MGC suspends Eastern States ILEV decision
Date: 2/21/2014
By Carley Dangona
carley@thereminder.comBOSTON – Eastern States Exposition (ESE) has one week to reach and agreement with MGM Springfield. If not, its fate will be determined by the Massachusetts Gaming Commission (MGC) when it rules on whether or not ESE qualifies as an Impacted Live Entertainment Venue (ILEV).
If designated an ILEV, a venue will begin negotiations with MGM Springfield, creating the opportunity for the impacted businesses to receive compensation to offset any profit loss.
Just before proceedings began on Feb. 18, it was announced that The Majestic Theater in West Springfield had reached an agreement with MGM over the prior weekend and had withdrawn its petition. ESE President and CEO Eugene Cassidy and Attorney Mark Cress from Bulkley, Richardson and Gelinas, LLP, representing ESE, were in the audience.
At the end of the deliberation, the MGC unanimously agreed to postpone its decision a week to provide ESE and MGM time to reach an agreement. They went forward with the motion despite the fact that Jill Lacey Griffin, director of Workforce, Supplier & Diversity Development for the MGC, advised the commissioners that the two parties had not met or conducted any “substantive discussions” since the Jan. 28 hearing.
Lyle Hall, managing director of HLT Advisory Inc., and consultant for the MGC, presented his recommendation after reviewing the ESE’s petition. He said, “The ESE itself does not qualify as an ILEV.”
Hall explained that three criteria – proximity, seating capacity and similarity of performance – must be met for a venue to qualify as an ILVE. He said the Xfinity Arena and Coliseum at the fairgrounds met only the first two qualifications.
Hall advised the MGC that the ESE does not qualify as an ILEV, but did advise it to add specific language to the MGM Springfield contract, if awarded, that protected the Big E. He explained that during the 17-day fair the ESE did qualify as an ILEV. Hall added that a “significant buffer” should be added before and after the fair to protect the ticketing process by ensuring MGM could not compete during the designated period.
“Why does that not mean they qualify?” Commissioner Stephen Crosby said.
Hall responded, “They qualify as an ILEV during that [17-day] period. The ESE doesn’t run these events outside of the fair.” He said that after reviewing the ESE’s event list for 2013 and 2014, he found only one event, a circus that met the three standards.
“It’s an on/off switch,” Crosby said.
“You’re either and ILEV or not an ILEV,” Commissioner James McHugh said. “MGM voluntarily entered agreements with two other venues [CityStage and the MassMutual Center], thereby creating a potentially adverse impact to the ESE by providing a positive impact to some ILEVs. So, they’re [MGM] hoisted by their own barter.”
At the time of the January hearing, attorney Jed Nosal of Brown Rudnick LLP, representing MGM Springfield noted that MGM will not impose radius restrictions or blackout dates for booking shows and outlined that fact in its gaming license application. “We don’t intend to engage in that practice,” he said.
McHugh questioned why an ILEV would be needed if MGM upheld its commitment to the aforementioned practices.
Crosby stated, “They wouldn’t necessarily know [if MGM did implement such practices], if you assume bad faith.”
Griffin said that the ESE would have no recourse to prohibit MGM from engaging in such practices.
At that point, McHugh proposed giving the ESE and MGM another week to reach an agreement.
Commissioners Gayle Cameron and Enrique Zuniga expressed their belief that an agreement could be made in that timeframe.
McHugh commented, “I frankly don’t understand why these people haven’t come to an agreement. The essence of an agreement is there. They both have a lot to gain.” He noted his concern that if the commission ruled in favor of one or the other that positions would “harden.”
The MGC was in consented to reconvening on the matter in another week.
In a statement released after the MGC’s decision to wait a week, Michael Mathis, MGM Springfield incoming president, said, “MGM has always considered the Big E an important marketing and tourism partner for MGM Springfield. We have discussed a mutually beneficial relationship with Mr. Cassidy in the past and today’s one-week deferral by the MGC allows time for the parties to memorialize cross-marketing discussions that have been under way.”
MGM announced its agreement with The Majestic in a press release that same day.
It stated, “MGM Resorts International announced today that it has finalized a seasonal sponsorship and cross-marketing agreement with The Majestic Theater in West Springfield. This extends MGM’s commitment to work with existing entertainment facilities throughout the region to continue to grow the area’s tourism economy.”
Mathis said, “We are pleased that MGM Springfield and the Majestic Theater were able to reach an agreement and can now work cooperatively to ensure a mutually beneficial future in the Pioneer Valley. We thank the Majestic Theater’s leadership team for its hard work and cooperative spirit leading up to today.”
Danny Eaton, Majestic Theater founder and producing director, said, “As we know in the theater – actions speak louder than words – and our agreement speaks volumes. MGM's follow-through and professionalism allowed us to come to this agreement and we are grateful with the result and show of support.”
The Majestic agreement calls for MGM Springfield to purchase the full capacity of the theater for one night for each of the theater’s five annual productions for five years.
The sponsorship will begin the first full year after the opening of MGM Springfield. MGM is considering how it will use the seasonal sponsorship opportunity but likely will host special complimentary MGM Springfield nights at the Majestic for employees and guests, as well as community nonprofits.
In addition, MGM Springfield will purchase playbill advertising for eight years, commencing in the first full year after the award of the gaming license to MGM Springfield. The Majestic Theater will cross-market and publicize MGM Springfield in its playbills and other materials distributed during performances.
