For now, one of the less plausible stories has passed into history as MGM and Wynn say they are no longer talking about MGM buying Encore Boston Harbor.
The idea of MGM buying Encore didn’t make much sense other than giving the company another major-market casino to join Detroit, New York City, the Mississippi Gulf Coast and Washington, DC.
The purchase would also have flown in the face of all that MGM has said it is doing—focusing on efficiencies to grow profitability, improving the balance sheet, maximizing the value of its real estate.
Indeed, the activist investors who have been pressing MGM in those areas might have been who the company was referring to when it said the prospective acquisition raised anxiety among some stakeholders. Certainly, spending $3 billion or so for what could initially have been a dilutive deal isn’t what activists have in mind.
So, MGM management can now get back to the business of improving the profitability of their business.
But the same might not be the case down the Las Vegas Strip at the headquarters of Wynn Resorts.
I’m reminded of a conversation years ago with a guy who had been in on the financing of the Rio. He said he expected the Rio would be sold. The reason: then CEO Tony Marnell had once thought of selling the property and when that idea enters your mind, it usually doesn’t go away, this guy said. Several months later, the Rio was sold to Harrah’s.
And so, it wouldn’t be a surprise if Wynn finds a buyer for its Boston property.
Strategically, Boston doesn’t fit. Wynn, after all, is an Asian company with a Las Vegas presence. It gets 80 percent of its EBITDA from Macau and much of its Las Vegas gaming revenue comes from Asian players. Wynn will become even more of an Asian company if it gets a Japanese casino license. Having one regional casino makes Boston an outlier. Even the reported interest in buying Crown Resorts in Australia would make more sense as Wynn would get the luxury Barangaroo casino in Sydney that is being built for Asian VIPs.
And Wynn’s executives might just as soon want to get rid of the aggravation that Massachusetts has become and get back to their core business of destination resort casinos.
The question then is who can plunk down $3 billion to buy Boston. Not Caesars. Nor the regional operators, Penn National, Boyd or Eldorado. Some could speculate Mohegan Sun, though Massachusetts regulators might not be delighted to have their neighboring competitor in the Bay State.
One possibility is Genting. The company has a history in New England, having helped finance Mohegan Sun and more recently lending money to the Mashpee Wampanoag Indians to build a casino in, of all places, Massachusetts.
Further, Boston would not be so much of an outlier. Genting has Resorts World in New York City, and Kien Huat, the real estate arm of the Lim family that controls Genting, in turn controls Empire Resorts, which owns Resorts World Catskills. And the Northeast region can feed players into Resorts World Las Vegas now under construction.
Of course, Wynn could, as the company says, commit itself to running Encore Boston and add steady profits to the corporate coffers.
