New MGM Springfield Could Be Headed Toward Job Cuts
Kenneth R. Gosselin | The Hartford Courant | January 10, 2019 2:40pm
Jan. 09--Just five months after MGM Springfield marked its grand opening, the casino's parent company is aiming to cut costs, including $100 million spent on its U.S. payroll over the next two years.
MGM declined Tuesday to say how the cost cutting might affect its operations in Springfield, where job creation was a critical component in securing approvals for the $960 million project. MGM Springfield employed 2,865, as of mid-October.
The $100 million is part of a larger plan to cut costs and boost its operating "cash flow," essentially how much money is flowing in and out of parent company, Las Vegas-based MGM Resorts International. The company hopes to boost its cash flow by $200 million by the end of 2020 and by another $100 million by the end of 2021.
More details of how MGM's plan will unfold are expected in six weeks or so.
The push by MGM comes as the casino and entertainment giant has struggled with missing quarterly earnings targets and a slumping stock price.
The MGM plan -- branded as "MGM 2020" -- is aimed at cutting 3 percent of what it spends on its workforce, but that does not necessarily mean 3 percent of its employees. In the United States, MGM Resorts employs 68,000, most of them -- 51,000 -- in Las Vegas.
According to the Las Vegas-Review Journal, MGM could mean as many as 2,000 job cuts, which could include unionized labor.
The majority of the reductions are expected through attrition, retirements and buyouts. The targeted positions are expected to primarily be at the manager level and above.
The move is part of a strategy -- now several years in the making -- to centralize more of its operations in Las Vegas. The idea is to make operations more efficient, meaning not necessarily having, say, an employee with the responsibility for the same thing at every casino MGM operates.
Efficiency also would extend to how and where it purchases goods and services, MGM said.
MGM also plans to invest in new technology to better evaluate what will attract new customers and keep established ones coming back. The move will mean using data, pricing as well as digital and digital and loyalty programs.
"When we launched our Profit Growth Plan a few years ago, we transformed our culture to embrace 'One Company' approach to operations, create best practices and efficiencies," Jim Murren, chairman and chief executive, said, in a news release. "Importantly, during this time, we established key centralized strategic functions and developed crucial operational expertise to enable best practices and efficiencies."
The functions are organized around "Centers of Excellence" focused on hotels, food and beverage and human resources.
MGM Springfield, which opened Aug. 24, has seen its gross gaming revenues -- revenues from slots and table games -- dip from $27 million in September to $22 million in October to $21 million in November.
Kenneth R. Gosselin can be reached at email@example.com.