MGM Springfield Is On The Chopping Block
Yes, it’s true. MGM Resorts International is looking for someone to take their MGM Springfield casino off their hands. According to Bloomberg, discussions are preliminary and may not result in action. Rumors that MGM Springfield was for sale started before the $970 million resort opened in August 2018. This isn’t the first time Springfield’s “Industrial Chic” casino is up for sale. It looks like MGM Springfield Is On The Chopping Block – Again.
A “Not-So-Shocking” Announcement
This is not surprising to those who follow New England’s casinos. It’s also been obvious to Springfield’s leaders and politicians. Many local opinions expressed disappointment, regret, and concern for downtown businesses. State Representative Angelo J. Puppolo, Jr. cited this as evidence of MGM’s lack of full commitment from the beginning.
Massachusetts State Senator Adam Gomez had a blunt assessment of MGM’s commitment. “The news of MGM exploring the sale of MGM Springfield is both surprising as they’ve become a fixture in our community and unsurprising as the rumors of their fickleness to the site started even before a shovel was in the ground.”
Disappointment in promised outcomes includes MGM’s:
- hiring practices,
- entertainment offerings,
- management of CityStage, and
- overall fulfillment of agreements with the host and surrounding communities.
Related Article – MGM Springfield generated more than $20M in gaming revenue in February
Mayor Sarno has tried to hold the criticism down to a dull roar in Springfield. But, he later stated, “it hasn’t gotten where we’d like it to be. But we have not stopped, nor would we stop, trying to make this the absolute best that it can be for this community. I assure you that my number one priority is protecting the interest of the city of Springfield.”
The Mayor is planning to meet with MGM Resorts International CEO and President Bill Hornbuckle soon to discuss the status of MGM Springfield.
MGM officially broke ground, with promises of an economic boost for Springfield and surrounding areas, millions of dollars in tax revenue, and thousands of local jobs. In short, the “largest economic development project the region had seen in generations.”
Related Post – MGM Springfield Is Not A Resort – 2021 Update
MGM International
Last year, MGM President William Hornbuckle indicated a reevaluation of the market’s potential and admitted that the Springfield casino did not meet initial business expectations.
“MGM Resorts International is proud of our partnership with the City of Springfield, which began long before the opening of MGM Springfield in 2018. We are equally proud of the strength of our operations at MGM Springfield, which achieved its highest revenue numbers in February. We know the recent press reports and have a longstanding policy not to comment on any rumors.”
MGM RESORTS INTERNATIONAL SPOKESPERSON
Same Hoops For Potential Owner
State Representative Puppolo sees the prospect of a new owner/operator taking over the casino. “I’m optimistic that a new owner, maybe even local ownership, can make this the destination and resort-style experience that our area deserves and was promised. I for one won’t be sad to see [MGM] pack up and leave.”
The same requirements for the initial license still prevail.
- The resort-casino licensing fee is $85 million and requires a capital investment, including a hotel facility, of at least $500 million. The Commonwealth will receive 25% of gross gaming revenues.
- Any sale must be approved by the Massachusetts Gaming Commission’s.
- The sports wagering operator licensing fee for a 5-year license is $5 million. Category 1 Sports Wagering Licensees are taxed on 15% of gross sports wagering revenue.
- A new owner buying MGM Springfield would still be bound by state gaming regulations accompanying MGM’s existing state license.
- Host agreements with Springfield and surrounding communities would be the same.
- Providing for tens of millions of dollars and has committed to spending approximately $50 million annually with regional vendors and suppliers
- Expectations for a new owner maintaining jobs belonging to current MGM employees.
However, any new owner would also have the right to petition for changes to the gaming license as long as those changes don’t conflict with state law, according to Massachusetts Gaming Commission regulations.
Related Post – An MGM Springfield Trip Report
A Look Back at Previous MGM MOVES
1. Deciding on MGM
In 2015 MGM International and then CEO Jim Murren said they were confident that New England would immediately make MGM Springfield the #1 casino resort.
The Massachusetts Gaming Commission had two choices for the western region gaming license – Mohegan Sun’s Palmer Hotel, Casino, and Water Park and MGM Springfield. Voters with influence from the MGC, chose MGM Springfield because they wanted the big industry names in the Bay State.
