Good afternoon and welcome to the MGM Resorts International Third Quarter 2022 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President; Corey Sanders, Chief Operating Officer; Jonathan Halkyard, Chief Financial Officer and Treasurer; Hubert Wang, President and Chief Operating Officer of MGM China; and Andrew Chapman, Director of Investor Relations. Participants are in a listen-only mode. After the company's remarks, there will be a question-and-answer session. [Operator Instructions] Please note, this conference is being recorded. Now, I would like to turn the call over to Andrew Chapman.

Good afternoon, and welcome to the MGM Resorts International’s third quarter 2022 earnings call. This call is being broadcast live on the internet at investors.mgmresorts.com. We've also furnished our press release on Form 8-K to the SEC. On this call, we will make forward-looking statements under the Safe Harbor provisions of the federal securities laws. Actual results may differ materially from those contemplated in these statements. Additional information concerning factors that could cause actual results to differ from these forward-looking statements is contained in today's press release and in our periodic filings with the SEC. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. During the call, we will also discuss non-GAAP financial measures in talking about our performance. You can find the reconciliation of the GAAP financial measures in our press release and investor presentation which are available on our website. Finally, this presentation is being recorded. I will now turn it over to Bill Hornbuckle.

Thank you, Andrew, and thank you all for joining us this afternoon. I'm pleased to report another phenomenal quarter of financial results driven by our domestic business, with the Las Vegas Strip setting a new record for revenues and adjusted property EBITDAR. These results come on the heels of a record-setting quarter in Las Vegas -- our second quarter in Las Vegas and our regions. Also, the Cosmopolitan Las Vegas had one of its best quarters in its first fourth quarter of operation under MGM Resorts leadership and continues to outperform our initial expectations. We continue to see further opportunity with the Cosmopolitan as we look to integrate our reward system and improve physical connection to our sister properties. Net-net, 2022 is shaping up to be a record year for many resorts, and we believe that fundamental change in people's perception of travel and the value that brings to their lives in Las Vegas and MGM Resorts is benefiting this emerging theme. I want to thank our employees again for the tremendous efforts they put forward to achieve these outstanding results. We know that our guests are experiencing greater satisfaction in their stays, as measured by our internal Net Promoter Scores, which continue to exceed our projections, as well as our TripAdvisor rankings, which have improved significantly across our portfolio in the last year. Put all together and MGM continues to make great progress towards our long-term vision, which is to be the world's premier gaming and entertainment company. We've achieved this vision by remain laser-focused on that strategic plan. Let me hit some of the highlights of the quarter and then Jonathan will dig into the results in more detail. First off, I'm pleased to share that we've completed our acquisition of LeoVegas in September. This important acquisition represents…

Thanks very much, Bill. Let me start my remarks by also welcoming Gustaf and the over 900 LeoVegas employees to MGM Resorts. No doubt the future of LeoVegas is bright, and I'm confident this enterprise will serve as a meaningful contributor of talent and earnings to our company. I'd also like to echo Bill's comments and thank all of our employees for the second straight quarter of record results. Our people are the best in the business and they demonstrate that every day with the care they show for our guests. Now let's discuss our third quarter results in some detail. Our consolidated third quarter net revenues were $3.4 billion, an increase of 26% compared to 2021, despite the 70% revenue decline at MGM China due to closures and other COVID-related limitations. On the Las Vegas Strip, top line demand was strong with same store net revenues increasing 18% and same store adjusted property EBITDAR up 8%. Occupancy was a major driver of the improvement year-over-year reaching 93% for the quarter, the highest it's been since the start of the pandemic and improvement and an improvement of over 1000 basis points year-over-year. The key driver of the occupancy gain is midweek demand, which is returning to more normal levels as conventions and groups return. The value proposition of our group business supports our pricing power in Las Vegas. ADR had a record $227 in the third quarter, an increase of 26% year-over-year. We continuously work to optimize the hotel mix in our business. Over the past two years, we've increased the effectiveness of our casino marketing and loyalty programs to drive the casino and direct high rate transient business mixed up by several percentage points each. And this has helped offset the decrease in convention myth mix that we experienced…

Thanks, Jonathan. We believe we've accomplished a great deal year-to-date. I'm optimistic about our path forward. What we are doing is working. Our existing operations continue to grow as evidenced by another record quarter in Las Vegas, with a positive outlook thinking about October and beyond. Our balance sheet is in a position of strength as we have more than 6 billion in domestic liquidity with almost no net debt. But MGM is firing on all cylinders demonstrating tremendous growth and remains on track to achieve profitability during 2023. We also expect further global digital growth with LeoVegas, MGM, China and Macau markets are showing some productive signals. And we believe we're well positioned in respect to licensing renewals. Also, New York and Japan represent future development growth opportunities for our company. I would again like to thank our employees for the continued hard work and commitment to our company. And with that, we'll open this up for questions operator.

