Metropolitan Park: Casino Integration Mitigates Mets Seasonality, Boosts Returns

Deep Dive

Steve Cohen, owner of the New York Mets, secured one of three downstate casino licenses from the New York State Gaming Commission for his $8 billion Metropolitan Park project. This endeavor aims to transform the parking lot surrounding City Field into a year-round entertainment complex. The approval comes five years after Cohen purchased his childhood team for $2.4 billion.

The project involves a 30-year casino operating license, for which Cohen will pay $500 million upfront and an estimated $850 million in annual tax revenue to the state. The core strategy behind Metropolitan Park is to mitigate the seasonality of Major League Baseball, which generates revenue primarily during the season. By converting the underutilized parking lot into a casino and hospitality hub, the Mets organization seeks to increase foot traffic, diversify revenue streams, and achieve higher returns on an existing asset. Several other sports teams, including the Atlanta Braves and Milwaukee Bucks, have pursued similar diversification strategies.

New York voters approved a constitutional amendment in 2013 allowing up to seven full-scale casinos on non-tribal land. The initial four licenses were awarded upstate, with a 10-year head start to avoid cannibalization of their business by downstate casinos. With that period expired, the New York State Gaming Commission turned its attention to the downstate region, offering three licenses for New York City, Long Island, and Westchester.

The approval process for these licenses required each project to gain regulatory approval from a local Community Advisory Committee (CAC). This committee, composed of local officials, civic leaders, and residents, votes on whether a project serves the best interests of the community. Casino operators presented their plans and visions at hearings, needing a majority vote for their project to advance. This process proved highly political, with only 50% of the initial interested groups securing CAC approval.

Several proposals faced significant hurdles, including Manhattan's CACs voting against all proposals due to concerns about traffic, congestion, and potential adverse effects on Broadway theaters. Coney Island's CAC also rejected a $3.4 billion proposal by Thor Equities. Steve Cohen's Metropolitan Park project encountered opposition from Senator Jessica Ramos, a lawsuit from the UST A concerning disruption of parking services during the U.S. Open, and the challenge of converting parkland into a commercial development. The source notes that Cohen and his partners employed expensive lobbying firms, dedicated significant time and resources to community outreach, donated to local politicians, hired former city officials, and agreed to fund renovations for the Mets' Willets Point 7 subway station.

Ultimately, four bids advanced through the CAC process for the three available licenses. MGM Empire City in Yonkers withdrew its application due to concerns about market cannibalization. This left three finalists: Bally's in the Bronx, Resorts World in Queens, and Metropolitan Park outside City Field, all of which were approved.

Metropolitan Park is designed to be a large-scale, Las Vegas-style resort, differing from smaller regional casinos. It will feature 1,000 luxury hotel rooms, 5,000 slot machines, 375 live dealer tables, 30 poker tables, and nearly 300,000 square feet of gaming space. Additionally, the complex will include retail shops, a 5,600-seat theater, 19 food and beverage venues, and 25 acres of public parks, athletic fields, and playgrounds.

The project's location on 50 acres of asphalt parking lots adjacent to City Field, near the USTA Billie Jean King National Tennis Center and a new 25,000-seat stadium for New York City FC, is considered a key advantage. The proximity to the 7 train and LaGuardia Airport further enhances its accessibility. Cohen already owns the land, minimizing displacement of residents and businesses. The development will actually increase parking capacity by building multi-story garages, expanding from 7,750 spaces to over 13,750.

Metropolitan Park is structured as a joint venture between Steve Cohen and Hard Rock International, with Hard Rock providing gaming expertise and operational experience. The stated budget of $8.1 billion does not include the $500 million licensing fee or an additional $500 million promised for infrastructure improvements. New York's gaming taxes, ranging from 10% for table games to 25-30% for slot machines, are projected to generate $850 million in annual tax revenue by the third year of operation. This revenue stream is expected to comprise gaming taxes ($550 million), income taxes on employee wages ($80 million), property taxes ($50 million), sales and occupancy taxes ($120 million), and miscellaneous taxes ($50 million).

The total cost to build Metropolitan Park is estimated between $9 billion and $10 billion, likely financed through debt. The property is projected to generate sufficient cash flow to cover annual debt service costs exceeding $300 million. For the state, the project offers a $500 million upfront payment, 30 years of lease revenue, $500 million in capital improvements, and substantial tax revenue.

Internal estimates from the New York State Gaming Commission project Metropolitan Park's hotel and casino business to generate $3.9 billion in annual revenue by its third year, positioning it among the top 10 U.S. casinos. Approximately two-thirds of this revenue is expected from the casino floor, with slots and table games contributing at least 80%. The sports book could add several hundred million dollars in revenue, albeit at a lower margin. Hotel rooms are intended to increase occupancy rates, enabling Hard Rock to generate an additional billion dollars or more annually from food and beverage sales, concerts, retail, parking, spa services, and event buyouts. Operating at margins similar to premium Las Vegas casinos, the property could generate over $1.5 billion in annual EBITDA, providing ample cash flow to service debt and potentially becoming the most lucrative asset for the Mets organization.

Beyond financial implications, Metropolitan Park is presented as a significant benefit for Mets fans by creating a "neighborhood" around City Field, which currently consists primarily of asphalt. The development aims to transform the game day experience from a short event into a full-day or weekend activity by offering restaurants, bars, parks, a theater, and a hotel. This provides casual fans with entertainment options outside the stadium and enhances the pre- and post-game atmosphere for dedicated fans, allowing them to linger longer even after a loss.

The investment is also driven by the Mets' financial performance. Despite record revenue of $444 million last year, the team recorded a $268 million operating loss. Metropolitan Park is intended to create a recurring revenue engine that operates independently of the team's on-field performance, providing financial stability amidst rising payrolls and fluctuating ticket demand. This diversification is described as building a hedge against sports performance risks. While Cohen is unlikely to sell the team, an integrated sports and entertainment operating company would command a higher market valuation than a standalone baseball franchise. The development is seen as creating a durable business that thrives regardless of the team's success.