Fatal Blow Or Mere Blip?

- The big question about MGM's pullout from the Aqueduct racino is whether this constitutues a fatal blow to NYRA's franchise bid....or if it's just a bump in the road to overcome, much like the Steinbrenner family's withdrawal from Excelsior. NYRA, naturally, opts for the latter.

"What has become clear to NYRA over the past few years is that there is no shortage of marquee gaming companies that would like to manage the VLT project at Aqueduct," [NYRA chairman Steve Duncker] said.

"The project is in an advanced stage of planning, and I anticipate that NYRA will be able to seamlessly introduce a replacement for MGM in relatively short order." [Albany Times Union]

And that seems to make sense. I'd imagine that any self-respecting casino company would jump at the chance to erect a slots parlor in New York City - even if it's in Ozone Park. But that being the case, why did MGM pull out?

"It's no longer worth it," said Alan Feldman, MGM's senior vice president for public affairs. "This was first proposed four years ago. Since then, we've doubled in size. There's too much else going on. That's the bottom line."

MGM is currently investing more than $10 billion developing a half-dozen resorts and casinos from China to the Middle East.
.....
"When we started this, we were a very different company," Feldman said. "We had just merged with Mirage and were seeking to expand. It looked like it could be a nice return for shareholders, a modest investment.

"To get this to come to a conclusion could take another few years, and there could be litigation involved." [Saratogian]

MGM was obviously frustrated with the constant roadblocks thrown up by the state, which is certainly understandable. (Duncker took a shot at the State in that regard when he told the NY Post: "Clearly, some [obstacles] were self-inflicted, while others were the work of a few who desired to see NYRA fail in order to advance their own agendas."]

But despite the delays, the escalation of costs, and their grand international ambitions, the move comes as a shock, especially since we're told that an agreement was close (though we've been told that for months). I'm especially surprised given the fact that the contract was awarded in a no-bid process that drew the ire of NYRA critics and rival bidders, with terms that had to be favorable to MGM, even though the state conceded that it was fair. And given the rosy predictions of a $400-$500 take per machine, it seems like a no-brainer even if they were going to have to loan NYRA a few tens of millions of dollars more than originally planned.

So I'm wondering if perhaps MGM is taking a look at the growing competition from Pennsylvania and other nearby states, as well as from the possible Catskills casino; and, in addition, noting the far lower take per machine figures being produced at Yonkers. Maybe they're figuring that it's not such as good deal after all. If MGM thought that Aqueduct would be the "slam dunk" (I hate that phrase) that all of the bidders are claiming it is, one would think they'd stick it out. I imagine that some other casino outfits are going over all the numbers and projections as we speak. NYRA's fate may depend on how accurate they think they are.