[Operator Instructions] And our first question will come from Joe Greff from JPMorgan. Please go ahead.

Good afternoon, everybody. Bill, Jonathan, whoever wants to take this question. I was hoping you could just talk a little bit more about where you do have visibility into next year, the group and convention business in Las Vegas. What percentage of your anticipated room nights are on the books right now? And at what price is that relative to this year or if you want to look at it in relation to 2019?

Sure. Let me kick it off and I'll probably turn it over to both of my colleagues here. So we're targeting, as I mentioned in my comments, 19% market mix. A couple of things. We've been as high as 2021. We've got about 100,000 room nights off-line. We're doing a Mandalay Bay complete remodel, which is undertaken and underway, and it's been highly well received. We were able to preview it recently through IMAX. We've taken 100,000 room nights off of weekends. Given the strength with weekends, we're very positive on our ability to drive higher-rated business, particularly through leisure and casino ultimately. ADRs in the mid-single digits. And then Corey, if you want to talk, I think, a little bit the percentage.

Yes, yes. We usually are about 80% on the books right now. I think we feel pretty good on where we are. In addition to that, we also are looking at where we place convention. So in the past, we had a lot of convention room nights on weekends. So we strategically think we could do better cash flow by not placing some of that business on weeknights. So you'll probably see our mix come down a little because of that also.

Great, thank you. And then with respect to your case, remind us the scope of the all-in investment, the timing of the spend and anticipated timeline to complete once you start - once you get approval.

Joe, you said New York, correct?

New York, yes.

Yes, yes. So hopefully, we hear something -- obviously, we get this RFA request. They have a 90-day window to issue it, which means by January 1. There's some debate over if they can issue all three licenses at once or if they will issue all three at once or they'll go independent of that. But we're hoping for '23 in terms of being awarded a license. If you factor in the licensing fee and the initial expansion, we're looking at about a $2 billion to $2.2 billion investment, which given -- let's just say, it takes till the end of ’23, so probably the spend on that is going to be between ’24 and ‘25.

Thank you.

Our next question will come from Carlo Santarelli with Deutsche Bank. Please go ahead.

Hey, everyone, good afternoon. Jonathan, you provided a lot of color on kind of a mix, and you guys just hit on the group pace for next year. But what was - how do you think about kind of the target of casino? What is casino running at this year as a percentage of room nights? And what is kind of the target next year within the 19% group and obviously trying to pull out of FIT and some of the OTA channels, things like that?

I'll just - I'll make a couple of comments and then certainly invite Corey to comment as well. Casino room mix be in the high 20s to low 30%. It's pretty stable. A lot of our work recently has been around yielding the casino even more effectively, particularly during midweek. The casino business was very strong for us in terms of room nights. A year ago, as I noted in my comments, but that has since that and some of the leisure business has been overtaken profitably by group business. The other thing I mentioned, which is important is our direct bookings through our proprietary channels are up about 11% this quarter versus a year ago. And that's it nearly 3 times the rate of the growth of our overall web bookings. So this is one of the areas in which our MGM Rewards program and the improvements we've made to that as well as other marketing efforts have really helped drive the leisure business even through our proprietary channels.

Jonathan I agree. I mean we got our casino room nights about where we want them, making sure that we have the most profitable customers on the weekend there. The goal would be as this group business comes back to shift it really at the package business, our lowest rated business.

Great. Thank you both. And then if I could just one follow up, Jonathan, I know you've mentioned, the target for regionals was kind of to remain 400 basis points to 600 basis points north of 2019 for that segment. With respect to Vegas and acknowledging a lot of moving parts with Cosmopolitan coming in, City Center being consolidated, Circus Circus going out, if we're going back to 2019, and then obviously, Mirage going out later this year. On an apples-to-apples basis relative to 2019, you guys have a similar kind of target range in mind.

