Wednesday, September 17, 2008

The Tribe In The News: Mohegan Makes Closing Argument On Its Bid For Kansas Casino

Feather News


This installment of The Tribe In The Media series, which shows tribal members how the Tribe is portrayed in the media and allows Feather News to reprint their articles without permission, are the last-minute statements by casino developers/managers as to why their casino proposals would be best for Kansas. Kansas' Lottery Review Board is expected to select the winning casino developers/managers by Friday.

More reports on remaining casino proposals released
By Sam Hartle
Kansas City Kansan
September 17, 2008

Kansas City, Kan. - A team of consultants plus officials from the three remaining Wyandotte County casino developers have submitted their final thoughts ahead of the Kansas Lottery Gaming Facility Review Board meetings in Topeka on Thursday and Friday.

The final reports come on the heels of hundreds of pages of reports and information the consultants and applicants processed during meetings earlier this month.

In an executive summary prepared for the review board, Dr. William Eadington, a professor a the University of Nevada-Reno, presented the consultant’s final reports, which included revisions and answers to questions posed by the review board.

During a teleconference meeting last week, members of the review board once again questioned the impact the proposals would have on the existing base of amenities in the Village West area.

Civic Economics, a consulting firm retained by the review board to analyze such issues, writes that all the proposals will grow the overall market instead of just shifting money around.

The firm, however, does note the risk to current Village West businesses.

“On the basis of sales per square foot, Village West full-service restaurants are, in aggregate, underperforming,” the company’s report stated. “The current performance of Village West food and beverage outlets suggests that the regional market may be stressed by the addition of substantial new competition in the area.”

The report continues that the destination-style of the retail, dining and entertainment options proposed will limit the effects because of the larger geographic base of customers.

Specifically, Civic says in the report that two particular proposals – Kansas Entertainment and Legends Sun – “present a much greater competitive threat, increasing the risk of further degrading performance at Village West.”

The company concludes that if the projects are developed appropriately, they could limit any affects on existing amenities in Village West, including the development of additional entertainment and nightlife attractions.

Richard Wells and William Cummings, the two consultants charged with projecting revenues for the casino developers, also submitted revised estimates.

The revisions, however, don’t seem to alter their original conclusions that the Hard Rock Hotel and Casino proposed by Kansas Entertainment would generate the most gaming revenue of the bunch.

Interestingly, the consultants’ revised estimates boosted the revenue projections for Pinnacle Entertainment’s casino operations, though those projections are now moot due to Pinnacle’s withdrawal on Monday.

Though a myriad of variables could be applied, the consultants still maintained that gaming revenues for the Golden Gaming and Legends Sun proposals would lag behind those generated at the Hard Rock.

Also included in the agenda report were responses from the three remaining applicants as well as Pinnacle, since the report was generated prior to the company’s withdrawal. The responses:

• Golden Gaming: In response to a board request for more information regarding, among other items, charitable contributions included in the company’s pre-development agreement with Edwardsville, the company committed to a minimum contribution of $1 million per year, with not less than 50 percent going to educational funding and other interests in Wyandotte County.

The company would also host a charity event where 50 percent of proceeds generated would go to charitable causes in the county. Finally, the company would host a charity golf tournament with proceeds donated to a charity of Tom Watson’s choice. Watson is charged with designing and building the golf course associated with Golden’s proposal.

The group also further delineated what infrastructure costs it anticipates to pay for as a result of the proposal.

Finally, Golden included a report from Art Hall, executive director of the University of Kansas School of Business Center for Applied Economics highlighting the development’s fiscal impact to the community.

• Kansas Entertainment: In its submission, the group continued to defend its mix of ancillary amenities, saying that the proposal “creates the critical mass of crucial non-gaming amenities necessary to attract significant incremental visitors to the region.” The group continues that the project “will create new demand that will benefit all existing businesses.”
Kansas Entertainment also responded to questions regarding the ability of the Hard Rock brand to generate additional revenues.

“Our experience and third-party research reports indicate that the addition of the Hard Rock brand to the project will provide approximately a 12-percent lift in project revenues compared to a non-branded facility.”

Finally, the group included written documentation of additional commitments made by Kansas Speedway during the review process. Those additional commitments include an effort to land a second NASCAR Sprint Cup Series Race and the construction of an infield road course, among others.

• Legends Sun: In its response to the review board, the Legends Sun team sought to drive home two points: 1) The experience and expertise of Mohegan Sun in generating gaming revenues, and 2) The financial ability of Mohegan and partner RED Development to finance the project.

The group defended the number of slots at its proposed facility (at 2,000 slots, the Legends Sun project would have far fewer than Golden Gaming and Hard Rock), stating that, “Our project is the most expensive and has the largest gaming floor – designed to accommodate more machines if the market so dictates.”

A detailed analysis breaking down the financial contributors to the project was also included in Legends Sun’s follow up report.

Finally, the team included a report produced by Gaming Market Advisors, an independent, third-party consulting firm, that indicated Legends Sun’s gaming revenues projected by Wells and Cummings.

To read full reports from the review board’s consulting team, and to view responses by developers, visit www.ksracing.org.