MGC does not designate Eastern States as ILEV

Date: 2/28/2014

By Carley Dangona

carley@thereminder.com



BOSTON – Although the Massachusetts Gaming Commission (MGC) voted against making the Eastern States Exposition (ESE) an Impacted Live Entertainment Venue (ILEV), it left the door open for reconsideration in the future.

The MGC was initially supposed to rule on the matter at its meeting on Feb. 18, but gave both parties an additional week to negotiate. The MGC reviewed Lyle Hall’s, managing director of HLT Advisory Inc., and consultant for the MGC, recommendation for the ESE. Parties from MGM and the ESE also spoke. After much back and forth, the commissioners voted 3 to 2 against the ILEV designation, with Stephen Crosby and Bruce Stebbins voting in the minority.

“At their [MGM’s] discretion, if they were to make an error, there’s no recourse,” ESE President and CEO Eugene Cassidy said, addressing the issue of MGM’s promise not to impose radius restrictions and blackout dates.

Jill Lacey Griffin, director of Workforce, Supplier & Diversity Development for the MGC, said, “Both parties communicated over the weekend, but no agreement was reached.”

She summarized to the MGC some of the details on which the two parties failed to agree. MGM was willing to co-promote some of the ESE events, but would not agree to provide ground transportation during the fair or co-promote the motor-coach industry.

Griffin added that the ESE requested MGM co-promote and sponsor two performances on its grounds, one during the Big E and the other in another part of the year, but that MGM declined.

“The question before us is not to mediate the terms of an agreement, but to determine whether or not the ESE is an ILEV,” Crosby said.

During his presentation on Feb. 18, Hall told the MGC that the Xfinity Arena and Coliseum meet the ILEV criteria of proximity and seating capacity, but not similarity of performance. He recommended that the ESE not be awarded the ILEV distinction, but that the MGC add a buffer period before and after the 17-day period of the Big E to prevent MGM from negatively impacting the success of the fair.

Attorney Jed Nosal of Brown Rudnick LLP, representing MGM Springfield addressed the buffer zones. He said, “[Agreeing to adhere to those restrictions] would impact MGM’s prior contractual relationships with the MassMutual Center, CityStage and Symphony Hall.”

As part of that agreement, MGM has committed to utilizing the three venues rather than building its own within the gaming development. It has committed 12 total calendar performances at the three venues.

Nosal advised the commission that MGM would not impose radius restrictions or blackout dates for booking shows. He commented that only nine months would be left for MGM to schedule those 12 shows if a buffer window on either end of the fair was implemented.

Attorney Mark Cress from Bulkley, Richardson and Gelinas, LLP, representing the ESE said, “We’re still concerned even with the blackout dates. Even [if] a small portion [of the fair] is affected; literally the survival of the ESE is at stake.”

Cress referred to MGM’s conduct during the negotiation process as “really troublesome.” He explained that 85 to 87 percent of the ESE’s income is from the fair. If that were hindered, the nonprofit would cease to exist. “The ESE begs you to please protect it,” he added.

Cassidy explained that MGM had more capital to invest in acquiring acts and more appealing venues. He said, “If the ESE books a particular name talent in September and MGM books that same talent in December, it completely takes the proverbial wind out of our sales. It takes the allure of presenting the famous person out of the marketing.”

“The ESE could renew the petition if MGM didn’t keep its commitment,” Commissioner James McHugh said.

Commissioner Enrique Zuniga argued that the ESE was not an ILEV because MGM was not “developing or operating” its own venues, as stated in the definition of an ILEV, but rather utilizing existing locations. He said he was “satisfied with the promise” by MGM not to engage in restrictive booking and ticketing practices.

Crosby countered, “They are developing and operating a gaming venue.”

Commissioner Gayle Cameron stated, “I agree with HLT’s decision that the ESE is not an ILEV.”

McHugh added, “I don’t believe that the ESE has satisfied its burden of proof [that it would be significantly impacted].”

Cameron, McHugh and Zuniga shared the opinion that MGM’s promise to not compete with the Big E was sufficient and that the ESE did not qualify as an ILEV.

While reviewing the ILEV definition, Crosby noted that it stated “experience” or “experiences.” He stated, “The language suggests we can reopen this if there were data later on [suggesting the ESE was impacted]. We get another bite at this apple whatever decision we make.”

Stebbins said, “I’ve wrestled with this. The justification being made by the applicant [MGM] not to schedule anything during the two-week window – aside from making it a condition of the license – I’m not sure how I cannot suggest they’re an ILEV.”

Crosby responded, “I totally agree with that. It seems like we’re cherry picking pieces from the debate.”

Zuniga made the initial motion to not approve the ESE as an ILEV.

McHugh proposed an amendment, which was accepted, to add the 17-day blackout period to the contract of MGM, if awarded, and that the ESE has the right to re-open the petition if it is negatively impacted.

Just prior to the vote, Stebbins said, “It’s not the 17 days that matters, it’s the ability to compete that matters.”