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MGM’s Mike Mathis Believes Problems, Doubts Are in the Past

Questions and Answers

RENDERING_-View-of-Main-and-Howard-Street-Rendering

design for MGM Springfield

These two renderings, one from 2013 (top) and the other from this fall (bottom), show the dramatic change in design for MGM Springfield, which has been a source of recent controversy.

It’s been an interesting, and in many ways frustrating, year for MGM and its project in Springfield’s South End. Ground was broken in March, but soon after, a decision was made to move the scheduled opening back, from 2017 to 2018, to coincide with conclusion of the I-91 viaduct project. Later, amid announced changes to the design, including the scrapping of the planned hotel tower and a reduction in the overall size of the footprint, there were questions about the company’s commitment to the Springfield project — and hastily called press conferences to confirm that commitment. Mike Mathis, president of MGM Springfield, admits that the company made some mistakes over the past several months, but he also admits that he was surprised by, and in some ways unnerved by, a perceived lack of trust in the company to keep its word and build a first-class facility in Springfield. He believes those doubts are now in the past, and in this wide-ranging Q&A, he explains why, and also why he believes 2016 will be a year of movement and much-needed momentum.

BusinessWest: Back in March, MGM staged an elaborate groundbreaking ceremony in the South End. There were several hundred people there, lots of excitement, and great anticipation that this project was going to start changing the landscape. That hasn’t happened, obviously. Can you talk about what appears to be a false start, why the South End looks the same as it did nine months ago, and why the timetable has been pushed back to late 2018?

Mathis: “We certainly expected that the groundbreaking in the spring would roll into demolition of the Zenetti School, which was the backdrop for the groundbreaking, and then new construction. But shortly thereafter, we started to hear rumblings about the viaduct project and the new timelines related to that. We heard the rumblings that it would be delayed past our late September [2017] opening, to the tune of 12 months or so.

“As a result of that, we started thinking about our own schedule over the spring and summer of 2015. There’s an inner relationship between the viaduct project and our project; I have to be careful with percentages, but about 90% of our arrivals will come off 91, so the viaduct is a crucial part of our business plan. When we realized that project would be delayed past our opening, we spent a good deal of the spring and summer trying to understand the new schedule, the performance history of the contractor, and the nature of MassDOT’s history on delivering on projects.

“And, no matter how good you felt about their ability to do it, we wanted to build in a little bit of conservatism. For a very long time, the project showed a late-2017 completion, and in many ways that made us nervous because there wasn’t much opportunity for slippage … we heard that there might be a new timeline associated with letting that contract out by the state, and we just reacted to it.”

BusinessWest: As it turned out, that change in your schedule was just the beginning when it came to emerging doubt about MGM’s commitment to Springfield and this project, which culminated in several press conferences and project updates this fall, where you and others with the company reaffirmed that commitment. Can you talk about what transpired and why?

Mike Mathis

Mike Mathis says he believes MGM has put concerns about the company’s commitment to Springfield and the South End project in the past.

Mathis: “I’m not sure how it happened, frankly. It was a combination of factors, and I think it was a perfect storm of events in terms of what was perceived as bad news upon bad news. And there may have been a little too much radio silence from us.

“I personally made the decision, and it was supported by the local team, that it’s a mistake to continually deny something that has no rationale in it. So we went quiet when people were saying ‘this is a signal’ and started talking about MGM’s lack of commitment. That void allowed some of the naysayers to get out there and talk about how this was the first shoe to drop, whether it be the schedule extension or the proposed design changes.

“When you really talk to a lot of people who were concerned, it was less about those specific items or the substance of those specific items; it was concern that it was the beginning of something else.”

BusinessWest: What has been the basic strategy when it comes to quelling these concerns, with both the public and elected officials?

Mathis: “Just getting information out to people, information that we believe shows that we are committed to Springfield.

“It didn’t help that some of this news dropped during the last six weeks of a municipal election cycle, because I think everyone’s looking for their issue to rally around, and for whatever reason, painting MGM as the bad guys that were going to be held to their promises was something that certain elected officials thought was a rallying call for their constituents. I didn’t understand it, I still don’t understand it, but I like to think we’re past it.”

BusinessWest: Certainly part of that perfect storm you described was the decision to scrap the hotel tower in favor of a six-story facility. Can you talk about that decision and why you think it became such a lightning rod for criticism and doubt?

Mathis: “Personally, I knew the tower was significant visually, because we touted it in a lot of our materials. So I expected to have a dialogue about it, I expected people to ask questions, and we were prepared to answer those questions. Early on, we had the support of the mayor, and his architectural consultant called the change brilliant, said it energized Main Street, and was more consistent with what we were doing with the rest of the project.

“We knew people would feel strongly about the tower, and some people would feel strongly in favor of what we were doing. But I think we were expecting a little more deference as the world-class developer to the changes we proposed. What surprised me and what surprised the team was the lack of trust that some of the public had in our expertise in this area.”

BusinessWest: Does the lack of a tower put MGM Springfield at any kind of competitive disadvantage, in your opinion?

Mathis: “We really don’t believe the tower is a competitive factor. Part of this road show I’ve been on explaining all these changes is explaining to people that the tower is the least compelling part of our project. And some of the comments we got during the evaluation process, by both the city and the state, back that up; the tower was actually called out, and analysts said it was the least attractive part of the project in terms of what we’re trying to do downtown.

