MGM Resorts International CEO William Hornbuckle (second from left) met with Springfield Mayor Domenic Sarno (center) in January 2023 to discuss concerns regarding MGM Springfield’s adherence to the host community agreement. Sarno said he would meet with Hornbuckle soon following a March 20 report that the casino company was exploring a sale of its Springfield operations.
Reminder Publishing file photo

SPRINGFIELD — Mayor Domenic Sarno said he intends to meet soon with MGM’s high-level management after a report by Bloomberg suggested the casino giant may be looking to offload its Springfield operations.

The media giant reported on March 20, citing anonymous sources, that the company is in the preliminary stages of exploring the sale of its casino operations in Springfield as well as its Northfield Park horse racing track and casino in Ohio.

“I have spoken to MGM Resorts International CEO and President Bill Hornbuckle and he has agreed to meet with me in my office in the very near future to discuss the status of MGM Springfield. I assure you that my number one priority is protecting the interest of the city of Springfield,” Sarno said in a prepared statement. Reminder Publishing asked Sarno’s Communications Director Bill Baker for clarification as to whether Sarno was previously aware of discussions related to a potential sale but did not receive a response as of press time.

A spokesperson for MGM Resorts International told Reminder Publishing in a prepared statement, “MGM Resorts International is proud of our partnership with the city of Springfield, a partnership that 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 among its highest revenue numbers in February. We are aware of the recent press reports and have a longstanding policy not to comment on any rumors.”

MGM Springfield’s land and buildings were sold in 2021 to MGM Growth Properties. MGM Resorts International leases the property and operates the casino and resort hotel. In addition, the company manages the operations for the MassMutual Center and Springfield Symphony Hall venues.

City Solicitor John Payne did not immediately respond to a request for comment regarding the host community agreement and how it might impact the process for any potential sale.

Massachusetts Gaming Commission Communications Division Chief Thomas Mills referred specific questions on Springfield’s host community agreement with MGM Springfield to the city but noted that the commission would have a role in the process if MGM attempted to sell and the issue would be addressed publicly at a commission meeting.

As part of its negotiated deal with Springfield, MGM contributes $25 million annually in addition to the $15 million up-front payment the city received.

MGM Springfield’s mixed results

In its 2023 fourth quarter and full year earnings report, MGM Resorts International illustrated that the company’s regional operations, consisting of seven domestic properties including MGM Springfield, experienced a 4% decrease in net revenues compared to the prior year. Casino revenues in the fourth quarter of 2023 were down 14% — and down 24% for table games — in comparison to the fourth quarter of 2022. Excluding MGM Grand Detroit and National Harbor, which experienced a strike, gambling revenues were down 9% — including 20% for table games — when comparing the fourth quarters. Non-gaming revenues, such as rooms and dining, were also down 5%.

Overall, the Springfield casino’s performance has been below community and company expectations since its 2018 opening and operations were heavily impacted by the coronavirus pandemic. Hornbuckle and then-MGM Springfield President Chris Kelley met with Sarno and City Councilor Michael Fenton, who was chairing the Casino Oversight Committee, in January 2023. Sarno called for the meeting after concerns were raised about the company’s adherence to the host community agreement and continued reduced amenities and services following the easing of coronavirus pandemic-era restrictions.

After the meeting when speaking with the press, Hornbuckle admitted that the casino would possibly have not been built in Springfield had the current market conditions been previously known.
“Our original valuation of this market simply was, off full stop … We thought there would be more business here than ultimately materialized,” said Hornbuckle.

He also acknowledged the company had overall failed to maintain its promise of 3,000 jobs, stating 2,000 was a more realistic goal.

In the months following, Kelley reported to the Casino Oversight Committee that the casino had surpassed $1 billion in revenue, had been the first to launch its on-site sportsbook and expanded hours. Offerings at the casino’s dining, pouring and entertainment locales. In March 2023, the Indian Motorcycle 1901 retail store reopened on the casino’s campus. Kringle Candle, which was located inside the former Spiritualist Church, never reopened.

According to the Massachusetts Gaming Commission’s February 2024 revenue report, MGM Springfield took in just shy of $23 million in gross gaming revenue from slots and table games last month, falling $280,256 short of its monthly revenue during February 2023, but far better than the $19.9 million it posted in February 2022.

Sports wagering has not been the boon some anticipated since it was legalized in 2023, a statewide trend. MGM Springfield colleced $262,066 in taxable revenue in February 2023, its first full month of sports wagering, and posted $172,624 in March 2023. The company posted its first and only loss of $232,493 the following month. Sports wagering revenue spiked to a high of $285,366 in September 2023. MGM Springfield posted $242,675 in taxable sports wagering revenue this February.

