MGM China has come to a deal with MGM Resorts International (NYSE: MGM) to keep on making use of the US gaming company’s well-known branding.
MGM extends branding partnership with Macau casinos
MGM China has come to a deal with MGM Resorts International (NYSE: MGM) to keep on making use of the US gaming company’s well-known branding.
MGM Cotai and MGM Macau are two of the casinos that are run by the Chinese company, which is part of the international gambling conglomerate headquartered in Las Vegas and has operations in Macau. The announcement follows the release of Macau’s decision to renew the validity of gaming licences for companies till the end of 2022.
“Following the further extension of the Sub-Concession pursuant to the Sub[1]Concession Further Extension Contract and in order to align the expiry dates of the Branding Agreement with that of the further extended Sub-Concession, the Company and the respective Counterparties have entered into the Second Renewed Branding Agreement on June 26, 2022 to replace and renew the First Renewed Branding Agreement,” according to a statement issued by MGM China.
The operator of the Bellagio holds close to 56 percent of the Macau company, whilst the co-chairperson of MGM China Holdings, Pansy Ho, is the second-most stakeholder with 22.49 percent. Pansy Ho is the daughter of Stanley Ho, a prominent figure in the gambling industry in Macau. MGM and Ho are both 50-50 shareholders in the company MGM Branding.
The first contract was reached in 2011, and it was supposed to expire in 2020. However, in 2019, it was renewed such that it would last until June 2022.
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The renewal of the branding arrangement is an essential matter for both MGM and its Macau affiliate, despite the fact that it is a foreseen and routine activity. When it comes to the second option, the company makes use of one of the gaming industry’s most well-known brands in order to entice customers to visit both of its integrated facilities.
Meanwhile, MGM Resorts International has the ability to make use of its connection to Macau in order to attract high-rolling gamblers from China to its establishments on the Las Vegas Strip, like the Cosmopolitan, the MGM Grand, and the Bellagio. This is possible in standard operating settings. The continuation of the branding agreement comes with a number of financial obligations as well.
“As one or more of the applicable percentage ratios (other than the profits ratio) under Rule 14.07 of the Listing Rules in respect of the monetary cap for the period from June 26, 2022 to December 31, 2022 under the Second Renewed Branding Agreement is more than 0.1% but less than 5%, such continuing connected transaction is subject to reporting, announcement, and annual review requirements but is exempt from independent shareholders’ approval requirements under Chapter 14A of the Listing Rules,” added MGM China in the statement.
According to the provisions of the contract, MGM China is granted the permission to make use of the MGM and MGM Grand brands, in addition to the well-known MGM lion and “other MGM-related service marks, trademarks, registrations, and domain names”.
MGM will, without a doubt, get payment under the terms of the deal. After dishing out more than $21 million for the rights to use the brand the previous year, the China business gave the US parent $4.7 million in the first quarter of this year for the right to use the trademark.
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