The president of MGM Springfield said Monday that tough competition from Connecticut’s two venerable tribal casinos is partly to blame for the the gambling and entertainment complex falling short of its revenue projections in its first year in operation.
The $960 million MGM Springfield was immediately seen as a threat by the Mohegans, who run the Mohegan Sun, and Mashantucket Pequots, who operate Foxwoods Resort Casino. MGM Springfield is among the biggest of the competitors to the two casinos since they opened in southeast Connecticut in the early 1990s.
“This market has some really strong competitors that have been in the market for 20-plus years,” Mike Mathis, head of MGM Springfield, told reporters. “So I think we underestimated that level of loyalty and what it would take for those customers to give us a shot. We’re a little behind in our first year projections, but I feel good about the trajectory of it.”
He said estimates made years in advance are tricky.
“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 to the product, your promotions, but what is the competition going to do to hold onto those customers,” Mathis said.
MGM posted $252.8 million in slot and table game revenue between Aug. 23, 2018, its opening day, and July 31. That fell short of the $412 million it told Massachusetts regulators in 2010 it expected to generate.
It was not a good year for Connecticut’s two casinos, either. Mohegan Sun generated $567.5 million in slot revenue for the state’s budget year that ended June 30, off 6 percent from the previous year.
Foxwoods posted slot revenue of $443.2 million, down 7 percent from the previous year.
Mathis said he does not believe the casino market in southern New England, which also includes sites in Rhode Island and Encore, the Wynn casino that opened in the Boston area in June, is filled to capacity.
“I think we’ve proven MGM can grow the market. Encore can grow the market,” Mathis said.
Peggy Holloway, senior vice president at Moody’s Investor Service, said in a note in May that MGM Springfield’s ramp-up is expected to be “slower than anticipated, and the property’s gaming revenues will remain challenged through the first half of 2019.”
In January 2019 the company announced a plan to reduce costs, improve operating efficiencies and position itself for growth through investments in technology, she said. Management expects to reduce its workforce, impose efficiencies and boost revenue by the end of 2020, Holloway said.
MGM Springfield employs about 2,500 workers, including certain businesses on the Springfield site. That’s down from more than 3,000 at its opening, Mathis said.
“We right-sized the business throughout opening period. Employees go. Employees come,” he said.
James Murren, chief executive officer of MGM Resorts International, acknowledged to investor analysts on a conference call last month that the Springfield site is not where MGM wants it.
“So if we are behind in someplace, like we’re behind in Springfield, we’re ahead in many other places and that is the value of being a diversified company,” he said.
Mathis met with reporters at the casino in a 45-minute news conference as MGM this week celebrates its one-year anniversary of the 14-acre downtown Springfield complex. Among the high points of MGM Springfield’s operations is that it has brought 6 million visitors to Springfield, providing a shot in the arm to the local economy, he said.
An important milepost that MGM reached is the hiring of local residents, Mathis said. MGM set a target of Springfield residents representing 35 percent of the workforce and it’s “hovering around 40 percent,” he said.
“I think that’s as important a stat as the gaming revenue numbers,” Mathis said.
Mathis also made a pitch for MGM to compete for a casino in Bridgeport and said a joint casino planned for East Windsor by the Mohegans and Mashantuckets is less of a concern.
“The focus is less on East Windsor and more on Bridgeport south,” he said. “South is where Connecticut would be best served.”
Much of Connecticut’s casino business is being lost to New York, Mathis said. And a Bridgeport site would help open the regional market for MGM Springfield.
“It would get some of that competition out of our backyard, he said.
Mathis said MGM is “not obsessed” with the prospect of an East Windsor casino intended to keep gamblers from heading north to Springfield. He said it will not be a “compelling destination.”
“Is the customer going to save 10 minutes to go to a facility that does not offer what we do?” Mathis asked.
Legislative allies of Connecticut’s two tribes have introduced a bill that would authorize a tribal-run casino in Bridgeport, locking out MGM. The casino and entertainment company has filed a federal lawsuit against the U.S. Department of Interior for authorizing a change in the tribal compact with Connecticut to allow off-reservation casinos.
Two Main Street business owners say they’ve benefited from MGM Springfield.
“I like it,” said David Glantz, co-owner of Buckeye Bros. Smoke Shop. “I’m happy for it. They made a $1 billion investment in Springfield. There was nothing else coming.”
He said he stays open later to bring in business from visitors to MGM Springfield’s concerts. “You’ve got people coming downtown,” he said.
Rico C. Daniele of Mom & Rico’s, a specialty grocery store and delicatessen, said MGM Springfield brings business, but should contribute more to the community. He suggested MGM contribute to improving a playground for local children.
“We see faces we’ve never seen before, which is good,” he said.
Stephen Singer can be reached at ssinger@courant.com.
