Tuesday, December 29, 2009

Flash - Mohegan Gaming Authority Publicly Reports Its Audited Financial Statements

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The Mohegan Tribal Gaming Authority filed its fiscal year 2009 audited financial statements yesterday as part of its 10K annual public filing with the U.S. Securities and Exchange Commission.

A link to the document is posted in the right-hand column of this website under the label ¨Mohegan Tribal Gaming Authority SEC Reports¨ then click on the document entitled ¨1) Audited Casino (MTGA) Financial Statements Per SEC : Oct 2008 thru Sep 2009.¨

MTGA issued a press release on its fiscal year 2009 earnings but had not issued its complete financial statements for fiscal 2009 until yesterday. In addition to its earnings, yesterday´s public filing includes MTGA´s balance sheet and cash flow statement as well as other information such as the status of its diversification plan and compensation for top MTGA officials.

The Feather News will attempt to highlight in an article information and figures gathered from the fiscal year 2009 audit report as soon as possible.

AP - Schaghticoke Chief Charged With DUI

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The Associated Press is reporting that the chief of the Schaghticoke Tribe was charged with driving under the influence on Christmas night.

The AP article further states that ¨Fifty-nine-year-old Richard Velky was arrested Christmas night. Police say an off-duty officer who saw Velky driving his SUV erratically pulled him over at about 9:15 p.m. Friday. Velky was charged with driving under the influence of alcohol or drugs, failure to drive right and breach of peace. He posted $5,000 bail and is to be arraigned Jan. 4 in Waterbury Superior Court. A woman who answered a phone listing for Velky Tuesday said his arrest wasn't newsworthy and hung up.¨

The Schaghticoke Tribe is recognized by the state of Connecticut.

Tuesday, December 22, 2009

Mohegan Tribal Member Don Chapman Appointed As U.S. Commerce Department´s Senior Advisor On Native American Affairs

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The Tribal Nation´s Conference hosted by President Barack Obama in Washington D.C. this past November was a historic gathering for Indian Country and allowed the President´s cabinet to speak directly with the Indian leaders present.

The heads of federal agencies affirmed to a crowd of over 400 representatives of Indian Country of their commitment to Indian Country. The head of the U.S. Commerce Department, Secretary Gary Locke, told the gathering that his Senior Advisor for Native American Affairs Don Chapman II was his point person regarding Indian Affairs.

¨I want to let you know that I have one person in the Department of Commerce that I count on and who has absolute direct access to my office, to me, anytime, on any issue and that´s our senior advisor for Native American affairs Don Chapman. Stand up. He´s with the Mohegan Tribe of Indians of Connecticut,¨ U.S. Commerce Secretary Locke told the audience.

¨We need to do better, we need to do more. We´re absolutely committed as part of the economic recovery of this nation to make sure that that recovery, the prosperity of America includes tribal lands and tribal people,¨ Locke added.

Commerce Secretary Locke is a former governor of the state of Washington and was accustomed to dealing with the 26 federally recognized tribes in that state. ¨I really believe and respect the sovereignty of the tribes all across America.¨

President Obama campaigned on a pledge to uphold a ¨nation-to-nation¨ relationship with tribes, not just a ¨government-to-government¨ relationship.

Secretary of the Interior Ken Salazar, who co-hosted the event, told the audience that ¨self-determination, sovereignty, self-government, empowerment, and self-reliance are not abstract concepts; they are the tools that enable Indian country to shape its own destiny. Our role, as an administration, is to help you fulfill your vision for your nations; to help your communities achieve their promise; to help your cultures flourish.¨

Chapman was recently appointed to lead the U.S. Department of Commerce's Office of Native American Business Development. The senior advisor´s office is in Washington, D.C., and the office´s broad function includes serving as the primary interface with all tribes and other federal agencies, such as the U.S. Department of the Interior and U.S. Housing and Urban Development, concerning business development and trade promotion for Indians. The office also leads the way on international import-export and tourism development on behalf of Indian Country and the Commerce Department.

Chapman is the U.S. Commerce Department´s first senior advisor on Native American Affairs, charged with implementing the President´s executive order 13175 which requires federal departments, agencies, and bureaus to create an office and policies on tribal consultation.

Chapman´s father, Don Chapman, is a former treasurer of the Mohegan Tribal Council.

Chapman will continue serving as a guest speaker and lecturer at Indian Country business outreach seminars.

Yale University Hiring Director For Native American Cultural Center

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Yale University in New Haven, CT, is seeking a director for its Native American cultural center. The position will provide strategic direction and supervise the operation of the Native American Cultural Center, serve on committees and lead various student and academic programs. More info at www.yale.edu.

Monday, December 21, 2009

Mohegan Gaming Authority Audited Financial Statements To Be Made Public Any Day

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The Mohegan Tribal Gaming Authority could make public its audited financial statements as early as this week, based on the filing dates in previous years.

MTGA publicly announced in October its estimated earnings for fiscal year 2009, which are the 12 months that ended September 30th, and MTGA in November reported its actual earnings for fiscal year 2009. MTGA reported a profit of $119 million for the twelve months that ended on September 30, 2009. Its important to remember that distributions to the tribal government are not deducted and that $45 million of the profit is the result of an adjustment on paper relating to th the total amount expected to be paid to the casino´s former management company, Trading Cove Associates, over the next 5 years.

The audited financial statements will include the figures in this earnings report released in November in addition to the balance sheet and cash flow statement, which have not yet been made public.

Other information in MTGA´s financial statement filing with the U.S. Securities and Exchange Commission will include MTGA executive staff compensation and details on MTGA´s debt.

The Feather News will report on the filing, more than likely during the holidays.

Spirit Lake Intertribal Social Postponed Until February

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Saturday´s Spirit Lake intertribal social in Groton, CT, has been postponed until February 20th.

Blizzard Of 2009 Strikes Over The Weekend

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Some parts of Connecticut saw over 2 feet of snow in the blizzard that struck over the weekend. Heavy winds created even higher snow drifts.

Although the snow ended yesterday, the Mashantucket Tribe is on a 90 minute delay in its opening this morning as well as Norwich schools. Montville schools are on a 2 hour delay this morning.

Senate Indian Affairs Committee Approves Land Into Trust Fix

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This installment of The Tribes In The Media is a Providence Journal article on legislation approved by the U.S. Senate Indian Affairs Committee last week that seeks to amend the ¨land into trust¨ laws.

Senate panel OKs bill to overturn ruling on Narragansetts
John E. Mulligan
The Providence Journal
December 17, 2009

WASHINGTON -- Without dissent, a key Senate panel took a big step Thursday toward reversing last winter's U.S. Supreme Court decision that blocked a special land status for the Narragansett Indians -- and many other tribes across the country.

The bipartisan vote of the Indian Affairs Committee to send the measure to the full Senate for debate was an important milestone on the path toward enactment of a bill that is a high priority in Indian Country and has the strong support of the Obama administration.

Rhode Island Democratic Senators Jack Reed and Sheldon Whitehouse have said, however, that they are prepared to oppose the measure on the Senate floor if necessary.

Other opponents include the town of Charlestown; Governor Carcieri; Attorney General Patrick C. Lynch; Rep. James R. Langevin, the Democrat who represents the Narragansetts and their neighbors; and officials in a number of other states. Opponents assert that the measure threatens to provoke more clashes between Indian tribes on the one hand and state and local interests on the other. In Rhode Island and other states, the worry at the root of the opposition is that the legislation could open the door to gambling casinos on tribe-held land. Langevin, Reed and Whitehouse oppose any change in law that would permit the Narragansetts to pursue casino gambling without the approval of Rhode Island voters.

The author of the legislation, Sen. Byron L. Dorgan, Democrat of North Dakota, said in an interview that his measure "is not about gaming.''

The Narragansetts have worked hard but without success over the years to secure gambling rights in Rhode Island. They have said, however, that the parcel of land at issue in the Supreme Court case was meant not for gambling but for housing.

The Supreme Court ruled that the Narragansetts were ineligible to have that piece of land taken into federal trust because the special status was available only to tribes recognized by the federal government as of 1934. Tribal lands that are taken into federal trust are removed from the jurisdiction of local and state laws and taxes.

The Narragansetts and other tribes viewed the Supreme Court decision as a blow to native American sovereignty. Tribal advocates said the ruling has disturbed the system of taking Indian lands into federal trust, clouding the status of economic development, law enforcement and other undertakings on tribe-owned parcels nationwide.

