MGM Resorts International selling Mirage operations for over $1B

Hard Rock will pay $1.075 billion in cash to acquire the operations of The Mirage in a deal that is expected to close in the second half of 2022, pending regulatory approvals and closing conditions.

The deal kicks off a rebranding for the resort — which first opened its doors in 1989 — as well as a change in the Las Vegas skyline.

As the new operators, Hard Rock announced plans to build a guitar-shaped hotel on the 77-acre property and rename it Hard Rock Las Vegas, bringing the company’s signature hotel style to the Strip. A rendering of the property by Hard Rock also shows the resort with a new blue-and-white motif and “The Mirage” name at the top of the resort replaced with “Hard Rock.”

MGM Resorts said it will retain The Mirage name and brand, and will license it to Hard Rock for up to three years while it finalizes its plans to rebrand the property.

“The Mirage is the casino, more than any other one, that’s inspired what Las Vegas is right now. The fact that that brand is going away means quite a bit,” said David Schwartz, UNLV ombudsman and gaming historian.

“The Mirage really is the model for pretty much everything that’s been built in Las Vegas since 1989,” Schwartz said, noting that it combined the theme elements of Caesars Palace with the large resort aspects of The International, now The Westgate. “It really did move the city and its resorts ahead.”

Jim Allen, chairman of Hard Rock International, said the company is “honored to welcome The Mirage’s 3,500 team members to the Hard Rock family.”

Hard Rock, which is owned by the Seminole Tribe of Florida, said it will enter into a long-term lease agreement with VICI Properties, who announced a $17.2 billion deal in August to purchase The Mirage’s real estate from MGM Growth Properties. The purchase is expected to close in the first half of 2022.

“This transaction is a significant milestone for MGM Resorts, and for Las Vegas,” MGM President and CEO Bill Hornbuckle said in a statement Monday. “As part of the team that opened The Mirage in 1989, I know firsthand how special it is, and what a great opportunity it presents to the Hard Rock team. I want to thank all of our Mirage employees who have consistently delivered world-class gaming and entertainment experiences to our guests for more than three decades.”

History

Originally developed by Steve Wynn on the former Castaways site, The Mirage opened its doors in November 1989. It helped change the face of Las Vegas by bringing in a new era dominated by integrated megaresorts that went far beyond the casino floor — helping cement a blueprint that every other company would soon follow.

MGM later acquired the resort in May 2000 when it bought Wynn’s Mirage Resorts for $4.4 billion.

Even though the resort was built using so-called junk bonds, the resort paid them off faster than most and replaced them with low-interest, mainstream loans. That helped bring in billions of new investments to Las Vegas, helping build the city into what much of what it is today.

The resort quickly established itself as one of the premier entertainment destinations thanks to offerings such as the illusions and white tiger-taming acts of Siegfried and Roy, a controversial dolphin habitat and an eye-catching volcano show on Las Vegas Boulevard.

Schwartz said that with The Mirage, Wynn showed three significant things that shaped modern-day Las Vegas: a resort of its size, with 29 stories and more than 3,000 rooms, could be built all at once — something never previously done in Las Vegas; how you could pay for it and sell Wall Street on it; and that it’s something tourists wanted.

“It proved that people would visit it, and there was a market for that kind of resort, which there hadn’t been like that in Las Vegas before because people hadn’t seen anything like that before,” Schwartz said.

Lead up to a deal

The announcement comes a little over a month after Hornbuckle told investors MGM was looking to sell the resort as part of a strategic decision that came down to capital allocation and wanting to diversify the company’s holdings, which made The Mirage “the obvious choice” to sell, he said.

MGM operates nine other resorts on the Strip and will soon add The Cosmopolitan into its portfolio, after agreeing in October to pay $1.6 billion for the resort’s operations.

“We have enough of Las Vegas,” he told investors during the November call.

For Hard Rock, the company has been anything but shy in sharing its desire to acquire a Strip property.

Allen told Bloomberg in 2019 that Hard Rock was looking to buy a property along the iconic corridor. The company also purchased the licensing and naming rights for Hard Rock Hotel & Casino Las Vegas in May 2020. And at this year’s Global Gaming Expo in October, Allen told reporters they were still waiting for the right opportunity.

“We recognize that Las Vegas is the capital of gaming in the United States,” he said. “If that opportunity comes up, then yes, we would be interested.”

Through Hard Rock, the Seminole Tribe will become the third tribal enterprise to enter Las Vegas’ gaming world but the first on the Strip.

The San Manuel Band of Mission Indians could receive final approval from gaming regulators this week in the tribe’s move to acquire The Palms. And Mohegan Gaming &Entertainment, operated by Connecticut’s Mohegan Tribal Gaming Authority, runs the casino at Virgin Hotels Las Vegas.

Alan Feldman, a distinguished fellow at UNLV’s International Gaming Institute, said that he expects there will be more tribal ownership as part of a larger diversification of the owners and operators along the Strip.

“That’s because gambling is growing across the country. It continues to be accepted on a wider and wider basis,” he said.

Feldman, a former MGM executive who moved to Las Vegas to help open the Mirage as a public affairs adviser, said it will be sad to see The Mirage brand go away.

“But let’s not kid ourselves. The Hard Rock is a major international brand,” Feldman said. “And the visual impact of one of the guitar hotels is a very significant additional to the Las Vegas skyline.”

Contact Colton Lochhead at clochhead@reviewjournal.com. Follow @ColtonLochhead on Twitter.