Rendition of Mohegan Sun, Palmer, 2018
2. Changing The Plan
Before they broke ground, changes were being made. The most serious concerned the hotel – the proposed highest building beckoning gamblers from southern New England and New York State. It was to be a 25-story glass facade rising above the city with an oversized parking garage. However, that was changed to a 5-floor hotel and a smaller parking garage by two floors with the casino floor made smaller.
“It’s evident to me that since day one MGM has not been fully committed to this project – look no further than the change in the high-rise hotel and shortened gaming space along with a short selection of restaurants and entertainment it’s clear that this was a placeholder for them,”
State Representative Angelo J. Puppolo, Jr.
3. Local Development
Officials from Springfield, Massachusetts, and the city’s MGM casino laid out a plan for the company to fulfill the requirement for residential housing. A pledge to provide a minimum of 54 units of market-rate housing in the general downtown area
Disagreements over the impact of COVID-19 caused adjustments to the housing plan. City leaders felt MGM wasn’t doing enough. That building project is now in the hands of another developer.
Units would be part of its development by partnering with the city to help fund the redevelopment of a former downtown hotel.
The old Court Square Hotel in Springfield, Massachusetts. Originally to be made into housing by MGM Springfield.
4. Taking Over Encore – Selling MGM
In 2019, there was serious speculation that MGM would sell the Springfield casino as part of a deal to take over the larger, and more profitable, casino that became Encore Boston Harbor when it looked like Wynn Resorts might have to divest itself in Massachusetts. State law bars one owner from having two Massachusetts casinos. The Wynn deal never happened.
Related Post – MGM Springfield Four Years Later
Would Connecticut Tribes Buy the MGM Springfield?
The CT tribes were planning a $300 million to $400 million investment in Tribal Winds, their East Windsor project. However, the plan was stopped when the threat from MGM Springfield was less than expected.
The CT tribes were planning a $300 million to $400 million investment in Tribal Winds, their East Windsor project. However, the plan was stopped when the threat from MGM Springfield was less than expected.
After MGM’s opening, the threat did not seem as large. Even MGM International admitted to overestimating the “loyal patronage” that visited Foxwoods and Mohegan Sun.
Bloomberg reported last week that MGM Springfield would soon be on the chopping block in a bid to improve MGM International’s bottom line. With the casino for sale, there’s speculation that the Mashantucket Pequots and the Mohegans — individually or as partners — might be interested. When asked for comment, both tribes were vague about their level of interest in MGM Springfield.
If it were to be available, a leading gaming expert and adviser for both tribes suggested such an acquisition by either tribe, or both, “makes a lot of sense, depending on the price.”
Related Post – MGM Springfield Finding Its Identity
MGM REEVALUATES THE DECISION TO BUILD IN SPRINGFIELD
If the market conditions in Springfield were fully understood at the time, the casino might not have been built.
MGM President William Hornbuckle
In January 2023, Hornbuckle told reporters “Our original valuation of this market simply was off. We are where we are now, but we thought there would be more business here than ultimately materialized. Scale, scope, etcetera. It is what it is.”
Pre-opening, MGM also told regulators it expected to see $418 million in annual gross gaming revenue in its first year, or an average of $34.8 million per month. The casino has never hit that $34.8 million goal. The record was $26 million in September 2018, the first full month of operation.
The casino projected it would have 3,000 employees and briefly came close to that mark when it opened in August 2018. Since then, that number has trended downwards. According to its third-quarter report to the Massachusetts Gaming Commission, it had 1,490 workers. And, the casino has been well off from revenue projections made before opening. In 2023, Hornbuckle said it was unrealistic to think MGM Springfield would get back to that 3,000-employee figure, and that the overall projections were inaccurate.
SUMMARY
The Lion isn’t roaring in Springfield these days due to rumors and MGM International’s admitted silence on selling its casino in the “City of Firsts,” We’ve seen this before. The city of Springfield deserves more. Downtown needs the lift of a thriving casino – either MGM or another company.
Robin “Binbin” Aubin