John W. Henry, the Owner of Red Sox and Boston Globe, Approached Wynn Resorts With Another Offer for Encore Boston Harbor
Wynn Resorts have officially confirmed that John W. Henry has come out with yet another offer for their $2.6 billion Encore casino. According to the company spokesman, the offer was unsolicited.
This isn’t the first time Henry had expressed interest in Encore Boston Harbor. Nonetheless, the talks in the past few weeks were as fruitless as his initial 2018 proposal. Red Sox owner had approached the company along with a group of potential investors but was unwilling to reveal who the other interested parties are.
Henry went straight to the Wynn Resort CEO Matt Maddox, confident he could put together a respectable group of local buyers, who would be willing to become shareholders or if need be outright purchase Encore.
Despite not being well-received, Henry’s offer didn’t come out of the blue. In fact, Wynn Resorts has considered selling Encore Boston Harbor to MGM Resorts International last year, and again these past weeks. The casino is scheduled to open on June 23rd, which makes the situation all the more peculiar. However, days after announcing the possible say, the company had declared that the talks have ended.
Apart from timing, industry analysts believe there are multiple other factors that must be included in the equation. First, the offers and inquiries regarding Encore Boston Harbor started coming in after the Massachusetts Gambling Commission expressed doubts regarding Wynn Resorts’ integrity and left the question of their license in the air.
What Prompted the Sale?
The reputation of Wynn Resorts took a heavy hit after multiple ex-workers accused the company’s founder, Steve Wynn, of sexual misconduct. The severity of the allegations prompted a thorough investigation by the Massachusetts Gambling Commission. Aside from sufficient evidence that supported these allegations, the company had determined that other Wynn Resort officials were actively trying to cover up the many incidents Steve Wynn was involved in. When Steve Wynn resigned and Matt Maddox took over as the company’s CEO, offers for the soon-to-be-opened Encore Boston Harbor started pouring in.
Although the commission’s reprimand wasn’t as extreme as revoking the company’s license, they did fine Wynn Resorts with $35 Million. Moreover, Maddox was fined an additional $500,000 and had to undergo leadership training. This is a safety net the commission put in place to prevent something similar from reoccurring in the company’s future.
From this perspective, it isn’t difficult to understand why Maddox entered talks with MGM Resorts. He didn’t try to hide the fact that he wasn’t overjoyed by the conditions the Massachusetts Gambling Commission set before him. Various industry experts are of the opinion that Maddox “cracked under pressure” and was looking for an easier way out of the whole mess. Springfield Mayor, Domenic Sarno, stated that Wynn Resorts that had approached MGM Resorts, giving merit to the analysts’ speculations.
The Legal Tangle
Another complication, and probably the reason why talks between the two companies have failed, is the fact that MGM Resorts already has a casino in Massachusetts. The state’s regulations don’t allow you to invest in, let alone own more than one casino.
So, if MGM were to buy out Encore Boston Harbor, they would have to sell their own casino in Springfield. Finding a buyer would undoubtedly prove challenging, given the fact that MGM Springfield has heavily underperformed so far. Moreover, they would have to convince Springfield, the commission, and the surrounding communities, that they are capable of running Encore Boston Harbor.
This opened up a potentially quite lucrative opportunity to John Henry, so it’s no surprise he extended an offer to Maddox. However, what’s curious is the timing of the offer. There are only a few weeks left before Encore Boston Harbor opens. It would be surprising if Maddox accepted Henry’s proposal, after he had already paid the hefty fine and went through the tedious leadership training.
All things considered, Encore’s fate remains unclear. We have no choice to wait until June 23rd to see how Encore Boston Harbor casino’s story will unfold.