The key provision in the pending legislation would essentially restore the status quo before the Supreme Court ruling, removing the effective date of 1934 from the pertinent section of a landmark law that is the basis for much of the modern relationship between native tribes and the federal government.

In other words, the Narragansetts and other tribes federally recognized after 1934 would once again be allowed to request that their lands be taken into government trust.

One big question mark about prospects for the legislation is whether Senate Majority Leader Harry Reid, Democrat of Nevada, will schedule it for a full Senate vote.

Reid has taken no position on this bill specifically but he has been a strong opponent of using a mechanism at the heart of the Rhode Island case -- federal land trust -- to create gambling casinos outside the boundaries of Indian reservations.

The House version of the "Carcieri fix'' -- so called after the name of the Supreme Court case, Carcieri v. Salazar -- has yet to be voted by the committee with jurisdiction over Indian issues, the Natural Resources Committee.
The panel's chairman, Rep. Nick J. Rahall II, Democrat of West Virginia, said in an interview Wednesday that he hopes to schedule a vote early in the new year.

Democratic Rep. Patrick J. Kennedy, the Rhode Island delegation's only supporter of the measure, has said he believes it can be signed into law next year.

But Kennedy has also predicted that the Narragansetts will never win casino gambling rights in Rhode Island without the agreement of state officials, including the rest of the congressional delegation.

Wednesday, December 16, 2009

SHINNECOCK INDIANS GIVEN PRELIMINARY FEDERAL RECOGNITION APPROVAL

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The Bureau of Indian Affairs gave preliminary federal recognition to Long Island's Shinnecock Indian Tribe yesterday. A final decision will be made after a 90 day public comment period followed by another 30 days for the Shinnecock Tribe to respond.

The Shinnecocks previously said publicly that they are willing to negotiate with the state for a casino site, possibly in the Catskill Mountains or on Long Island.

The Tribe´s reservation is in Southampton, N.Y., located on the eastern end of Long Island.

Tuesday, December 15, 2009

Mohegan Sun Reports About 11% Drop In November Slot Revenue

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The Mohegan Tribal Gaming Authority reported that its November slot revenues decreased by 10.8 percent compared to November 2008 while Foxwoods reported a 1.4 percent decline.

Total November slot revenue at Mohegan Sun was $59.6 million and at Foxwoods, slot revenue was $53.7 million. The tribes pay the state of Connecticut 25 percent of their slot revenue.

Monday, December 7, 2009

Recent Newspaper Accounts

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Two recent articles appeared in The Day newspaper on the Mohegan gaming authority and we posted them below. The Feather News added a footnote at the end of the second article.

Mohegan Sun: We're not Foxwoods
By Patricia Daddona
TheDay
December 3, 2009

The Mohegan Tribal Gaming Authority reduces stipends to tribal members when changes like the current economic downturn warrant it, casino officials told the financial community today.

Mohegan Sun also has a stable management team that is continuing to work to improve the product it offers patrons, despite the effects of the recession.

Casino officials made the comments this morning during a Webcast presentation at the Bank of America Merrill Lynch 2009 credit conference in New York City. Participants in the Webcast included a broad range of members of the financial industry.

The tribe's Mohegan Sun casino is one "you could put anywhere and it would be a category killer and a market leader," said Mitchell Etess, the casino's president and chief executive officer.

"We've been constantly evolving our product ... trying even in this (economy) to keep things fresh, keep things going."

In touting that stability, Etess differentiated the Mohegans from their neighboring competitors, the Mashantucket Pequots. The Mashantuckets own and operate Foxwoods Resort Casino and MGM Grand at Foxwoods.

"We have been very cautious to make everybody know we're not Foxwoods," Etess said. "We operate differently than Foxwoods."

The Mashantuckets are struggling to restructure debt and could default on loans. Tribal members recently ousted Tribal Chairman Michael Thomas, whose promise to keep tribal stipends intact before lenders were paid sent shock waves through the global financial community.

Mohegan Sun is also hurting from the recession but its balance sheet is strong, Etess said. Net revenues were down 12 percent year over year and overall revenues are down 7.5 percent, he said.

Peter J. Roberti, vice president of finance at the casino, pointed out that the tribe, whose 1,700 members get monetary distributions from casino revenues, reduces that take when necessary.

"The tribe is making moves to reduce their expenditures, and taking a look at the stipends and taking less out of the Gaming Authority," he said.

Tribal Council Chairwoman Lynn Malerba later clarified that Mohegan Sun is always evaluating financial performance. She said the tribe made reductions last year to tribal government, but it did not reduce individual stipends.

Etess said, "Our tribe understands the situation; what happens when money gets shorter. Our tribe shows what happens; they take less money."



Mohegans seek partner to finish hotel tower
By Patricia Daddona
The Day
December 4, 2009

The Mohegan tribe is looking for a partner to help it finish the Project Horizon luxury hotel at Mohegan Sun.

The Mohegan Tribal Gaming Authority said Thursday it is seeking partners for a couple of key projects besides the suspended Project Horizon, including a $500 million casino in Palmer, Mass., and a hotel at Mohegan Sun at Pocono Downs in Pennsylvania.

Partnering for future growth is part of an effort to incur less debt, Mitchell Etess, the president and chief executive officer for the casino, said Thursday following a Webcast presentation at the Bank of America Merrill Lynch 2009 Credit Conference in New York City for people in the financial and investment industry.

Demand is high for more hotel rooms to complement Mohegan Sun's existing hotel, but the economy is not out of the woods yet and it's not clear when the expansion, which was halted in the fall of 2008, could resume, said Etess, who represented the gaming authority at the conference.

Adding a hotel partner, possibly one with a brand name, is being pursued aggressively, he said.

"The most important thing right now is to improve our balance sheet," he said, "and the lopping on of additional debt for our hotel tower wouldn't necessarily be the first thing we would do. However, if someone else could build that tower, and we could get additional rooms, that would generate significant additional cash flow, which would allow us to improve our financial position."

Tribal Chairwoman Lynn Malerba confirmed that intent later in the day.

"We are committed to reduce our overall debt, and one way to do that is to enhance the overall property and revenues without putting a lot of our own capital in," she said.

The Mohegans are also keeping track of the possible legalization of casinos in Massachusetts, where Etess said they hope to find a partner to help develop a resort-style casino smaller than Mohegan Sun but larger than the Mohegan Sun at Pocono Downs in Pennsylvania. He said a casino there could include 3,000 slot machines, 100 table games, a hotel, retail operations and branded restaurants.

Project Horizon started out in 2007 as a $740 million project that escalated to $925 million. The "Earth Hotel Tower," a 39-story edifice intended to be the tallest building in Connecticut, was the centerpiece.

Etess said that partnering on the hotel tower doesn't signal any change in direction for the proposed expansion, which would add 920 rooms and include a House of Blues music hall. The featured restaurant, Margaritaville, and new gaming hall called Casino of the Wind, have already opened.

"Exactly how that tower turns out will depend very much on who we end up partnering with," Etess said.

Branding a hotel at the tribal gaming property is risky, said Jane Pedreira, a gaming analyst with Rye, N.Y.,-based Clear Sights Research.

"I would be somewhat skeptical of that working, unless they were going to run it as a convention business where people actually go there not to gamble," she said. "I don't know what percentage of their rooms are cash versus (complimentary), but the industry standard is to 'comp' your big gaming guests."

At the conference, Etess and Peter J. Roberti, the casino's vice president of finance, reviewed this year's casino operating results and acknowledged that while there's no sign the declining trend for gaming revenue has reversed course, the casino balance sheet is strong. Net revenues were down 12 percent year over year and overall revenues are down 7.5 percent, they said.

"We're hoping we will flatten out this next year," Etess said. "We think one day the economy will get better and people will start spending again."

In the meantime, Roberti said, a "disciplined approach" to capital spending and reducing full-time positions through attrition rather than layoffs have helped contain costs. Malerba later noted that reductions to tribal government costs, although not to individual stipends, have helped curb expenses.

Etess called that a "prudent" way of managing distributions.

He sought to differentiate Mohegan Sun from Foxwoods Resort Casino and MGM Grand at Foxwoods, which are owned and operated by the Mashantucket Pequot Tribal Nation on the reservation in nearby Ledyard.

"We've been very cautious, especially lately, to make sure everybody realizes we're not Foxwoods," Etess said. "We operate completely differently than Foxwoods in every aspect of operations, and we also have better market share."

For the 12 months ending Sept. 30, Mohegan Sun operated with an average daily slot win per machine of $316, versus $240 at Foxwoods, Roberti said.

