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Cover Story

A Six-month Checkup

Mike Mathis, foreground, with recently promoted MGM employees

Mike Mathis, foreground, with recently promoted MGM employees, from left: Marissa Dombkowski, Bill Blake, and Nickolaos Panteleakis.

A half-year after opening its doors, MGM Springfield is well behind its stated goals and expectations for gross gaming revenues, or GGR, and the numbers have been declining each month since the fall. But the winter months are traditionally the slowest in this industry, said Mike Mathis, president and COO of the resort, and the company is still ramping up its operation. Overall, he said, there are a number of positive indicators.

‘Ramping.’

That’s the word you hear quite frequently from MGM’s leaders as they talk about the $950 million property in Springfield’s South End. Jim Murren, president and CEO of MGM Resorts International, used it early and often in a conference call with stock analysts last month following the release of MGM’s fourth-quarter earnings in 2018.

And Mike Mathis, president and COO of MGM Springfield, leaned on it as he talked with BusinessWest late last month, six months after the facility opened its doors. With casinos like this one, Mathis said, the ramping-up process, if you will, goes on for three years or so and is quite involved.

It entails watching, listening, learning, and adapting, all with the goals of growing visitation and, therefore, the bottom line, while also improving efficiency and making the operation in question more profitable.

“I think it’s premature to judge us, or anyone, on a partial data set; it’s a little early to say we’re going to underperform or overperform for our first year.”

“In the context of a new resort, it’s commonly understood within the industry that there’s a three-year stabilization period — a ramp period to stabilization,” he explained. “Three years serves as a benchmark. You’ve been through a few different seasonality rotations, you see the different ranges of weather, you see the different ranges of how holidays land, whether they land on weekends or midweek — you get all those different scenarios.

“You’re also building up your database,” he went on. “Seeing how your competition’s reacting to what you’re doing — how are they activating their property. You get a feel over a couple of years — did we do well that weekend because the competition didn’t have much going on? Or did we suffer because they put in a big act to counter that weekend? That all shakes out over two or three years.”

These references to ramping up are being generated by questions about revenues at MGM Springfield, and, more specifically, about why they are not approaching the numbers the company projected to the Mass. Gaming Commission.

‘Slower’ is the operative word being used with regard to revenues, and it fits if one considers MGM’s projections of $418 million in annual gross gaming revenue (GGR) in its first year of operation, or $34.8 million per month. Indeed, the company recorded $21.58 million in GGR in December, and just $19.7 million in January (February’s numbers will not be released for a few weeks). GGR for November was $21.2 million, the number was $22.2 for October, and in September, it was $26.95 million.

Mathis, while certainly acknowledging that the numbers are lower than projected, at least for the winter months, told BusinessWest that the $418 million projection given to the Gaming Commission was made several years ago, and that the landscape has changed in some ways since then.

Mike Mathis says the winter months are traditionally the slowest for casinos

Mike Mathis says the winter months are traditionally the slowest for casinos in the Northeast, and he is optimistic that visitation will climb as the mercury does.

Meanwhile … it’s early, said Mathis, referring to the fact that the casino has only been open for six months, and a few of those months (January, February, and early December, before the holidays) are among the slowest for casinos, especially those in the Northeast.

“I think it’s premature to judge us, or anyone, on a partial data set; it’s a little early to say we’re going to underperform or overperform for our first year,” he told BusinessWest. “If you look at our August and September numbers, we would have exceeded our expectations. And going into the winter months … that’s the low end of the season.”

And, overall, the casino is still ramping.

That means it’s still learning, collecting data, watching patterns develop, and adapting to what the data shows. As he said earlier, it’s an involved process that involves a number of factors, including the weather. Make that especially the weather.

Mathis said he and his team are tuned into the forecasts, because one thing he’s noticed thus far — and this counts as one of the surprises on his list — is that, despite a reputation for being hardy, people in New England are apparently easily scared off from traveling in snow — or even forecasts of same.

“We thought New England would be hardier than what we’ve seen on some of these snow days,” he said with a laugh. “We’ve had a little bit of experience with snow in Detroit and Atlantic City, but I think every market is unique, and we’re learning some of the patterns and behaviors.

“And it’s not just snow,” he went on, sounding much like area golf-course operators when they talk about rain and how it impacts them. “It’s what type of snow and what time of day it hits and what day of the week it hits. Weather forecasts have become an important tool for operating and planning; it’s been a very interesting learning curve.”

One that extends, as he said, well beyond snow, and into other realms such as where people are visiting from, how often they visit, which games they play, which restaurants they frequent, and much more.

