Wednesday, November 13, 2013

Some observers believe Wynn is banking on Boston

Developer Dan Keating was attending a board meeting Monday afternoon for the University of Pennsylvania's Abramson Cancer Center when he got an urgent message:

Steve Wynn was dropping out of the competition for a Philadelphia casino license.

No one was more shocked than Keating. His company, Keating Consulting, had been hired to develop a waterfront casino in the city's Fishtown section for Wynn Resorts.

The decision, Keating said, "is a painful one for us."

This is the second time the runaway bride of Las Vegas has bolted from Philadelphia, and onlookers are just as baffled as the first time it happened.

"Everyone is stunned," said Kevin Feeley, a spokesman for Jim Anderson, the New Hope builder who gave Wynn an option to buy 60 acres on the Delaware in Fishtown. Anderson would have received a million shares of Wynn Resorts stock had the Las Vegas company won the Philadelphia license - a deal valued at more than $167 million.

"We're just sort of letting the smoke clear and see where we are," Feeley said. "We're surprised, disappointed - a lot of people are. There are a lot of people on the ground in Philadelphia who did a lot of work on this project and believed in it."

The last time this happened, in 2010, Wynn stepped in to rescue the sinking Foxwoods Casino only to abruptly step out of the deal a few weeks later.

This time around, Wynn Resorts said among the "host of factors" was the performance of the local gaming market, which has been slipping, as well as the recent vote in New York state to expand gaming.

Onlookers who are familiar with Wynn's efforts here have their own theories on what may have played out behind the scenes. Most spoke on condition of anonymity.

The most popular theory is that Wynn was afraid of losing his bid for a license in Philadelphia.

While his waterfront project had the highest price tag - $926 million - it was not the clear front-runner.

Five other groups are vying for the city's second license: three in South Philadelphia (Casino Revolution, Live! Hotel & Casino, and Hollywood Casino Philadelphia) and two in Center City (the Provence and Market8).

The Wynn project had strong backing from community groups, but only qualified support from city officials. Wynn billed his project as part of a global gaming empire extending from Las Vegas to Macau. But Deputy Mayor Alan Greenberger recently expressed doubts about the company's ability to draw international customers to such an isolated site in Fishtown.

"Better to bail instead of looking like you lost," said a real estate investor familiar with people involved in the Wynn project.

The flip side of this thinking is the possibility that Wynn Resorts could win a license in Boston.

Massachusetts soon will select a gaming operator for the Boston area, and Wynn Resorts has an inside edge with its proposed $1.3 billion project there, many observers say.

The other contenders include a project with Foxwoods Casino, a financially ailing tribal operator; and a casino resort at the Suffolk Downs racetrack. The racetrack project has not received community support and had to recently drop its operator - Caesars Entertainment - because of concerns raised by regulators about its suitability.

"He wants Boston worse than Philadelphia," said a person familiar with the casino competition here.

When Wynn first surfaced as a possible bidder in Philadelphia, skeptics immediately placed bets on whether he would follow through.

At every opportunity, Wynn insisted that he was committed to Philadelphia. With his signature flamboyance, he painted a vision of grandeur for Fishtown, promising a luxury hotel, spa facilities, a riverfront promenade, restaurants, and gardens.

In an interview with The Inquirer on Feb. 7, Wynn was asked point-blank whether his abrupt 2010 exit from the Foxwoods deal would haunt him.

Wynn countered that he got into that venture only as a favor to his friend "Ronnie" - shopping center developer Ron Rubin. But once he agreed to take over the project, he said, he could never get his arms around the finances.

"There was no way of making a business out of it, and I had to tell Ron Rubin, 'Hasta luego,' " Wynn said.

Pennsylvania regulators, he added, "told me they didn't blame me for leaving."

Philadelphia and Boston were supposed to be the first attempts to extend the Wynn brand to cities. But recently, Wynn, famous for his thin skin, revealed his impatience with regional regulators.

In a conference call with Wall Street analysts Oct. 24, Wynn said states were "asking us to come and spend billions of dollars. Now, if we were any other business, they would stand on their head and spit wooden nickels to get billions of dollars invested from any other business. But we find ourselves being treated, in many respects, as if they're doing us a favor."

A state official who read the transcript remarked, "You could start to see him getting a little perturbed."

Said another observer involved in the license competition: "He was a lot more irascible than I anticipated, given that gaming officials from two states were listening to him."

The following week, Wynn Resorts' board met for two days and voted to pull the plug on Philadelphia.

Source: Philly.com

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