The Mashantuckets are struggling to restructure a debt load of more than $2 billion and could default on loans. Tribal members recently ousted Chairman Michael Thomas, whose promise to keep tribal stipends intact before lenders were paid sent shockwaves through the global financial community.

Pedreira, who listened later in the day to a recording of the conference call, said the Mohegans and their casino managers "have got the gaming industry down to a science."

"I definitely feel they're great operators," she said. "They have great upside in Pennsylvania. They've done a great job of trying to diversify, probably better than any other Indian tribe. What impresses me about them is they're so progressive, they're ahead of the curve - running the property, getting out ahead of Massachusetts."


Footnote ... The Feather News contacted Ms. Pedriera and asked if she was misquoted since it appears that MTGA´s approximately three quarters of a billion dollar investment in diversification (Poconos plus corporate diversification department costs since inception) has resulted in annual losses in the tens of millions of dollars each year, maybe $50 million last year alone if one takes account interest expense on the Pocono facility and the ogoing costs for MTGA´s corporate diversification department (which was $17 million last year alone).

Ms Pedreira responded in an email, ¨Mohegan is the only tribe to get licensed by a state so they are considered a legitimate force when bidding on a new venue which is the path to take for diversifying.Keep in mind, PA is about to get table games. As with many new jurisdictions, it takes time to ramp up and develop. Many states will pass regs that are strict but ease up over time. So you can’t always measure success in first few years. Mohegan also has a shot at MA which would enable them to mitigate against damage to CT. No telling if they get that but they were out in front.¨

Feather News On Vacation

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We´ll be back in a few more days.

Monday, November 30, 2009

Mashpee Wampanoag Tribe Exiting Relationship With Prior Investors And Signing On Malaysians That Backed Foxwoods

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This installment of The Tribes In The Media is a Boston Globe article outlining reports that the Mashpee Wampanoag Tribe of Massachusetts has switched investors, changing from principal investors Sol Kerzner and Len Wolman and moving to new investors - the Malaysian group that financed Foxwoods at its inception.

Wampanoag cut ties with casino investors
Now in negotiations with Malaysian firm
By Christine Legere
The Boston Globe
November 30, 2009

The Mashpee Wampanoag tribe is dissolving its partnership with two investors to develop a Middleborough casino and making a new start with an international investment group that boasts a strong track record for building successful gambling resorts.

New investors could put the project on steadier footing at a time when gaming is likely to get its most favorable airing yet on Beacon Hill early next year. But the tribe faces a number of obstacles, including the possibility that the state Legislature may legalize expanded gambling next spring, giving locations like Suffolk Downs a jump on Middleborough.

Wampanoag Tribal Council vice chairman Aaron Tobey said yesterday that investors Sol Kerzner and Len Wolman have agreed in principle to bow out of the project. The pair had been backing the tribe for more than two years, after striking an agreement with former Tribal Council chairman Glenn Marshall. Marshall was convicted of fraud and embezzlement and is currently serving a 3 1/2-year prison term.

A new slate of Tribal Council members refused to reaffirm their agreement with Wolman and Kerzner last spring, saying it was unfair to the Wampanoag tribe. The investors subsequently ceased to make agreed-upon payments to the tribe - a sign the rela tionship was unraveling.

The 500-acre target site in Middleborough will be turned over to the tribe under the terms of the breakup. “The tribe is turning the page and moving forward with investors who are committed to our goals,’’ Tobey said.

The tribe said yesterday its leaders are negotiating an agreement for a “world class’’ resort-style gambling facility with Arkana Limited, a wholly-owned affiliate of Malaysian investment group Kien Huat.

Dennis Whittlesey, the Washington lawyer who helped Middleborough craft its multimillion-dollar casino agreement with the Wampanoag tribe, said the change in the investment team should bode well. “They have a lot of money and they are experienced in getting projects done,’’ Whittlesey said of the Malaysian group. “Depending on the terms of the deal, this could be a very positive development.’’

In the United States, Kien Huat affiliates financed the startups of Foxwoods Resort and Casino in Connecticut in 1992 and the Seneca Niagara Casino in New York in 2002. Worldwide, Kien Huat affiliates maintain substantial interests in a group of companies actively involved in gaming, leisure, cruise, power generation, plantations, property development, biotechnology, and oil and gas.

Kerzner and Wolman, meanwhile, recently filed for bankruptcy for their jointly owned Twin Rivers casino in Rhode Island.

“I suspect the Malaysian group saw a good opportunity with the Wampanoag,’’ said casino specialist Clyde Barrow, a professor at the University of Massachusetts in Dartmouth’s Center for Policy Analysis. “And those investors are very successful with casinos.’’ But Barrow said the tribe faces other obstacles. “Unless they are willing to do some type of arrangement with the state, I think you’ll see other Massachusetts casinos open three to five years before a tribal casino,’’ he said.

Tribal leaders have no plans to meet with Governor Deval Patrick to discuss how the tribe’s proposal fits into the consideration for expanded gaming in Massachusetts, Tobey said.

Rev. Richard McGowan, a Boston College economics professor who studies gambling, said the switch in investors makes the tribe’s position a little more solid.

“It puts them in a better position, but there are still a lot of hurdles,’’ McGowan said. “I don’t think the governor is going to let the tribe take over a casino at a racetrack. And if the Legislature allows casino gambling at places like Suffolk Downs and Wonderland, I don’t see how a casino in Middleborough is ever going to compete.’’

One hurdle the tribe faces could be removed in the coming months. A recent Supreme Court ruling bars the US Department of the Interior from placing land into trust for tribes recognized after 1934, which has stalled the Mashpee Wampanoag’s application to put the Middleborough casino site into trust. “In five or six months, I expect to see legislation correcting that decision,’’ Whittlesey said.

Middleborough Selectwoman Marsha Brunelle said she was unaware of the tribe’s tentative agreement with the new investors. But she maintained it is not likely to have any impact on the town’s deal. “Our agreement is with the tribe,’’ she said. “If they go with different investors, that’s up to them.’’

Sunday, November 29, 2009

A Perspective On The Mashantucket's Financial Situation

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The following installment of The Tribes In The Media is an article in today's Hartford Courant on the possible precedent setting situation of the Mashantucket Pequot's financial crisis.

Many Eyes Watching Foxwoods' Negotiations With Creditors
By Eric Gershon
The Hartford Courant
November 29, 2009

When the Mashantucket Pequot Tribal Nation disclosed that it failed to make a large scheduled debt payment Nov. 16, the owner of Foxwoods Resort Casino left no doubt that it faces the sort of financial stress that could drive a business into bankruptcy court.

Debt rating agencies pounced, branding the tribe a defaulter. Despite hundreds of millions of dollars in revenue from slot machines alone, the tribe fell $7 million short of a $21 million payment.

But as Foxwoods limps into the holiday season — traditionally a weak time for business at the casino — the Pequots' situation isn't as desperate as it would be for a regular private business.

As a sovereign nation, the tribe doesn't operate under all the same rules: It can't be forced into Chapter 11 bankruptcy, so its creditors have unusually limited ability to compel payment.

Some legal experts doubt whether the Mashantuckets could even qualify for a voluntary Chapter 11 filing, an option that might benefit the tribe as a way of easing the load of its more than $2 billion in debt.

For now, creditors have little choice but to negotiate with the tribe. The terms the Pequots offer — and the terms that creditors ultimately exact — will affect more than the parties involved, and Native American business interests nationwide are paying close attention.

The outcome could influence every tribal casino operator that might need to restructure debt — or borrow money in the future.

"Foxwoods is going to set the precedent," said Greg Guedel, chairman of the Native American Legal Services Group for the Seattle law firm Foster Pepper. "It's such a significant business enterprise that it is probably going to become a model, good or bad, for whatever happens subsequently."

Because the tribe does not issue public financial reports other than slot revenue (25 percent of which goes to the state of Connecticut) it's difficult for outsiders to gauge how deep Foxwoods' financial troubles are. The Pequots have said their debt restructuring is "separate and distinct from operations at Foxwoods" and "will not have any impact on guests, employees, suppliers or business partners at Foxwoods and MGM Grand at Foxwoods," which employ about 9,000 people — down from 11,000 in October 2008.

Still, it remains unclear whether the problems that led to the restructuring will force more cost-cutting.


Bankruptcy Possible
The Pequot tribe opened Foxwoods in 1992 and has since turned it into the nation's largest casino.

On Nov. 16, the tribe said it failed to deliver in full a scheduled payment on a $500 million debt and expects to enter default. The announcement followed the tribe's disclosure last August that it had hired an investment bank to help restructure its debt.

