MGM China Signs a New Agreement with MGM Resorts International

MGM China has signed a new agreement with its majority shareholder, MGM Resorts International, under which the latter will be tasked with helping source more international customers for its Macau properties.

Under the new International Marketing Agreement, which replaces the previously signed Sixth Renewed MGM Marketing Agreement, MGM Resorts will establish a number of new global marketing offices – the costs of which will initially be borne by MGM China – aimed at further diversifying the company’s Macau customer base.

The offices as a whole, including those already in operation, will be overseen by a Special Manager, named as MGM Resorts’ current President Far East Marketing, Sean Lanni.

In a Friday filing, MGM China said the new agreement with its parent company is specifically designed to address the Macau government’s directive to diversify the Macau economy and reduce its reliance on customers from mainland China, Hong Kong and Taiwan.

“For the purpose of fulfilling its obligations under the New Concession Contract, and pursuant to the commitment by [MGM China] to the Macau Government to expand overseas markets and to increase the growth of non-gaming revenue, [MGM China] desires to utilize the know-how and international resources and reputation of MGM Resorts International and its designated affiliates to conduct marketing activities via [its] existing and future Marketing Offices that will result in additional international customers visiting the Macau Properties for non-gaming attractions and also casino gaming,” it said.

“The changes brought by the International Marketing Agreement include putting in place Macau leadership, a Macau based sales and service support team, as well as new sales incentive plans and more aggressive targets.

“In summary, the benefits of entering into the International Marketing Agreement include providing [MGM China] (i) the ability to quickly bring on new hires in overseas markets to grow sales resources by making use of existing marketing offices, processes and set up; (ii) a more cost-effective way to establish an international sales network than building marketing network independently; (iii) with greater influence over the day-to-day operations of the Marketing Offices in order to drive a greater volume of business overall to both [MGM China] and [MGM Resorts]; and (iv) ultimately, the resources to reach its KPIs arising from the New Concession Contract.”

Under the terms of the initial three-year agreement, MGM China will pay expenses to MGM Resorts up to a capped maximum of HK$64 million in 2023, rising to HK$82 million in 2024 and HK$113 million in 2025.