The Future of MGM Springfield Casino | Connecting Point | Apr. 26, 2018

The Future of MGM Springfield Casino | Connecting Point | Apr. 26, 2018


ALTHOUGH IT HAS MADE A NEARLY
$1 BILLION INVESTMENT IN ITS
SPRINGFIELD PROPERTY, THERE’S
BEEN BUZZ THIS MONTH THAT MGM
MIGHT HAVE ITS EYE ON ANOTHER
CASINO IN THE STATE, WYNN BOSTON
HARBOR IN EVERETT.
ALTHOUGH THE PROJECT IS STILL
UNDER CONSTRUCTION, THE WYNN
COMPANY HAS SIGNALED IT MAY SELL
THE PROJECT.
MEANWHILE, MGM SPRINGFIELD
LEADERS HAVE SAID THEY ARE
COMMITTED TO ITS PROJECT IN THE
CITY.
BUT WHAT WOULD BE REQUIRED FOR
IT TO FOLD?
ROB RIZZUTO OF MASSLIVE AND THE
REPUBLICAN DISCUSSIONED WHAT IT
WOULD TAKE.
>>PERFORM THEY WERE TO REACH A
DEAL TO PURCHASE THE WYNN BOSTON
HARBOR PROPERTY, NAY WOULD ONLY
BE ABLE TO HAVE, UNDER CURRENT
LAW, HAVE ONE CASINO LICENSE IN
MASSACHUSETTS.
>>WHICH THEY CURRENTLY HAVE
HERE IN SPRINGFIELD.
>>YES, WELL OVER A BILLION
INVESTED OVERALL IN ALL THE
MONEY THEY’VE SPENT TO THIS
POINT.
BUT THEY WOULD HAVE TO SELL ONE
OF THE LICENSES.
SO YOU CAN ONLY HAVE ONE, AND I
DON’T SEE THE STATE CHANGING THE
LAW TO ACCOMMODATE A CASINO
GIANT TAKING OVER TWO CASINOS IN
THE STATE.
>>BUT THEY HAVE A HOST
AGREEMENT WITH THE CITY OF
SPRINGFIELD THAT CONNECTS THEM
TO THIS PROJECT.
SO IF THEY WERE ABLE TO SELL THE
LICENSE, AND WE’LL DIG INTO THAT
LATER, WHAT HAPPENS THEN TO THE
HOST AGREEMENT?
>>WELL, THE HOST COMMUNITY
AGREEMENT, TO THE BEST OF MY
KNOWLEDGE, IT’S A STANDARD LEGAL
DOCUMENT, IT’S BETWEEN TWO
PARTIES, MGM AND THE CITY OF
SPRINGFIELD.
BUT THERE’S PROTECTIONS IN THERE
THAT BASICALLY SPECIFY, IN THIS
CASE MGM, THE OWNING COMPANY,
HAS TO MAKE CERTAIN ANNUAL
PAYMENTS, SOME OF THEM ARE
ADJUSTABLE, OTHERS ARE FIXED.
IT HAS TO HAVE CERTAIN HIRING
PRACTICES, YOU KNOW, THIS WHOLE
CAVEAT OF DIFFERENT CONDITIONS
THAT WERE PLACED ON THEM
RECEIVING THE LICENSE.
THERE’S ALSO A LITTLE NOTE IN
THERE THAT’S BEEN UNREPORTED AS
OF YET, BUT IT STATES THAT
NEITHER MGM NOR ANY 5% OR MORE
STAKE HOLDER IN THE PROJECT CAN
TRANSFER THE LICENSE WITHOUT
ACTUAL APPROVAL FROM THE CITY,
WHICH IS REALLY INTERESTING IF
YOU THINK ABOUT IT.
>>BECAUSE THAT WOULD TAKE SOME
SERIOUS WHEELING AND DEALING, I
WOULD IMAGINE, FOR THE MAYOR OR
COMMUNITY DEVELOPMENT, ET
CETERA, TO SIGN OFF ON THAT.
>>ABSOLUTELY.
I MEAN, THERE WOULD HAVE TO MAKE
SENSE FOR THEM.
IT’S A CLAUSE THAT’S IN THERE,
YOU KNOW, WHETHER MGM OR THE
CITY PUT IT IN THERE, IT’S VERY
INTELLIGENT.
YOU KNOW, YOU CAN’T REALLY
FORESEE SOMETHING LIKE WHAT’S
BEING TALKED ABOUT NOW ACTUALLY
HAPPENING, BUT PERHAPS SOMEBODY
DID.
>>AND THERE’S BEEN A TON OF
BUZZ ABOUT THIS, THERE’S BEEN
SOME GAMING INDUSTRY INSIDERS
WHO HAVE SAID THAT, AND THIS WAS
IN MASSLIVE, THAT MGM
SPRINGFIELD WAS A GREAT FIT FOR
MGM WHEN THE LICENSE WAS AWARDED
IN 2014, BUT MGM IS A VASTLY
DIFFERENT COMPANY TODAY.
HOW HAS MGM CHANGED IN THE LAST
FOUR YEARS?
