Host Community Agreements, by the Numbers

September 4, 2013
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The recent release of the Host Community Agreement between the City of Boston and Caesars Entertainment has many people speculating as to its comparison with that of the agreement between Wynn Resorts and the City of Everett.  On its face, the deal between Caesars and Boston looks very lucrative.  However, when you look closely, and peel back the details of the agreements, it becomes clear that the agreement between the City of Everett and Wynn Resorts is still the most beneficial in the Commonwealth.

Under terms of the agreement between Suffolk Downs and Boston, the project will provide $52 million in annual revenue and $33.4 million in upfront payments. The agreement also calls for $45 million in transportation and infrastructure improvements.  However, the $52 million dollar annual payment figure is dependent upon the casino’s gross gaming revenue – which must reach at least $800 million in order to pay out the $52 million figure.  According to available public filings, not one of the casino operator of the Suffolk Downs, Caesars’, current thirty-six domestic establishment has generated more than $500 million in gross gaming revenue. The casino at Suffolk Downs would have to exceed the performance of every single other Caesar’s throughout the country in order for the City of Boston to realize the full advertised benefits of their host community agreement, something that gaming experts have declared virtually impossible.

In the City of Everett’s agreement with Wynn, yearly payments in excess of $25 million are guaranteed regardless of Wynn’s annual gross gaming revenues.  Also, the City of Everett’s agreement is the only one that looks toward the future and includes yearly, guaranteed increases of 2.5% that will not be subject to the ebb and flow of gaming revenues. It was a priority of Mayor DeMaria throughout the negotiations with Wynn that the City be able to plan ahead with stable, predicable income for the future. This goal was achieved within the Everett’s Host Community Agreement.

Another superior and critical aspect of Everett’s agreement is the condition that the development is constructed and opened in one, single phase.  The City of Boston, in a major concession to Suffolk Downs, had to defer to a phased opening of the facility to be located in East Boston and Revere.  Historically, out of seven of Caesars’ phased casino developments, two were postponed or cancelled, two were significantly delayed, two were completed but with their scope reduced, and one, whose scope has also been reduced, has yet to see completion. By building in one phase, Wynn will cut down on construction time and costs, and be able to deliver the benefits of their development to the people of Everett without staggering them over an entire decade.

Boston’s agreement also seems to boast large figures for both traffic mitigation and commitment to the local economy.  However, the $45 million dollar amount to traffic is non-specific, not stating any particular project or plans.  For Everett, it was essential to have no floor or ceiling associated with the traffic mitigation compensation.  The agreement between Wynn and Everett details out specific traffic needs, currently and for the future that will result from the addition of the development, regardless of the price tag. The City, in its negotiations, were focused on the ultimate results and solutions to possible traffic issues, not with the ability to boast the highest number on paper. When all is said and done, the traffic leading to Wynn Everett will be mitigated and improved, regardless of cost to the developer.

In other areas, such as guaranteed jobs and commitment to local businesses and vendors, Everett’s HCA continues to benefit the community more so that the agreement in Boston.  Under the agreement Suffolk Downs has promised Boston 4000 permanent jobs and 2500 construction jobs. Wynn has agreed to 8000 permanent and construction jobs for the City of Everett.  And while Boston claims it will reap $50 million towards local vendor services – Suffolk Downs states that they will make the “best effort” to spend in the East Boston community for vendor services that are non-described. In contrast, Wynn has already held to his agreement and proven his commitment to local Everett vendors – a commitment that is required by the Gaming Act. Wynn, in furtherance of his commitment to local businesses, has utilized such local companies as Rita’s Catering and Marji’s Florist for the several events he has coordinated and held during his community outreach.

The chart below is the clearest evidence that the Everett agreement is still the strongest negotiated Host Community Agreement for its citizens.  It shows the breakdown of how much each resident would essentially benefit from the addition of the casino in their city.  Everett clearly reaps the most benefit per capita – guaranteed.  While Boston, despite its high figures on the surface, benefits less per person, and is dependent on the Caesars casino achieving far reaching gross gaming revenue goals.