City’s finances hanging in the balance
By Josh Resnek
On Saturday, the Massachusetts Gaming Commission voted unanimously to temporarily suspend operation at the state’s three casino properties, including Encore Boston Harbor, MGM Springfield and Plainridge Park Casino. In a statement from the MGC that stated, “In response to the coronavirus pandemic, the decision was made in collaboration and cooperation with our licensees to safeguard the health and well-being of casino guests, employees, and regulators.” Doors closed at 6:00pm on Tuesday, March 15.
The closing of the doors to the Everett casino and hotel is a seismic event.
The city takes in about $30 million a year in lieu of taxes from Encore. If Encore isn’t open, Encore can’t pay. If Encore goes broke, the city goes down with it.
Wynn Resorts, who owns Encore, has suffered almost catastrophic stock losses during the past 25 days.
The price for Wynn Resorts has plunged from about $130 before the epidemic began to about $54 this week. With the stock price plunge comes the company’s market share plunge – that is – what the company’s stock is worth as a measure of what he company is worth.
The market share value of Wynn Resorts was about $14 billion last month. As the week began, its market share value is closer to $5 billion, a staggering $9 billion loss.
Encore shutting its doors here has temporarily furloughed 5,000 employees who it has pledged to pay.
Right now, with no end in sight for the coronavirus, the likelihood of a two week closing followed by another two week closing is odious, and company officials are fearful of this – as we all should be.
Knowing what is real and what is not about the crisis stretches the imagination.
It was reported last week that Utah Jazz star Donovan Mitchell was a visitor in early March to Encore Boston Harbor casino and subsequently tested positive for coronavirus. No doubt he was hanging out in the high roller area since he makes over $5 million per year. After the news broke, Encore stated that it was stopping those who exhibited symptoms and taking their temperature. We haven’t heard whether anyone was escorted out for being sick but one of our roving reporters walked through the casino last Friday and nobody stopped him to ask how he was feeling.
As the news evolves by the minute, our Governor Baker is working with New York Governor Andrew Cuomo to close casinos across New York, Massachusetts, Connecticut and Rhode Island. The coordination was meant to prevent a mad rush of gamblers from one state to another. So not running to Mohegan Sun or Foxwoods for a casino fix. The governors have agreed to shut casinos, indefinitely, so two weeks would be the best-case scenario.
Even after the casino opens, there is the problem with getting anyone outside of the area to the casino. Encore and Wynn Resorts executives counted on high rollers coming to Everett from around the globe. Flights have been cancelled around the world and news is that most airlines will not survive without a bailout from the government.
Remember the last time you flew? There were no empty seats! Now airlines are cutting routes by up to half, and the summer travel boom is a total bust. Expect a negative effect on Boston’s summer travel destination and visits to our local casino, if it is even open then.
President Donald Trump is finally figuring out that this is a national crisis that could last through the summer. The stock market is down thousands. Wynn’s stock is under $55/share and it borrowed billions for both its Macau and Everett locations. The reality is that the company, like all companies who have come to halt with the virus, is in trouble and they need people pulling those slots and sitting at the tables and quickly.
With all of this bad news, many finance professionals are saying that the economy could likely go into recession causing the unemployment rate to increase. Gambling is a luxury item, even for those who have gaming problems. You have to have money to gamble. Encore doesn’t take credit from small time players.
Government officials want that casino open because it brings in money. They will probably open the casino before they open the schools, but that is going to take more than a few weeks.