I actually think we can do better than that in Las Vegas, in part for a number of the reasons you mentioned, which is, of course, some of the changes we've made to the portfolio here or we'll have prospectively with the sale of the Mirage, but also just increasing effectiveness in driving demand and yielding. I feel comfortable that the margins will stabilize at increments higher than that that I described for the regional properties.

Okay, is it safe to say it's kind of 400 to 600 operational plus the big influence of those kinds of four assets coming in and out?

At a minimum, I would say yes at a minimum.

Okay. That’s helpful. Great. Thank you very much.

Okay.

Our next question will come from Shaun Kelley with Bank of America. Please go ahead.

Hi, good afternoon, everyone. Just wanted to ask a little bit about mix and margins, specifically maybe sticking with Las Vegas for a moment. It looks like continued pretty strong sequential growth on the casino side. And Jonathan, I know this has been an area where you've probably been expecting things to be at some point, maybe settle back into more normal behaviors, but it just still seems like it's really robust. So could you just give us a little bit more color about the dynamic there, what you saw in the quarter and how you see that trending both sort of market-wise and then things you might be doing for market share because, again, that does look strong relative to the market.

Yes. I -- the margin performance is, of course, a number of dynamics going into it, but one of the most important has been our ability to yield on the room demand here. And we've seen it not only in our luxury properties, but also more recently in our other properties here in Las Vegas. So I would say the main contributor to it has been the strength in the hotel yielding. We have grown our labor in both the regional markets and in Las Vegas in the past quarter and we've done that intentionally. It's been reflected in our NPS scores and what our customers are telling us about their experience here. But it's also had some impact on margin, one that we intended and hopefully, we've signaled pretty clearly in the past. And that's really important because it is all about growing long-term market share for profitable market share for our businesses here in Las Vegas. And we think that that those customer service scores and the retention associated with those customers are going to help us get there.

And Shaun, what I would add on the casino side, every weekend here is just a major weekend with events between Allegiant, the 3 major showrooms here, the arenas that demand, we don't really see slowing down. And probably the piece is still missing, but we're starting to see some of this come back is the Far East play. We've seen some groups from Hong Kong. We've had intentions from groups from Singapore that wanted to come back. So I think we're pretty optimistic on what we see in the casino front in Las Vegas.

And Shaun, maybe final, just some color. It was kind of interesting to me last night. Elton John was here on a Tuesday night, he put 50,000 plus in Allegiant Stadium the south end of the strip is absolutely benefiting. We thought Allegiant could do like 40 events. I think it's going to do that in more. And if you think about the nature of people saying, that's like 100 days a year that people have visitation to Las Vegas driving a huge activity case, particularly at the south end of the strip which is obviously core to that neighborhood. And so we're pretty excited by it. We think it underlines a foundation that just puts us at a different place than we've ever been historically. So that's one of the reasons I think we've seen this ADR growth has been amazingly substantiated throughout the company. This particular month in October, Excalibur Luxer had great months.

Thank you very much.

Our next question will come from David Katz with Jefferies. Please go ahead.

Good afternoon, folks. Thanks for taking my questions. In the past, I can recall, Jonathan, you're giving out some and land-based MGM and MGM Rewards players. Are you able to talk about any of those this time?

It's actually Bill, David. I'll take part of that. Look, it continues. The idea of omnichannel is still very strong. First and foremost, MGM Rewards has just surpassed 40 million folks in our database. We get about 40 -- the key driver to that has been BetMGM. And so we are just supplying close to 40% of our new customer base. The inverse of that is we're supplying BetMGM with about 15% of its customers. And then we've seen -- and I know you've heard some other industry numbers on folks that have come in omnichannel spend. We've seen that number double in the last year between what happened in the third quarter of 2021 versus the third quarter of 2022 in terms of activity. So there's nothing to indicate we're not extremely positive by that that opportunity in the channel that brings us and the overall nature of it. And interestingly, we're excited to continue to project that into LeoVegas and some of the things we want to do internationally over time. And so overall, it's working exceptionally well.

Understood. And my follow-up question was going to be about LeoVegas. And if you could just be a bit more specific about what capabilities it brings you that may be transferable or helpful within the United States or North.

