China – MGM China and MGM resorts to open more global marketing offices to promote Macau casinosBy Phil - 3 April 2023
Macau casino licence holder MGM China has signed a new deal with its majority shareholder, MGM Resorts International, whereby the latter will open several global marketing offices to promote MGM China and source international players.
The new International Marketing Agreement replaces the Sixth Renewed MGM Marketing Agreement, and is designed to address the Macau government’s aim of to diversifying the Macau economy and reduce its reliance on customers from mainland China, Hong Kong and Taiwan. MGM China will pay expenses to MGM Resorts of HK$64m in 2023, rising to HK$82m in 2024 and HK$113m in 2025.
MGM China said: “In order to fulfill its obligations under the New Concession Contract, MGMGP as one of the concessionaires, is required to invest in growing revenue from overseas markets and is committed to expand the overseas sales network and resources. By leveraging the existing MGM Marketing Offices cluster operated by MGM Resorts International, the Macau Group is able to more efficiently grow its resources to reach its Key Performance Indicators (KPIs) within the set timeframe. Furthermore, pursuant to its commitment to the Macau Government, the Macau Group envisages to further open additional Marketing Offices in order to fully utilize the international marketing offices network.
“In order for the Macau Group to have greater oversight and take a stronger lead in MGM Marketing Offices operations, the Parties agreed to enter into the International Marketing Agreement whereby, among others, the Macau Group should pay its fair share of the MGM Group Expenses (subject to reimbursement mechanism in relation to revenue generated by the Macau Group for the MGM Properties). Therefore, the Parties have terminated the Sixth Renewed MGM Marketing Agreement, and entered into the International Marketing Agreement which provides for a shared expenses model.”
“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 the Macau Group (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 the Macau Group and MGM Group; and (iv) ultimately, the resources to reach its KPIs arising from the New Concession Contract.”