MGM and Boyd are currently 50/50 owners of the Borgata. Under the agreement, MGM will become the owners of the whole kit and caboodle for the substantial price of $900 million.
Vote of confidence in New Jersey
The deal is a massive vote of confidence in New Jersey. MGM is making a big bet that the Borgata will not only remain the top attraction in Atlantic City, but that it will be able to grow in a difficult environment.
All New Jersey residents know that their taxes are among the highest in the U.S. Atlantic City is in dire financial straits, and Governor Chris Christie has just signed a bill to increase casino taxes.
Over the next nine years, AC’s casinos will have to pay extra taxes of $120 million a year, increasing by 2 percent every year.
“For Atlantic City officials, the final countdown starts today,” said Christie. “They know that if they fail to change their tendencies of wasteful spending and mismanagement, my administration will be empowered to immediately step in and do the job for them.”
MGM expects the Borgata to grow
MGM has brushed off these fiscal problems and voted with its pocketbook in favor of a bright future for the Borgata and Atlantic City.
“Borgata is the premier resort in Atlantic City and a great addition to our growing presence in the Northeast,” said Jim Murren, chairman and CEO of MGM Resorts International. “While the market continues to experience challenges, Borgata has outperformed and differentiated itself as the undisputed leader in the city.”
The deal is not expected to be completed until this fall, but when it does, Borgata customers can expect to see some immediate changes.
Murren said the first extra benefit would be membership of MGM’s valuable rewards program.
“We are excited about the opportunity to bring our market-leading loyalty program, M life Rewards, to the resort and integrate our operations, to position Borgata for further growth.”
MGM’s loyalty program extends across all its casinos, including the Bellagio, MGM Grand, Mandalay Bay and the Mirage. MGM is also developing new casinos, the MGM National Harbor in Maryland and MGM Springfield in Massachusetts.
Competition from New York and North Jersey is no deterrent
“Our findings are quite clear. Three to five casinos will close. The fallout of those three to five casinos will be, potentially, 23,000 job losses,” Giannantonio said. “Foreclosures will double, unemployment will double. I can go on with many, many more metrics.”
MGM’s investment shows that it takes a different view of the commercial prospects for the Borgata, which has also been a leader among legal NJ online gambling sites.
Expect a strong marketing push with plenty of freebies on offer when the deal closes later this year.
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