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MGM was winner of Mayweather vs. Pacquiao bout

For all the media giants' controversy over the "fight of the century," Wall Street's winner of the Floyd Mayweather Jr.-vs.-Manny Pacquiao bout was a casino stock.


Manny Pacquiao is punched by Floyd Mayweather Jr. in the first round of their title fight in Las Vegas on May 2, 2015.
Steve Marcus | Reuters
Manny Pacquiao is punched by Floyd Mayweather Jr. in the first round of their title fight in Las Vegas on May 2, 2015.

The years-in-the-making boxing match between Floyd Mayweather and Manny Pacquiao at MGM Grand on Saturday, May 2, boosted gambling on the Las Vegas Strip last weekend, with MGM getting the biggest payout, according to ITG Investment Research.

"We observed a jump in Strip game occupancy driven by tables, while MGM's occupancy handily outpaced the rest of the Strip," ITG's senior analyst Matthew Jacob said in a report released Friday.

Las Vegas' game occupancy, a metric for the portion of game tables, slots and other games that are being used, jumped 365 basis points year-over-year to 24 percent, led by significant gains in table games and slot machines, the note said. MGM outpaced the overall Las Vegas Strip, with overall occupancy up 668 basis points, year-over-year, at 42.2 percent.

MGM, which has a market cap of about $10.3 billion, said on its May 4 earnings call that the boxing fight weekend would add about 1 percent to the second quarter's revenue per available room (REVPAR), a metric used by the hotel industry that does not take into account revenue from casinos, restaurants and other services. MGM operates 23 resorts and casinos around the world, with 14 properties in Las Vegas.

"Because of the fight, we achieved one of our highest REVPAR weekends in the history of the company," MGM Chairman and CEO James Joseph Murren said on the conference call. "And since we have the sole rights to the closed-circuit parties, we hosted dozens of parties around our properties and sold over 46,000 tickets to our guests to watch the fight and then enjoy the rest of what a casino hotel has to offer."

That said, it's clear that the benefits to MGM from the historic fight between Mayweather and Pacquaio will not be a recurring revenue driver for the stock.

"This fight was a one-time event, one of the biggest ever for Las Vegas," ITG's Jacob said.

The boxing match does highlight steps MGM is taking to embrace the events industry, however. At $20 a share, MGM is still well below its peak price of $96 when the financial crisis hit in 2007.

"MGM's strategy to leverage its sports arenas to host high-profile events gives them an edge when these events are in town," Jacob said. "MGM received 40 percent of the tickets to the fight and had the exclusive right to the closed circuit feed on the Strip, and that helped MGM to capture a disproportionate amount of the casino play during the fight weekend."

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The second quarter offers "a favorable event calendar" for MGM, which is hosting Las Vegas' first Rock in Rio festival over the coming two weekends. The artist lineup includes Taylor Swift, Bruno Mars and Sam Smith.

And the Strip always benefits from major sporting events such as the Super Bowl. As much as a boost Las Vegas received from the boxing match, the game usage figures are about 13 to 14 percent below the average Super Bowl weekend levels for the last 20 years, ITG said.

Looking back at 52 Super Bowls and March Madness kickoffs since 1990, MGM outperformed the S&P 500 and Wynn Resorts in the five days following those events, according to historical analysis using Kensho. MGM had an average return of 2 percent in the week following the events, trading positive nearly two-thirds of the time. Wynn Resorts had less consistent positive trades and averaged 1.50 percent in returns.

Disclosure: CNBC's parent NBCUniversal has a minority stake in Kensho.