The tribe would not comment on its financial circumstances this week. But in an interview Tuesday, a source familiar with the tribe's thinking said a bankruptcy filing is not totally out of the question, even though the tribe prefers to continue negotiating directly with debt holders.

"On surface, that does appear to be potentially difficult," the source said of a bankruptcy filing. "But in no way are we ruling it out. It's not something that appears to be top of the list in terms of viability."

Guedel said a voluntary bankruptcy is effectively impossible for political reasons within the tribe, but he does not view it as impossible: "I think if you had a tribal business that decided, 'The best thing we can do here is file for Chapter 11,' I think they could do it."

Like casinos nationwide, revenues at Foxwoods have plunged. Between the 2004-05 fiscal year and the end of the 2008-09 fiscal year in June, slot revenue fell by 13.5 percent from an all-time high of $820 million to $709 million, the smallest total in a decade.

Slot revenue this past July through October was down further — 9 percent from the prior year.

At a time of cost-cutting, that doesn't fully explain how the tribe became unable to deliver a semiannual $21.25 million debt payment.

The broader explanation holds that the onset of recession in late 2007 coincided with Foxwoods' massive, highly leveraged expansion, namely the addition of MGM Grand at Foxwoods, which opened the following spring amid a hiring spree.


Pressure From Tribes
The Pequots' failure to make the Nov. 16 debt payment underscored the nature of the unusual risk borne by investors in tribal casinos.

"If it was a typical U.S. corporation, then the lenders would have more leverage at the negotiating table," said Craig Parmelee, a managing director at Standard & Poor's who follows the gambling industry. "They could accelerate their loans, demand full payment today. And if they were to do that, that would force the corporation to file for bankruptcy protection. And we have a well established process through our bankruptcy courts where the situation gets worked out thereafter.

"Often in those situations, the lenders take control of the company and can sell it and/or operate it. In case of a tribe, they can still accelerate and demand payment today. The problem is that doesn't take you down the same path."The Pequots may be insulated from a forced bankruptcy, but they nonetheless face pressure to deal with creditors fairly, for their own sake and that of other tribal casino operators.

"Whatever value the tribe places on maintaining relationships with the capital markets — that's the leverage that the lenders have," Parmelee said.

Other tribes, eager to keep the trust of lenders, will also be urging the Pequots to use their negotiating advantage responsibly, according to Guedel, the lawyer in Seattle.

"Every lender, when a tribe came calling, would say, 'Wait a minute, look what happened over here with Foxwoods,'" he said.

Creditors' inability to take control of Foxwoods or force a sale of its assets means that the casino must remain open for business for them to get paid at all. In its Nov. 16 announcement, the tribe said its restructuring efforts would not affect visitors' experience of the casino, and at least one gambling analyst said he saw "zero" chance that Foxwoods would close for business.

"The lenders are trying to attain the maximum value that they can for their loans," Parmelee said. "If the casino were to shut down, then there's no value."

Saturday, November 28, 2009

Investment Company Buying Up Mashantucket Debt

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This installment of The Tribes In The Media is a Norwich Bulletin article on an investment company seeking to profit through purchasing Mashantucket Pequot debt. The Day newspaper previously reported on the debt purchases.

Foxwoods debt buy could aid outside firm
By William Sokolic
The Norwich Bulletin
November 27, 2009

Could Apollo Management, the parent of largest casino company in the nation, be gobbling up debt from the Mashantucket Pequot Tribal Nation at distressed prices?

The private equity owner of Harrah’s Entertainment Inc. isn’t saying. Neither is the tribe, which owns Foxwoods Resort Casino and MGM Grand at Foxwoods.

Still, according to folks who track the industry, there are potential upsides for Apollo, or any private company, to invest in the financially strapped tribal gaming authority, despite the limitations outside investors face when dealing with Indian gaming.

An outside company can manage gaming operations but cannot own any portion of the casino or hold any ownership stake. Nor can an outside firm foreclose on a tribal casino.

Marketing, branding

Yet, as MGM can attest, such investments can lend marketing and branding efforts to tribal casinos. MGM does not own the casino hotel at Foxwoods that bears its name, but struck a deal for use of its brand. Should Apollo buy up enough debt — even if purchased from a creditor rather than the tribe — it could present synergies with the Harrah’s brand, said Megan Neuburger, a director with Fitch Ratings Services. Apollo completed its transaction to buy Harrah’s early last year.

“They can in some way explore a marketing partnership,” Neuburger said.

There also is a potential to sell any purchased Foxwoods bonds at a profit, she said, especially if bought at distressed levels.

“Buy cheaply, and when gaming levels recover, sell at a profit,” Neuberger said.

Foxwoods, like most gaming companies in the country, has fallen on hard times. Slot revenue has declined year-over-year for much of 2009 as consumers cut back on discretionary spending.
The Mashantuckets have cut costs, as have gambling companies elsewhere.

Apollo, or any other company, would not buy debt at face value if there were concerns it would not be paid in full, said Craig Parmalee, managing director of Standard & Poor’s, which just lowered the tribe’s rating after the announcement last week that it might be unable to meet a complete interest payment due this month, and would likely miss the grace period, going into default.

“But an investor could buy debt at a substantial discount, like 10 or 20 cents on a dollar,” Parmalee said. “They could buy the debt from a creditor at a fraction of par, or face value.”
If the purchasing firm can make a deal for even twice that much later on, it stands to walk away with a profit, he said.

Moody’s Investor Services withdrew its ratings on the Mashantucket Pequot Tribal Nation last week because it lacks adequate information to maintain a rating, Moody senior vice president Keith Foley said.

In addition to the default, the tribal council said last month that as part of the ongoing debt restructuring process, it entered into a forbearance agreement, which extends through Jan. 20, with its senior lenders.

The tribe is working with Miller Buckfire, a New York financial firm, on its debt restructuring.

Apollo Management is a private equity investment firm founded in 1990 by former Drexel Burnham Lambert banker Leon Black. The firm specializes in purchasing distressed companies involved in corporate restructuring.

Apollo also owns AMC Entertainment and Norwegian Cruise Lines, in addition to Harrah’s Entertainment.

Oneida Indian Nation Of New York To Give Out $5 Million In Employee Bonuses

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This installment of The Tribes In The Media is an Observer-Dispatch article on the Oneida Indian Nation's decision to give out over $5 million in bonuses to its employees.

Oneida Nation gives out $5.1M in bonuses
By Rebecca Croniser
Observer-Dispatch
November 27, 2009

Despite an economic downturn that hit many area businesses hard, the Oneida Indian Nation this week awarded $5.1 million in bonuses to most of its 4,800 employees.

The bonuses topped last year’s by about $400,000 and are believed to be the most the Nation has ever distributed, said Dana Sovocool, the Nation’s vice president of human resources.

The funds were distributed to about 90 percent of employees across all of the Nation’s business divisions, including Turning Stone Resort & Casino in Verona, SavOn convenience stores and video and animation company Four Directions Productions.

Nation officials said their enterprises — including Turning Stone Resort and Casino — performed exceedingly well this year.

Officials declined to release revenue figures, but Sovocool said the bonuses are “based on the Nation’s performance.”

“Knowing we were facing a troubled economy, we took careful measures to manage the various businesses,” Sovocool said.

In 2008, the Nation — the largest employer in Oneida and Madison counties — laid off an estimated 100 employees in an attempt to avoid troubles seen at other casinos. Spokesman Mark Emery said Friday that about half of those laid off have been hired back.

Sovocool said the cuts were designed not to take away from customer service or quality.

“We’ve focused more heavily than ever on service,” he said.

He said that approach has paid off with more visitors this year than last year, though specific numbers were not available.

The Nation has been expanding its enterprises lately. Last year, it purchased an Erie County cigarette plant. Employees of the cigarette plant, described as its own entity, were not included in the bonuses.

Emery said no more additions are on the immediate horizon.

“Right now the focus is on what the Nation already has,” he said.

Wednesday, November 25, 2009

President Obama's Thanksgiving Proclamation

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The following proclamation was issued by the White House:

BY THE PRESIDENT OF THE UNITED STATES OF AMERICA
A PROCLAMATION

What began as a harvest celebration between European settlers and indigenous communities nearly four centuries ago has become our cherished tradition of Thanksgiving. This day's roots are intertwined with those of our Nation, and its history traces the American narrative.

