NEW YORK, YOU GOTTA BE KIDDING ME

Mohegan Sun weighing N.Y. licensing fee
Winning bidder on casino must pay large upfront fee

By Brian Hallenbeck Published on 4/24/2009

Mohegan Sun executives, who are expected to submit a bid to build and operate a casino at Aqueduct Racetrack in Queens, the New York City borough, are studying New York state's plan to fast-track the project, which includes providing $250 million worth of construction financing.

New York's request for proposals, issued late last week, calls for bidders to offer an upfront licensing fee, a provision that led to the undoing of Delaware North Companies, the Buffalo, N.Y., firm chosen to build the casino in an initial round of bids last year. In March, however, Delaware North withdrew its plan, informing New York Gov. David Paterson's office that it was unable to make the $370 million upfront payment it had offered.

According to the agreement the winning bidder would now have to sign with New York officials, the licensing fee would have to be paid within 10 days of the document's signing. No minimum bid for the fee has been established.

According to the agreement the winning bidder would now have to sign with New York officials, the licensing fee would have to be paid within 10 days of the document's signing. No minimum bid for the fee has been established. ”We're running models of the competitive landscape and haven't decided whether to provide a bid,” Jeffrey Hartmann, chief operating officer of the Mohegan Tribal Gaming Authority, which manages Mohegan Sun, said Thursday. He added, however, “We believe we have the best understanding of the Northeast gaming market.”

The Mohegan authority partnered with Capital Play, a New York company, in submitting its earlier bid, which was one of three finalists. Hartmann said the authority has not decided whether to partner with another entity on a new bid.

Hartmann said New York's latest request for proposals was substantially the same as the earlier one. However, it does not provide an option for bidders interested only in building and managing the casino as opposed to owning it, which is likely to keep the Mashantucket Pequot Tribe's Foxwoods Development Co. from entering the fray, Gary Armentrout, Foxwoods Development's president, said Thursday.

New York contemplates that the winner (of the bidding process) would own and operate the facility,” Armentrout said. “They're looking at a $3 million upfront payment just to be considered, as well as the upfront licensing fee and effectively a 78 percent tax rate. Based on that, it's not likely that we're going to participate this time around.”

Foxwoods Development did submit a bid for a state-owned, Foxwoods-managed casino in the initial round of bids.

Delaware North had planned to build a casino that included 4,500 video lottery terminals, which are similar to slot machines; restaurants; a hotel and a 60,000-square-foot conference center. The New York Racing Association has the franchise to operate Aqueduct's horse racing.

Hartmann said he expected the economic conditions and a “tight time frame” - proposals are due May 8 - to limit responses to a handful of bidders.

Delaware North, which is expected to come forward again, has been accused of breach of contract in a New York state Supreme Court suit filed by SL Green Realty Corp., its one-time partner in a group called Empire Racing. SL Green also is expected to participate in the Aqueduct rebidding.

B.HALLENBECK@THEDAY.COM

EDITORIAL FOOTNOTE;

Jeffrey Hartmann, Chief Operating Officer of the Mohegan Tribal Gaming Authority (MTGA) said, "We're running models of the competive landscape and haven't decided whether to provide a bid. We believe we have the best understanding of the Northeast gaming market."

The Mashantucket pequots will probably not bid on the New York projects. The bids are due n on May 8, 2009. The bids require a three million dollar ($3,000,000.00) up front licensing fee.

New York wants a 78% tax rate. That leaves 22% to pay loans, salaries, interest, everything and try and make a profit. Are you kidding me? How can this possibly be done? This is insanity. Who's minding the store? The MTGA (the Mohegan Tribal Council) is okay with this?

In my opinion, the Mohegan Sun at Pocono Downs can't make a profit at between 55% to 62% off the top. How can it be done for 78% off top?

One tribal member said, 'you my as well give them 100%, because there is no way this thing can make money."
'

Is this more smoke and mirrors, from the Mohegan Tribal Council? Is this the best plan they can come up with? Should they go at election time? Are they doing the right thing for the Mohegan Tribe? What do you think?

New York you gotta be kidding.