Dan Haar: One year in, MGM Springfield marks shortfalls and successes
The Middletown Press
August 21, 2019
The Monday din was just rising at MGM Springfield casino when Michael Mathis, president of the $960 million development, talked about the mixed year since the place opened.
Saturday will mark exactly 12 months since MGM Springfield changed the region’s gaming landscape with 2,550 slot machines, 125 table games, a 250-room hotel and some big entertainment — all of it in quick shot to Connecticut.
We, the neighbors to the south, have only moved backward in that year as we bicker over how to tap the industry’s fleeting growth. Fleeting, because the window may be closing amid a gathering economic slowdown, a plethora of casino options and, perhaps, changing tastes that leave many competitors fighting for the same customers’ chips.
Mathis couldn’t hide the fact that revenues fell below expectations in this first year, and staffing is down by hundreds of workers from opening day. But in grand corporate style, he paints a pretty good picture nonetheless — of a place fitting into a growing community, pulling levers for growth, with 40 percent of its workers living right in Springfield.
“The first year can be the most difficult because you’re really trying to figure out not only how is the market going to respond,” Mathis told reporters inside the dark Commonwealth Bar and Lounge at the center of the casino floor, “but what is the competition going to do to hold on to those customers?”
Without naming Foxwoods and Mohegan Sun, he added, “This market has some really strong competitors that have been in the market for 20-plus years. So I think we may have underestimated that level of loyalty and what it would take to get those customers to give us a shot.”
Whoa, that’s a strong tip o’ the hat for an executive whose Las Vegas-based company is suing the federal government over approvals for a casino just 13 miles away, in East Windsor, which the tribal owners of those same Connecticut gambling Meccas would build.
Hopeful but short numbers
Back in 2011 or 2012, when the proposal was still forming, MGM pegged a figure in the range of $415 million for gross gaming revenue. Through 49 weeks of the year, revenues reported to the Massachusetts Gaming Commission are at $253 million.
That suggests a shortfall of more than 30 percent. And, while the company’s unreleased, updated projection may have been lower, the staff of 3,000 from a year ago is now down to 2,200, Mathis said, plus a few hundred more at affiliated businesses such as a movie theater and candle store on a historic building on the MGM Springfield campus.
Massachusetts can expect to haul in about $66 million for the year from direct payments of 25 percent of table games and slot machine revenues.
In Connecticut, meanwhile, the Mashantucket Pequot and Mohegan tribes beefed up marketing and upgraded the huge facilities that are, these days, considered overbuilt. Instead of dropping toward $200 million in revenue sharing for the state — based on 25 percent of slots — the tribes pitched in $250 million in the fiscal year that just ended. That’s way down from a peak of $420 million before the recession and it’s down from fiscal ’18 but not by much.
And so we have a battle. Mathis happily described MGM’s weapons and successes. MGM Springfield’s July numbers were better than June’s, a solid sign after the opening of the Encore Casino built by Wynn resorts in Everett, just across the harbor from Boston.
Most obviously, MGM Springfield fits into its environment, making it more of a free-flowing experience than the remote tribal casinos or the same-old, same-old Vegas-style glitz we see at the $2.5 billion Encore. Rare among casinos worldwide, this is an inside-out development with numerous doors and windows to the outside.
It’s designed to fit into the cityscape, with restaurants and even the casino floor open to the outside. When Monday’s afternoon downpour hit, a flock of elderly customers in the food court area gravitated to the wide doorways and watched as a besieged bus driver loaded his passengers.
“The porous design of our casino is something very special to us,” Mathis said. “It comes with a lot of benefits but it comes with a lot of challenges ... No one feels like they’re getting corralled past the slot machines, or past any other aspect of the resort.”
That includes an outdoor courtyard area with a covered music pavilion that seems seamlessly part of the casino floor. In all, MGM manages four music venues, including the local symphony hall of 2,500 seats, Springfield’s 5,500-seat arena and a ballroom in addition to the 1,600-seat pavilion.
That makes security harder, as kids can and do wander in, some filtering momentarily onto the gaming floor.
And for better or worse, it’s a city. “I don’t like coming into Springfield,” said Carol Banderheiden, of Belchertown, Mass., who brought her 96-year-old mother, Doris Sobzak, to the casino for the first time. It’s not that she’s afraid of crime, which has proven mostly a non-issue here; it’s that driving in and out, especially at night, is not easy for her.
“I like Mohegan. It’s got more, I can wander around more. This is small compared to Mohegan and Foxwoods,” she said — though she’s a regular at MGM Springfield.
Then there’s the no-smoking policy. “That’s something that we’re capitalizing on,” Mathis said.
Sports betting would boost MGM Springfield’s take by as much as 10 percent, Mathis said, by giving customers more reasons to show up and stick around. Talks are underway to launch it this fall in Massachusetts, a far shot better than the stalemate gripping Connecticut as the tribes claim exclusive rights to betting on ballgames.
Casino and city ramping up
MGM is stepping up its cross-promotions with other MGM casinos, including the Empire City casino at Yonkers Raceway and the Borgata in New Jersey. And the Las Vegas-based company bought the right to be the official Red Sox casino, leading to a giant billboard of the MGM lion with red socks. Add in deals with the Big E New England-wide fair, Six Flags and local museums and the sense that MGM is more connected starts to show.
“We saw a lot of customers come from the Big E last September but I think we can see more of them,” Mathis said.
History shows that casinos, like sports stadiums, create way less nearby development than promised. MGM could be a bit different because it’s truly part of downtown Springfield, not a fortress. MGM and the city are about to break ground on a cooperative apartment complex and just down the block from the casino, MGM is about to build a Wahlburgers restaurant. There’s a hotel in the works in town and across Main Street, CVS is building a store from the ground up.
“In Boston that would not be a newsmaker,” Mathis said, “but for those of you that live in Springfield, you know that that’s a huge accomplishment ... that will then justify new market-rate housing.”
It’s a CVS. Not sure I’d agree it’s huge, but Mathis sees it in perspective. “That’s the cycle that we need to get started and that we’ve helped to kickstart.”
Across from the CVS, Milano Imported Fine Foods is bustling at lunchtime with its home-cooked, modestly priced Italian fare. Is the market seeing a jolt from customers and employees? Not directly in significant numbers, co-owner Nick Recchia said, “but we’re still getting more customers because the environment is better,” he said.
“It’s very helpful that they’re here,” Recchia said.
With Aerosmith shows scheduled this week to mark the first anniversary — any questions about the target market? — the pattern is clear. This and other casinos can no longer count wild success just by opening, but they can make it work.
“A year later, six million visitors later, we’re knocking the cover off the ball on many, many facets of it,” Mathis said, again with the upbeat corporate view.
It’s an optimism colored by the pragmatic conditions descending on a gambling industry that seemed magical for a few years.
“Ramping up the slot machine business is tricky. It’s going to take some time in a market like this. We think we’ll get there, it’s just a matter of how long it’s going to take,” Mathis said. “We’re not looking to hurt our competition, we’re hoping we can all grow the business.”