That MGM Resorts International casino project in Massachusetts looked like a long shot to me — and so it was. After a high-profile launch, complete with a personal appearance by CEO Jim Murren, a dedicated Web site and a promised monthly newsletter, the whole thing fizzled abruptly late last night. Chief Marketing Officer Bill Hornbuckle (left) said, “The unique nature of MGM’s plans for an all-inclusive world-class resort of the Brimfield site, and our growing understanding of the needed scope for its infrastructure, simply do not allow us to pursue the comprehensive MGM resort originally envisioned here.”
English translation: “We can’t afford it.” The news promptly — and illogically — sent MGM stock into a slump. Considering the debt overhang that MGM is busily refinancing and the prospect of cannibalizing MGM’s Foxwoods outpost, management’s volte-face makes sense, even if you wonder why the company went so far out on a limb before getting vertigo. In particular, the access problems inherent in building a casino on a narrow country road were evidently taken into consideration so late in the game that MGM now has the appearance of having leapt before it looked. Ergo, yesterday’s somewhat embarrassing retreat. Hornbuckle also hinted at adverse public response from Brimfield residents as a contributory factor in MGM’s change of mind.
Don’t count MGM out entirely. According to Hornbuckle, the lion is on the prowl for other sites in the western part of the Bay State.You have to wonder how this is playing at Ameristar Casinos, which has a marketing partnership MGM’s M Life loyalty program. Obviously, Ameristar’s near-term chances are greatly improved by yesterday’s dispatches. However, what if the MGM project crash-lands in another western-Massachusetts town, one with better infrastructure? Besides, MGM’s Brimfield business partners have signaled their intent to continue pursuing a casino and Penn National Gaming just so happens to be still without a site … but probably not for much longer.
Flying the unfriendly skies. Passengers on a Jet Blue flight to Las Vegas found themselves gambling with their lives when the pilot went stark raving bonkers at 30,000 feet. Look on the bright side: After that unplanned “thrill ride,” the Vegas-bound travelers should feel much less trepidatious about riding Stratosphere’s X Scream or Insanity (not that you’ll ever get me on one of those) or even the Desperado at Primm Valley Casino Resort … assuming management feels like operating it on the day you visit.
Props for Pinnacle. Gaming analysts at J.P. Morgan are feeling the love for Pinnacle Entertainment and say you should be, too. “In an environment where investors are looking for fresh money ideas with underappreciated fundamentals and reasonable valuations, we think PNK is a solid/risk reward investment,” they write. Even the fact that over two-thirds of Pinnacle’s revenue derives from the St. Louis and Lake Charles markets does not cool their ardor. Why? They don’t think Pinnacle is getting enough credit for its foray into Vietnam or its River Downs racino near Cincinnati. Nor does it hurt that 1Q12 revenue is running well ahead of expectations to the tune of $7 million, with $2.5 million of that coming from Belterra Casino Resort & Spa, above. Since it’s trading below its peer averages, in better times, Pinnacle would be a major acquisition target … not that we need any further consolidation in the gaming sector.
The Adelson touch. It’s possible Newt Gingrich thought it up himself but I’d prefer to believe this rinky-dink cash grab was another brilliant suggestion from sugar daddy Sheldon Adelson. After all, the rent-gouging, comp-welshing Las Vegas Sands CEO has taken crassness to the level of an art form.