Hard Rock to buy The Mirage for more than $1 billion

Development plans will ‘completely gut’ The Mirage

A rendering shows Hard Rock’s plans for a guitar-shaped hotel tower, which would be located on the Las Vegas Strip as part of The Mirage. The Florida-based Seminole Indian Tribe owns Hard Rock, which is paying $1.075 billion for the Strip resort.

A rendering shows Hard Rock’s plans for a guitar-shaped hotel tower, which would be located on the Las Vegas Strip as part of The Mirage. The Florida-based Seminole Indian Tribe owns Hard Rock, which is paying $1.075 billion for the Strip resort. Courtesy: Hard Rock International

Howard Stutz | The Nevada Independent

Friday, December 17, 2021

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EDITOR’S NOTE: This story was first published Dec. 15 by The Nevada Independent as part of the Indy Gaming newsletter and is republished here with permission. It follows The Indy’s initial report from Dec. 13 on the pending $1.075 billion transaction.


In October, Hard Rock Entertainment CEO Jim Allen shared the stage at the Global Gaming Expo in Las Vegas with MGM Resorts International CEO Bill Hornbuckle and Wynn Resorts CEO Matt Maddox during a keynote roundtable discussion about the industry.

Off stage, Allen and Hornbuckle were quietly discussing a potential sale of The Mirage.

“Frankly, we’ve been having conversations about it for quite some time. They even go back to [former MGM CEO Jim Murren],” Allen told The Nevada Independent Tuesday morning, a little more than 12 hours after Hard Rock announced it was acquiring the operations of The Mirage for $1.075 billion. MGM Resorts said on Nov. 3 it wanted to sell the iconic Strip property.

“Certainly, we needed to wait until MGM started their official process, but we had identified [The Mirage] as a premier location,” Allen said. “We were very enthusiastic to have the opportunity to participate in the [request for proposal] process and it was certainly better news when we went under exclusivity.”

Allen, who is also chairman of Seminole Gaming, the business arm of Florida’s Seminole Indian Tribe that owns Hard Rock, called The Mirage and its 77-acre site “the 50-yard line” of the Las Vegas Strip and the perfect location for the company’s signature hotel tower, which resembles the body of an electric guitar.

The Seminoles will become the third tribal gaming operator to land in Las Vegas in less than a year, following Connecticut’s Mohegan Gaming taking over the casino at Virgin Hotels Las Vegas and Southern California’s San Manuel Band of Mission Indians in the process of buying the Palms Casino Resort. But this will be the first tribe-run gaming location directly on the Strip.

“The beautiful thing about Native American capital is that it is generational and Hard Rock will be able to do this right without concern for short-term return on investment hurdles, which is a positive for all of Las Vegas,” CBRE gaming analyst John DeCree told investors in a research note Tuesday.

Allen, who has spent 20 years directing the gaming, hospitality and entertainment operations for the Seminoles, called the deal “a great opportunity for us.” He noted gaming revenue throughout the U.S. is “basically a 50-50 split” between commercial casinos and tribal operators.

In calendar year 2019, commercial casinos produced more than $43.6 billion in gaming revenues, according to the American Gaming Association. Tribal casinos that same year produced $34.6 billion in gaming revenues, according to the National Indian Gaming Commission.

“If you back out the racetrack pari-mutuels, there are some studies that say there is slightly more business in tribal casinos,” Allen said. “The experience in tribal gaming now is identical to commercial and I think some people would argue that in many locations, even more than one step above.”

Location ‘is a gift’

During the 15-minute conversation, Allen didn’t share many additional details beyond Monday’s announcement. He said the company is still determining how many rooms the Guitar Hotel tower will include. The first Guitar Hotel opened in 2019 at the Hard Rock Hollywood near Fort Lauderdale, Florida. It has 683 rooms and cost more than $1.15 billion to construct.

Allen said timing will determine whether Las Vegas’ Guitar Hotel expansion will be the company’s second venture. Another four Guitar Hotel concepts are in the planning stages at other Hard Rock locations outside the U.S.