Overall, and as might be expected, Mathis is optimistic that the monthly numbers for GGR will improve as the weather gets better and the casino can make much better use of its outdoor facilities with concerts — Aerosmith is coming for the first-anniversary celebration — and other activities.

But looming over MGM Springfield, in a big way, is the opening of a competing casino in Everett, slated for sometime this summer. Mathis said that development will further alter the landscape and certainly add new wrinkles to the ramping process.

Driven by Data

Mathis told BusinessWest that this first six months of operation have been a learning experience on all kinds of levels, and this, too, was to be expected, because gaming is still relatively new to Massachusetts (Plainridge Park Casino, a slots facility, opened in the fall of 2017), and while those at MGM had expectations, they didn’t know exactly what to expect.

What have they learned? For starters, they’ve learned that visitors much prefer the weekend to the weekdays. And while that sounds obvious, the disparity in the numbers is eye-opening.

“I’m surprised at how weekend-centric the business has been — the difference between weekends and weekdays is pretty dramatic,” Mathis noted, adding that, with the former, visitation averages roughly 18,000 to 20,000 a day, while with the latter, it’s closer to 10,000.

This disparity is far greater than it is in Las Vegas and with most other MGM properties, said Mathis, adding that one big reason for this is a still-ramping (there’s that word again) meeting and convention business in Greater Springfield.

Mike Mathis says the ROAR! Comedy Club has become a solid attraction for MGM Springfield

Mike Mathis says the ROAR! Comedy Club has become a solid attraction for MGM Springfield and a vehicle for bringing new audiences to the resort.

“We have the ability to impact those numbers midweek by putting more convention groups in the MassMutual Center, getting more citywide events, and getting more entertainment mid-week, which we plan on ramping up,” he explained. “There’s ways to impact that midweek business to the benefit of the entire downtown.”

What else have they learned? There’s that aversion to traveling in snow that was mentioned earlier. That was in evidence a few weeks back. The weekend before Presidents Day was one of the best the casino had since it opened, said Mathis, crediting MGM’s ROAR! comedy shows and a host of other things happening downtown and elsewhere, including two Thunderbirds games and a camping and RV show at the Big E, for the surge, one that contributed to one of the few real traffic jams recorded since the property opened.

But the holiday itself (a day off for the vast majority of workers in this region) was considerably slower, and Mathis believes that the few inches of snow that fell overnight had a lot to do with this. Of course, Monday is also a weekday.

What else? Well, to date, MGM Springfield is “underperforming” (Mathis’ word) when it comes to attracting people from Central Mass. Indeed, while the casino does well in drawing people from Upstate New York, New Hampshire, Vermont, and Connecticut (the I-91 corridor), the numbers from the central part of the state are less impressive, which, if you take the glass-is-half-full approach, which Mathis does, means there’s considerable room for growth.

“We’re trying to understand the phenomenon of east-west travel on the Pike, frankly,” he explained. “I think there’s a bias to go north-south — I think that might be the more the traditional traffic pattern, and that’s what the data shows — but we’re also doing well with Boston.

“The good news about how this data shakes out is that there’s upside opportunity for us in Central Mass.,” he went on. “And this might blunt the impact of the Everett casino.”

There have been a few other surprises, including the number of people making their first visit six months after the ceremonial ribbon was cut.

“I’m still surprised by how many people I’m meeting on the floor who are seeing it for the first time,” he said. “Our team has been at this since 2012, so sometimes I feel that anybody who was interested in coming would have come in the first month or two. But there are people hitting the floor every day who are brand new, and for whatever reason have decided that this is the weekend they want to check it out.”

A Laughing Matter

While much of the media’s focus has been on GGR and the hard fact that the numbers are not where they were projected to be, Mathis said there are a number of positive developments to note as the casino passes that six-month mile marker. Here are several he listed:

• The data clearly shows that the opening of MGM Springfield has grown the overall gambling market in this broad region, he said, adding that this becomes clear when one does some simple math and looks at MGM’s revenues and the declining numbers for competitors. The former is larger than the aggregate of the latter, which translates into growth, which bodes well for all players.

“I think one of the good things about new properties coming into the market is it keeps everybody in a position of having to keep up.”

“I’ve met countless customers on our floor who have said that MGM Springfield is their first casino gaming experience, and there’s a few reasons for that,” he said. “Some say they were in Las Vegas, they’re Mlife members, and they’d been to a convention or show, but didn’t happen to go into the casino on that trip; with this in their backyard, they thought they’d give it a try. Others will say they like our non-smoking gaming environment and had never gone into another casino because they didn’t want the smoke; that’s a real competitive advantage for us.”

