with Borgata and will oversee daily operations of the property after the sale is finalized, MGM Resorts International CEO Jim Murren said in a statement after the sale was announced.

Last week, the state Casino Control Commission signed off on several leasing issues associated with the purchase.

“MGM is committed to maintaining Borgata’s brand of excellence, and I will hold its leadership to its commitment to continued capital improvements of the property, to New Jersey in general and to the Atlantic City gaming market in particular,” said Matthew B. Levinson, chairman and CEO of the Casino Control Commission.

The acquisition of Borgata adds to MGM’s growing Northeast portfolio. The company is set to open MGM National Harbor in Maryland later this year, while MGM Springfield in Massachusetts is scheduled to open in 2018. The MGM corporate family controls Bellagio, MGM Grand, Mandalay Bay and The Mirage in Las Vegas and MGM Macau in China.

“We have various properties coming online in the next couple of years in the mid-Atlantic to Northeast region,” McManus said. “We have properties in Mississippi and Michigan, and tying them all together will provide a value proposition for the customers of Borgata and other MGM Properties.”

Contact: 609-272-7046

Twitter @ACPressHuba

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.

PLEASE BE ADVISED: Soon we will no longer integrate with Facebook for story comments. The commenting option is not going away, however, readers will need to register for a FREE site account to continue sharing their thoughts and feedback on stories. If you already have an account (i.e. current subscribers, posting in obituary guestbooks, for submitting community events), you may use that login, otherwise, you will be prompted to create a new account.

Load comments