Let’s Make a Deal
Local Enterprises Look to Do Business with MGM Springfield
Joe Frigo’s family has done business in the South End of Springfield for 65 years.
“We’ve seen a lot of good and a lot of bad, and the South End is in a bit of a lull right now,” said Frigo, owner of Frigo’s Foods, a restaurant and catering business.
That said, “I’m fully in support of MGM,” he told BusinessWest. “For the last 10 or 15 years, everyone has been saying, ‘we need some type of influx.’ We’re not going to get any type of industry down here at this point, so everyone is leaning toward entertainment, and it’s now in our lap. If we don’t take advantage, it’s going to be a big mistake.”
Frigo is one of a number of South End business owners who welcome MGM Resorts International’s plan to build an $800 million casino in their neighborhood — not just because of the expected street improvements and foot traffic, but because MGM offers an uncommon business opportunity.
“They have made a proposal to us, though nothing is written in stone,” Frigo said. “They did extend an invitation for us to open up a shop within the casino, and still have a store in the South End. Hopefully, we land the deal and make it happen.”
MGM’s host-community agreement with Springfield calls for, among many other concessions, a commitment to spend $50 million per year with local and regional vendors. “That represents about 50% of what we would spend annually,” said Mike Mathis, president and CEO of MGM Springfield.
Some business partnerships are national by nature, he noted. “We have our Coke and Pepsi deals; that’s something we can’t source locally.” But for providers of many other types of goods and services, the casino giant typically makes an effort to strike partnerships in its host communities. “That’s just good business.”
Local vendors run the gamut from food providers to accounting, legal, and engineering services; from office and industrial equipment to building maintenance and facilities; from cleaning to groundskeeping. “We do some of these things in house, but a lot of it is outsourced,” Mathis said. “In each of those categories, there are a host of line items.”
Frigo isn’t the only one who sees growth potential in this local commitment. Brent Bertelli, owner of Langones Florist, also welcomes the MGM development.
“There are opportunities for many businesses thinking outside the box,” he said. “If I were selected as a vendor, naturally, with the size of their resort, it would be a benefit to my bottom line and help me hire more local people, because I’d need extra staff.”
Bertelli said a casino will provide an economic and confidence lift for the entire downtown area. “It’s going to bring a cleaner image back to the South End, and some diversified retail. And, of course, it will lead more people to my front doors; that’s just common sense.
“I have heard they’re really open to using a diverse collection of local business, whether it be a florist or a tuxedo-rental place in the area or a few of the local restaurants,” he added. “But even if I wasn’t a vendor, I’d still get a boost from it, absolutely.”
Jeffrey Cuiffreda, president of the Affiliated Chambers of Commerce of Greater Springfield (ACCGS), has been busy preparing chamber members to interact with casino decision makers.
“We’ve been working with MGM. We worked with all three applicants, actually, but more closely with MGM because they seemed, quite frankly, more outgoing with some of these things,” he said, noting that, in addition to the $50 million commitment, the casino has determined to use the chamber as a vehicle to reach out to businesses.
The ACCGS surveyed its members recently to gauge interest, and about 70 companies responded. “Without a whole lot of information, they were interested in pursuing those options — which range, literally, from sharpening knives to producing the meats and vegetables and the linen services. Conservatively speaking, there are about 60 different categories of goods and services.”
Mathis noted, however, that many local vendors will have to engage in capacity-building efforts to do business with MGM.
“As part of that, we’ve reached out to the Affiliated Chambers and the local chambers, and we’ve reached out regionally to the four counties, working with different organizations to assess the market.
“In addition, we’ll bring our procurement department out from Las Vegas and walk [businesses] through the different products and services we need, get them enrolled in the system, get them pre-qualified,” he added. “We want to make sure they understand we’re a Fortune 500 company with different requirements, compounded by the fact that we’re in a heavily regulated industry.”
Indeed, Cuiffreda said, doing business in the gaming industry requires clearing a number of hurdles, and part of his goal in sitting on a state advisory board is to try to minimize the hoops vendors will need to jump through. “The state came out with some draft regulations for procurement, and the chamber commented heavily on that,” he said, noting that some of the requirements are so onerous that many small businesses might not bother to apply.
“MGM is looking for quantity, quality, and price,” he said. “But the state is going to be looking for an awful lot of financial data and information that, quite frankly, could turn some vendors away. We’re hopeful that, when the final regulations come out, they turn out to be more user-friendly.
“We’re a relatively small-market city, and they are obviously a massive business that’s going to require large quantities of goods and services,” Cuiffreda went on. “Our concern is that they do not overlook the smaller businesses here.”
Among the small businesses that intrigue MGM are local agricultural enterprises.
“On the food side, we’re really taking advantage of the farm-to-table movement, and we’ve reached out to different vendors in the region, particularly in the Berkshires, for some of the great things they’re doing with local food processing. That’s one area we’re really excited about,” Mathis said.
Cuiffreda said the chamber has already begun connecting companies of all kinds with programs to help them ramp up to do business with MGM.
“We do have concerns that some small businesses out there may not be ready right now — they have a product, but may need some capacity building, may need help with accounting or backroom work or whatever, and they need to comply with some of these regulations.
“The chamber is looking at that as well,” he continued. “If [MGM] needs 10,000 widgets, and someone has a capacity of only 8,000 or 9,000 now, we don’t want to see that contract go elsewhere. We want to work with those businesses. The chamber has some technical assistance programs in place, and we’re doing all we can to help these small businesses that might be a little too small, to get them to where they can get these contracts.”
He doesn’t think 70 is the ceiling on how many local businesses are interested in being MGM vendors, however. “I think a lot more are interested, but it seems to have taken a back burner right now. When it becomes more real and the license is awarded, a lot of people will jump off the sidelines and get involved. But we want to get them involved early.”
Mathis noted that companies that strive to build capacity and meet MGM and state requirements will be better off for the experience no matter how much business they do with the casino. “If you can meet our requirements, you’ll be well-positioned to meet the requirements of other blue-chip companies.”
Frigo is among those who expect to be in that position. “I’ve been to markets in other states that have riverfronts or a Faneuil Hall or market areas, where a well-established business opens in a high-traffic spot with signage saying, ‘visit our main location,’ or ‘this is a flavor of what we have; if you like it, visit our original store,’” he said.
“I think it’s a way to expand my name to thousands of people coming through the casino every day, and we think that’s a positive thing all around,” Frigo added. “And it’s not just food; if you make pencils or linens, they want to do business with you. If you’ve got the right product and want to do business with MGM, they want to do business with you.”
Joseph Bednar can be reached at [email protected]