News

Northampton vs Casino

A casino in Northampton could cause a “downward spiral” in the city’s economy.


Tuesday, March 04, 2014
Daily Hampshire Gazette photos
David Narkewicz

The magnet of the Upper Valley is Northampton, home to Smith College, whose stately brick architecture, perched on a low rise, crowns the bend where Main Street turns to Elm Street. On Main Street, historic buildings with eye-catching architecture—the courthouse, First Churches, the city hall—lend character to the view, while smart, colorful stores and restaurants in a mix that offers something for all tastes liven the scene.

Partly because of the nostalgia of generations of Smith graduates, Northampton is well known from New York to New Haven, Hartford and Boston, and is seen as the closest “real city,” in spite of its size, by people from the wooded northern reaches of Massachusetts. In a word, Northampton works. It’s largely serendipitous; no ingenious planning, but the accidental convergence of talented people in the area in the mid-1970s, turned the quiet town into a place with enviable flair.

Now the community finds itself under threat—though exactly how severe a threat is unknown, which reassures no one—from the prospect that MGM Resorts International will build a casino 18 miles down I-91 in Springfield. The casino will not just be a gambling house but will offer five to eight restaurants, retail shops, a bowling alley, theaters and other amenities.

Not within memory has a recreational facility on that scale been proposed with only a few miles of fast highway separating it from Northampton. In order to apply for the “surrounding community” designation that would have given them the standing to ask for monetary compensation for economic losses caused by the casino, and perhaps to negotiate protections for its entertainment venues, Northampton officials commissioned a study of the possible impacts of a casino on the small city.

The city lost its bid for “surrounding community” status, but the study (at http://bit.ly/1fZp7Yy) has been useful for other reasons, Suzanne Beck, executive director of the Northampton Chamber of Commerce, told the Advocate.

“We have no idea what’s going to happen, and we won’t know until it happens,” Beck said. “The concern is that we’ll be playing catchup. The study gave us a stake in the ground about a range of possibilities—quantitative information rather than speculation.

“The reason we’re anticipating the negative impacts are, one, the casino trade area is a direct overlay of where Northampton and Hampshire County’s customers are coming from. New York, metro Hartford, New Haven and Fairfield County [Conn.]— basically, that I-91 corridor to the south of us is where we draw most of our visitors from.”

 

Camoin Associates, the firm that authored the study, agreed that the trade areas of Northampton and the casino overlap, and that Northampton may suffer from the proximity of a casino because its economy is built on small independent businesses not backed by deep pockets.

“Many of Northampton’s retail shops and restaurants are small businesses that are operating on thin margins, such that even a small decline in patronage could force them to shut down,” it warns. “If a handful of establishments were forced to close due to competition from the proposed casino, the destination appeal of Northampton could begin to unravel, turning a small decline in business into a downward spiral for the whole downtown.”

The authors of the study estimated that Northampton businesses would lose a minimum of 4 percent (or $4.1 million) and, in the worse case scenario, 8 percent ($8.3 million) of their sales revenue annually because of competition from the casino.

Then, the study continues, there would be secondary losses—reductions in business-to-business income, reductions in spending by consumers. All those losses would lead to, and in turn be aggravated by, the loss of 90 to 180 jobs and $1.6 million to $3.2 million in earnings.

Not only city businesses, but the city itself, would lose revenue, according to the study. That loss of revenue, like the loss of sales, would vary between a low of 4 percent and a high of 8 percent per year. The study offers these specifics:

 

*Lost Meals Tax-Related Revenue

4 percent: $26,650 8 percent: $53,250

 

*Lost Occupancy Tax Revenue

4 percent: $21,027 8 percent: $42,016

 

*Lost Parking-Related Revenue

4 percent: $24,172 8 percent; $48,301

 

*Lost Property Tax Revenue

4 percent: $65,087 8 percent: $130,055

 

*Total Lost City Revenue

4 percent: $136,936 8 percent: $273,623

 

How would the impact of a casino begin to make itself felt? As the Advocate spoke with people in Northampton, the concern most often expressed involved entertainment—the possibility that entertainment at the casino would take a toll on Northampton’s venues, and that restaurants and retail venues would suffer as a result of that. Asked if he were concerned about the impact of a casino on Northampton, Michael Saki, a managing partner of the Spoleto’s Restaurant Group, said, somewhat surprisingly, that he is “not worried about the five to eight restaurants that are going to come in at the casino.”

