Amid the coronavirus pandemic, MGM Resorts International has thought it wise to make adjustments at the highest level of the company as they look forward to a post-covid-19 recovery. The move is in response to the uncertain future faced by casino operators in Nevada as Governor Steve Sisolak is considering additional restrictions to reduce the spread of the virus in the state.
In an internal memo, the president and CEO of MGM, Bill Hornbuckle, announced the reshuffling. Some of the changes that followed the report are;
- Corey Sanders will be returning to the post of Chief Operating Officer (COO). He is currently the Chief Financial Officer (CFO) and will continue to stand in despite his new position until a replacement is found
- Ann Hof, former MGM Chief Marketing Officer, has been tasked to lead the Bellagio and Park MGM properties
- MGM’s president of commercial and growth. Atif Rafiq has been relieved of his duties according to the report
- The former president and Chief Operating Officer of MGM’s Las Vegas portfolio, Anton Nikodemus was also affected in the reshuffling. He is now the president of CityCenter – a 76 acres mixed-use complex located on the Las Vegas Strip
MGM just received new financing with $750 million, which is why we suspect such changes are being made at the management level. It is an indication that the reshuffling is meant to introduce a new era, where profitability is increased, and operating cost reduced drastically. According to a finance professor at Boston College, Rev. Richard McGowan, “MGM just received $750 million in new financing, so the thought is that new management will bring new ideas on how to utilize those funds. Even before the pandemic, MGM was not doing well at all, so in many ways, this is an attempt to save the firm. The new management team also needs to reduce the number of operations and increase the profitability of the remaining casinos. They also need to increase the entertainment portion of their casino operations.”
Lay-offs first happened in May at MGM Resorts International, at the property level. This is the second top-level change in the resorts amidst the covid-19 pandemic.
Six Months Review Period?
A current surge in the number of cases is currently threatening a full recovery of the gaming sector in the state. The coronavirus vaccines could be available nationwide in several months, but until then, casinos might be forced to remain shut if the cases continue to increase.
A directive was given by the Governor, Sisolak, last month for casinos to reduce the capacity from 50 percent to 25 percent, and that was to go on for at least three weeks. The order was given following a spike in covid-19 cases at the time. If the numbers continue to rise, we are sure to see more strict restrictions from the Governor. These restrictions will majorly affect non-essential business, an umbrella which the Nevada casinos fall under. The same was the case earlier in the year that forced Nevada casinos to remain shut for several months.
The resort has announced midweek closure of some of its hotel properties in Las Vegas due to lower demand. MGM employed 70,000 US workers before the pandemic, but in August, 18,000 were furloughed.
254 managers were also let go in 2019, which was well before the pandemic. All of these are conscious efforts by the company to reduce labor costs by all means. The lay-off of the managers in 2019 helped the company reduce labor costs by $100 million.