Today, we recall President George Washington, who proclaimed our first national day of public thanksgiving to be observed "by acknowledging with grateful hearts the many and signal favors of Almighty God," and President Abraham Lincoln, who established our annual Thanksgiving Day to help mend a fractured Nation in the midst of civil war. We also recognize the contributions of Native Americans, who helped the early colonists survive their first harsh winter and continue to strengthen our Nation. From our earliest days of independence, and in times of tragedy and triumph, Americans have come together to celebrate Thanksgiving.

As Americans, we hail from every part of the world. While we observe traditions from every culture, Thanksgiving Day is a unique national tradition we all share. Its spirit binds us together as one people, each of us thankful for our common blessings.

As we gather once again among loved ones, let us also reach out to our neighbors and fellow citizens in need of a helping hand. This is a time for us to renew our bonds with one another, and we can fulfill that commitment by serving our communities and our Nation throughout the year. In doing so, we pay tribute to our country's men and women in uniform who set an example of service that inspires us all. Let us be guided by the legacy of those who have fought for the freedoms for which we give thanks, and be worthy heirs to the noble tradition of goodwill shown on this day.

NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim Thursday, November 26, 2009, as a National Day of Thanksgiving. I encourage all the people of the United States to come together, whether in our homes, places of worship, community centers, or any place where family, friends more and neighbors may gather, with gratitude for all we have received in the past year; to express appreciation to those whose lives enrich our own; and to share our bounty with others.

IN WITNESS WHEREOF, I have hereunto set my hand this twentieth day of November, in the year of our Lord two thousand nine, and of the Independence of the United States of America the two hundred and thirty-fourth.

BARACK OBAMA

Former Mohegan Gaming Authority CEO Bill Velardo Dies At Age 54

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Bill Velardo reportedly died earlier this week at the age of 54. Velardo initially served as Mohegan Sun's executive vice-president in 1995 and later became the president, general manager and chief executive officer before leaving in 2004.

Velardo later served as the president and chief operating officer for Fontainebleau casino in Las Vegas and in 2007 as president and chief operating officer of a joint venture between MGM Mirage and Kerzner International.

Feather News is still attempting to confirm the death.

Tuesday, November 24, 2009

Mohegan Gaming Authority Earnings On The Back Of A Napkin

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By Ken Davison


Last week the Mohegan Tribal Gaming Authority issued its earnings report for the three months of July through September and for the twelve month fiscal year which ended on September 30th.

I have always said that to understand MTGA's financial statements a reader must understand how MTGA accounts for its contract with its investors, Trading Cove Associates.

As the reader may know, MTGA agreed to pay Trading Cove five percent of its revenues (before expenses) to Trading Cove Associates for 15 years, beginning on January 1, 2000 and ending on December 31, 2014.

MTGA has paid Trading Cove Associates about $75 million per year in recent years but since Trading Cove was not entitled to five percent of the revenues on the Casino of The Wind expansion that $75 million (approximate figure) has declined to somewhere in the $60 plus million dollar range.

So when MTGA reports on the details of the fiscal year that ended September 30th, will the profits be reduced by the $60 plus million dollars that MTGA will have paid Trading Cove Associates last fiscal year? The answer is no, MTGA not only will not show an expense of $60 plus million related to what it paid Trading Cove Associates but it will show a profit of $15 to $20 million on that contract because of the accounting method used.

At the end of every fiscal year, MTGA estimates what it will pay Trading Cove during the entire 15-year contract period which means it must estimate the payments through December 2014. This past fiscal year, MTGA estimated it would pay Trading Cove less than previous estimates so MTGA recorded a $45 million gain in the last fiscal year that ended in September.

As far as the payments to Trading Cove throughout the year, MTGA records only about half of those payments as an expense in the year they are incurred because MTGA booked a huge expense in the two fiscal years before the contract took effect. MTGA probably recorded between $25 million and $30 million as an expense in the last fiscal year (out of the $60 plus million it paid Trading Cove).

So if you take that $25 - $30 million expense and then take into account the $45 million gain explained earlier, then the Trading Cove contract shows up as a gain of $15 million to $20 million in the income statement last fiscal year.

That's how a $60 plus million expense can be shown as a profit of $20 million on the financial statements. One can look at it as the profits being overstated on paper by about $80 million based on the accounting treatment of that Trading Cove contract.

MTGA has not yet issued its full financial statements for last fiscal year, only a press release so that is why we're dealing with estimates here and why we're calling these calculations "back of the napkin" computations. But when the details are issued in December, it will be mighty close.

MTGA reported a profit of $119 million for the twelve months that ended on September 30, 2009. Take away $80 million and that figure becomes $39 million. Take away the $71.5 million that MTGA distributed to the tribal government last fiscal year (which is not deducted from profits but from retained earnings and the situation looks pretty dicey.

The accounting for the Trading Cove contract is all on the up-and-up, I'm not saying it isn't. What I am saying is that a clear understanding of the Trading Cove contract is the key to understanding MTGA's financial statements.

St. Regis Mohawks End Bid For Catskills Casino

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This installment of The Tribes In The Media is a Times Herald-Record article on the St. Regis Mohawks ending their long fought battle to build a casino in the Catskill Mountains of New York.

St. Regis Mohawks vote to stop pursuing Sullivan
By Barry Lewis
Times Herald-Record
November 24, 2009

MONTICELLO — The St. Regis Mohawk tribe appears to have ended its decade-old fight to have an off-reservation casino in Sullivan County.

The decision was the result of a referendum Saturday by tribal members who voted 178-140 against continuing with an off-reservation gaming project.

The Mohawks, who have a reservation near the Canadian border, have had a long but at times bumpy relationship with Empire Resorts, their partners in developing a casino at Monticello Gaming & Raceway.

"We respect the process and procedure of the St. Regis Mohawks, and we are evaluating the impact of the referendum," said Empire spokesman Charlie Degliomini.

The Mohawks did not return calls for comment.

The vote by the tribe comes as Sen. Chuck Schumer has lobbied Interior Secretary Ken Salazar to reverse the policy of the Bush administration on a blanket ban on off-reservation casinos. Such applications have been proposed by the Mohawks and the Stockbridge-Munsee Band of Mohicans, a Wisconsin tribe with ancestral claims to Sullivan. The Buffalo-based Seneca Nation has also had talks about a possible casino in the Catskills.

"We still have two good tribes that want to open a casino in Sullivan County," said Thompson Supervisor Tony Cellini. "The St. Regis Mohawks have been on and off about a casino and have been changing sites for years. We'll work with tribes who want to be here."

News of the Mohawks' vote sent shares of Empire plummeting nearly 20 percent, closing at $2.43 a share.

Monday, November 23, 2009

Connecticut Tribes Under Financial Stress

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The following installment of The Tribe In The Media is one of at least four articles written by Bill Cummings in the past few days on the plight of the Mohegan and Mashantucket Pequot's financial situation.

Tribes teeter on financial brink
Stamford Advocate
By Bill Cummings
Stamford Advocate
November 23, 2009

At the top of a steep hill, high above the Thames River and the glimmering glass towers of the Mohegan Sun casino, a huge white building sits half-finished.

A newly paved road winds its way to the plastic-shrouded shell of the Mohegans' new tribal office and community center. Construction equipment is scattered about, but work on the facility stopped months ago.

It's a stark and unmistakable symbol of the financial crisis within Connecticut's multibillion-dollar Indian gaming empire.

After making and spending billions over the last decade, the Mohegans and their nearby neighbors, the Mashantucket Pequot Indians, are teetering on the brink of a financial meltdown.

Expansion plans have been canceled, employees have been laid off, credit ratings are in free fall, and bankers and bond holders are knocking on the door. In a sign of just how bad it has become, the Pequots last week defaulted on a Wall Street bond, signaling to creditors the tribe cannot meet its obligations.

All of this adds up to a toxic mix of problems that only a few years ago would have been unthinkable for two tribes with economic engines that once seemed geared for never-ending growth.

The immediate cause is a national recession that has cash-strapped gamblers staying away or spending less when they do visit. The trend is similar across the country. Casinos in Atlantic City are reporting slot losses of 20 percent or more, and gaming revenue in Las Vegas is in a downward spiral. Three smaller Indian tribes have already defaulted on loans.

But the revenue drop at the Mohegan Sun and Foxwoods, the casino built by the Pequots, is being magnified by billions of dollars in debt the two tribes accumulated during a nearly decade-long building binge and dubious business deals that have crippled cash flow for both operations.

All this comes as competition grows around the casinos. Slot parlors at race tracks in Rhode Island and Yonkers, N.Y., are already cutting into the take, and both tribes face the possibility that Massachusetts will soon allow casino gambling in the Bay State.

