Circus Circus does not generate significant revenue for MGM.

Circus CircusCircus Circus

MGM Resorts and Phil Ruffin have finalized a sales agreement for Circus Circus, marking a significant deal worth $825 million.

It is a common misconception that frequently emerges when Circus Circus makes headlines, implying that it was a lucrative venture for MGM Resorts. However, this notion is far from the truth.

Circus Circus ranks at the bottom in terms of operating income among all the MGM Resorts in Las Vegas.

According to SEC filings, Circus Circus reported an operating income of $43,592,000 in fiscal year 2018, which increased to $62,626,000 when factoring in depreciation and amortization expenses.

In terms of operating income, this particular establishment finds itself at the very bottom within the vast network of MGM Resorts Las Vegas, with the exception of Park MGM. It's worth noting that Park MGM's operations were partially closed during the transition from Monte Carlo. It is not surprising to see this ranking, as it aligns with the pattern observed in previous years.

In fiscal year 2018, Circus Circus trailed behind all other MGM Resorts properties, generating at least $38 million less in operating income. Let me give you the rundown, rounded to the nearest million, of the complete list:

  • Bellagio: $405 million
  • MGM Grand: $305 million
  • Mandalay Bay: $174 million
  • New York-New York: A staggering $113 million
  • Mirage: $94 million
  • Excalibur: $91 million
  • Luxor: $81 million

MGM Resorts' ownership of Aria amounts to just 50%. The resort contributed $138 million to the company's operating income, as reported.

All the Las Vegas properties owned by the company had similar performance when EBITDA was used as the measure. The one coming closest to Circus Circus, except for Park MGM, had a $49 million higher performance.

Gold Strike in Tunica, the sole other casino under the ownership of MGM Resorts, experienced a slightly lower cash flow from its operations throughout the entirety of 2018. However, the discrepancy in revenue amounted to a mere $500,000. It is noteworthy that Gold Strike's casino floor is just half the magnitude of Circus Circus.

Gold Strike's property is smaller than Circus Circus, with approximately 2,600 fewer hotel rooms.

Circus Circus boasts a size that rivals other Las Vegas establishments.

Circus Circus boasts an impressive total of 3,764 hotel rooms, whereas Bellagio offers a slightly higher number with 3,933 rooms. It's worth noting that under the MGM Resorts umbrella, the average number of hotel rooms per property stands at 3,880.

Circus Circus boasts a casino floor spanning 95,000 square feet, which deviates slightly from the average size of 111,000 square feet found within the Las Vegas market.

Circus Circus stands out with its 1,221 slot machines, slightly below the market average of 1,230. However, it falls behind with a mere 36 table games, ranking last in this category.

In Las Vegas, the Circus Circus property boasts a sizeable 102-acre parcel, which places it in second position among the company's properties in terms of acreage. The MGM Grand, another prominent establishment, also occupies a sprawling 102 acres of land. Not far behind, Mandalay Bay claims a slightly larger 124-acre parcel for its operations. Interestingly, these three properties showcase the diverse and expansive nature of the Las Vegas hospitality industry, with each venue offering its own unique experiences and attractions within their vast acreage.

In terms of company size, this places it somewhere in the middle. However, its financial performance ranks it at the lowest within the company.

Why MGM Resorts was shopping Circus Circus becomes clear when we consider the return on assets at the property in comparison to other properties in the MGM Resorts portfolio. It is evident that Circus Circus is not a cash cow by any means.

Hopefully, Phil Ruffin has a strategy in place to enhance its future financial performance.