Mr. Wynn Comes to Everett
It was long assumed that Suffolk Downs had the inside track on the single casino license Massachusetts will issue in the Boston area. But that was before billionaire Las Vegas mogul Steve Wynn’s whirlwind courtship with the blue-collar city of Everett and its mayor, Carlo DeMaria. Now the race between Wynn and Suffolk Downs is entering the home stretch…even if, as he tells us, Wynn doesn’t think there’s any competition.
In many ways, Caesars was shaping up to be the perfect foil to Wynn. The operator of 54 properties, the company is the casino version of a national big-box chain, dependent on mid- and low-market gamblers for much of its revenue. The company’s original DNA comes from the downmarket Harrah’s chain, which swallowed Caesars in 2005 and took its name. Bo Bernhard, the executive director of the International Gaming Institute at the University of Nevada–Las Vegas, said that Caesars’ urban model in cities like Cincinnati, New Orleans, and Cleveland is the best-developed in the industry. It’s based on striking partnerships with local businesses, restaurants, and hotels, and integrating them into their massive customer-loyalty rewards network. For example, when their own hotels fill up, Caesars will book guests in other local hotels to make sure that prospective gamblers get to town. Or, if you spend enough time at the slots, the casino may comp you a meal at a local restaurant. Or gift you tickets to a show downtown. In December, Suffolk Downs and Caesars announced a deal with the Citi Performing Arts Center, operators of the Wang, Shubert, and Colonial theaters.
Caesars, though, has never built a luxury casino resort as grand as what it designed for Boston. Or, for that matter, one on par with Wynn. The company saw Suffolk Downs as a chance to build its credibility in the high-end market, working with Elkus Manfredi Architects to dream up interiors complete with high ceilings, chandeliers, gold-colored doorways, and yes, a Roman statue or two.
Bernhard confirmed that, when it comes to design, everyone is aspiring to match Wynn, whose reputation is top-notch: His resorts in Las Vegas and Macao are where employees most want to work and guests most want to stay. But they are designed as cloistered oases, places guests should never want to leave. This foray into urban, nontraditional gambling markets—Wynn is also trying to build in Philadelphia—where the casino must try to leverage local amenities, is new to him, and much more Caesars’ specialty.
Loveman, regarded as more of a numbers wiz than a visionary, said that Wynn’s reputation for design mastery is a product of simply outspending the competition. But with both the Wynn and Caesars designs projected to cost roughly equal amounts, Loveman insisted, “Both of them are going to be of equal quality.”
Nevertheless, a few months after Wynn’s entry, Suffolk Downs announced that it was upgrading its plans. The track revamped the property’s entrance to provide a more bucolic approach and added green space where vast parking lots had been—all in the hopes, apparently, of creating a resort of even more equal quality to Wynn’s.
With Menino onboard as Suffolk Downs’ biggest cheerleader, the host-community agreement between Boston and the track seemed like it would be a formality. But the mayor was intent on wringing every last penny he could for the city. The negotiations dragged on for months, and into the summer.
What Boston fears most is a casino going just across the river in Everett, a scenario in which Boston gets all of the spillover headaches of a casino but very little of the money to help deal with them. That being the case, said Father Richard McGowan, a Boston College economics professor and gaming expert who assisted the city with negotiations, it took the momentum behind Wynn’s proposal in Everett to finally spur Boston toward a deal. “I think the mayor all of a sudden realizes Wynn’s got a legitimate thing here,” McGowan said. “We better get together and get this done.”
The agreement that finally materialized in August was a table-thudding 186 pages. The track agreed to pay Boston $33 million up front, plus $32 million annually. If Suffolk Downs hits certain gaming-revenue benchmarks above $800 million per year, the city gets additional money. Despite Menino’s initial objections, the deal also allows Suffolk Downs to build the project in phases, first opening the casino and a renovated track grandstand, then the resort hotel. Suffolk Downs also spills into Revere, and it soon after struck a host-community agreement with that town, too. Both cities’ referendums are scheduled for election day, November 5. Coincidentally, DeMaria is up for reelection in Everett the same day, and is expected to win easily.
So why was the Wynn deal so short and the Boston deal so long? “It looked like they had thousands of consultants providing lots of input and lots of lawyers. If you get down to the substance, ours was very clean and clear,” Maddox, the Wynn CFO, said. “We don’t need to add definitions for definitions.”
Wynn was more succinct: “You get the lawyers involved, everybody’s getting paid extra, and I say bullshit. Kiss my bippy.”
While it’s true that the Boston deal does have pages and pages of legal definitions—remarkably, including one for “mayor”—it also contains a level of detail that goes significantly beyond Everett’s. Most notably, Suffolk Downs must spend $50 million annually on goods and services in Boston, with $5 million of that in Eastie. On traffic, the Wynn-Everett deal identifies a handful of projects. The Suffolk Downs–Boston deal itemizes them and spells out how much each will cost, requiring at least $45 million to be spent on transportation improvements. There are penalties for missed deadlines and payments and even a clause requiring that Suffolk Downs garage all its vehicles within city limits, so that Boston can collect the excise tax. The track also must build a 5,000-square-foot greenhouse on the casino roof.
“The difference is ours is a long-term partnership,” Tuttle, the Suffolk Downs COO, said. “It’s not a shotgun marriage.”
Whatever else they do, the agreements speak to two different approaches: For Boston, it was maybe trust, definitely verify. For Everett, it was trust.