I think there might be a few more people wandering, and will kick this off. The clock to start.

Afternoon, everyone. Thank you for joining us.

Very happy to have MGM Resorts, an old friend, Jonathan Halkyard, Chief Financial Officer of MGM. Thank you, Jonathan for coming.

Really appreciate your participation.

So maybe I think probably the most topical and recent sort of big event in Vegas, obviously, the first F1 race wrapped up, I guess, right the weekend before Thanksgiving, right? There's a lot of coverage, a lot of hype going into it.

Some people try to talk it down beforehand. Maybe you can just give us your quick two cents on sort of like the success of the race and the impact on the market, and maybe just more generally, sort of how Vegas is changing around the sporting events and the sort of mega visitation events?

Sure. Well, thank you, James, for having me.

Thanks, everybody, for coming this afternoon. First of all, did anybody here at the F1 race in Las Vegas?

We had very high expectations for what this event would be in Las Vegas, in particular, because it was during what is normally one of the slowest, if not the slowest weekends in Las Vegas. And because of our high expectations, we invested pretty heavily into it.

In particular, creating an experience for our casino customers and some retail customers in front of the Bellagio, among other things. Anyway, the race met every one of our expectations.

It was the highest grossing weekend for us in hotel revenue in the company's history. The second highest was CES during in 2019, and so when you think about other events that have happened in Las Vegas over the years, and the scale of our company, that's quite something to have a record weekend on what was otherwise the slowest weekend of the year.

It was -- it met our expectations in terms of casino volume, food and beverage, and most importantly, the guests and our employees, I think, had a very good experience during the long weekend. This was an event that certainly had a lot of friction in the months leading up to it, a lot of construction in Las Vegas.

Some of that will certainly be recurring. A lot of it will not be as dramatic in coming years because over the course of about a year, we -- F1 in the city got the city ready to race for this event.

F1 invested hundreds of millions of dollars of capital in their Paddock facility, and that along with money that we invested to build this hospitality experience I described, we'll reuse that year after year. So I'm very optimistic that this is going to be a fantastic event in the years to come.

And finally, this event as a tempo in the month of November also, we expect it will enable us to post November as the record month in hotel revenue in the history of the company.

More broadly, you've been in Vegas for a long time, I guess, with the stent away. But I mean the market's really transformed when you think about the idea of professional sports when I started covering the industry 20 years ago was sort of like it was not anyone's sort of expectation set how have like whether it's F1 now, the NFL, ML -- both major baseball potentially.

How is that sort of changing the market in Vegas?

Yes. I've been living in Las Vegas on and off, mostly on for about 25 years.

And it's certainly true that Las Vegas has always had a symbiotic relationship with sports, but has never been itself a home of sports, beyond college basketball and a few other things. And I did leave Las Vegas in 2014, and I came back about 2.5, 3 years ago, that is singly the biggest change I've seen in the market is not only the investment, but the embrace of not only the locals, but also the professional sports leagues themselves.

In Las Vegas, of course, we have a championship hockey team, championship women's basketball team. The Raiders who are still searching for their first championship in the market, and then the A's coming, you have the F1, which we talked about.

In our particular campus at MGM Resorts, we have within a mile or so Allegiant Stadium T-Mobile Arena, the F1 Paddock, and then eventually the A's stadium at the corner of Tropicana and Las Vegas, and this is a vicinity in which we have 30,000 hotel rooms. So the market has changed dramatically with the introduction of this, but we've also had other things like the Pro Bowl, the NHL All-Star game.

And I think our company is uniquely situated to capitalize on this new interest. And the only other thing I'd point out is that ours is a different market when it comes to these events.

As an example, when the Raiders play at home, so 8 or 9 home games per year, you'll see 50% or better of the fans will be from the visiting team, making not only the game but the entire weekend part of their experience. So these events for us turn what my -- what our CEO is called turning a 3-hour game into a 3-day weekend, and that happens routinely.

And with a company like ours that has database in the cities like Denver and Baltimore, New York, et cetera, it can be a very attractive proposition for us to have those kinds of fans travel.

For sure. Jon, while we're on the topic of sports, you mentioned the A's, the proposed stadium site literally you control the 3 other quarters.

How have you started to think about assuming is moving forward, which I mean seems that to be the case. Like how do you think about capital investment in that neighborhood in your 3 assets there?

So I'm sure you're all familiar with this geography, but this corner of Las Vegas Boulevard in Tropicana, which the A's Stadium is going to go on the southeast corner of that, and we have MGM Grand, New York, New York and Excalibur on the other 3 corners of this important intersection, of course right next to the airport as well. And we are looking at how we can invest against this development, which I think is going to come around 2026, 2027 season.