>>IT’S GROWN, RIDICULOUSLY.
THEY SPLIT PART OF THEIR
BUSINESS OFF INTO A REAL ESTATE
INVESTMENT TRUST, WHICH HAS BEEN
PRETTY SUCCESSFUL AS WELL.
THEY HAVE REALLY GROWN THEIR
PRESENCE ON THE EAST COAST.
THEY OPENED THE MGM NATIONAL
HARBOR PROJECT IN MARYLAND RIGHT
OUTSIDE OF D.C.
THEY RECLAIM ED THEIR STAKE IN A
ATLANTIC CITY CASINO.
THEY HAVE GROWN EXPONENTIALLY
SINCE THEY WERE ATTEMPTING TO
GET THIS LICENSE.
SO THEIR PLACE IS LIKE THE
NUMBER ONE ENTERTAINMENT CASINO
GIANT ON EARTH, IT’S REALLY,
REALLY SOLID AT THIS POINT.
>>WHAT MGM OFFICIALS HAVE SAID
HERE IS THAT THEY’RE COMMITTED
TO THE SPRINGFIELD PROJECT AT
THIS POINT.
BUT IF, AS INDUSTRY INSIDERS SAY
IS ACTUALLY HAPPENING, ACCORDING
TO THE REPORT IN MASSLIVE,
THERE’S DISCUSSIONS LOOKING INTO
WHETHER OR NOT THEY COULD
ACTUALLY ACQUIRE THIS PROPERTY
IN BOSTON.
IT WOULD MEAN SELLING A LICENSE
HERE, AS YOU SAID.
AND LET’S LOOK AT THE TOP THREE
CONTENDERS FOR THAT, AS ALSO
REPORTED IN MASSLIVE.
MOHEGAN SUN IS NOT TOO FAR AWAY.
OF THE THREE ON THE TABLE, IS
THERE ANY THAT YOU THINK WOULD
BE MORE LIKELY TO GO FOR THE
LICENSE OR TO BE ABLE TO AFFORD
IT?
>>THAT’S A COMPLICATION AS
WELL.
I THINK MOST LIKELY IT WOULD BE
MOHEGAN.
AS OF RIGHT NOW THEY ARE WORKING
TO GET THE EAST WINDSOR, THE
SMALL CASINO AS A BUFFER BETWEEN
BASICALLY THE WEALTHY WEST
HARTFORD AREA AND SPRINGFIELD.
>>TO STOP PEOPLE COMING HERE,
THEY WANT TO KEEP IT IN
CONNECTICUT.
>>EXACTLY.
LOOKING AT THE CONVENIENCE
GAMING THEORY THAT PEOPLE IF
THEY’RE GOING TO GAMBLE ARE
GOING TO GO TO THE NEAREST
PLACE, THEY DON’T CARE ABOUT THE
GLITZ.
THERE’S COMPETING THEORIES ABOUT
WHETHER THAT WILL WORK.
BUT MOHEGAN IS FOCUSING ON
GETTING THAT PUSH ED THROUGH.
BUT LOOKING AT THE SPRINGFIELD
LICENSE, I THINK MOHEGAN IS THE
MOST LIKELY CONTENDER.
>>WHAT ABOUT PENN NATIONAL?
>>THEY WERE IN COMPETITION WITH
MGM FOR THE SPRINGFIELD CASINO
LICENSE, THEY HAD A PLAN, AND
WHERE THEIR REPUBLICAN NEWSPAPER
OFFICES ARE TO REDEVELOP THAT
LAND AND HAVE A CASINO.
>>WOULD HAVE BEEN A BIG CHANGE
FOR YOU GUYS.
>>YES, BUT THEY’RE PRETTY WELL
ESTABLISHED IN PLAINVILLE, THEY
HAVE A SLOTS PARLOR.
I’VE HEARD THAT FLOATED, BUT I
THINK THEY’RE COMFORTABLE WHERE
THEY ARE.
>>BECAUSE NAY WOULD HAVE TO
SELL THE SLOTS AND THAT WOULD BE
A LOT OF SHUFFLING AROUND FOR
THEM?
>>YES.
AND SINCE THEY AROUND WARDED THE
SLOTS LICENSE, THEY’VE —
WHETHER THEY’D BE INTERESTED IN
COMING BACK TO SPRINGFIELD WHEN
THEY ALREADY HAVE A WELL
ESTABLISHED BUSINESS IN
MASSACHUSETTS IS QUESTIONABLE.
>>SPEAKING OF PROFITS, HOW IS
IT THAT MGM WOULD BE WILLING TO,
CONCEIVABLY WHAT WOULD THEY DO,
TAKE A LOSS HERE IN ORDER TO
OPEN UP A CASINO IN BOSTON?
WHY WOULD THAT BE WORTH IT FOR
THEM?
>>BECAUSE THE NET GAINS NAY
COULD GET BASED OFF THE BOSTON
MARKET WOULD BE DOUBLE DIGIT
OVER GROSS GAMING REVENUE AS FAR
AS WHAT THEY COULD ANTICIPATE
HERE.