Well, to be clear, within the United States and North America of note, Canada and Ontario province to be specific, that is the domain of BetMGM. And so that -- all of that activity case would remain with that JV and that partnership. LeoVegas was an opportunity to open up rest of the world. And so while relatively small, its scale to some, it's probably going to be about $50 million in cash flow. We love the team. We love the operating environment it has, the system it has. It's got a full slate of iGaming opportunities. Sweden is the benchmark, about 35% of its business comes from there. But we've got a sports betting product. So it's got all of the tools. We look to add on to it with live dealer. We're looking at a studio increment that could be added on to this thing. And so we see it as a cornerstone to grow rest of world. If we think about places like Brazil, which is that activity and talking more and more about sports betting and hopefully and potentially, casino gaming. We just see that as a leading opportunity for us and a vehicle to do that.

Okay. Thank you very much.

Our next question will come from Dan Politzer with Wells Fargo. Please go ahead.

Hey good afternoon everyone. Jon, you gave some detail on how you think about valuation for your stock. I think you called out the $11 per share of cash on the balance sheet. How do you think about the elution here given you have the $4.4 billion of cash, $1 billion and one sixth of liquidity. What do you think is the normalized cash balance that you feel comfortable with, given the macro and some of your rent and CapEx obligations?

There's about $400 million or so that's required in so-called working capital and our cages, etcetera. And we have established a financial policy that we will have $1.5 billion available to us in addition to our revolving credit, which is approximately $1.5 billion. So that's the way we think about it. $1.5 million would be considered our minimum cash.

Got it. And then just as my follow-up on Vegas. Some of your competitors have called out one-offs in the quarter such as utilities. Was there anything there that you'd call out or that you saw on your side?

No. Not in the third quarter. We -- our utilities are largely bought through the -- our energy costs largely bought through the end of 2023. So we didn't suffer any meaningful increase there. In fact, the opposite is that we continue our energy efficiency programs have had a slight decline in usage. But no, there's really nothing unusual in Vegas. In the regions, there were a couple of unusual items. There was some minor hold impacts in the third quarter, about 60 basis points. And we also had some hurricane proceeds in the prior year quarter, about 80 basis points. Most of the rest of it was labor increases when we look quarter-over-quarter, but we did probably have 1.5 points of unusual margin items in the regions in the third quarter.

Got it. Thanks so much.

Our next question will come from Chad Beynon with Macquarie. Please go ahead.

Hi good afternoon, thanks for taking my question. Bill, Jonathan, I know you mentioned that, I guess, firstly, BetMGM is coming in better than the $1.3 billion revenue projection. And you're still on track on the losses for the year. You did mention that you still expect to achieve profitability in 2023 at some point. But given that everything is coming in better than expected. California, there's not going to be a big launch in 2023. Just given the maturation of the markets where you currently offer your product, are there reasons why you might not be able to hit that goal potentially earlier if hold is as expected? Thanks.

Look, Chad, I wouldn't go so far as to change our projections and our prediction that by this time next year, we should be in a profitable scenario. So I want to stay on point on that. The new markets we've indicated we're opening up. We think we have real opportunity there. We're doing some very interesting 1 and the only kinds of things in the iGaming marketplace where we have integrated jackpots at our omnichannel that will stretch across our casinos as well as the digital channels. And so we've got two or three products coming out that are going to be exclusive, and we're excited by. And I think you all know iGaming is the lion's share of the NGR in this whole universe, actually. And so -- but no, I don't want to get ahead of ourselves. We continue to invest in the business. We want to see it grow. We like the positioning we have, both from iGaming in particular and ultimately in sports betting. And so it will take some investments. Point on California is well taken. But we're not going to get our head on sales right now.

Okay, thanks. And then with respect to the zero COVID policy in China and kind of where things stand right now. Has anything changed in terms of your expectation of when this picket could or should turn back on? And then if not, how should we think about the current burn rate in that market. Thanks.