And the first thing we're looking at is circulation amongst the different properties. Because in a market like Las Vegas, we know that all of our guests really do make several stops.

They'll stay at one place, but they'll go to several other properties. And winning that second, third or fourth stop is really critical to winning in market share spend amongst our guests.

So with customers who will come for an A's game or at one of our other properties, improving circulation amongst those 4 corners, I think, will be an important part of our investment because that will, among other things, increase our ability to get that second and third stop.

Very good. Beyond just the advent growth of sports.

I mean the market has just been -- Vegas has been booming post-COVID, whether it's on the hotel side with rates, I mean, gaming productivity has been like truly off the charts. Do you worry at all that like there's some reversion to the mean over time?

Like is there some of this pent-up demand or pent-up savings that people have? Or do you think that this is more sort of sustainable in your business?

Well, even though we've been talking a lot about Las Vegas so far, this afternoon, but it's really important to note that there are many segments within that market. And while, of course, the performance of our company in Las Vegas has been very strong, pretty consistently now for 2 or 2.5 years since the pandemic.

The nature of that performance has really changed. For example, in the summer of 2021, we had almost zero group business.

The business mix was exclusively casino and transient business. That really began to change in the late 2021 and early 2022 when group started coming back.

We dialed back some of the casino marketing, transient continued to grow. And so within the performance, at least in our company, you actually see a lot going on under the surface in terms of the different segments.

Yes, I certainly am concerned about the general macroeconomic environment and overall demand perhaps being impacted. But I also think market has -- it's changed quite a lot.

And I'd say permanently. We've talked about sports and events.

Allegiant Stadium, for example, does 8 or 9 Raiders game, but it will do 45 or 50 events over the course of the year, concerts and things like that. The group business in Las Vegas continues to get stronger and stronger as we and others are able to win business from other cities.

And then transient business enabled by airlift into the market, which stands at about 120% of where it was back in 2019 has also really helped the ability of the market to continue to sustain and grow visitation. And finally, there's not really much supply growth.

I mean, I think over the past 10 or 12 years, James, I'm sure you have this data, but the supply growth has been less than 1% compound annual growth and supply of hotel rooms over the past 10 or 15 years. So you have all of these attractive dynamics, which drive demand in multiple segments and yet against limited supply.

And I think they all really auger well for just the continued performance of the market.

Just on that supply point, there is a new property opening that's been in the works for decade plus. But possibility it will open before the end of the year, it's sort of at the opposite end of the strip from where your center of gravity is.

I guess, do you anticipate any sort of meaningful impact on your business? Did you -- do you have a -- like any color on sort of what Resorts World did when it opened?

And if like -- if it moved business around at all if it was more just like a blip?

Yes. Resorts World opened into a kind of a difficult time, if memory serves it was the fall of 2021.

But I think as they've kind of found their group in Las Vegas. We haven't really noticed any impact to our business from Resorts World entry.

Fontainebleau is opening in mid-December. I know some of the members of the management team, is an excellent management team.

But they are -- so they'll, I think, be attractive for folks who are going to the convention, the new expanded Las Vegas convention hall on the north side. I suspect they're probably also targeting some of the customers that we serve at the Cosmopolitan.

But I do think the location is a bit difficult, given its distance from some of the center of activity on the Strip. But I wouldn't write it off at all.

It's going to be a new large resort. But I would not expect it's going to have like the much of an impact on our kind of like Resorts World in -- I mean, it's a huge market, and there's -- again, there hasn't been much supply entry.

Very good. I forget, I think it was maybe 3 to 6 months ago, you guys announced a strategic partnership with Marriott.

I know that the launch maybe was delayed slightly, but maybe you could just talk -- I think it's supposed just going to launch early '24 now?

Yes.

Yes. So maybe you can just talk a little bit about sort of like the scope of that.

There have been some sort of smaller deals in Vegas, but this kind of was of a larger scale and sort of a first of a kind in Vegas from like my recollection.

Yes. This -- I think this is one of the most exciting parts of our company's prospects in '24 and '25.

So when we looked at the Cosmopolitan, almost 2 years ago to acquire it, we knew they had, had a long-standing distribution partnership with Marriott, and we're very interested in this. And as we did our diligence on that property, and ultimately, we acquired it, 15% to 20% of the rooms from the Cosmopolitan were delivered through the Marriott distribution channel, both cash paying as well as reward Bonvoy redemption room nights.

So that's a meaningful part of their room base for sure. So we looked at this and after acquiring the Cosmopolitan, we started discussing with Marriott the prospects of having a partnership that looked like that, but for all of MGM Resorts.

