GGRAsia – MGM China to pay max US$173mln in 3yrs for trademarks

MGM China to pay max US$173mln in 3yrs for trademarks

Dec 09, 2022 Newsdesk Latest News, Macau, Top of the deck

Macau casino business MGM China Holdings Ltd is to pay up to US$173.2 million over the course of three years from January 1 next year, for use of trademarks linked to its parent entity in the United States, MGM Resorts International.

The information was in a Thursday filing to the Hong Kong Stock Exchange, which said the deal runs from January 1, 2023 until December 31, 2025.

MGM China, recently-confirmed as provisionally approved for a new, 10-year casino concession in Macau, operates two casino properties in Macau: MGM Macau (pictured) on the peninsula, and MGM Cotai.

The Hong Kong-listed firm said it had been granted the licence to use “MGM”, “MGM Grand”, “MGM Grand Macau” and the MGM lion and other “MGM-related service marks, trademarks, registrations and domain names” owned by MGM Resorts and its subsidiaries.

“In addition to any expansion of MGM Macau and MGM Cotai, any future resort and casino projects or sites that the group may develop … will use the MGM brand,” it added.

The annual payments are calculated on a basis equal to 1.75 percent of MGM China’s consolidated gross monthly revenues, but capped. The cap is US$55.6 million for 2023; US$57.6 million for 2024; and US$60.0 million for 2025.

In Thursday’s filing, MGM China also said it is to pay the equivalent of a maximum US$46.4 million in 2023 to connected parties for services including branding services, laundry services and hotel cleaning work.

Of the aggregate in 2023 outgoing payments, US$15 million will go to MGM Branding and Development Holdings Ltd, a British Virgin Islands firm jointly and equally wholly-owned by MGM Resorts and MGM China co-chairperson Pansy Ho Chiu King. The same annual amount will also be paid in 2024 and 2025, respectively.

There is also for the period 2023 to 2025 inclusive, a yearly, capped amount of HKD180 million (US$23.1 million at current exchange rates) payable to Hong Kong-listed Shun Tak Holdings Ltd for certain services for MGM China’s hotels. Ms Ho is Shun Tak’s executive chairman and managing director.

The latter deal is to cover dry cleaning and laundry and property cleaning; the sale of cash vouchers from the Shun Tak group to MGM China; provision of rental rooms from Shun Tak to the group at intercompany rates; and the provision of rental rooms from MGM China to Shun Tak Group at a wholesale room rate.

MGM China will also pay up to HKD65.0 million in 2023 to the MGM Resorts parent for marketing services. Such amount will rise to a maximum of HKD75.0 million for 2024, and HKD85.0 million for 2025.

The filing also highlighted renewal of a “non-compete” agreement for Ms Ho, with the MGM Resorts parent.