Wynn, MGM End Talks of Encore Boston Harbor Sale
Just days after confirming they were in talks about the sale of Encore Boston Harbor, Wynn Resorts Ltd. and MGM Resorts International have announced that no transaction will be made.
On Friday, the two companies put out a joint statement addressing the rumors.
“Over the past several weeks, we have engaged in conversations around the potential sale of Encore Boston Harbor,” the statement said. “They are very preliminary and of the nature that publicly traded corporations like ours often engage in, and in fact when opportunities such as this are presented, we are required to explore. We cannot say today where these conversations will lead, however we can reaffirm our commitment to the communities where we operate today.”
“Our conversations will not impact the jobs at our facilities and will not impact the opening of Encore Boston Harbor,” the statement added. “Regardless of where this leads us, we will ensure that our commitments will be met, and that those who welcomed us into their communities will not be disappointed.”
Encore Boston Harbor, built by Wynn at a $2.6 billion price tag, is set to open in Everett, Massachusetts (adjacent to Boston and five miles from Logan International Airport) on June 23rd. Little is known about the discussions, but it sounds like MGM approached Wynn to potentially acquire the yet-to-open casino. No financial terms were disclosed.
Well, That Was Quick
But just as quickly as talks were confirmed, talks have shut down. And again, not much is known as to why. In a statement, MGM said, “We have noted the anxiety raised by various stakeholders regarding a transaction and this troubles us at MGM. We only wish to have a positive impact on communities in which we operate. We think the best course of action is to discontinue discussions concerning this opportunity.”
The anxiety may come from state regulations that limit companies to owning just one casino license in Massachusetts. Thus, if MGM had purchased Encore Boston Harbor, it would have had to jettison MGM Springfield in the south-central part of the state, not too far from the Connecticut border. Because Encore Boston Harbor is the only casino licensed in the Boston area, it has significant potential, which is probably why MGM was interested in acquiring it, even if it meant losing MGM Springfield.
Local politicians were not happy with the potential sale.
“It’s not going to happen,” Everett mayor Carlo DeMaria told the Boston Globe on Monday. “I don’t think I would have done a host agreement with anyone else. And now they’re going to sell it? No.”
Massachusetts Governor Charlie Baker was also worried, feeling that a sale could “disrupt” the communities where both Encore Boston Harbor and MGM Springfield are located.
As for Wynn, it is not known why it was talking sale, but logic would dictate that MGM had an attractive offer on the table. The company said, “At times, world class assets attract the attention of others and our board takes seriously its fiduciary duty to review such interest.”
Wynn Resorts Still Trying to Distance Itself from Founder
It is also possible that Wynn was trying to get out of Massachusetts in order to get away from a major scandal. In January 2018, the Wall Street Journal published an exposé detailing a history of sexual assault and harassment by company founder Steve Wynn. His acts were so brazen and so commonplace that employees would do things like create fake appointments for the massage therapists at Wynn’s Las Vegas properties so that they wouldn’t have to have a private appointment with Wynn.
One manicurist, who felt forced to have sex with Wynn in 2005 during an appointment in his office, was paid $7.5 million as part of a settlement.
Wynn Resorts was at risk of losing its gaming license in Massachusetts because of Steve Wynn’s actions and the company’s lack of oversight and responsibility and was the subject of a three-day hearing in April in front of the Massachusetts Gaming Commission.
At the hearing, the company proposed a total ban of Steve Wynn from its properties. Wynn left the company in February 2018, not long after the Wall Street Journal report was published.
In the end, Wynn Resorts was able to retain its gaming license, but was hit with a $35 million fine and has to meet certain conditions over time, such as harassment training and paying for an independent monitor of company policies.
State commissioners said they were “profoundly disturbed” by “repeated systemic failures and pervasive culture of non-disclosure…”
“Specifically, the corporate culture of the founder-led organization led to disparate treatment of the CEO in ways that left the most vulnerable at grave risk,” the Commission’s decision read, in part. “While the Company has made great strides in altering that system, this Commission remains concerned by the past failures and deficiencies.”
The Nevada Gaming Commission also fined Wynn Resorts $20 million, the largest ever handed down by the Commission.