And that's eventually what we signed up with them. So to put this in perspective, roughly half of MGM's 12 million room nights a year in Las Vegas are coming through transient customers.

So not through the casino, not through groups. And about 2/3 of that half are coming through our proprietary MGM Resorts distribution channels, which is business we love.

But about 1/3 of -- the other 1/3 is coming through other OTA channels, where we don't know those customers as well. They don't come in at high rate -- as high rates, and they come at a meaningful cost.

So Marriott and their Bonvoy 180 million members, we think, can really help us remix that business and drive very high-value transient customers who, from our experience with Cosmopolitan, we know spend more while on property. These are fantastic customers for MGM Resorts.

And so as we get this introduced and you'll be able to book into the Bellagio directly to the Bonvoy distribution channel and our other properties, we think it's going to be a pretty meaningful component of our transient segment. We think that it can increase our EBITDA per room night by about $100 for every room night that we can successfully shift from OTA over to Bonvoy.

And do you anticipate that there's going to be like a pretty immediate effect? Or is there going to be like a -- ramp up to that relationship, I guess.

I mean I think it's going to happen pretty quickly. We -- I mean Marriott did not have terrific distribution within Las Vegas, and yet there's a high degree of interest, as you can imagine, both from their Bonvoy members for regular transient rooms as well as loyalty redemptions in the market and so we're going to open up that possibility that the range of options to those customers.

And so I expect it to be meaningful in 2024. It's -- we'll get it going during the first quarter of 2024.

So there's always a little bit of a shakedown period, but this is not something that's going to take 2 or 3 years to develop.

Yes, very good. Maybe before moving on to another -- a couple of other parts of the business, just have to hit on cybersecurity and the labor negotiations because they were like so heavily covered in the press.

I think the good news is both are seemingly behind us. Maybe you can talk a little bit about sort of resolution, and if there's anything we need to think about in terms like impact on a run rate basis?

Yes. We were very busy this month with those two March 10th -- sorry, September 10th was a -- that first week was pretty difficult as we began to deal with the cyber incident.

We tried to communicate as best we could to our employees and our guests and our shareholders about what the impact of this was. I would say that the impact we quoted early was probably $100 million across the system.

Most of that in September, a little bit of it bled into October in two ways. First, we were unable to get out some direct marketing offers in the last 2 weeks of September, our regional markets.

That hurt us a bit in October. Our occupancy was lower for the first few days of October, but I can tell you that October came back really quickly in Las Vegas.

So by the middle of October, we felt like it was largely behind us. And the business across the whole system has been back to normal now for well over a month.

There will be some capital cost that's involved next year as we continue to strengthen our operating environment. We will have a business interruption claim from our insurers, which should be resolved sometime during 2024.

So when that happens, we'll call that out to our shareholders. But our expectation is all of our costs in this incident will be covered by our cyber insurance carriers.

As it relates to the union, folks know we came to a new contract with the Culinary Union a couple of weeks ago. They ratified it overwhelmingly last week.

So this is a new 5-year contract. We think it's a great contract for the Culinary Union, and that over 20,000 of our employees who are covered by this collective bargaining agreement, but it will introduce increased costs for us, of course, in labor costs, but we also believe that we've got a number of levers on the top line that can offset those impacts and that this is really important to continue what's been decades of labor piece in Las Vegas.

So we're just really happy that we got the agreement completed.

Have you quantified at all sort of like how to think about what the cost sort of incremental cost headwind might be in '24, like either before or after offsets?

We really haven't quantified it except to say that the prior contract expired at the end of May, and beginning in June, we began accruing for incremental. What we estimated would be the incremental cost associated with the new contract.

And we did that and have done that now for 6 months. So in 2024, the impact against 2023 will just be an incremental 5 months or so of that increase.

So I think it's been reported and it's pretty close that the entire compensation associated with this group is about $1 billion a year. So anyway, some observers of the company have done some math around that.

They're not terribly far off, but it will be about 5 months of impact in '24.

All right. Very good.

Just quickly on regional gaming, this is not a small part of your business, I think the sort of outlook on regional is probably a little less sort of clear than in Vegas, I think after having a huge rebound after COVID, revenues have sort of -- in many markets were sort of like stalled out or mild declines. And obviously, there's some cost creep, but how are you feeling about the regional businesses?

And are there any like particular call-outs on your assets are generally pretty big large markets.

That's right. We have seven regional properties, and they're generally market leaders and closer to integrated resorts than they are, in many cases, to what we normally think of as regional casinos.

So properties like the Borgata, the Beau Rivage, even National Harbor in and around D.C. These are massive businesses, in many cases, with customer segments, which come from beyond what we think of as a typical local catchment area of a regional casino.

