Mohegan Sun revenues fall 16% in 2nd quarter
By Brian Hallenbeck Published on 5/1/2009
Mohegan - Revenues at Mohegan Sun fell more than 16 percent in January, February and March, but the losses were partially offset by a cost-containment program that reduced the casino's operating expenses by more than 18 percent.
The figures were released Thursday by the Mohegan Tribal Gaming Authority, which discussed its second-quarter financial results in a conference call with investors and analysts. The authority owns and operates Mohegan Sun and Mohegan Sun at Pocono Downs, a Wilkes-Barre, Pa., facility that offers slot machines and harness racing. The authority's 2009 fiscal year began Oct. 1, 2008 and ends Sept. 30, 2009.
The authority's consolidated results show its net income for the second quarter totaled $33.2 million, a decline of less than a percent over the same quarter in 2008.
”We're relatively pleased with our results,” said Mitchell Etess, the authority's chief executive officer, who told call participants that the economy continues to take a toll on the gaming industry. He noted that the authority reported adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $85.1 million for the quarter, a 1.4 percent decline, while net revenues came to $351.4 million, a 10.5 percent decrease.
The cost-containment program, which featured salary rollbacks - but no layoffs - for all Mohegan Sun employees, including top executives; cuts in spending on advertising and marketing; and some shortening of hours at the casino's shops and restaurants, saved $30 million in the quarter, Jeffrey Hartmann, the authority's chief operating officer, said. The program is expected to produce another $40 million in savings by the end of the fiscal year, he said.
Both Etess and Bruce “Two Dogs” Bozsum, chairman of the Mohegan Tribal Council, lauded employees' role in reducing expenses. Acknowledging that the authority's quarterly EBITDA “did not achieve the levels of previous years,” Bozsum said he was “proud and grateful to the entire Mohegan family.”
While the authority's consolidated slot revenues of $244 million were down 3.6 percent, table-games revenues fell 27.5 percent to $74.2 million, and nongaming revenues - from restaurants, hotels, retail shops and entertainment venues - dropped 21 percent to $54.2 million. At Mohegan Sun alone, gaming revenues were down 15.2 percent to $290.4 million and nongaming revenues were down 24.1 percent to $49.6 million.
Etess said the gaming numbers showed that table-games players had curtailed their gambling due to the economic conditions. While “rated” players' trips to the gaming tables were up slightly for the quarter, spending per player was down significantly. As for slot-machine revenues, Mohegan Sun's share of the Connecticut market slipped from 55 percent to 52.5 percent during the quarter, a decline Etess attributed to the “competition's capital investments.” Foxwoods Resort Casino opened MGM Grand at Foxwoods last May, adding more than 1,000 slot machines.
In reporting its financial results, the authority also called attention to an $8.5 million gain from the early extinguishment of debt. As of March 31, the authority's total debt was approximately $1.6 billion.
EDITORIAL FOOTNOTE; Bruce "Two Dogs" Bozsum, the Mohegan Tribal Council Chairman, said EBIDTA "DID NOT ACHIEVE THE LEVELS OF PREVIOUS YEARS" but he waa "PROUD AND GRATEFUL TO THE ENTIRE MOHEGAN FAMILY." In my opinion, once again Chairman Bozsum got it wrong. He is sticking his head in the sand. Either he really doesn't understand finances or he is trying to make a bad situation look better. The facts do not bare out what he said. The other thing is, who does he mean by the Mohegan Family? The workers, the tribe, who? The only thing, I agree with him about is that the workers from the casino do a great job. They should be commended.
The fact, that is not evident in this article, is the Mohegan Tribal Gaming Authority's total debt today in 2009 is $1.598 Billion Dollars compared to one year ago in 2008 of $1.367 Billion ($1,597,548,000.00 now compared to $1,366,587,000.00 in 2008. The Total Debt increased Two Hundred and Thirty One Million Dollars. Almost a Quarter of a Billion dollars. Look at the number, $230,961,000.00. Our credit rating dropped to B3 by Moody's. Chairman Bozsum, this is good? How come you aren't telling it the way it is? What figures are you looking at?
The reality, is that under this present, Tribal Council, has consistantly lost money, over and over again, over the last few years. This situation was going down hill before the economy hit the bottom. These people (the existing Tribal Council) have failed us. They should go. They didn't get it done.
Once again, in my opinion, Chairman Bozsum, and the Mohegan Tribal Council are trying to sell something to the tribal membership. Does anyone want to by a bridge? I have a bridge that connects Brooklyn and Manhattan in New York for sale. Is anyone interested? What do you think?