I'll let Hubert chime in here in a moment. I would say this because obviously, we all got the message of zero tolerance, and it was demonstrated this week in Shanghai and ultimately at our own Cotai property and Hubert can speak to that. Also, at the other side of the coin is they've opened up every province. All 31 provinces now are accessible to do eVisa which is convenient and timely. And so we're encouraged by the signal and really what it means for Macau. Macau is obviously an SAR, but it is obviously considered part of broader China in every way shape performance. So the support, I think it's trying to give it. By doing that, I think, is meaningful to us. And hopefully, over time, can get us to a different place. I'm not going to project when that time is. It's just been, as we all know, so many curves in this road. But I don't know me, Hubert, if you want to talk any more sentiment and particularly, maybe talk about where you are with the lockdown.

Yes. Thanks, Bill, and thanks, Chad, for your question. The policy that recently loosened up the eVisa application and also the group visa application for entire nation to Macau. I think that's definitely a long-term positive. Short term, we probably will still -- it's a gradual ramp-up process and maybe with fluctuation between due to the dynamic zero cold policy in place. So I think that just to give you an example, in Macau, recently, there have been in some cases. So we have seen the measures to border crossing has been tightened. And there are cases -- there were 1 case, single case in MGM Cotai, and we had to shut down the operation for three days, and we just reopened and quarantine yesterday and will reopen today. So these types of things could happen from time to time, if the policy is still in place. But overall, I think over the long run, it's a positive. In terms of your question on the bond rate for us, I think that we're looking at OpEx of about USD 1.5 million a day in that range.

Thank you.

Our next question will come from Robin Farley with UBS. Please go ahead.

Great, thanks. I know you talked a little bit about some of the factors with the regional margin being down with labor costs and things. I'm just curious if you're seeing anything in terms of marketing your promotions in the regional markets, just given that you mentioned that gaming revenue was pretty much flat and the growth was coming from non-gaming if that is starting to lead to anything promotional. Thanks.

Hi Robin, it's Corey. I think in general, in most of our regions, we're seeing some reasonable reinvestments. Atlantic City, we saw a little bit of a ramp -- that market is a tough market right now. But in general, our reinvestments have stayed pretty consistent. As we add some of these amenities, which our players have been asking for, that component of those comps will go against that gaming revenue, which would give it a reason why it'd be flat, but you would see profitability in other departments in the regional areas.

Okay, thank you. And just for the follow-up, I'm curious if you're seeing anything different in terms of demand at your Vegas resorts in terms of the more premium properties versus the properties that are sort of more broad market. Are you seeing any difference in demand trends there? Thanks.

Look, I think we've said it in our general comments, Robin, although again, October for some of our legacy properties was a bit surprising in the context of affirmative part of it was probably due to the programming I mentioned earlier. But generally speaking, our ability to yield up is tied to luxury. It's tied to average rates at places like Aria, Casapalca and Bellagio. It's tied to fine dining, it's tied to the entertainment experiences that may be a Bruno Mars or something of that ilk. And so we just have not seen a slowdown in that fact to the contrary. And so it doesn't mean -- we're not -- eyes wide open on what may happen here. But to date and through October, the phenom of what's happened in Las Vegas, particularly for our higher-end properties continues, and we're pretty excited by all of that.

Okay, great. Thank you very much.

Our next question will come from John DeCree with CBRE. Please go ahead.0

Hi, everyone thank you for taking my questions. Maybe one more in Las Vegas about your Convention group bookings, maybe a bigger picture question. As you look forward to 2023, and we've got the big ones in 1Q, maybe Corey, are you seeing attendance or bookings per the big events get back closer to 2019 levels or when you start to see pacing, is it more driven by more events? I guess, we have a lot of conversations. Are those big events going to see similar attendance as 2019? Or might they be smaller and then you guys can kind of grow overall attendance through various sales to other departments. So curious if you have any visibility on that yet?

Yes. I think the answer is yes to all of them actually. The bigger events that are still coming in, depending on the type of industry, you'll see attendance reach the levels that they were before, especially if they're more domestic they have an international component, maybe not. But we're also seeing a lot of smaller groups and medium-sized groups come in and book also. So the business is definitely dynamic right now from that perspective. We're seeing a lot of demand for that business, where we're seeing a lot of demand for that business in the year for the year also.

Got it. Thanks Corey. And Jonathan, maybe a housekeeping one. In the press release, there was a little over $1 billion amortization charge, I think, related to subconcession in Macau. I think we've maybe talked about this last quarter, but we've got a couple of questions. Could you remind us on the accounting of that and what's that for?