"The Connecticut tribes got in the same situation as commercial operators," said Megan Neuburger, a senior analyst with Fitch Ratings Services, which tracks gaming trends nationally.

"Revenue was up, and a lot of investor money was available. Now revenue is down. Did they overbuild? To some extent, I think so. There was easy access to capital for a half a decade. There was also a belief that this was a recession-proof industry." Neuburger said.

Bradley Beecher, a former head of the Connecticut State Police gaming unit who later worked for the Mohegan Gaming Commission, said he watched the tribe overpay for goods and services during its accelerated building campaigns.

"It was crazy what they were paying. They imported wool carpet from London, glass beads from India. And it was all fast-track construction," Beecher said.

"Ask yourself why they are in a bind when they pay no tax on 75 percent of their revenue," Beecher said, referring to the fact that while the state takes 25 percent of slot revenue, the tribes pay no taxes because of their status as sovereign nations.

TOUGH TIMES

Over the last two years, the Pequots watched their slot revenue drop by more than $100 million while debt grew to $2.1 billion.

The Pequots' credit rating fell to CCC, but the news got far worse last week when the tribe defaulted on a $500 million bond package. Standard and Poor's dropped the Pequots rating to D, the lowest possible.

Pequot tribal leaders had already laid off 800 of its more than 7,500 workers and offered buyouts to top tribal employees.

The Pequots are also struggling to meet payments to a Malaysian family that bankrolled Foxwoods and to MGM Mirage, the Las Vegas casino developer that helped build the MGM Grand at Foxwoods. The Malaysian investors will earn money until 2018, when they are expected to walk away $1 billion richer.

The Mohegans are not much better off. The tribe is carrying $1.6 billion in debt, its net income dropped 23 percent in 2009, and it must send five cents out of every dollar spent at the Sun to South African investors who built the first casino.

The tribe recently avoided default on a $200 million loan when it refinanced at 12 percent interest. Earlier, the tribe refinanced a $330 million note.

A new hotel planned at the Sun is on hold, along with other projects.

THE RISE OF THE SUN AND FOX

For Connecticut's two federally recognized Indian tribes, the foray into gambling began with hundreds of millions of dollars in borrowed money. The source was dubious at best, but few believed casinos in a rural part of Connecticut would be successful.

The Pequots in 1992 turned to Kien Huat Realty, a family-owned construction and development firm that made its fortune in Malaysian government projects. The deal provided $235 million to build the first version of Foxwoods.

The Mohegan Sun came on line a few years later under an arrangement with South African casino mogul Solomon Kerzner and his partner Len Wolman, a Mystic hotel chain owner and fellow South African.

The Pequot and Mohegan casinos quickly surpassed expectations. Foxwoods grew into the world's largest casino, featuring thousands of hotel rooms, dozens of restaurants and seven gambling areas. The Sun grew to 3.1 million square feet, offering three casinos, assorted hotels and other features.

Public records show in 1993, the year Foxwoods opened its doors, the casino earned $81 million from slot machines. By 2005, the slot take had swelled to $818 million.

The Sun earned $227 million in slot revenue in 1997, its first year of operation. Slot revenue ballooned to $916 million by 2007.

The Pequots bought the Lake of Isles Golf Course in North Stonington and the Spa at Norwich Inn, built a $200 million museum dedicated to Eastern Indians and invested in a Philadelphia casino plan.

The Mohegans purchased the Pocono Downs race track in Pennsylvania and added a casino. They proposed a $1 billion casino in Palmer, Mass., bought a golf course in Connecticut and a WNBA basketball team, and struck several deals with other tribes to build casinos outside Connecticut.

The building and buying mirrored what was happening nationally. The Native American gaming industry took off like wildfire, moving from a handful of bingo parlors and card rooms in the early 1990s to a $27 billion industry in 2008.

THOSE EXPANSION BLUES

By the end of 2008, however, the national recession had taken a serious toll on casino income, in Connecticut and nationally.

Foxwoods earned $708 million from its slot machines in 2009, a $111 million decrease since 2005. The Sun earned $802 million from its thousands of slot machines, a $114 million drop from 2007.

The first three months of the 2010 fiscal year, which began in July, showed no improvement. Foxwoods slot revenue dropped 13 percent from the previous year, and slot revenue at the Sun was down 10 percent.

Reports filed by the Mohegans with the federal Securities and Exchange Commission show the tribe's net income dropped 11 percent in 2009; gaming revenue fell 8 percent; gross slot revenue was down 5 percent; and non-gaming revenue dropped 16 percent.

The Mohegan's interest expenses rose 19 percent compared with 2008, according to financial statements.

The Pequots do not file reports with the SEC, claiming their status as a sovereign nation makes disclosure voluntary. The Mohegans agree, but file anyway.

At the Sun, the revenue drop had a very visible impact. The Mohegans launched an $800 million expansion, but it was cut short. Although a third casino opened in mid-2008, at a cost of $113 million, the rest of the project, another hotel, parking garage and other features, was suspended because of lack of money.

TROUBLE IN MASHANTUCKET

The first public sign the Pequots were in trouble came in September when former Pequot Tribal Chairman Michael Thomas told tribal members in an e-mail that he would rather keep casino profits than make payments to bond holders and banks.

"These are dire financial times for the tribe," Thomas wrote. "The situation is serious and threatens our tribe. Regardless of what may happen, I have made it clear that we will not accept Wall Street mandates for cuts to tribal government or the incentive." The incentive is a stipend every adult member of the tribe receives. According to a variety of published reports and sources, the payments can be as much as $100,000 a year for each of the 450 or so adult members of the tribe.

The tribe also uses casino revenue to provide health insurance, day care and higher education for members, and operate tribal government.

Pequot spokesmen and other tribal members declined to comment on the stipend or the cost of other services. Some said reports of a $100,000 stipend are false, but they refused to say how much each member receives.

Meanwhile, Thomas worried possible casinos in Massachusetts would drain profits. At least three casino ventures are on the table, and the state Legislature this fall decided to put off a vote allowing casino gambling until next year.

According to a study by the Center of Policy Analysis at the University of Massachusetts at Dartmouth, more than 7 million Bay Staters in 2008 visited casinos in Connecticut and slot parlors in Rhode Island and Maine.

SHOCK WAVES AND PANIC

Thomas' e-mail sent panic through the financial institutions that set the cost of bonds and lending. He was quickly removed from office and opted not to seek re-election during balloting this fall.

Attempts to reach Thomas for comment were unsuccessful.

"The tone affected investors," said Neuburger, the Fitch analyst, referring to Thomas' remarks. "The tribe's response (suspending Thomas) helped." Neuburger said the issue facing the Pequots and Mohegans is what Thomas feared: how revenue from the casino will be distributed and how much will have to go toward debt.

"The lenders may want to change how it's distributed," she said, explaining the tribe may receive less as more revenue is diverted to pay debt.

Pequot tribal leaders this fall hired Miller Buckfire, a high-powered New York City financial firm that specializes in reorganizing companies, to restructure the tribe's debt and finances.

The biggest immediate challenge is a $700 million revolving loan due next July that the tribe cannot pay, according to a source with direct knowledge of tribal finances. The Pequots recently entered into a forbearance agreement in which certain creditors agreed to take no action until the end of January.

That agreement, however, did not include the $500 million loan now in default, or a $250 million note due in 2021.

The tribe last week announced it paid $14.2 million of a $21.3 million interest payment on the $500 million bond. Tribal leaders said they did not anticipate paying the balance, resulting in default.

"NOT SURPRISING"

Neuburger, the Fitch analyst, said the default is "not good news," but added it was "not entirely surprising" given the forbearance agreement.

"There have been other defaults at smaller tribes, but this is an outstanding situation," Neuburger said. "Everyone is watching to see if they default more." The problem facing lenders, industry analysts explained, is creditors cannot attach property owned by tribal nations, which means they cannot foreclose. Instead, lenders accept payments based on cash flow. If the tribe does not meet its payments, there is little a lender can do except cut off credit.

The source close to the tribe said hiring Miller Buckfire is an acknowledgement of trouble. The source described Foxwoods as "a highly leveraged business," and admitted the reorganization under way is akin to what a company would do in Chapter 11 bankruptcy.

Chapter 11 allows companies to reorganize their business and pay off debts while also keeping the doors open and avoiding foreclosure.

Kelly Sullivan, a Pequot spokeswoman, cautioned against reading too much into last week's the default.

