Suffolk Downs has lost a significant partner. Vornado Realty Trust, which held nearly a 20 percent stake in the track for several years and served as a key backer during the resort casino license pursuit, has decided to exit the project.
The Massachusetts Gaming Commission (MGC) disclosed Vornado’s withdrawal during a regular meeting last week. According to MGC General Counsel Catherine Blue’s letter to commissioners presented at the March 28th session, 11 of Vornado’s 14 principals declined to participate in Phase I background checks. They received instructions to divest their Suffolk holdings, and they complied.
“Originally 14 individuals associated with Vornado were identified by the (Commission) as qualifiers for purposes of the applicant’s suitability investigation,” stated the letter. “Of those original 14 individuals, one was allowed to withdraw as a qualifier and two individuals filed the required disclosure forms…The remaining 11 individuals refused to file required disclosure forms…The applicant’s representatives came to meet with (the Commission) to determine how they could proceed in the process and have the application deemed complete.”
To maintain Suffolk’s position in the licensing process while Vornado divested, commissioners approved placing Vornado’s stake into a blind trust. Trustee Attorney Steve Kidder of Hemenway & Barnes would oversee the arrangement. Kidder submitted to MGC background scrutiny, and any entity replacing Vornado would face identical vetting requirements.
Commissioners characterized the arrangement as a temporary mechanism enabling Suffolk to advance its application while Vornado formally withdrew. The move essentially allowed the track to continue without disruption.
According to Suffolk COO Chip Tuttle, “The partnership has worked with the Gaming Commission to update our list of qualifiers and work towards the opportunity to earn a gaming license in Massachusetts. We are confident in our ability to design, finance, develop and operate a world-class Caesars Resort at Suffolk Downs that will be an economic engine for the creation of jobs and tourism in our Commonwealth. This change to our list of qualifiers will have no impact on our application for a gaming license.” “Vornado has decided to focus on its core real estate development practice and has decided to divest its 19 percent interest in Suffolk Downs that it acquired in 2005.”
When contacted, a Vornado representative in New York declined to comment on the company’s departure from Suffolk.
Recent corporate developments suggest why Vornado might be retreating. The company has faced substantial financial pressures and strategic reassessment in recent months.
Vornado’s Chairman and founder Steve Roth announced last month a major divestiture of the company’s JC Penny stock holdings, resulting in losses exceeding $250 million. The company had acquired the stake years earlier and recruited an Apple executive as CEO to revitalize the retailer, but the investment failed to produce returns. Additionally, CEO Michael Fascitelli stepped down, with Roth assuming his duties temporarily. The company also settled a prolonged New York lawsuit regarding disputed rent from a Stop & Shop location. Stockholders and internal voices pressed Vornado to return to its foundational strength: commercial real estate operations in New York City and the eastern seaboard.
Vornado’s departure from the Suffolk casino venture aligns with this pressure to refocus on core competencies.
Sidebar – Financial luminaries populate casino applications
The investor lists and company officials—termed “qualifiers” for state gaming background investigations—in the Everett and Revere/Eastie casino proposals read like the pages of a daily financial newspaper. The Mass Gaming Commission (MGC) recently provided this newspaper with names, companies and stakeholders for each application, revealing no shortage of big names and familiar names in the list of “qualifiers” that the MGC is now examining with a fine-toothed comb for the purpose of state gaming background checks – of the casino proposals in Everett and Revere/Eastie read like the pages of a daily financial newspaper. There are no shortage of big names and familiar names in the list of notable individuals and entities:
•Lynn C. Swann, a Hall of Fame wide receiver from the Pittsburgh Steelers, sits on Caesar’s Entertainment’s Board and participates in the Suffolk application. He also maintained a substantial stake in the Heinz ketchup company until recently.
•Robert J. Miller serves as a Board member for Wynn Entertainment and previously governed Nevada, the nation’s gaming epicenter, from 1989 to 1999. His tenure was marked by considerable public approval. His son continues to hold a state position in Nevada.
•Jeffrey Housenbold leads Shutterfly, the internet photo-sharing platform, and sits on Caesar’s Board as part of the Suffolk application. He previously held an executive role at eBay.
•Matt Maddox, 37 years old, functions as Chief Financial Officer at Wynn and ranks among the highest-paid executives under 40. He is expected to become the company’s next COO following Michael Schorr’s recent retirement. Notably, Maddox previously served as executive vice president of finance at Caesar’s.
•John Strzemp holds the position of executive vice president at Wynn while also competing as an accomplished World Series of Poker tournament player. His professional activities span both casino administration and competitive poker.
•Dr. Ray Irani, a Wynn Board member, succeeded the legendary Occidental Petroleum CEO Armand Hammer. Irani maintains ties to Occidental and currently pursues recapturing the CEO position after stepping down years ago amid compensation controversies.