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MGM challenging Mohegan Sun for shot at Massachusetts casino

By Brian Hallenbeck

Publication: theday.com

Published August 22. 2012 10:00AM   Updated August 23. 2012 9:17AM
Spokesman says existing alliance with Foxwoods is 'something we'll have to talk about'

Springfield, Mass. — MGM Resorts International put a handful of new cards on the table here Wednesday, unveiling its plan for an $800 million entertainment complex on 10 downtown acres next to Interstate 91.

MGM Springfield, the company's name for the project, would include a 25-story, 250-room hotel, an entertainment district and enough gaming, retail and restaurant space to give Connecticut's casinos a run for their money.

While company officials scarcely mentioned the gaming aspect of the proposal during a presentation to city officials and business and civic leaders at the MassMutual Center, an executive said the company believes it can "recapture" 30 percent to 40 percent of the Massachusetts gambling market that finds its way to Connecticut — to Foxwoods and Mohegan Sun — and to slots parlors in New York and Rhode Island.

"If we can't do that, we can't make this work," said Bill Hornbuckle, MGM's chief marketing officer and president of MGM Springfield.

Jim Murren, MGM's chief executive officer, also said that given that MGM Springfield would compete directly with Foxwoods Resort Casino, MGM would have to look at its relationship with Foxwoods, which branded its second freestanding Ledyard casino "MGM Grand at Foxwoods." The second Foxwoods casino, which sports MGM's lion's head logo atop its tower, opened in 2008.

"I haven't sat down with Scott yet," Murren said, referring to Foxwoods CEO Scott Butera, like Murren, a graduate of Hartford's Trinity College. "That's something we'll have to talk about, especially if we get the license."

In 2006, MGM, then known as MGM Mirage, entered into a "strategic alliance" with Foxwoods' owners, the Mashantucket Pequot Tribe. The parties agreed to collaborate on off-reservation casino projects, with MGM lending the tribal Foxwoods Development Co. $200 million. No projects materialized.

Butera, reached Wednesday afternoon, said he understands Murren's "dilemma."

"If they thought it was a problem, I'm sure we could work something out on a friendly basis," Butera said of the branding deal. "Right now, no change has been planned. It's working well."

If it prevails in Springfield, MGM would compete for the western Massachusetts license with the Mohegan Tribal Gaming Authority, which operates Mohegan Sun. The MTGA has long eyed a site in Palmer, Mass., where it is negotiating a host community agreement, as required by the state gaming law enacted late last year.

But to win the right to build the one resort casino the state will allow in western Massachusetts, MGM first must win a competition among as many as three other gaming operators who have shown interest in Springfield, the state's third-largest city. All three are major players in the industry — Ameristar Casinos of Las Vegas, which has acquired a 41-acre development site off Interstate 291; Hard Rock International of Orlando, Fla., which once was interested in a Holyoke, Mass., site; and Penn National Gaming of Wyomissing, Pa.

Murren, MGM's chief executive, said the Las Vegas-based giant was in the process of paying a nonrefundable. $400,000 application fee to the Massachusetts Gaming Commission.

Company executives are expected to meet next week with Springfield officials to discuss the vetting process, said Hornbuckle, MGM Springfield's president. Once city officials decide which proposal to support, that applicant will pursue a host community agreement with the city. The gaming law, which authorized up to three resort casinos in the state as well as one slots parlor, also mandates that casino proposals be subject to a binding referendum among residents of prospective host communities.

Hornbuckle estimated that MGM Springfield, were it to win the sweepstakes, would open in 2016.

Mitchell Etess, CEO of the Mohegan Tribal Gaming Authority, said in a phone interview that he had yet to assess the MGM Springfield proposal, noting that MGM has a reputation for large-scale developments.

"We know this market very well," he said. "We know what's appropriate to drive the right amount of revenue for the commonwealth. We have a great sense of the region. We think our location brings an awful lot to the table."

The MTGA's Palmer site is located off Exit 8 of Interstate 90, the Massachusetts Turnpike.

Etess said MGM may have felt compelled to file its application fee early to demonstrate its commitment, having withdrawn from an earlier project. In March, MGM abandoned a plan to develop a resort casino in rural Brimfield, Mass., citing infrastructure problems.

The plan unveiled Wednesday was much different, incorporating three city blocks that still bear signs of the devastation caused by a June 2011 tornado that swept through downtown Springfield. MGM executives said they hoped to partner with the city and others to help rebuild and revitalize an area that is home to the Basketball Hall of Fame, the Springfield Symphony and the MassMutual Center, a convention hall that would be linked to the development via a pedestrian bridge.

The plan calls for a 130,000-square-foot dining, retail and entertainment district tentatively named Armory Square. It would include about 25 dining and retail outlets, including a 12-screen cinema, a bowling alley and an outdoor stage. Rather than operate an indoor entertainment area, MGM plans to partner with existing facilities to help drive traffic to them and promote tourism.

b.hallenbeck@theday.com

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MGM Springfield

• $800 million total investment

• About 10 acres over three blocks

• More than half a million square feet of new development

• Incorporates existing iconic architecture into new development

• 40 retail and restaurant venues

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