February 8, 2008
Revised: February 12, 2008
The Tribe's business arm, Mohegan Tribal Gaming Authority (MTGA), reported a 38% decrease in profits for the first quarter of fiscal year 2008 compared to the same period last year, according to a report made public last week.
MTGA reported $23.7 million in net income for the three-month period of October 1, 2007 through December 31, 2007 while last year's quarterly profit was $37.9 million.
MTGA would have reached its "pre-2001 Sunburst expansion" profit levels in recent years had losses related to the tribe's diversification efforts not been taken into account. The tribe has easily lost over $100 million between accumulated losses at Pocono Downs and the total expense of the MTGA department that was set up to oversee the diversification efforts. That's almost $100,000 per adult tribal member.
The above loss doesn't include the hundreds of millions of dollars, largely borrowed, to buy the Pocono Downs and for construction on that site.
The diversification program losses increased last quarter, according to the report released last week. The MTGA department that oversees the diversification efforts, labeled the 'corporate department' on the MTGA income statement, has been costing an average of around $10 million per year but its expense more than doubled in the first quarter. This was due, in part, to setting aside a reserve to help cushion against potential denials of Indian casino projects in other states in which the tribe has development and management agreements. Additionally, losses at the Pocono Downs widened in the quarter. The most direct competitor yet to the tribe's Pocono Downs in Pennsylvania opened their doors in the middle of the quarter - in October - and patrons flocked to the new casino, located about 20 miles away as the crow flies.
The Feather News will provide further analysis on the quarterly report soon.
MTGA's Securities and Exchange Commission (SEC) filing can be found at:
The above filing includes MTGA's income statement. A more complete filing for the quarter (which will include the balance sheet, the cash flow statement and more supporting information) is expected soon.
MTGA's press release on the quarterly earnings, which is much briefer than the SEC report but gives reasons for some of the variances, can be found at:
The Hartford Courant, The Norwich Bulletin and The Day newspaper articles on the quarterly earnings can be found on the below links. Notice that none of the articles, which cover MTGA's quarterly earnings report released last week, actually mentions the earnings for the quarter. One of the articles erroneously reports that the Pocono Downs is profitable because the reporter fails to take into consideration the immense interest expense and other costs associated with the Pocono property.
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