Yes. When MGM went to a majority position in MGM China in 2011, we recorded through the purchase accounting an intangible related to the concession. We've been amortizing that intangible to between 2031 and 2038. When the law was released back in June, we, together with our outside auditing firm, Deloitte, we came to the conclusion that it's a new concession that we'll be beginning post December. So the existing concession on which the intangible was based, we needed to amortize that towards the end of its life or by the end of its life, which is this year. So we took a relatively small amortization charge in the second quarter and then we're taking the remainder in the third and the fourth quarter. And so that's what that is.

Got it. Understood, thanks for that clarity. Thanks everyone.

Our next question will come from Barry Jonas with Truist Securities. Please go ahead.

Great. Thank you. Just a follow-up on the strip margin in the quarter. There was a call out in the 10-Q for higher advertising costs. Are we now at a more normal level there? Or could that line item fluctuate a little bit going forward?

Yes. It's higher than 2021 because 2021, we cut back a little, but it's lower than we were spending in 2019.

Got it. Okay. And then just...

Yes. It's probably a new normal of where we feel pretty comfortable, plus or minus on going forward in the future also.

Okay. That's great. Just as a follow-up, I wanted to ask about some of the partnerships and sponsorships that BetMGM has made. Wondering if you think some of the lower ROI deals could roll off over the next few years and maybe help drive profitability for BetMGM, if possible, maybe walk us through the setup there.

So Barry, this is Bill. The answer is yes. We go into different markets, we try different things. Some of them are access deals. You need a partner and a sponsor to help you get state, et cetera. and get ultimately licensed and in some cases, even get legislation through in terms of motivating the cost from the get-go. Some of them have been very profitable, some of them are not as. The team knows exactly the CPA cost per market, and it allocates certain percentages to what those sponsorships may feel like. But there's clearly an opportunity going forward. Those deals range anywhere from a single year up to 5. It just depends on market and depends on who and what they are. But yes, I think as we get all smarter about this, we all build a customer base that begins to plateau at a reasonable level, you'll see everyone get including us, most notable more efficient at that.

Great. Thanks so much.

Our next question will come from Stephen Grambling with Morgan Stanley. Please go ahead.

Hey thanks. In the deck, you did mention investing in advanced marketing and physical/digital experiences, I think, associated with the loyalty program. As you ramped up to around, I think you said 44 million members and continue to invest in engagement, how are you thinking about monetization opportunities or partnerships fund reinvestment or even make the loyalty program a profit center?

Look, we have several different opportunities, whether it's around our existing partnership with Hyatt and expanding it. We just actually did something with BetMGM with Carnival that we'd like to bring into MGM Rewards over time as well. And so there are -- we obviously have a deal with Marriott at the Cosmopolitan of Las Vegas. And so we'll continue to push on that. And obviously, we have something now to trade at 44 million members that are active. There's a real opportunity to go back and forth on that. As we've opened up, remember, the whole essence behind MGM Rewards versus MLive as we've opened up for rewarding all spend, not just gaming spend. And so it's introduced a different set of customers to us. It's introduced a higher-end retail customer. I think that gets expanded by things like F1 and some other things that are coming to town. And so we've got a whole team structured and focused on doing exactly that. And we'll begin -- we're going to hit our first full year here coming up. We'll begin to give you some metrics here going forward about where we've been and where we're at. But some of the initial indicators are pretty very firm of actually. So the general thinking.

Sounds good. That's helpful. One other unrelated follow-up. The market in Canada on the online side is a bit opaque at this point. I guess, what are you seeing in that market for BetMGM in terms of how it's ramping versus the U.S. and how it might evolve from here?

Surprisingly well. And why I say that is obviously, that's been a market that's gray market in Ontario of note for a decade or so and maybe more. And our ability -- they don't actually publish per share. So we can't have exact things, but I know what we're doing. We've done exceptionally well. I think part of it is our Ontario/Detroit database, and we've had exposure to those customers for 20 years. And so we have taken real share. And if we're not leading, we're damn close in the context of iGaming of note. And we have a real position in place with sports betting, we were fortunate enough to get Wang-Getsky [ph] on board early. And he's just iconic. And so we feel really good about what's happened there. And surprisingly so, which gives us a great deal of confidence in a highly competitive market before we entered.

Great one, thank you.

