Just in case you thought Wynn Resorts (NASDAQ:WYNN) CEO Matthew Maddox was suggesting he would sell the pending Boston Harbor resort to prevent any "contagion" of misconduct allegations from spreading to the rest of the company, he wants you to know that, no, the project is not up for sale.
Shuffling the casino deck
There's been much speculation on whether MGM Resorts (NYSE:MGM) might step in and buy Wynn Boston Harbor because regulators may not approve of Wynn Resorts running the operation. After founder and CEO Steve Wynn left his leadership position at the company and sold all of his shares after allegations of sexual misconduct surfaced, Massachusetts gaming officials are taking a look at the casino operator's licenses.
Because the Boston Harbor project is very near to completion, and regulators there have been quite critical of the company, many believed MGM would be willing to sell its new casino in Springfield, perhaps even to the Indian tribes in Connecticut with which it has been feuding over their own casino aspirations, to gain ownership of the new resort.
MGM CEO Jim Murren has always been cagey on whether MGM was actually pursuing talks with Wynn, but when Maddox told analysts on a recent earnings conference call that he would do what it took to protect shareholder value if "heightened rhetoric" or "any contagion from Massachusetts" threatened the $30 billion global operation, many took that to mean selling Boston Harbor was on the table.
A dose of cold water
Now it appears Maddox is trying to tamp down the fire he lit. In an appearance on CNBC, Maddox said flatly, "Boston's not up for sale. What Boston represents for us is a good growth opportunity." Because Maddox was personally involved in siting the project and negotiating the deal with the city, it's personal for him.
However, the situation at Boston Harbor remains critical. Gaming regulators are not only looking at Steve Wynn's conduct, but whether other executives in the firm, as well as the board of directors, were complicit in any inappropriate behavior and hid its occurrence when Wynn Resorts applied for a license.
Thus the resort operator is trying to scrub any vestige of the company's founder from the discussion. Maddox just officially proposed changing the name of the resort from Wynn Boston Harbor to Encore Boston Harbor. That's not entirely unexpected as the Boston Herald had discovered Wynn had registered various websites that used the Encore name, but it may not be enough; the whole company may be in need of a rebranding.
Although Wynn Resorts has stated in SEC filings over the years that much of its value was closely tied to Steve Wynn and the Wynn name due to his reputation of world-class resort development, it seems to be coming clear to many within the company -- let alone outside of it -- that the brand may be damaged. Wynn may start by just renaming the local project, but it may spread globally.
Despite Maddox maintaining that Wynn is not selling Boston Harbor, if gaming regulators vote against the project, Wynn may have little choice but to sell it to someone, MGM or otherwise.
That could be the start of dominoes falling elsewhere. As license renewals come up -- and if the tempest of misconduct allegations has not gone away -- Wynn may be required to launch a campaign for a whole new corporate identity.