The expansion of entertainment and gaming across the street from the Encore flagship casino and hotel is a logical extension of the casino’s ability to generate income and to redo an end of Broadway that has been a polluted mess for 100 years.
The Massachusetts Gaming Commission will certainly, after great debate and serious thought, and legal renderings, approve the expansion, as it should.
The only problem with the expansion is this: what does the city gain in added revenues?
Early talk by some of the city’s economic mavens indicates that something like $15-$20 million a year might be gained by the city from this added expansion with a combination of new taxes, hotel and entertainment fees and the such.
This leads most business minded individuals to wonder about Encore’s $30 million a year in lieu of taxes payment to the city for the occupancy on the 33 acre site which it no longer owns.
Wynn Corporation spent approximately $2.6 billion to build the gaming complex and hotel, and to remediate the land.
For this, Encore pays the City of Everett $30 million a year.
Now comes the proposed development across the street, which might cost between $500 – $750 million when all is said and done – although the final tab could be more or less.
If the city can expect $15 – $20 million a year from a much smaller business entity across the street from the flagship Encore casino and hotel, how does this aid in equating the value of the $30 million a year the city is receiving from Encore for a 33 acre site that has a value well in excess of $3 billion -$5 billion today?
Encore’s core gaming revenue base is at approximately $720 million this year.
The city receives about 4% of Encore’s gross gaming revenue as rent with room fees from the hotel adding additional income.
This represents a gross imbalance in what Encore is worth and how much it generates and what the city receives.
The $30 million a year the mayor bargained for with Wynn Corporation at the beginning of this run is a pittance now almost four years later.
With inflation, the $30 million yearly from Encore for the city today is worth far less than it was when first negotiated in 2018.
The mayor won the battle bringing casino gambling to Everett. But he lost the war with the $30 million yearly payment.
With this expansion, this base $30 million must be raised to
reflect not only inflation but the dramatic added value to its bottom line the new facility on the other side of Broadway is going to produce.
We urge the MGC to examine the efficacy of the $30 million a year payment when the value for the entire casino and hotel investment is now in the billions and rising.
With sports betting about to become a reality in a matter of weeks, many, many more millions of dollars of revenues are go- ing to flush through the casino.
This is all well and good for Encore.
What does Everett get out of this?
If the new development with a parking garage, an entertainment venue and spaces for gaming and sports betting can raise as much as $15 million or more a year in taxes paid to the city, what justification is there for the MGC to approve such an expansion without first increasing Encore’s yearly tab for the massive 33 acre site it sits on and generates more than $700 million a year.
There is a clear and apparent inequity in this income stream for the city.
The $30 million yearly must be adjusted higher, and it must be adjusted higher keeping in mind the much smaller value of the expanded development being planned for across the street, which percentage wise, will produce so much more.
The MGC owes this to Everett.
Encore owes this to Everett.
Encore is made out of money.
The mayor’s poor deal making at the start needs an adjustment.