Friday, November 8, 2019

MGM considering sale of Springfield casino’s real estate - The Boston Globe

MGM considering sale of Springfield casino’s real estate - The Boston Globe


MGM considering sale of Springfield casino’s real estate - The Boston Globe

Posted: 07 Nov 2019 02:50 PM PST

MGM Resorts is considering whether to sell its Springfield casino's real estate, a move it says would help free up cash while allowing it to continue operating the $960 million facility it opened just a year ago.

Such a deal would follow similar decisions made by the company, including MGM's $4.25 billion sale last month of the real estate where its Bellagio resort in Las Vegas is sited. The company is also considering a comparable deal for its signature MGM Grand in Vegas this year, which would leave the Springfield site as its last wholly owned US casino.

MGM Resorts has been looking to cash out some of its assets and pay down debt. The company's chairman and chief executive, James J. Murren, said on a recent call with financial analysts that it would soon be focusing on what to do with properties, including Springfield.

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MGM Resorts has explored transactions involving its Springfield facility before. Last spring, MGM was in talks to buy Everett's Encore Boston Harbor casino from Wynn Resorts. That move would have required it to relinquish its license to operate a casino in Western Massachusetts, but MGM eventually pulled out of those discussions.

A sale of the real estate associated with the casino, which could conclude with MGM leasing back the buildings and land, would have a much more subtle effect on the gambling landscape in Massachusetts.

In a statement, MGM suggested that a real estate sale would not affect how its casino runs.

Such a transaction would "focus exclusively on the transfer of real estate and have no bearing whatsoever on the property's management or operations," it said.

"These transactions have no impact on employees, partners or the guest experience," the company added.

MGM revenues have been disappointing since it opened in August 2018, falling well short of the projections it offered to state regulators when the company was seeking a license. After more than 13 months, the MGM Springfield's total of $293.6 million in gaming revenue remained well below the roughly $400 million it had projected for its first year.

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MGM said recently that it employs about 2,300 people — though that number is hundreds lower than when it opened. The casino has said it is continuing to build its business, and that entertainment events and other attractions have also drawn visitors.

A deal to sell its real estate in Springfield would be sure to attract government scrutiny.

City officials have been counting on a big economic development boost from the casino. Mayor Domenic J. Sarno said in a statement that he will insist MGM adheres to its host community agreement, which sets out the standards for the casino to operate in the city.

"We will certainly hold MGM to this legally binding agreement," he said. "Part of this mandates the city and the Massachusetts Gaming Commission must approve any and all adjustments to said agreement."

Elaine Driscoll, spokeswoman for the Massachusetts Gaming Commission, said it is difficult to say what kind of permissions a deal could require because nothing has been proposed to the regulatory body. But, she added, "commission approval is required for a change in the real estate structure."

Driscoll noted that the commission did vote this summer to approve the sale of the Plainridge Park casino's Plainville real estate, which was acquired by an investment trust. Plainridge Park continues to be operated by Penn National Gaming.

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Material from Bloomberg was used in this report. Andy Rosen can be reached at andrew.rosen@globe.com.

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