Friday, May 6, 2011
MOHEGANS TO THE CATSKILLS
Mohegan Tribe partnering on Catskills project
By Brian Hallenbeck
Publication: The Day
Published 05/06/2011 12:00 AM
$600 million venture with N.Y. developer includes casino, hotel
Growing up at Grossinger's, the family hotel in Liberty, N.Y., Mitchell Grossinger Etess, the chief executive officer of the Mohegan Tribal Gaming Authority, would occasionally play the Concord Hotel golf course in nearby Kiamesha Lake, some 15 miles away. He'd also frequent the movies and a hamburger joint just down the road.
The two hotels - The G and The Concord - were then the pillars of the Catskills' Borscht Belt, rivals on the order of Macy's and Gimbels. Louis Cappelli, the real estate developer who has owned the properties for more than a decade, first unveiled plans to rebuild The Concord in 2000.
On Thursday, the MTGA and Cappelli's Concord Associates announced they will partner on the development and operation of the Concord Resort on the former site of the hotel in Thompson, N.Y. Plans for the project's $600 million first phase, scheduled to open in the spring of 2013, call for a 75,000-square-foot casino featuring 2,100 video lottery terminals and room for up to 450 electronic table games, a 258-room hotel, a harness racing facility with a grandstand, a five-eighths-of-a-mile track and related paddock facilities, a simulcast facility for parimutuel wagering, 10,000 square feet of meeting rooms and ballrooms, five restaurants, retail outlets and several entertainment spaces.
"It is a little ironic," Etess said of the property's proximity to the hotel Jennie Grossinger, his grandmother, made famous. "It's an interesting twist. What's more important is that I believe in the Catskills and what the region can do. It's a beautiful place."
Under the agreement, the proposed hotel would be called the Mohegan Sun Concord, Etess said. It would be managed by Mohegan Gaming Associates, the gaming authority's casino-management arm, whose formation the authority announced late last year. At that time, Etess, then president and CEO of the authority's flagship, Mohegan Sun in Uncasville, relinquished his casino post to concentrate on other business ventures on behalf of the Mohegan Tribe. Jeffrey Hartmann took over as the casino's top executive. Gary Van Hettinga, former Mohegan Sun CFO, became president of the new unit.
With Thursday's announcement, the reorganization has borne fruit, Etess said.
"Now when we get an opportunity like this, we can do it," he said. "We have programs, policies and a methodology," as well as experience operating a harness racing track at the authority's Mohegan Sun at Pocono Downs in Wilkes-Barre, Pa.
Etess said Concord Associates approached the authority about partnering earlier this year. He said Cappelli was interested in reactivating his Concord project, which has been stalled since 2008. Cappelli, a director of Empire Resorts, which owns Monticello (N.Y.) Casino and Raceway, had planned to relocate the Monticello facility to the former Concord Hotel site. After razing the hotel and completing some preliminary work, construction was halted amid financial difficulties.
Marnell Architecture, a leading casino and resort design firm, has planned the full development of the site, according to the joint statement issued by Concord Associates and the MTGA.
Concord Kiamesha Holdings LLC, the joint entity formed for the project, has engaged Jefferies & Co. Inc., a global investment banking firm, as financial adviser. More than $100 million has already been spent on site preparation, foundations, curtain wall, demolition and remediation of environmental issues, the parties said.
"The project is more than shovel ready," Etess said. "Once the financing is in place, we can get a quick start, by the end of June."
Etess said the Mohegan Tribe would be "a small, minority equity partner" in the project.
The Concord Resort is expected to provide billions of dollars in economic benefits to the Catskills over a 10-year period and serve as a catalyst for the creation of more than 1,000 new construction and permanent jobs with a majority of the employment benefiting New York's Sullivan, Orange and Ulster counties, the parties said.
The MTGA is also prepared to partner on a resort casino project in western Massachusetts if and when that state legalizes casinos.
"Obviously, part of the strategy of the (Mohegan) tribe is to be in their feeder markets," Roger Gros, publisher of Global Gaming Business magazine, said. "This is the same as the Palmer (Mass.) project. They don't want to have major casinos around them taking their players. It's very forward-thinking."
Gros, however, noted that previous casino projects proposed for the Catskills have failed to materialize, most recently one that surfaced last year involving the Stockbridge-Munsee tribe of Wisconsin, whose partners included Len Wolman of Waterford, the hotelier whose Trading Cove Associates helped develop Mohegan Sun.
"It's a long way from being done," Gros said of the Concord Resort project. "Frankly, it's hard to believe it ever will be."
EDITORIAL FOOTNOTE: Where is the MTGA going to get the funds to do this deal?
Is this expansion or diversification?
What about the hole in the ground, the Earth Hotel at the Mohegan Sun in Uncasville, that was never completed?
What about the Mohegan Government and Community Building, that will only be half occupied when completed in August, 2011, because of alleged lack of funds?
What about the bad deal at Pocono Downs?
COULD IT BE THE MTGA IS DOING DESPERATE THINGS TO BRING MONEY TO THE MOHEGAN TRIBE? What do you think?