MGM's Voting Reset Cannot Hide a 20% EBITDA Drop

MGM Resorts has resolved one governance question while exposing a more immediate operating problem. The company amended its voting agreement with its largest shareholder, People Incorporated, on the same day it reported a 1% decline in third-quarter revenue and a 20% drop in adjusted EBITDA.

The agreement follows People Inc.'s withdrawal of a proposal that valued MGM at more than $18 billion. People Inc., Barry Diller and related parties held 66.8 million MGM shares, or about 27% of the company, according to a September filing cited by Hotel Dive. The amended agreement caps their aggregate ownership at 29.9% unless the terms change.

The covered shareholders also agreed to vote with MGM's board recommendation if a future change-of-control proposal reaches shareholders. In return, MGM agreed not to take defensive measures designed to disadvantage the group while it complies with the agreement. The amended agreement caps the Diller group at 29.9% and requires it to follow MGM's board recommendation in a future change-of-control vote.

Those terms reduce the risk of another public standoff over control, and they give the board more room to repurchase shares. They do not create a sale process. MGM's own announcement says no transaction is contemplated, while chief executive Bill Hornbuckle said the back-and-forth discussion about one company buying the other was finished.

The operating results make that distinction important. Consolidated revenue fell 1% from a year earlier to $4.2 billion, while adjusted EBITDA dropped 20% to $403 million. MGM reported a $17 million net loss attributable to shareholders, compared with a $285 million loss a year earlier. Adjusted diluted earnings swung to a loss of $0.11 per share from earnings of $0.24.

Las Vegas was the main source of pressure. Segment revenue declined 2%, adjusted EBITDAR fell 12%, and both revenue per available room and average daily room rates were down 8%. Occupancy was flat. Management said higher fuel costs and broader economic pressure weighed on leisure and transient customers, even as group and convention business remained relatively firm.

There were meaningful offsets. MGM China increased revenue 5% and reached a record 17.1% quarterly market share, according to the company's results. BetMGM North America distributions and branding fees to MGM totaled $34 million. Management also pointed to digital operations and the MGM Osaka project as longer-term growth drivers, while October Las Vegas activity improved with a stronger convention and event calendar.

For shareholders, the voting agreement is best viewed as a capital-allocation framework, not an operating catalyst. It may make buybacks easier and set clearer rules for any later control proposal. That split matters because the agreement gives MGM more freedom on capital allocation, but it does not fix weaker room pricing or guarantee a transaction.

The next evidence should come from Las Vegas pricing, convention demand and cash returns rather than takeover speculation. A sustained October rebound would support management's view that the third-quarter weakness was temporary. If room rates and leisure demand stay soft, the governance reset will matter less than the earnings pressure it cannot solve.