MGM Resorts and Boyd Gaming owned a 50 percent stake each in Atlantic City’s Borgata Hotel Casino & Spa but now MGM Resorts will become the sole owner after Boyd Gaming decided to sell its share to MGM Resorts.
The Borgata Hotel Casino opened its doors back in 2003 and since then has become Atlantic City’s top performing casino. Even though the city’s casino industry has witnessed a major slump, the Borgata has continued to lead the pack as the casino has successfully managed to increase its non-gaming offerings which have brought in significant revenue for the casino. The Borgata reported net revenue of $812 million and adjusted earnings of $212 million during the first quarter of 2016.
Boyd Gaming sold its 50 percent stake for $900 million, out of which $600 million will be a cash settlement. Atlantic City also owes the casino close to $180 million in back taxes and Boyd Gaming will be eligible to receive 50 percent of this amount whenever the city manages to remits these outstanding funds. As of now as per a court order, the Borgata has stopped paying its property taxes and will resume only when the city is able to settle its debt.
MGM Resorts will now be the sole owner of the Borgata Hotel Casino and its non-gambling Water Club hotel which is located in Atlantic City’s marina district. The acquisition is expected to be completed before the third quarter of this year. Boyd Gaming decided to sell its stake in the Borgata as the company was looking for immediate cash to reduce its debt and improve its balance sheet. This settlement will now enable Boyd Gaming to provide its shareholders with more value.
MGM Resorts International CEO Jim Murren stated that even though the casino industry in Atlantic City has witnessed a major slump, he remains confident about the performance of the Borgata Hotel casino and believes that the new relief package that Governor Chris Christie approved last week would give the casino industry a much needed boost.
In a statement, Murren said “We believe Borgata’s best days are yet to come. When you’ve got a great property that’s carefully cared for in a market as large as Atlantic City, you can and should do well.”
Once MGM Resorts completes its acquisition of Boyd Gaming’s 50 percent share, the property will be acquired by MGM Growth Properties LLC who will then lease the property to a subsidiary of MGM Resorts who will then be responsible for running operations at the Borgata. Boyd Gaming was responsible for running operations at the casino in the past.