MGM Wants to Sell Springfield Casino, But City Just Says ‘No’

MGM Resorts International’s (NYSE: MGM) legal rift with the city of Springfield, Mass. is raging on with the city asking a Hampden County Superior Court judge to move the parties’ arbitration proceedings into the open. MGM Springfield. The city asked a judge to move arbitration proceedings into court. (Image: MGM Springfield) The gaming company is at odds with Springfield because the former wants to sell its operating rights to the regional casino while the city believes MGM hasn’t lived up to promises it made prior to the opening of the venue in August 2018. Per the casino host agreement, the city has some say in who runs the gaming venue. From MGM’s perspective, Springfield leaders are standing in the way of the company’s efforts to sell MGM Springfield, claiming in arbitration proceedings that the city is on the hook for $500 million in financial damages because it has blocked the transaction for two years. On Wednesday, counsel for the city asked Judge Jeffrey Trapani to move what’s currently a behind-the-scenes arbitration into court so the proceedings are in plain sight for Springfield residents. MGM Wants to Sell and It Has a Buyer The $960 million regional casino has been a disappointment since opening eight years ago with MGM acknowledging as much. That’s likely why the operator wants to sell the venue. Accentuating its legal tussle with Springfield, MGM has a buyer lined up in the form of Canadian private equity Clairvest. A year ago, Clairvest acquired the operating rights to the MGM Northfield Park racino near Cleveland, so those two parties have a clear working relationship. However, Springfield stands in the way, noting that MGM hasn’t lived up to staffing pledges of at least 3,000 and promises to maintain 2,800 to 3,000 gaming machines and 75 to 100 table games. Local media reports indicate that the city won’t green light a sale of MGM Springfield until those issues are addressed, but MGM’s willingness to boost headcount and increase gaming availability at the venue isn’t clear at a time when it wants to wash its hands of the venue. MGM Certainly a Motivated Seller It remains to be seen how the MGM vs. Springfield legal battle plays out, but there’s no denying that the gaming company is a motivated seller. Likewise, Clairvest appears to be a willing buyer. Beyond the venue’s disappointing track record, understanding the operator’s desire to part with MGM Springfield is easy and largely boils down to economics. The seller could fetch in the neighborhood of $500 million for the operating rights — capital that could be used to reduce debt, repurchase stock or for growth initiatives in other parts of the company’s portfolio. Additionally, the sale of MGM Springfield would get MGM out from under the $30 million in annual rent on the venue it pays to VICI Properties (NYSE: VICI). The post MGM Wants to Sell Springfield Casino, But City Just Says ‘No’ appeared first on Casino.org.