“One of the things I’ve been saying to people is that ‘you can’t see the tower from Hartford.’ The power of our project is the MGM brand, the marketing, the outreach, the programming you put at the MassMutual Center in terms of entertainment. In multiple-jurisdiction markets, you have the competition of the neon across the street; it’s the ‘hey, look at me’ factor. So you need something very visual.

“Foxwoods has a tower, Mohegan has a tower, but a tower doesn’t distinguish the project. If anything, the low-rise we’re proposing is a cooler feature; being on Main Street is a more unique experience.”

six-story facility

Mike Mathis says MGM does not believe that scrapping the hotel tower for a six-story facility will present a competitive disadvantage.

BusinessWest: Let’s talk for a moment about this project and doing business in Massachusetts and Springfield, a state and a city that are new to the casino industry and therefore new to the process of building a casino. What has that been like, and how it is different from — and more challenging than — building in Las Vegas, for example, and how has this played a role in the public-relations troubles and trust issues that emerged over the summer and fall?

Mathis: “What’s unique about Massachusetts and the Springfield project is that we’re doing it under so much public scrutiny. So much of it is in different venues, be it the city or the Gaming Commission. And we knew coming into this opportunity that this was a privileged license, and as a result, the public feels, and rightfully so, that they have an ownership stake in the project.

“I can’t think of anything in the MGM portfolio where we’ve come into a process like this; in Las Vegas or Macau, and in multiple-license jurisdictions in general, they tend to be more pro-development, and it’s development as a right, as I describe it. And because of that, we joke around in the office these days to never take for granted the days when we could go down to Clark County, which is the jurisdictional body in Las Vegas, and pull a permit; you pull a permit, and three years later we see you at the grand opening. That’s oversimplifying it, because they do have some control over some of the program and design, but generally it’s development as a right.”

BusinessWest: So has this been a learning process in some respects?

Mathis: “It has been. For MGM, this has been a pretty unique, sort of sole-license jurisdiction bid, and I don’t think we were quite ready for the kind of scrutiny that came with this.

“But in fairness to the public and some of the folks we’ve been dealing with through this process, much of this has been self-inflicted by MGM because we made some significant changes in the design, and but for those changes, I think we’d be well on our way — not from a scheduling standpoint, because that was outside of our control, from our view, but from a design and momentum standpoint, we feel we’d be in a different position if we didn’t need to make some of the changes we proposed.

“But this isn’t unique. We make some of those kinds of changes with our other projects all the time, and you wouldn’t notice, much less feel it from the public like we have. Things are exponentially simpler in Las Vegas and some of the other jurisdictions we’ve worked in because there’s already an established procedure for these kinds of projects. They care about parking, and they care about certain architectural elements — how far is the building set back, what are the heights, some really objective criteria. And once you check those boxes, you’re generally good to go.”

BusinessWest: How close is MGM to being good to go with its Springfield project? Do you believe you’ve put doubts about the company’s commitment to Springfield and this project behind you?

Mathis: “The quick answer is ‘yes.’ If we hadn’t earned trust back in 2012, 2013, or 2014, I think we earned it with this last round of discussions. What I’m hoping is that, if or when there’s an issue, next time we get a little more of a benefit of the doubt from the public.

“I hope there’s a sentiment that we’re not leaving town, we’ve made a substantial commitment, and every day that goes by, our commitment grows. And I hope that elected officials give us the time to work through an issue, knowing that we have the best interests of the city in mind.”

BusinessWest: Certainly the doubts about MGM’s commitment to Springfield have been fueled by the rumors that Foxwoods and Mohegan Sun, with the support of the state, will be building another Connecticut casino close to the border with Massachusetts. If that third casino becomes reality, how does that impact your plans for MGM Springfield?

Mathis: “If that competition comes, and it comes across the state line — which is not the best thing for Connecticut or Massachusetts, because there are other opportunities in Connecticut that aren’t in our backyard that would be better for MGM but also better for Connecticut — it won’t impact our project other than to potentially increase the investment we’re going to make.

“That’s because we’re going to have to be that much more attractive a destination. From what I’ve understand, what they’re talking about in Connecticut is a slots facility, $300 million or so, which represents about a third of what we’re investing here. It’s tailored to the convenience gambler, and on the edges that will hurt our business, but what I think will be really important in my mind, as leader of this venture, is that it will simply raise the bar for what we have to do in Springfield and make it that much more worth it to go the extra 20 minutes to get to our facility.”

BusinessWest: Looking back over the past nine months or so, what could, and what should, MGM have done differently?

Mathis: “That whole process of going from where we had a large amount of support from the public to having things devolve into putting out fire after fire is one of those situations where the more you refute something, the more you legitimize it, and that’s something we tried to avoid early on when some of the naysayers came out and questioned our commitment. I don’t know if there’s ever a right way to handle something like that because it’s not completely rational.

“We’ve done what feels like a postmortem on the past six months, trying to think about how, if we had to deal with some of these same issues again, we might do things differently, we might handle them differently. I think part of the challenge we’re always going to have is being transparent with the public in sort of real time. And that doesn’t lend itself to perfect or full information.

“We’re always going to err on communicating a problem and then finding the solution. Maybe we could have done a better job of letting people know that ‘this is the problem, and we’re working on a solution.’”

George O’Brien can be reached at [email protected]

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