• The ROAR! Comedy Club has been a solid addition to the MGM lineup, helping to drive visitation, especially during some of the slower months on the calendar. Located in the historic Armory, the shows have drawn consistent crowds, said Mathis, adding that, as the calendar turns to spring and then summer, the team at MGM Springfield will look to maximize its outdoor facilities with a full slate of entertainment to be announced in the coming weeks.

“In talking with the comedians, they say we’re now the buzz within that community — it’s a cool venue, something all the comics want to play on their East Coast rotation,” he told BusinessWest. “it’s a great way to expose the building to different customers.”

• The team continues to find new ways to leverage its many facilities at the casino, said Mathis, noting that it has added entertainment in its ballrooms — Sinbad recently performed two sold-out shows — and the staff continually looks for new opportunities.

“We’re doing a lot of fun activations in different parts of the resort,” he explained. “We want to make sure we understand the booking patterns for convention and meeting groups, and when we see holes, it’s like an empty airplane seat; how do you fill it, and how do you bring new customers to the resort?”

• The hotel and food and beverage side of the casino operation has been exceeding expectations, said Mathis, adding that, among other things, a recently added weekend brunch at Cal Mare restaurant has helped grow that side of the equation.

“Our hotel and restaurant business has been extremely strong, and we thought that would be the case, because there’s good, local lodging and F&B in the market, but perhaps not to a Vegas standard, and we believe we’ve brought a Vegas standard to this market. We’ve exceeded occupancy, and we’ve exceeded our average daily rate.”

• But despite this success, there has been some spillover to other area businesses in this sector, and this is by design, said Mathis, noting that the hotel, with 252 rooms, is not particularly large, and the dining options, while growing (groundbreaking on a Wahlburgers is slated for later this year), leave plenty of opportunities for other eateries in the downtown.

“One of the reasons we sized the hotel the way we did was that we wanted to make sure that developments like ours have a spillover effect to other businesses,” he said. “And we wanted to make sure that came true. Some restaurant owners, including the Caputo family at Red Rose, have been quoted as saying that their business is up 20%, and people are expanding and extending hours.”

• Likewise, the numbers regarding the workforce have been generally positive, said Mathis. He estimated a 35% churn rate since the facility opened its doors, and noted that, while this might sound high to business owners and managers in other sectors, it’s in line with industry norms and actually lower than in many other areas.

Meanwhile, the targets for hiring Springfield residents, veterans, women, and minorities have all been met or exceeded, and many employees have already moved up the ladder since the casino opened its doors.

“I got the stat the other day … I think we’ve had 200 or so promotions since day one, and 30% of those are Springfield residents,” he noted. “Nothing makes me prouder than to see a line-level employee on day one who’s now wearing a suit in a supervisory management role. And it’s happening.”

As examples, he cited three employees who joined him for photos later in the day: Bill Blake, formerly graphic supervisor and now creative manager; Nickolaos Panteleakis, formerly Front Services manager (where he handled many front desk duties) and now director of Front Services; and Marissa Dombkowski, who has been promoted twice already — she started as an HR communications specialist, moved up to Entertainment Marketing coordinator, and is now Marketing manager for the MassMutual Center.

Overall, and to recap, Mathis reiterated that ramping up is, indeed, a three-year process, one that involves a serious learning curve on many different levels.

“I tell my team all the time, ‘if it were easy, everyone would do it,’” he said of casino operations in general. “That’s why we’re here — to manage through, collect data, and be smarter every day as we collect data and finetune the business.”

Driving Force

Mathis was one of those people caught in that traffic jam on the Saturday of Presidents Day weekend.

He told BusinessWest that it took him more than 45 minutes to get to an event downtown from his home in Longmeadow, normally a 15-minute drive. But unlike most others, he certainly wasn’t complaining.

“I’ve never been happer to be in stand-still traffic,” he said, adding that, while it has always been MGM’s goal to minimize such disruption, he’ll gladly take more nights like that in the weeks and months to come.

And he predicts he’ll be getting more as that ramping process continues.

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

Community Spotlight

Community Spotlight

Mayor Will Reichelt

Mayor Will Reichelt says that West Springfield’s biggest challenge may be a lack of developable land, which places a priority on maximizing existing real estate.

Like just about everyone else in this region, Will Reichelt has circled August 24 on all his calendars.