Our last question will come from Ben Chaiken with Credit Suisse. Please go ahead.

Hey, how’s it going? Sorry if I missed it. Just taking another swing at Vegas margins. Revenue and EBITDA improved kind of regardless of how you cut it. With this in mind, if we think about the sequential margin compression in Vegas, 2Q to 3Q, how much of this is a mix dynamic, so adding lower margin revenues as you called out? And how much of this is sequential margin compression on the existing business from headcount, for example, which you also called out. If that didn't make sense. I can try it differently. Thanks.

No, that's all right. It's -- this is Jonathan. It is mostly having to do with mix and to a minor extent, some addition of labor. It's almost impossible to overstate how much. I know your question was around sequential, but year-over-year and sequential, just the volume of activity has increased here, and that's required some additional labor resources. We've also opened some final outlets that had been closed over the past year or 2. So it's really both of those dynamics, which have caused that.

Got you. And then just to squeeze one more in. There seems to be -- I think you've highlighted a few times, but there seems to be a disconnect in your valuation. You've got the lease liability on the balance sheet and then you've got kind of the EBITDAR multiple discount. With this in mind, I guess, just kind of like high level, is the OpCo structure do you think still the most desirable strategy? Or would you ever consider a pivot from the asset structure, if that's an appropriate way to phrase it?

I think it is absolutely the right strategy. I -- the valuation considerations aside for a moment, I love this capital structure. It's a perpetual capital structure with escalations of 2% to 3% over the next 10 years. It is one that we do not have to refinance. And when I look at what we've been able to accomplish on our M&A agenda, it's probably not too difficult to tease out that the Cosmopolitan and ARIA did nearly $300 million of EBITDA during the third quarter. And these are businesses that when you look at what we paid to acquire them are sub-6x EBITDA multiples. And at the same time, we've sold the Mirage and the Gold Strike at 17 and 11x multiples respectively. So there's clear valuation disconnect going on here. But when I look at the capital structure, the combination of it and its cost with what I think is our operating leverage in these other businesses with the demand dynamics we've described and the fact that really our regional cross-property efforts are just getting started to the Cosmopolitan integration is still very early in this whole event backdrop I just think it's a fantastic opportunity for value creation. So I wouldn’t change.

That’s really helpful. Thank you.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Bill Hornbuckle for any closing remarks.

Thank you, operator, and thank you all for your attendance and, obviously, your interest. Just some highlight comments again. But we feel obviously very strong and excited by our business here in Las Vegas. You continue to see the strength in the growth Again, we think there's been a couple of fundamental changes both in the context of the customer mix, the opportunity and the desire to want to come to a place like Las Vegas and our position with the asset changes of Mirage for Cosmopolitan and some of the other things we do. We just really like where we are in Las Vegas. Macau, despite all of its trials and tribulations, in the month of October, did $450 million of GGR. So annualize that and think about that marketplace and its potential long term. We have a great deal of safe in Macau long term. And I think we're really well positioned to get relicensed and are confident that we'll do so by year-end. You heard obviously the success in BetMGM. It's absolutely tracking in the right direction. And we're equally, if not more excited, ultimately for MGM Resorts for LeoVegas, and our push into rest of world with that vehicle leading the way. I think most relevant is Jonathan's point about our balance sheet. The liquidity is amazing. It gives us two things. If we should go into a more significant downturn obviously, we've got the resources to sustain and ultimately enough resources to also be opportunistic. And so the opportunity that balance sheet presents for us, we think, is very compelling and very exciting as we think about the next couple of years. We are keenly focused on margins. I can assure you. We are at a place -- we said they would come back to where they are. We want to do more work, and we will continue to do -- they will not go backwards from this point. You have a commitment on that. And I think there's some room for enhancement in a couple of places, Las Vegas and potentially a couple of regional properties despite the one-off opportunities and things that hit us. The rent is compelling. The 2% to 3% versus open -- the cost of what's going on right now in the marketplace. And ultimately, our growth pipeline with New York and Japan around the Horizon -- we love that -- both of those opportunities for obvious reasons. And so I think we're well positioned in both of those places to take advantage of that as well. And then ultimately, to the colleagues at the table and all of our team I couldn't be happier with the crew and how it's performing. So thank you all, and appreciate you joining us today. Have a great night.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.