April 18–The potential sale of Wynn Resorts' yet-to-be-finished Boston-area casino project, Wynn Boston Harbor, to MGM Resorts International received a nod of approval from a gaming industry analyst.
John DeCree of Union Gaming told investors this week that purchasing Wynn Boston Harbor could result in a double-digit increase in return on investment for MGM than their casino project in Springfield, the Las Vegas Review-Journal reports.
In his report to investors, DeCree said MGM Springfield "was a great fit for MGM when the license was awarded in 2014, but MGM is a vastly different company today."
The report goes on, "In 2014, MGM's total leverage was six times and the company generated $1.5 billion of domestic," the report reads. "Today, MGM's balance sheet is 4.5 times leveraged and going below four times in a hurry. The company now generates over $2.5 billion of domestic cash flow and has significantly expanded its presence on the East Coast with MGM National Harbor and The Borgata. As a substantially larger enterprise, we believe MGM is a good fit for Boston."
Union Gaming is a Las Vegas-based investment bank and advisory firm.
Industry insiders have confirmed to MassLive that MGM officials are exploring the purchase of Wynn Boston Harbor, a $2.4 billion casino project in Everett.
Neither Wynn nor MGM officials have denied early discussions of such a sale.
"We remain very excited about the Boston market," Wynn CEO Matthew Maddox said in a statement. "However, our obligation to shareholders is always to maximize the value of our assets and to mitigate risk."
Numerous women came forward in recent months, detailing decades of allegations of sexual misconduct by Steve Wynn, the founder of Wynn Resorts.
Wynn stepped down as CEO in February and sold the remainder of his stake in Wynn Resorts in March.
Following an explosive report in the Wall Street Journal detailing allegations against Wynn, Massachusetts Gaming Commission opened an investigation into the suitability of Wynn Resorts to hold the sole eastern Massachusetts casino license.
During a recent commission meeting, gaming chairman Steve Crosby told Wynn officials that the project was allowed to proceed on an "at-risk" basis. The casino has a scheduled opening date of June 2019.
MGM is building a $960 million casino project in Springfield slated to open in September.
State gaming regulations prohibit a casino operator from holding more than one license to operate within Massachusetts, making the sale of the Springfield casino necessary if MGM were to purchase the Boston-area project.
Who would purchase the Springfield property?
Springfield is "a compelling opportunity for a number of prospective buyers," DeCree told investors.
DeCree listed several potential operators, including Penn National Gaming, Mohegan Sun and Foxwoods.
Penn National pitched opening an $807 million resort in the city's North End. The proposed project featured a 300,000-square-foot casino complex, including 100,000 square feet of gaming space.
MGM was chosen as the preferred casino project in the city and Penn National pursued another gaming license in Massachusetts.
Penn National was awarded the state's only slots parlor license in 2014 for the Plainridge Park Casino in Southeastern Massachusetts. The licenses allows the company to operate up to 1,250 slot machines but no table games.
If Penn National were to make a bid for the license currently held by MGM, the slot parlor license would need to be sold.
In reaction to the Springfield casino project, Mohegan Sun and Foxwoods joined together for a satellite casino in East Windsor intended to keep gaming money in Connecticut.
Before MGM was awarded the Massachusetts license and deemed a threat to Connecticut gaming operations, Mohegan Sun proposed opening a nearly $1 billion resort casino on 152 acres in Palmer near the Massachusetts Turnpike interchange. The casino plan failed by 93 votes in a 2013 town referendum.
Cody Chapman, a spokesman for Mohegan Sun, told the Hartford Courant "that like everyone in the industry, we are watching what happens in Massachusetts closely."
