Possibility MGM Springfield Could Be Sold And Leased Back

In a conference call with investors on Oct. 30 MGM Chairman and CEO Jim Murren said a sale similar to the $4.25 billion sale and lease back of the Bellagio Hotel & Casino on the Las Vegas strip is possible for the iconic MGM Grand in Las Vegas would probably be announced by the end of the year, as reported by The Las Vegas Review-Journal.

Deals involving MGM Springfield and Aria and Vdara casinos in Las Vegas are being discussed using the Bellagio Agreement as a model, he said.

Murren plans to use MGM Grand sales proceeds and other properties to reduce debt and invest in new opportunities for growth, including a potential $10 billion casino in Japan and sports betting in the U.S.

MGM Resorts International said in a statement to The Republican that it was “proud of our work in our Springfield community and is committed to building on our shared accomplishments. This partnership has resulted in thousands of jobs and millions of dollars of revenue in the area, and we look forward to expanding our engagement in the Commonwealth.”

The statement concluded: “Previous financial transactions made by MGM, like last month’s announcement regarding Bellagio in Las Vegas, focus exclusively on the transfer of real estate and have no bearing whatsoever on the property’s management or operations. These transactions have no impact on employees, partners or the guest experience.”

Mayor Domenic J. Sarno of Springfield noted that the town has a “very strong Host Community Agreement with MGM and we will certainly hold MGM to this legally binding agreement.”

“Part of this mandates the city and the Massachusetts Gaming Commission must approve any and all adjustments to said agreement,” Sarno said.

MGM Resorts International and Blackstone Real Estate Income Trust formed a 95%/5% BREIT-led joint venture to purchase Bellagio’s real estate assets in a sale-leaseback deal for $4.25 billion. As part of that deal, MGM Resorts signed a long-term contract to rent the Bellagio from the joint venture and continue to manage, run and be accountable on a daily basis for all facets of the assets.

Last year, MGM Springfield opened at a cost of nearly $1 billion in the South End of the city. The casino did not perform as well as expected initially.

MGM Springfield has taken in less than two-thirds of the $418 million in gross gaming revenue from MGM executives since its opening in late August 2018, promising the state that the Springfield casino would see in its first year.

Gross gaming revenue from the casino was $273.8 million from its inauguration on August 24, 2018 through the end of August 2019.