"This is not an unusual step when you enter into restructuring. Now that they are in default nothing really happens. There are discussions with all lenders, but this won't impact operations."

Mohegan Investors Making More Than Tribe From Casino

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This installment of The Tribe In The Media is another article by Bill Cummings in the past few days on the Mohegan's business dealings.

As revenue falls, tribe's investors now making more than Mohegans draining assets of Mohegan tribe
By Bill Cummings
Newstimes.com
November 23, 2009

The international investors who helped the Mohegan Indians build their casino 13 years ago are making more money from it than the tribe.

Since 2000, South African casino mogul Solomon Kerzner and his partners earned $542 million from the Mohegan Sun, the casino they helped build and finance, according to publicly available documents.

The 1,700-member Mohegan tribe, which owns the casino, earned $475 million during the same period.

In fact, the tribe's annual take from its casino has steadily dropped since 2005, while payments to Kerzner and his partners have risen.

The money pouring into Kerzner's bank accounts will continue until January 2015, when his contract with the tribe ends. Although Kerzner was instrumental in running the Sun during its early years, he has not had a management role since 2000.

Financial experts estimate that Kerzner and his partners will walk away with more than $1 billion when their contract ends, depending on how well the casino does in the future.

That huge annual obligation to Kerzner is draining the Mohegans, who are suffering from a toxic combination of dwindling revenue because of the recession, growing competition and high payments on $1.6 billion in accumulated debt.

MEGA-BUILDER

In the early 1990s, Kerzner, a South African billionaire and casino mogul known around the world for creating mega-resorts, saw opportunity in the hills of southeastern Connecticut.

The Mohegans had gained federal recognition and, like their neighbors 10 miles away, the Mashantucket Pequot Indians, the tribe now had permission to build a casino, complete with hotels, restaurants and other resort features.

Kerzner formed a partnership with Len Wolman, a Mystic hotel chain owner and the head of the Waterford Group, and created a new company called Trading Cove Associates. Kerzner and TCA invested about $10 million in the original Sun and backed $90 million in bonds that were sold on Wall Street.

The tribe obtained $175 million in bank notes to finish the initial $280 million casino, which opened in 1996. The developer later oversaw the next phase of the Sun, a $1 billion expansion that added another casino, a new hotel and a variety of other features. That expansion opened in 2002.

For its efforts, TCA initially received as much as 40 percent of the net revenue from the casino, a hefty amount that drew criticism for being too generous. Kerzner's company was also assigned the role of managing operations at the Sun.

In 1999, Kerzner struck a new deal with the tribe that ended his management role, effective in 2000. In return, the Mohegans gave TCA five cents for every dollar spent at the casino, its restaurants, hotels and other businesses.

The new contract marked a big change for Kerzner.

Along with ending his management duties, Kerzner's take was previously calculated on the basis of net revenue, the amount the tribe kept after expenses. Now his payments were calculated against gross revenue, the total amount taken in.

For Kerzner and his partners, it was a windfall.

In 2000, the year TCA ended its management role, the developer and his partners earned $20 million. Those yearly payments grew to $77.5 million in 2007 and $76 million in 2008.

At the same time, the tribe was earning less. The tribe collected $50 million in 2000. By 2008, the tribe earned $58.2 million, $18 million less than the group led by Kerzner.

`EGREGIOUS'

The new deal with Kerzner was immediately panned within the American Indian gaming industry as too generous. Bradley Beecher, a former head of the Connecticut State Police gaming unit who investigated Kerzner when he sought a Connecticut gaming license, said the tribe was unable to stand up to such an international business superstar.

"They got taken advantage of," Beecher said.

The National Indian Gaming Commission called the deal "egregious," and declared the management contract to be far above the legal limit, which is 30 percent of a casino's profits for no more than five years.

But as the gaming commission reviewed the complicated contract, it concluded the deal was a consulting contract, not a management contract. That meant the commission had no jurisdiction, and the deal stood.

The distinction, some call it a loophole, between a management contract and a consulting contract is allowed under the national Indian Gaming Regulatory Act, which oversees Indian casino transactions and partnerships. Under the act, investors can avoid caps on their return by calling their deals anything but a management contract.

In filings with the federal Securities and Exchange Commission, the Mohegans refer to their contract with Kerzner as a "relinquishment agreement," which at face value appears to indicate the ending of a previous relationship.

"We and TCA agreed to terminate the management agreement," the Mohegans explained in their 2008 annual report to the SEC, the most recent available. "This termination occurred on December 31, 1999. On January 1, 2000, we assumed the day-to-day management of Mohegan Sun.

"To compensate TCA for terminating its management rights, we agreed to pay to TCA five percent of revenues, as defined in the relinquishment agreement, generated by Mohegan Sun during the 15-year period commencing on January 1, 2000 and ending on December 31, 2014," the SEC filing explains.

Federal lawmakers, including Sen. John McCain, attempted to change the rules and close the consulting contract loophole. But aggressive lobbying by the gaming industry, including Kerzner, foiled the attempt.

Len Wolman, Kerzner's partner in TCA, declined to comment regarding arrangements with the Mohegan tribe. He referred all questions to the tribe.

"We have a really good relationship with the Mohegans, but they comment on anything related to their facilities. You have all the public information," Wolman said.

Mohegan tribal officials did not return calls regarding TCA or Kerzner. Representatives for Kerzner did not respond to requests for comment.

`WORLD'S BEST SALOON KEEPER'

When Kerzner opened his flagship casino in South Africa in 1979, the famed Sun City resort, Frank Sinatra remarked that the developer was the "world's best saloon keeper." Sun City was vintage Kerzner: a heavily themed, over-the-top resort that offered hundreds of hotel rooms, dozens of restaurants and, most importantly, huge areas for slot machines and table games.

He continued to develop international resorts, most notably the massive Atlantis Resort in the Bahamas. One Kerzner company, One & One Resorts, manages seven luxury properties in the Bahamas, Mexico, Mauritius and the Maldives.

Kerzner is also involved with the Twin River slots and greyhound racing parlor, one of Rhode Island's top revenue producers. That operation recently entered bankruptcy, although state officials are backing moves to restore it to good health and keep the revenue stream pouring into state coffers.

But despite his reputation as a premier resort builder, controversy followed Kerzner from the moment he arrived in Connecticut. Former Gov. John Rowland, who later resigned and pleaded guilty to corruption charges, tried to block Kerzner from receiving a gaming license, his first in the United States.

Allegations of bribes paid to South African officials followed the developer to Connecticut, and Rowland declared the casino mogul unfit to do business in his state.

"There was serious pressure on me to make sure he didn't get a license," said Beecher, the former state police trooper who later headed the state police gaming unit.

Beecher said the bribe allegations were thoroughly investigated, a process that included sending Connecticut investigators to South Africa. In the end, Beecher concluded there was nothing to the accusations.

"Sol stood up to a very intense state police investigation. This was a 10-year-old allegation that was never prosecuted. It just did not hold weight," Beecher said.

"Everyone was saying, `Make sure this guy does not get a license.' It was so bad that Rowland hit up Wolman for season tickets to the (formerly Hartford Whalers) while we were conducting the investigation of Kerzner. I was livid.

"What was the difference between what was going on and what Kerzner was accused of doing?" Beecher said.

MOVING EAST

Kerzner and Wolman recently set their sights on a tract of land in Middleborough, Mass., and signed a deal with the Mashpee Wampanoag tribe to build a $1 billion casino on the rural site near Cape Cod.

The Wampanoags have identified more than 500 acres, but the federal Department of the Interior has yet to approve its application.

Casinos are a hot topic in Massachusetts, where a number of ventures are on the table, backed by recognized tribes and commercial operators.

The Mohegans proposed a casino for Palmer, Mass., pledging to serve as a commercial developer, and others are circling with similar projects.

The Massachusetts state Legislature is expected to vote next year on whether to allow gaming.

Friday, November 20, 2009

Flash: Mohegan Gaming Authority Announces 4th Quarter Operating Results

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Last month the Mohegan Tribal Gaming Authority issued estimates as to what it believed would be the final profit figure (and other figures) for the fourth quarter but today MTGA issued the final number.

A few of the highlights, until a more complete article can be written are as follows:

Profits (or net income) for the fourth quarter, which is the three-month period of July through September, was reported to be $66.4 million but this figure includes a one-time annual adjustment of $45.7 million that relates to estimated payouts to the casino's former management company, Trading Cove Associates. Had the one-time annual adjustment of $45.7 million not been included, then profits would have been $20.7 million for what is by far the busiest three-month period in MTGA's seasonal calendar. Note that distributions to the tribal government are not deducted from the profit figure.