IT’S A BIGGER MARKET, A LOT MORE
MONEY OUT THERE, A LOT MORE
PEOPLE.
AS FAR AS BEING A COMPANY
LOOKING AT PROFITS, LOOKING AT
MONEY, YOU COULD TAKE A HALF A
BILLION DOLLAR LOSS HERE ON A
POTENTIAL SALE MAYBE, AND MAKE
THAT UP IN A RELATIVELY SHORT
AMOUNT OF TIME IN THE BOSTON
MARKET.
SO IT COULD BE SOMETHING THAT
WAS WRITTEN OFF AND THEN YOU
FOCUS ELSEWHERE, DOUBLE DOWN ON
YOUR EFFORTS AND MAKE THAT
MONEY.
>>NICE CONNECTION, DOUBLE DOWN,
I GOT THAT.
WHEN YOU LOOK AT THE HOST
COMMUNITY AGREEMENT AGAIN,
ENTERTAINMENT WAS A HUGE PIECE,
AS I UNDERSTAND IT, OF THAT
DOCUMENT.
THEY HAVE SOME SERIOUS
OBLIGATIONS, WHETHER IT’S
FIVE-YEAR COMMITMENT TO BRINGING
IN EVENTS TO MASS MUTUAL, THE
ICE SKATING RINK, NAY HAVE TO
MAINTAIN THAT OVER A NUMBER OF
YEARS.
THAT’S A BIG PIECE OF THIS TOO,
RIGHT?
>>IT IS.
IN THE HOST COMMUNITY AGREEMENT,
MGM AGREED TOCOPROMOTE,I THINK
IT’S FOUR SHOWS AT THE MASS
MUTUAL CENTER, THREE AT SYMPHONY
HALL, AND THREE AT CITY STAGE,
EACH YEAR, FOR AT LEAST FIVE
YEARS AFTER OPENING.
SO LET’S SAY THEY HOO
HYPOTHETICALLY SELL THE LICENSE
AND THIS OTHER CASINO COMPANIES
COMES IN, YOU COULD HONOR THOSE
SAME, YOU COULD HONOR THE
LOGISTICS OF WHAT’S IN THE
AGREEMENT, BUT YOU MIGHT NOT DO
WITH IT THE SAME, YOU KNOW,
LEVEL OF OOMPF THAT MGM WILL PUT
INTO IT.
>>MAYBE YOU WOULDN’T HAVE THE
BUYING POWER THAT MGM WOULD.
>>THE INCENTIVE TO SPEND MONEY
OUTSIDE OF YOUR OWN COMPLEX AS
PART OF A PLAN TO UPLIFT THE
CITY.
I COULD MEET MY ONLY FOR THOSE
VENUES AND ACTS, BUT MAYBE IT
WILL BE SOMETHING THAT NOBODY IS
INTERESTED IN GOING TO SEE.
IF THAT’S THE CASE, THERE’S NO
POSITIVE UPLIFT TO THE GREATER
DOWNTOWN COMMUNITY AS FAR AS
ENTERTAINMENT IS CONCERNED.
SO I COULD MEET THE OBLIGATION,
BUT IF I DON’T REALLY CARE,
THAT’S A POTENTIAL PIT FALL.
>>SO THIS POTENTIAL, WHETHER OR
NOT MGM WILL STAY HERE IN
SPRINGFIELD, WHICH AGAIN THEY
HAVE SAID THEY ARE COMMITTED TO
STAYING HERE IN SPRINGFIELD, BUT
A LOT PEOPLE IN THE GAMING
COMMUNITY ARE BUZZING ABOUT THE
POTENTIAL THIS WOULD MEAN FOR
THE MGM COMPANY TO MAKE THIS
LEAP TO BOSTON.
ARE WE HEARING FROM EITHER THE
MAYOR OR THE COMMUNITY
DEVELOPMENT OFFICE?
ARE THEY SWEATING A LITTLE BIT
WITH THIS POTENTIAL?
>>I THINK THEY ARE.
YOU KNOW, BASICALLY THE MAYOR
HAS COME OUT AND SAID THAT MGM’S
EXECS HAVE SAID WE ARE COMMITTED
TO SPRINGFIELD, OR THEY’RE
COMMITTED TO A SUCCESSFUL GRAND
OPENING HERE AND MAKING GOOD ON
ALL THEIR COMMITMENTS.
THEY’VE BEEN HERE FOR QUITE A
LONG TIME NOW, IT’S BEEN A
NUMBER OF YEARS THAT IT’S GONE
BY RELATIVELY QUICKLY.
BUT THEY ARE INVESTED IN THE
COMMUNITY.
BUT AT THE END OF THE DAY,
BUSINESS IS BUSINESS.
>>VERY INTERESTING TO SEE WHO
IS PLAYING WHAT HAND AND HOW.
>>IT IS.
IT’S POLITICS, ENTERTAINMENT AND
TV, IT’S ALL WRAPPED INTO ONE
AND IT’S OUR DAILY LIFE HERE IN
THE GREAT CITY OF SPRINGFIELD.
>>THANKS FOR THE INSIGHT, ROB.
>>THANK YOU.

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