That’s the day MGM Springfield opens, as most everyone knows, and it’s a day of high expectations and some anxiety. Especially in West Springfield, where Reichelt has served as mayor for nearly three years now.

West Side isn’t the host city for MGM, but it is certainly among those to be the most impacted by the $960 million development that has gone up just across the Connecticut River.

The Eastern States Exposition will handle MGM’s overflow parking on August 24, with a shuttle running between the two locations. And the annual 16-day Big E will begin only a few weeks after MGM opens, creating considerable talk — as well as that aforementioned anxiety — about just what traffic will be like on Memorial Avenue, I-91, the Turnpike’s exit 4, the Memorial Bridge, Route 5, the North End Bridge, and other arteries in and around the city.

“It’s certainly going to be an interesting weekend and couple of weeks, with the Big E opening three weeks later,” said Reichelt, in a classic bit of understatement. “It will be interesting to see how Big E traffic interacts with MGM traffic.”

He added, as others have, that traffic and parking issues in the wake of MGM Springfield fall into the category of good problems to have, at least from a vibrancy standpoint. And looking beyond August 24 and the days to follow, Reichelt is hoping, and perhaps also expecting, that MGM will generate, in addition to traffic issues, some additional development opportunities.

“It will be interesting to see what happens long term as a result of MGM, especially just over the Memorial Bridge, where there are certainly some development opportunities,” said the mayor, referring to some of the retail areas on the eastern end of Memorial Avenue. “People have talked about a hotel, restaurants, and maybe redevelopment of the whole Memorial Avenue/Main Street area.”

More specifically, he was referring to redevelopment of some vacant or underutilized properties there and in other areas within the community, which has been the basic M.O. for this city for quite some time.

Indeed, unlike neighboring Westfield and many other area communities, West Side is, as they say in development circles, ‘land poor,’ meaning that most all developable parcels have been developed. That goes for residential development — although a few new small projects seem to materialize each year — and especially commercial development.

Most of the projects in that latter category have involved reuse of vacant or underutilized property, and examples abound — from the conversion of the former Yale Genton property and some neighboring homes on Riverdale Street into the site of the massive Balise Honda, to the conversion of the former Boston Billiards site just north on Riverdale Street into a new Marriott Courtyard.

The most recent example is the stunning transformation of a former auto body shop just off Memorial Avenue into the home of Hot Brass, an indoor firearm and bow range that opened its doors in early August.

“It will be interesting to see what happens long term as a result of MGM, especially just over the Memorial Bridge, where there are certainly some development opportunities. People have talked about a hotel, restaurants, and maybe redevelopment of the whole Memorial Avenue/Main Street area.”

Reichelt said MGM could help trigger more developments of this kind on sites ranging from the old Medallion Motel property just over the Morgan-Sullivan Bridge linking the community to Agawam and across from The Big E, to the United Bank building on Elm Street street (the bank is moving across the street into space once occupied by Webster bank), to some properties north of I-91 on Riverdale Street, which are in less demand than those on the south side of the highway.

“South of I-91 is the real hot spot; whenever there’s a vacancy, it usually fills quickly,” said Reichelt, adding that the city’s board goal is to the make the area north of the interstate just as hot.

For this, the latest installment in its Community Spotlight series, BusinessWest talked with Reichelt about ongoing efforts to bring more economic development to West Side and make the very most of the property that can be developed.

Developing Story

The ambitious Hot Brass venture, which combines a retail sporting goods store with a 17-lane recreational archery and shooting range, is, indeed, only the latest example of how underutilized properties have found new lives in this community.

And, as the mayor noted, this is out of necessity, because there are very few, if any, developable spaces left in this city, for either residential or commercial development.

West Springfield at a glance

Year Incorporated: 1774
Population: 28,391 (2014)
Area: 17.49 square miles
County: Hampden
Residential Tax Rate: $17.05 
Commercial Tax Rate: $32.90
Median Household Income: $54,434
<strong>Median Family Income: $63,940
Type of Government: Mayor, Town Council
Largest Employers: Eversource Energy, Harris Corp., Home depot, Interim Health Care, Mercy Home Care
* Latest information available

“When I was on the Planning Board four years ago, we approved a subdivision, which I assumed would be the last one,” Reichelt recalled. “But then, when I was a lawyer for the city, they approved another one, and I said, ‘that must be the last subdivision in West Side.”

Developers keep finding ways to shoehorn in smaller residential projects, he went on, but on the commercial and industrial side, the city has essentially run out of real estate.