“It really is a gift,” Allen said of The Mirage’s Strip real estate. “It's obviously where the little curve [in the Strip] is located, and it fits in nicely in that location.”

Real estate investment trust VICI Properties, which is acquiring The Mirage site and will be Hard Rock’s landlord, said it would fund up to $1.5 billion of the renovations.

Allen said the entire footprint of The Mirage, which was opened by Steve Wynn in 1989, would be renovated. The Mirage name will eventually be removed with the property rebranded as Hard Rock Las Vegas.

“MGM has just really kept it in great condition, but certainly I think we all know that it's extremely dated,” Allen said. “You will see concrete on the floor and concrete on the roof and everything else will be brand new. Frankly, some of the structure will change. For the existing 3,000 rooms, it's our plan to gut them completely, bathrooms and everything, and start over.”

Allen said no decision has been made concerning several non-gaming attractions, including Siegfried & Roy's Secret Garden, which houses some of the lions and tigers raised by the late Strip entertainment icons, and The Mirage’s Dolphin Habitat, which serves as a scientific research, education and conservation outreach program.

“As far as the dolphins and the tigers, that's part of the agreement between MGM and ourselves that we have no comment on this time,” Allen said. “Certainly, we want to protect them and make sure that their lives as animals are as comfortable as they are today.”

Still unclear, however, was the fate of The Mirage’s Strip-front 90-foot volcano, which appears to sit directly on the footprint of the future Guitar Hotel.

The transaction is not expected to close until the second half of 2022 and Nevada gaming regulators will need to sign off on the deal and license Seminole Gaming.

MGM meets strategic objectives

MGM Resorts said in a statement that it would retain The Mirage name to potentially be used in future projects.

“I’m obviously saddened that The Mirage brand will be leaving the Strip for now,” said former MGM Resorts spokesman Alan Feldman, who came to Las Vegas in 1989 as an outside public relations consultant to assist in the property’s opening.

“It’s also good to know that MGM is retaining the Mirage brand and that it may someday return to Las Vegas or another market someplace in the U.S. or around the world,” Feldman said.

The investment community focused on what the transaction means for MGM Resorts. The company spent the past couple of years remaking its balance sheet and its company structure, selling its entire Strip portfolio to several REITs and leasing back the operations. In addition, MGM Resorts is acquiring the operations on the Cosmopolitan Las Vegas as part of a $5.68 billion sale that was announced in September and is awaiting Nevada regulatory approval.

The company’s focus is now south of Flamingo Road down to Russell Road where its 10 developments are located.
Macquarie Securities gaming analyst Chad Beynon said in a research note MGM Resorts will have $11 billion in cash after its recent deals and once the sale of MGM Growth Properties and The Mirage are finalized.

“MGM has now announced all its strategic actions it talked about doing in the last several years,” Beynon said. “We commend MGM’s recent progress towards better aligning the business with its long-term vision and they walk away with a clean reporting structure and healthy balance sheet.”

MGM Resorts Chairman Paul Salem said in a statement the transactions “position the company with a fortress balance sheet, premier portfolio, and significant financial resources to pursue our strategic objectives."
Meanwhile, analysts said other gaming operators along the Strip were evaluating The Mirage sale with great interest.

Jefferies gaming analyst David Katz said Caesars Entertainment “should see strong demand” from the company’s previously announced plans to sell one of its Strip resorts next year.

“We expect there could be further redevelopment activities around the older, mid-market properties across the Strip, some owned by MGM Resorts and other disparate owners,” Katz wrote in a research note.

Howard Stutz is a reporter for The Nevada Independent, a 501(c)3 nonprofit news organization. The following people or entities mentioned in this article are financial supporters of The Indy: MGM Resorts International - $957,500; Wynn Resorts - $175,000. Caesars Entertainment - $155,200; David Katz. This story was first published Dec. 13 by The Nevada Independent and is republished here with permission. Go to nvindy.com for more Nevada news. 

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