In April, MGM Resorts International President and CEO Bill Hornbuckle met with Springfield Mayor Domenic Sarno to discuss the future of the casino as Bloomberg had reported earlier in the year that MGM was considering selling the Springfield casino.
After the meeting, Sarno released this statement: “My number one priority is to protect the taxpayers of the city of Springfield. It is imperative that every aspect of our host community agreement is met and adhered to and that Springfield will receive every dollar it is owed in accordance with the HCA. Additionally, I will insist that the quality of entertainment and all other amenities are fulfilled as provided for in the HCA. I have been in contact with Jordan Maynard, interim chair for the Massachusetts Gaming Commission, to make it clear that we expect our HCA to be honored.”
Accordingly, MGM issued this statement: “MGM Resorts International remains dedicated to serving the best interest of the city of Springfield. Our President and CEO Bill Hornbuckle had a productive meeting with Mayor Domenic J. Sarno and we continue to focus on the needs of the city, its residents and our team members.”
In other words, nothing was settled in terms of the news report, or at least nothing either Sarno or Hornbuckle wished to make public, as to be expected.
I thought it would be interesting to read the transcript of the last quarterly conference call MGM officials had with various investors.
The conclusion I came to was pretty simple: Springfield is certainly not on the minds of the Wall Street types and MGM has much bigger fish to fry.
For instance, here is part of a statement by Hornbuckle, “Turning to our development pipeline, in Osaka, we successfully began liquefaction countermeasures in the fourth quarter, maintaining our trajectory to commence preparatory construction efforts in 2025, on time for 2030 opening. Additionally, in New York, the request for proposal process is currently underway. We anticipate submitting our full application to the government by the middle of this year with a decision expected shortly thereafter. Putting it all together, our company is in a great position to generate free cash flow through 2028.
“We’ll deploy this free cash strategically into development projects, such as Japan and New York. We’ll reinvest in our existing portfolio through maintenance and growth capex, which we are specifically focused on enhancing and expanding our luxury-oriented offerings, and the repurchase of shares at attractive levels and investment which we believe will still continue to generate strong returns.”
Yes, MGM is developing a casino not just in Japan, but also in the New York City market. It operates a “racino” there in Yonkers but as iGamingbusinness reported last year, “MGM is seeking to transform the facility into a much larger venue with a range of facilities. These would include a full-scale commercial casino with live-dealer tables, slots and a high-limit gaming area.”
MGM, according to Hornbuckle, is doing just fine. “We find ourselves with one of the best balance sheets in the industry, which well positions us to invest in places like Japan and New York,” he told the investment analysts.
Mr. Hornbuckle, with all due respect, if you’re doing that well, how about reopening the Springfield casino and its amenities 100%? I think the answer is there is little incentive to do so.
Part of this success, Hornbuckle and others noted, is due to appealing to high-end gamblers who can afford luxury. There is considerable discussion about appealing to this demographic.
If “whales” are coming to Springfield — industry parlance for gamblers with a lot of money to spend — I would be surprised. I walk through the casino frequently and the gamblers I see are not coming in on private jets.
According to the Massachusetts Gaming Commission report, MGM Springfield in March grossed $25,248,645.40 from table games and slot machines. That figure was an increase over February’s take of $22,977,235.45, which I assume would be good news to everyone, the company and the city.
Clearly though this is small potatoes for MGM when compared to its Las Vegas holdings as well as their casinos in Macau.
Springfield may not have a high priority for MGM, but the jobs it provides to the region as well as the tax dollars it pays to the state and city are indeed a very big deal for us.
I will be eager to read the transcript of the next earnings call to see if anything has changed.