And, as has been the case for some time now, most development — or redevelopment — efforts have been focused on the two main retail thoroughfares, Riverdale Street, home to countless auto dealerships, the massive Riverdale Shops, a cinema complex, several hotels and motels, and more, and Memorial Avenue, home to more auto dealerships, more retail plazas, and, of course, the Big E.

Both are doing very well, and are in seemingly constant motion, development-wise, said Reichelt, adding that over the past few years, Memorial Avenue had added new Fathers & Sons Audi and Volkswagen dealerships, a Chipotle, a new Florence Bank branch, and, most recently, Hot Brass, and a Sketchers outlet store.

Meanwhile, on Riverdale Street, additions to the landscape include the Marriott Courtyard, a new Pride store (the first one with a full-service kitchen), and a Balise carwash, among others.

But there are opportunities on both main drags for additional development, said the mayor.

On Riverdale, these include the site of the closed Bertucci’s restaurant, just south of the new Marriott Courtyard, and some vacant or underutilized property on the north side of the highway.

As for Memorial Avenue, there’s the former Medallion Motel site, but also the closed Hofbrauhaus restaurant, the site of the closed Debbie Wong restaurant (across the street from the Big E), and others.

The United Bank building on Elm Street

The United Bank building on Elm Street, soon to be vacated by the bank, is one of the keys to bringing more vibrancy to the downtown area.

The Medallion Motel site, at the corner of Memorial Avenue and River Street, is intriguing because of its size and proximity to the Big E, although its location, just over the Morgan-Sullivan Bridge, a site of persistent traffic congestion, is seen by some as a drawback, said the mayor, adding quickly that reconstruction of the bridge and a broad plan to redo all of Memorial Avenue from the Morgan Sullivan Bridge to the Memorial Bridge may change that outlook.

Work is slated to begin in 2021, said Reichelt, with plans calling for maintaining four lanes between the Memorial Bridge and Union Street, with some turning lanes carved out in the center (lack of such lanes leads to considerable congestion), with three lanes between the Morgan-Sullivan Bridge and Gate 9 of the Big E, with turning lanes added on that stretch as well. Meanwhile, there will be a bike path constructed on the Big E side between the Morgan-Sullivan Bridge and Union Street, with bike lines on both sides between Union Street and the Memorial Bridge.

As for the much-anticipated reconstruction of the Morgan-Sullivan Bridge itself, that work is expected to commence after this year’s Big E concludes, said the mayor.

Back on Riverdale Street, one of the main goals at present is to stimulate more interest in the section north of the highway. And for many retailers, it remains a much tougher sell.

“We need to help more people understand that north of I-91 is still Riverdale Road and it’s still a high-traffic area,” he explained. “There are many businesses that have been there forever and they’ve done extremely well.”

But while Riverdale Street and Memorial Avenue get most of the attention, community leaders are also focusing efforts on an often-overlooked asset — what’s considered the downtown area, the stretch of Elm Street beginning at Park Street.

That section boasts the Majestic Theater, a few restaurants, including B-Napoli, the town library, a few banks, and some retail, and has considerable potential as a destination, said the mayor.

“Every mayor says they want to have a Northampton-like downtown,” he told BusinessWest. “And in a way, our downtown suits itself to that, because we have a huge common on Park Street and a smaller common on Elm Street.”

The downtown section is hampered by a lack of parking, as many downtowns are, he noted, adding that a recent renovation of the municipal lot by City Hall to add more than 100 spaces will help.

One key moving forward is the United Bank building, which sits adjacent to the Majestic Theater and is around the corner from the city’s offices.

Years ago, the space occupied by the bank was home to a number of small retail shops, said the mayor, adding that a similar mixed-use role — with residential as possibly part of the mix — could help bring more people, and more vibrancy, to that section of the city.

Meanwhile, there are a number of municipal projects ongoing, everything from construction of a new elementary school, to infrastructure work including water and sewer projects, to ongoing improvements to Mittineague Park, all aimed at making the city a better place to live and work.

Some Solid Bets

Projecting ahead to August 24 and the days to follow, Reichelt said West Springfield residents, those who commute through the city, and even retailers on Memorial Avenue should be ready for what’s to come because they’ve dealt with Big E traffic for years.

“They know what to expect,” he said, adding that long-term, it’s a little harder to predict just what will transpire.

Overall, for the city across the river from the casino, the changing landscape presents many new opportunities to put some older properties to new and exciting uses.

There’s been a lot of that in West Springfield over the past several years and there are very good odds (yes, that’s a gaming industry term) that there will be much more in the years to come.

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