Rather, he added, “One of the driving forces for business in Northampton is the entertainment that comes into town. Those venues become the lifeblood of the city when the students are away. If the smaller venues in Northampton—the Calvin, the Academy of Music, Pearl Street—are competing with bigger acts in entertainment venues in Springfield if the casino does come in, there might be some business loss.” Saki explained that people coming to early shows eat dinner as early as 4 p.m., while other people eat after the shows.

A tactic sometimes used by casinos to restrain competition from other entertainment venues is the “blackout,” a requirement that acts they hire not play anywhere else within a given radius. When the casino law was first being discussed in Massachusetts, officials at Springfield’s City Stage and other theaters in the state expressed worry about the possible effects of blackouts on their recruiting of talent.

MGM’s representatives have said that the company would not make blackouts a condition of performance at a Springfield casino. Still, MGM’s level of capitalization gives it an edge over every other recreational venue in Western Massachusetts when it comes to luring big-name acts.

“My concern is the marketing advantage and the ability to undercut some of our restaurants and entertainment,” Northampton mayor David Narkewicz told the Advocate. “They can offer free shows and some other amenities without having to worry about the profit margins. Shows at the Calvin Theater, for example, might decide to go to a casino. That’s thousands out of our economy on a Saturday night.”

Proprietors of leading entertainment venues in Northampton were reluctant to speak in detail about the particulars of their businesses and what competition with an international resort casino company might mean. Debra J’Anthony, executive director of Northampton’s historic Academy of Music, simply said she had no comment. More forthcoming was Eric Suher, whose Iron Horse Entertainment Group owns the Iron Horse Music Hall, the Calvin Theater and Pearl Street Night Club. The Calvin, which draws such national class acts as George Carlin, James Brown and Loretta Lynn, would likely be more apt than any other venue in Northampton to find itself in direct competition with a casino, though at the Mohegan Sun casino in Connecticut, many of the better-known regional musicians perform, which suggests that an MGM casino might find itself dipping into the same talent pool as the Iron Horse.

Suher was resolutely upbeat about the possibility of coexistence with a casino. “Over the past few months, there have been ongoing discussions with MGM about possible ways for our two companies to work together in this market,” he told the Advocate by e-mail. “Clearly, it makes sense for IHEG and MGM to cooperate with regard to booking schedules and cross promotion.”

Determined not to take the posture of David to MGM’s Goliath, Suher continued, “IHEG has been promoting events in the region for many years, and we have a great understanding of the market and the type of entertainment that sells here. If we combine our knowledge and experience in this marketplace with their clout and deeper pockets, the area can only benefit from the results.”

 

Much of what gives Northampton’s Main Street its style and color comes from the one-of-a-kind, boutique quality of its shops, which plays well with the lively aesthetics of its restaurants. But those businesses aren’t operating with the margins many of them had in the past, says Beck: “You lay [the potential impact of a casino] on an economy based on independent businesses that don’t have the capital or the reserves to get through a tough time and come out on the other side of it. Since 2008, the margins for the businesses have gotten smaller and smaller. It’s not just the recession, it’s the Internet and the increasing popularity of malls.”

So how does Northampton hold its own with a one-stop resort offering a casino, entertainment and food—possibly subsidized—amid glamour paid for by an international casino company?

That question leans on another question: why has Northampton drawn people from as far away as Vermont, Boston, Connecticut and even New York in the past? Because what the city has to offer is set within the context of a real downtown with a history, with churches and government institutions, with an intact Main Street stretching from the artistically enhanced railroad bridge to Smith College, and with no significant blight or crime. For those who want to spend a day or evening out in a small, chic but safe, friendly environment without fighting crowds, an island of glitz in an urban setting is not the same.

“A lot of us believe that Northampton and Amherst and Hampshire County fall into the category of undiscovered destinations, and that a lot of people are looking for the downtown experience and the more pastoral experience,” said Beck. “That is a different experience than an urban casino. We just need to up our game, and get better at telling people our story and increasing the numbers of people that come.”

“I don’t think we were ever asserting that the entire downtown was going to be shuttered,” said Narkewicz. “I don’t like to use a gambling metaphor,” added the mayor who has opposed casinos from the beginning, “but my money’s on Northampton.”•

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