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Finances, Politics Stood In Way Of MGM-Wynn Deal

   Relative calm has returned to the burgeoning casino industry in Massachusetts after a week of uncertainty.  It was triggered by word that MGM Resorts International and Wynn Resorts were in talks about the sale of Wynn’s yet-to-open Boston-area casino. 

   The top executive of Encore Boston Harbor told the Massachusetts Gaming Commission this week the $2.6 billion casino that Wynn Resorts built will open to the public next month as scheduled.

   "We'll be ready to go on June 23rd at 10 a.m.," said Encore Boston Harbor President Bob DeSalvio.

  His comments came hours after MGM Resorts announced it had broken off talks with Wynn about buying the casino.  It was just a week ago, the two casino industry titans said their respective CEOs had held “very preliminary” discussions about a possible sale.

  Because Massachusetts law does not allow a company to hold more than one casino license in the state, if MGM purchased the Wynn property in eastern Massachusetts it would have to divest the $960 million casino it opened just last August in downtown Springfield.

The mega-deal would have been subject to approval by the gaming commission and local officials in both Springfield and Everett, the city north of Boston where the Encore casino was built on a once badly polluted industrial site along the Mystic River.

  Could such a deal have been pulled off?

  "It could have been done, but would have been difficult from both an economic and political point of view," said Clyde Barrow, head of the political science department at the University of Texas - Rio Grande Valley and a gaming industry specialist.

  He noted that reports surfaced more than a year ago that MGM was interested in buying the Boston-area casino.  At the time, Wynn was facing the possible loss of its Massachusetts license over sexual misconduct allegations about founder Steve Wynn.

" If you look at the peformance of new resort casinos that have opened in the northeast recently, they have just dramatically underperformed their orginial forecasts and revenue projections," said Barrow. " I think Wynn is taking a look at this and realizing the Encore Boston Harbor is not going to be the facility they originally expected it to be. And yet they have $2.6 billion invested in it. I doubt MGM was willing to pay anything close to that amount, and probably just could not reach a deal on a price."

  In announcing the break-off of talks with Wynn Resorts, MGM acknowledged the “anxiety” the discussions had caused among local and state officials.

  During a visit to Springfield Tuesday, Gov. Charlie Baker made his concerns known.

  "We don't want to see anything happen with respect to either MGM's position here or Wynn's position in Everett that creates a significant disruption for either community," Baker said. "I mean people put a lot of time, effort, money, resources, and lost opportunity into ensuring that both the MGM casino in Springfield would go up and be operational and that the Wynn facility would go up. People are going to expect those commitments are honored."

     The host community agreement between MGM and Springfield protects the city financially if MGM were to sell its Springfield casino, according to Mayor Domenic Sarno.

   "If something does occur, I am in a good position of leverage with the gaming commission that nothing can occur that will not benefit the city of Springfield without my OK and the Mass. gaming commission's OK," said Sarno.

   MGM’s hotel casino complex is the largest single property taxpayer in Springfield to the tune of about $17 million a year.  Additionally, MGM is obligated to pay millions more into reserve funds for public safety and community improvements.

    The casino operator is also committed to employ 3,000 people throughout its facility with Springfield residents constituting at least 35 percent of the workforce.

   Aside from the jobs and revenue, MGM is also being counted on to use its clout in the entertainment industry to transform Springfield’s nightlife and entertainment scene.  Sarno said any other casino operator would be hard pressed to deliver what MGM can.

  " They are world renowned," said Sarno. " We wanted the best and we received the best."

  In its first year, MGM brought Stevie Wonder and Cher to Springfield and booked Aerosmith for four shows this August.

  MGM operates the MassMutual Center – the state-owned arena and convention center in downtown Springfield.  The city is negotiating with MGM to take over management of Symphony Hall.

  In January, MGM partnered with the Springfield Thunderbirds to bring the AHL All Star Game to Springfield – the first time the city had hosted the event in 60 years.

The record-setting tenure of Springfield Mayor Domenic Sarno. The 2011 tornado and its recovery that remade the largest city in Western Massachusetts. The fallout from the deadly COVID outbreak at the Holyoke Soldiers Home. Those are just a few of the thousands and thousands of stories WAMC’s Pioneer Valley Bureau Chief Paul Tuthill has covered for WAMC in his nearly 17 years with the station.
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