In late October 2023, MGM Springfield reached a $6.8 million settlement with Attorney General Andrea Campbell’s office following an investigation into complaints about the company’s management practices that began shortly after the casino’s 2018 opening. A spokesperson for the company said it had been “proactive” in rectifying the issues that led to the complaints since 2019.

Also in October 2023, MGM Resorts International reported a cyberattack that may have impacted customers of MGM Springfield. Hackers were able to obtain other information, including customers’ names, contact information, genders, dates of birth and drivers license numbers of customers.

Additionally, some of these customers’ social security and passport numbers were compromised. The incident specifically impacted customers who did business with MGM Resorts prior to March 2019.

Legislative response

State Rep. Carlos Gonzalez (D-Springfield) lamented the lack of communication related to such a potentially impactful conversation and decision.

“I’m deeply disappointed to learn from a Bloomberg News source that MGM Springfield is being put up for sale without prior notification to the state Gaming Commission or the Springfield state delegation,” he said. “Transparency and open communication are vital in maintaining trust and accountability in the gaming industry.”

Gonzalez, whose House district includes the neighborhood in which the casino is located, wrote a letter to the Massachusetts Gaming Commission in response to the report in which he requested that the commission deny MGM’s request to sell the casino.

“Springfield has benefited from MGM and its casino. The establishment has not only provided significant employment opportunities but has also contributed to the economic growth and development of our community,” he wrote. “By denying MGM’s request to sell the casino prematurely, we can safeguard the interests of our community and ensure that MGM fulfills its obligations and remains committed to the long-term success and sustainability of the casino in Springfield.

“I request that the Massachusetts Gaming Commission thoroughly evaluate the potential ramifications of MGM’s sale and consider the concerns of the Springfield community. It is crucial that any decision regarding the casino’s sale prioritizes the residents’ best interests and ensures the continuation of the positive impact MGM has had on our local economy.”

State Sen. Adam Gomez (D-Springfield) and state Rep. Angelo Puppolo (D-Springfield) either suggested or outright stated their belief that the casino giant had little interest in its Springfield project dating back to its early design stages when the company pivoted from a proposed 25-story hotel to the current layout and phased out on-site market rate housing from its plans.

Gomez, whose district consists of most of Springfield, including the downtown area in which the casino is located, responded to the report with a public statement that read, “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.

“My chief concern is if the casino is sold, that it be in true accordance with the host community agreement. Secondly, the buyer must be a reputable entity that will continue to live up to and beyond the agreements in the [host community agreement] if it is another casino operator. MGM, the potential buyer and our city and state officials must all be under close scrutiny on behalf of the taxpayers throughout this process; if there is a potential sale.”

Puppolo’s statement was stronger. “I for one won’t be sad to see them pack up and leave,” he said, characterizing MGM as having “one foot out the door” for some time.

Puppolo added, “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.”

Puppolo has been a vocal critic of the company and following the Hornbuckle’s January 2023 meeting in Springfield, he penned a letter demanding information on MGM’s hiring and employment practices and distribution of host and surrounding community agreement funding. Like Gonzalez, he also expressed concern “that the legislative delegation representing Western Massachusetts has not been kept abreast of developments confronting MGM Springfield; and your admission of the vast underperformance of the current business model as presented to the citizens of the region.”

Regional impact

In addition to the host community agreement with Springfield, MGM Springfield has surrounding community agreements with Agawam, Chicopee, East Longmeadow, Longmeadow, Ludlow, Wilbraham and West Springfield.

Longmeadow and West Springfield secured the most lucrative agreements. After its negotiations ended in arbitration, Longmeadow took home $850,000 in up-front payments, and $275,000 annual payments, subject to 2.5% automatic yearly increases. West Springfield received $665,000 up front, plus reimbursement for consultants and attorneys, and $375,000 in annual mitigation payments plus an additional $750,000 spread out across years two through 13 of the agreement.

Agawam and Chicopee’s agreement netted each $125,000 up front, $100,000 in annual payments and an additional of $750,000 in varying amounts spread across years two through 13 of the agreement. East Longmeadow received an up-front payment of $50,000, annual payments of $75,000 and $350,000 spread between years two and nine of the agreement. Holyoke also received $50,000 up-front and annual payments of $85,000 in year one, $135,000 in year two, $85,000 in years three to five, $160,000 in year six, $85,000 in years seven to 12, and $43,334 in the final three years of the 15-year agreement. Ludlow and Wilbraham’s agreements called for a $50,000 up front, $75,000 in annual mitigation payments and an additional $375,000 distributed between years two and nine.

The company has played host to regional and national entertainment acts, including Bruno Mars for two nights in June 2023, and the Red Sox Winter Weekend. Locally, they have sponsored or supported numerous events as well as community and charitable endeavors.