With top MGM Springfield executives out, where does casino go under Chris Kelley
Wednesday 22nd January 2020
SPRINGFIELD -- The ouster of MGM Springfield President and Chief Operating Officer Michael Mathis and Vice-president and Chief Financial Officer Courtney Wenleder on Tuesday followed a record-low gross gambling revenue for December and months of disappointing results for the 17-month-old, $95 million resort.
MGM Resorts International's move of Mathis from Springfield -- where he'd worked since 2014 preparing for the casino's construction and August 2018 opening -- may be a reaction to gambling revenues that have been about half the pre-opening projections, employment levels that are not at the 3,000 jobs MGM promised and commercial development around the 17-acre MGM property that seems never to have taken off.
MGM Springfield has about 2,500 employees.
Or it could simply be MGM moving executives around, putting Mathis in a position to foster new casinos like he did in Springfield, while bringing experienced hand Chris Kelley, the new president and chief operating officer, in to grow MGM Springfield.
MGM Springfield reported gross gambling revenue of just $18.9 million for December -- the lowest full-month revenue figure in the casino's 16-month history. It's just more than half what MGM had projected to bring in every month.
"In business, the buck stops with the person in charge. The expectations may have been unreasonable. But that's no consolation," said Fred Carstensen, professor of finance and director of the Connecticut Center for Economic Analysis which studies the gambling industry in New England. "I don't think they are losing money. It's just that they are not generating the money they'd projected."
MGM Springfield has a unique, inside-out design where it fits in an urban environment and is more open to the street. Carstensen said most casinos have their only access through the gambling floor.
However, the design might not be popular with gamblers -- and Mathis has been here since the beginning.
"It may be that he was so involved with that approach that he has to take the fall," Carstensen said.
Before opening in August 2018, MGM Resorts International told regulators the Springfield casino would bring in an average of $34.8 million a month in gross revenue from slot machines and table games. Instead, the average over the first 16 full months was $21.54 million a month, with a high of $26.9 million in September 2018, its first full month of operations.
MGM Springfield reported gross gambling revenue of just $18.9 million for December -- the lowest full-month revenue figure in the casino's 16-month history.
The disappointing December 2019 numbers follow gross gambling revenue of just $19.9 million in November, which at the time was the second-lowest monthly total since the casino's first full month of operation in September 2018.
MGM Springfield reported gross gaming revenue of $21.6 million a year ago in December 2018.
"It seemed to me optimistic at the time," Carstensen said. "There is just so much regional competition. Everybody is opening casinos. Everybody is adding keno. Everybody is adding sports betting."
Encore Boston Harbor, Massachusetts' second-to-open resort casino, reported gross gaming revenues of $54 million in December, an improvement from $47 million in November and $45 million in October. That $54 million was the highest number in Encore Boston Harbor's seven-month history.
MGM is really transitioning MGM Springfield from start-up to operating as an ongoing business, said Richard K. Sullivan Jr., president and CEO of the Economic Development Council of Western Massachusetts.
He said he communicated with Mathis Tuesday and Mathis is excited professionally and personally to get back to Las Vegas, where MGM Resorts International has its headquarters, and get working on new projects.
According to Tuesday's release, Mathis will assume a new role as senior vice president of business development working on various company initiative. He will report to MGM Resorts' President and COO Bill Hornbuckle's office.
Wenleder had been the chief financial officer and vice president of finance at MGM Springfield since January of 2017, more than a year before the casino opened.
Sullivan said the gross gambling revenues are a concern, of course -- and its something he expects Kelley and MGM to address.
"Certainly, MGM is in the business and they are professionals. They certainly know how to drive those numbers," he said.
That includes, Sullivan said, in hiring.
"I have always said that the places where MGM has been most impactful employment numbers working there," Sullivan said.
But MGM also must live in a crowded market, one that's only added more gambling options since it formulated those pre-opening revenue and employment projections.
"You adjust your business plan accordingly," Sullivan said. "Growth and adjustment. I suspect you will see both things happening."
Justin Hurst, the Springfield City Council President, said its frustrating that Encore had a good month while MGM Springfield lagged.
"I trust that MGM has been around the block a time or two. They will rectify what seem to be an issue," he said.
Hurst though had nothing but praise for Mathis.
"I think he's been an excellent partner. We couldn't ask more from a businesslike MGM."
Springfield Mayor Domenic J. Sarno echoed those sentiments in a prepared statement.
I enjoyed a fine working relationship with Mike Mathis and thank him for his commitment to Springfield," Sarno said in the release. "He did a great job in ensuring participation of our Springfield community. I wish he and his family well. My administration now looks forward to working with new President and COO of MGM Springfield Chris Kelley to taking our MGM Springfield to the next level."
Sullivan praised Mathis for his work bringing local businesses into MGM's network of vendors and suppliers.
And MGM has had an impact on the region's tourist economy, Sullivan said, driving business through out the downtown. He pointed to the crowds at this weekend's Boston Red Sox Winter Weekend.
"You've seen other hotels that are built and have been planned," Sullivan said.
The Massachusetts Gaming Commission doesn't need to approve executives at the state's casinos. But they must be licensed, said Gaming Commission spokeswoman Elaine Driscoll.
Driscoll also passed on a prepared statement:
"The Massachusetts Gaming Commission would like to commend Mr. Mathis for his leadership, collaboration and diligence regarding the opening and operation of MGM Springfield," he said. "Mr. Mathis is highly regarded for his commitment to the community and his earnest oversight of the property during critical periods of implementation and growth. The Commission extends its best wishes to Mr. Mathis as he takes on his next endeavor with MGM Resorts. The MGC also looks forward to an ongoing cooperative and positive regulatory relationship with newly appointed CEO Chris Kelley."
Kelley comes to Springfield from the MGM Northfield Park casino in Ohio which he'd run since April 2019.
MGM bought the former Hard Rock Rocksino in Northfield Park, Ohio in 2018 for $1 billion. His job was to transition the Hard Rock into an MGM branded property.
Kelley joined MGM Resorts in 2017 as vice president and chief financial officer of MGM Grand Detroit. Before then, he worked at Viejas Casino & Resort near San Diego.
In Ohio, MGM Northfield Park was the top gambling revenue earner of the state's 11 casinos in 2019 with $253.6 million, according to Cleveland.com. However, MGM Northfield Park revenue fell $2.3 million from $255.9 million in 2018.
The only other Ohio operation to experience a decline in 2019 was Hollywood Casino Toledo, which slipped from $202.7 million in 2018 to $202 million last year.
Kelley was unavailable for comment Tuesday, according to MGM spokesman Saverio Mancini.