So I would say, by and large, our regional properties are pretty stable right now. They're operating actually before the cyber incident, which really didn't affect the regional properties very much.

But in July and August of the third quarter, our regional properties as a group had growing trips from our rated customers and slightly growing theoretical win per rated trip, which is a better trend that we had seen back in '22 where we were seeing trips kind of flat and per trip declining slightly because they were coming off of some of the real strength coming out of the pandemic. But that business has stabilized across the whole regional portfolio, and margins kind of in the low to mid 30s.

I would -- I guess I would call out pockets of strength of the Beau Rivage for sure, down in Mississippi, a business which draws 80% of it's rated win from a distance greater than a few hundred miles. It's really not a local's casino so to speak.

The Borgata is having -- is certainly a market leader in Atlantic City. Springfield, small business, but has pretty strong trends in Western Massachusetts.

Detroit is one on the other side, which is -- it's a market that's been declining a bit for a couple of years. And then we, and the others, of course, have some labor issues in Detroit as well, which we're continuing to kind of work through.

So I would say, Detroit is one. And then the National Harbor business where we have very high market share, but that market also isn't growing as much.

And we have some idiosyncratic issues in the fourth quarter that will likely make that down over year-over-year. But otherwise, the regions, I would say, are kind of as a group pretty stable for us.

Hopefully. We only got -- time is going by quickly here.

I want to hit on BetMGM, obviously, digital is sort of one of the most interesting growth areas to come around in the industry in years. With ESPN BET launching, I guess, how do you feel about market share, market positioning?

The market seems to have stabilized and now Penn is kind of like coming back and sort of try to take a second bite at the apple. How do you feel about sort of that digital market?

We feel good about BetMGM right now, for sure. I mean, this is now really kind of 3 years into it since early '21 when a couple of states came on and these businesses really started to generate meaningful levels of revenue.

The market has shaken out pretty much the way we expected it to, which was that you were going to have 2, 3, maybe 4 big players making up 90% of the market. And then you'd have a smaller group making up the tail of the distribution.

I think it's too early to tell with Penn and ESPN Bet if they're going to change that dynamic at all. But BetMGM is roughly 17% market share nationally across online sports betting and iGaming.

Now we're definitely in that top 2 or 3 depending upon the state and the product. I would mention that on Monday, December 4, BetMGM, the investor -- the management team is having an investor update, which I'd invite all of you to call into.

And at that point, Adam, and Gary and Matt will be giving kind of their outlook for '24 and how the business is doing. But we'll see with the ESPN but I think BetMGM is in a solid position.

Very good. And I have to ask, just given -- I think you hear this question at every event, but given business as a 50-50 JV, is that the right structure long-term for MGM don't have, and Entain on the other half of BetMGM.

Well, it's our structure. It's a 50-50 JV that was built to last.

We have 3 Board seats. Entain has 3 Board seats.

It certainly -- is always a good thing when the business is performing well like BetMGM has, but our focus at MGM is to make BetMGM as successful as possible. And I think that's not to speak for them, but I think that Entain's interest as well.

Very good. I guess just last quickly on the balance sheet, the leverage -- you'd highlighted in the last call, you leverage is sort of below the target range.

You guys have been pretty active buying back stock, but you also have a lot of development opportunities. We have time to talk about Japan and New York, but how are you thinking about sort of balance sheet management and then also just you used to be like the most regular gaming issue.

We're in high yield, and now you've been a net repayer of high-yield bonds. How should we think about MGM and high-yield at tapping markets and bank loans versus bonds?

Well, we've been -- we, of course, have really transition the balance sheet from a traditional bank and bond capital structure to the opco structure that we have now. And that transformation is largely complete with almost all of our properties having sold the real estate.

So we had the significant lease payment right now. We have been repaying debt.

We've been deploying the capital that we realized from those real estate sales to repurchase shares. We've repurchased over 1/3 of the company's shares in the last 2.5 years.

But that process is kind of coming to a conclusion. The company is transitioning now in terms of capital deployment more towards growth with -- you mentioned our -- we hope to be able to expand our property in New York.

We have a huge integrated resort development project in Japan. And so I think that's where some more of the free cash flow is going to be going in the future towards those development opportunities.

I wouldn't rule out the company being an issuer of high-yield debt in the future. We certainly have debt capacity right now, but it's more likely that the capital will be allocated to growth and then some additional share repurchases.

Very good. We are at the time.

Thank you, Jonathan. Really appreciate your participation and support, as always.

Thank you for coming.

All right. Thank you.

Thanks, James. Thanks, everybody.