Happy Thanksgiving from GGB; Newsletter Returns December 4

FANTINI’S FINANCE: A Wynn Win Situation

Wynn Resorts’ deal with Boston Mayor Martin Walsh was celebrated by both sides—the very definition of a good negotiation. Walsh gets to claim victory, and Wynn can move forward without the Boston distraction.

Leo Marshal would have been proud of Boston Mayor Marty Walsh for striking a deal with Wynn Resorts and ending his lawsuit to prevent the company from building its .7 billion resort in neighboring Everett.

The late Leo Marshal was an old-time political boss who, in holding the jobs of Democratic city chairman and city clerk, ran the city of Wilmington, Delaware, as much or more than the mayor.

One day, when the Delaware legislature appeared ready to explode in anger over some controversial issue, Marshall, who was there to make sure the city delegation voted the right way, took it very calmly.

A young State House newspaper reporter—me—naively asked Marshall whether the bitter fight among the legislators would prove disastrous for the bill.

Marshall approached me, took his cigar from his mouth, and pointed it at my chest.

“Look,” Leo the Point, as he was known, said. “You fight. You call names. You threaten to bring the house down. You scare everybody in the place. And then, if you don’t have the votes, you compromise.”

That describes Marty Walsh’s battle against WYNN.

He sued. He called names. He acted with seeming recklessness. Then, when it was obvious he would lose the court case that he probably all along knew had no merit, he compromised.

However, the compromise was a small victory for Walsh, and a big victory for Wynn, which will pay an immaterial greater amount of money to Boston to offset traffic impact, and just a portion of the city’s legal fees.

Wynn isn’t entirely out of the woods. There are other challenges to the project, but Boston was the big one.

Now Wynn should get to move ahead freely on what will probably be one of the most lucrative regional casinos in America.

There is concern about New England becoming too crowded a casino region, with the disappointing opening of Penn National’s Plainridge slots casino being the current poster child.

No doubt more competition is coming. MGM Resorts 95 miles to the west in Springfield will compete for customers midway between the cities. Twin Rivers in Rhode Island wants to put a casino on the Massachusetts state line. The Mashpee Wampanoag Indians will open a casino 40 miles away in Taunton. Rush Street Gaming wants to build a casino in Brockton just 30 miles off, and Mohegan Sun and Foxwoods will fight to retain their many Boston area gamblers.

But none of the new Boston area casinos will be the exquisite, compelling attraction that Steve Wynn will create.

And no one of them will be smack-dab in the middle of an extraordinary metropolitan area.

Boston has 4.7 million people in its metropolitan area, and that consolidated area has 8.1 million people. The Boston metro is affluent with median household income over $53,000 a year. Boston draws tourists at a rate over 16 million a year. People in the region have a penchant for gambling, as the success of Foxwoods and Mohegan Sun and the Massachusetts state lottery demonstrate.

Perhaps more important to the long-term value, of Wynn’s stock, Boston puts the company in the regional casino business with a property that can be a model for other cities and states considering casinos.

For Wynn, with so many of its eggs in one basket, Macau, geographic diversification should be a priority.


Articles by Author: Frank Fantini

Frank Fantini is principal at Fantini Advisors, investors and consultants with a focus on gaming.