Interest expense for the full twelve months of fiscal 2009, which ended on September 30th, increased to $109.7 million from $93.8 million in the prior fiscal year although the weighted average interest rate on MTGA's debt was 6.7 percent in fiscal year 2009 compared to a lower rate, 7.2 percent, in fiscal year 2008.

MTGA's total debt was $1.64 billion as of September 30, 2009 compared to $1.56 billion the year before, on September 30, 2008.

A Feather News analysis concludes, based upon figures reported in the press release and separate interest expense computations, that Pocono Downs lost more money since the expansion was opened than before the expansion opened in the summer of 2008.

A conference call with analysts is scheduled for 11:00 a.m. this morning.

The entire press release can be seen at http://www.sec.gov/Archives/edgar/data/1005276/000119312509238924/dex991.htm

Thursday, November 19, 2009

Mashantucket Tribal Member Found Guilty

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A federal jury in Hartford today found a Mashantucket tribal member guilty of wire fraud in a scheme that defrauded investors.

Nora R. Dannehy, United States Attorney for the District of Connecticut, announced that a federal jury sitting in Hartford found Christoper Pearson, 50, of Ledyard, guilty of eight counts of wire fraud.

According to the announcement, Pearson, who was formerly a Deputy Chief Operating Officer for the Mashantucket-Pequot Tribal Nation, defrauded a number of investors out of $280,000 that he obtained from them based upon his representations that he would purchase land in Honduras on which a casino would be built.

Pearson is scheduled to be sentenced by on February 5, 2010. Pearson faces a maximum term of imprisonment of 20 years and a fine of up to $250,000, on each count.

Pearson is also a defendant in a civil case in the Mashantucket Pequot tribal court because some of the investors were tribal members but no decision has yet been issued in that case.

Comments On Feather News

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One of the comments we received yesterday will be thoroughly researched. We did not post the comment, in part because of the sensitivity of the subject and in part because some of us have been discussing for some time the appropriate action to take on that topic. Stay tuned ... and thank you.

Tuesday, November 17, 2009

Mashantucket's Credit Rating Downgraded

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This installment of The Tribes In The Media is a Bloomberg News article on the Mashantucket Pequot Tribe's likely default on interest payments:

Foxwoods Casino Owner Will Likely Default on Payments (Update2)
By James Callan
Bloomberg News
November 16, 2009

The Mashantucket Pequot Tribal Nation, owner of Foxwoods Resort Casino, said it will probably default on interest payments for its $500 million of 8.5 percent notes due in 2015.

The tribe entered a 30-day grace period for payments on the notes and doesn’t expect the remaining amounts to be paid during that period, according to an e-mailed statement today. The trustee for the notes has received and distributed about $14.2 million of the $21.3 million semi-annual interest payment due today, the southeastern Connecticut-based tribe said in the statement.

Last month, creditors for the tribe agreed not to pursue default rights if debt payments aren’t made or loan conditions are breached. That forbearance agreement with senior lenders runs until Jan. 20, giving the tribe time to restructure debt.

Standard & Poor’s cut its rating on the notes four steps to D today, signaling the debt is in default.

Moody’s Investors Service stopped covering the tribe because the rating company “lacks adequate information to maintain a rating,” according to a statement released today.

The 8.5 percent notes due in 2015 rose 0.125 cent to 30 cents on the dollar today, according to data compiled by Bloomberg.

Foxwoods, among the largest casinos in the U.S. by gambling space, is on tribal land in the town of Ledyard. It has lost business in the recession and to competition from new casinos and racetracks with slot machine-style video-lottery in nearby states.

Mashantuckets Credit Rating Lowered, Interest Payment Missed

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The following appeared in today's The Day newspaper:

Mashantuckets likely to default on key payment
By Brian Hallenbeck
The Day
November 17, 2009

Two-thirds of $21.25M in interest paid, but tribe says balance won't be on time as credit rating plummets

The Mashantucket Pequot Tribal Nation expects to default next month on the balance of a bond interest payment that was due Monday.

In a statement, the tribe said it had paid about two-thirds of a $21.25 million payment, triggering a 30-day grace period in which it could pay the rest. It said, however, that it does not "currently anticipate" paying the balance within the grace period, meaning it will be in default as of Dec. 16.

While the tribe stressed that its ongoing efforts to restructure debt will have "no impact" on operations at its casinos - Foxwoods Resort Casino and MGM Grand at Foxwoods - it did not say whether tribal government or payments to tribal members could be affected.

Spokesmen for the tribe did not respond to a request for more information.

Hours after the tribe's announcement, Standard & Poor's, the credit-rating agency, lowered its "issuer credit rating" on the tribe from CCC to D, the lowest possible rating, which is assigned to debtors whose bonds are in default because of nonpayment of principal and/or interest. The agency also lowered to D its "issue-level rating" on the 8.5 percent notes in question.

"The rating actions stem from the Tribe's announcement that it did not make the full $21.25 million interest payment due today on the notes; it made a $14.2 million payment," Standard & Poor's said in a press release.

Although the tribe has a 30-day grace period in which to retire the balance of the interest payment, or "coupon," Standard & Poor's said it considers a default to have occurred, even if a grace period exists, "when the nonpayment is a function of the borrower being under financial distress - unless we are confident that the payment will be made in full during the grace period."

The $21.25 million payment represents half of the 8.5 percent annual interest on $500 million in notes, which are to mature in 2015.

Three weeks ago, the tribe announced it had reached a so-called forbearance agreement with its "senior lenders," a reference to the Bank of America-led syndicate of banks that has extended the tribe a $700 million revolving line of credit, which is due in its entirety in July 2010. It could not be determined whether terms of the forbearance agreement prevented the tribe from making the full $21.25 million payment on the 8.5 percent notes, as one financial analyst familiar with the situation speculated.

The tribe's agreements with bondholders give the bondholders the right to restrict payments to the tribe in the event of a default. According to one financial source who asked not to be named, a default on the 8.5 percent notes would not necessarily cause the tribe difficulty because the distribution of gaming revenue to the tribe would not be severely restricted.

A default on more senior bonds, however, could lead to severe restrictions on distributions to the tribe, the source said.

The Day first reported in late August that the tribe had drawn down the balance on its line of credit and would seek to restructure more than $2 billion in debt with the help of Miller Buckfire, an independent New York investment bank. Michael Thomas, then the chairman of the Mashantucket Pequot Tribal Council, had informed tribal members that he intended to put tribal government and "incentive" payments to members ahead of payments to creditors.

Thomas' pledge sent shock waves through the financial markets and Indian Country, and the tribal council moved swiftly to relieve him of his duties. He has since been expelled from the council. Rodney Butler, the council treasurer, was elected chairman Nov. 1 by the tribal membership and will take office Jan. 1.

The tribe met last week with a committee of bondholder representatives, which hired GLC Advisors & Co. to provide financial advice and the New York firm Bracewell & Giuliani as legal counsel. In addition to the $500 million in 8.5 percent notes, the tribe's bond debt includes $570 million of special revenue obligation bonds, or SROs; and $369 million in subordinated special revenue obligations, or SSROs.

The tribe also owes Kien Huat, the Malaysian investment company that originally bankrolled Foxwoods, some $21.2 million.

In its statement Monday, the tribe said once again that its debt-restructuring efforts "are separate and distinct from operations at Foxwoods" and would not affect "guests, employees, suppliers or business partners at Foxwoods or MGM Grand at Foxwoods."

"There's been no impact on our operation," said Robert Victoria, Foxwoods' senior vice president of consumer marketing. "The debt and the restructuring, that's all handled on the (tribal) nation side. People really don't talk much about it."

The Mashantuckets' impending default is expected to send more ripples through Indian Country, particularly among other gaming tribes that need to access credit to upgrade their operations.

Asked for her tribe's reaction to Monday's news, Lynn Malerba, chairwoman of the Mohegan Tribe, which owns Mohegan Sun, said, "Our thoughts are with our friends at the Mashantucket Pequot Tribal Nation, and we sincerely hope they can resolve their financial issues in a manner that is fair to everyone involved."

Monday, November 16, 2009

Mohegan Sun Reports 3.8% Decline In October Slot Revenue

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The decline in slot revenue slowed considerably for Mohegan Sun in the month of October. The Mohegan Sun reported a 3.8 percent decline in its October slot revenue compared to the year before in October 2008 while Foxwoods reported a 4 percent decline.

Slot revenue for October at Mohegan Sun was $62.9 million and Foxwoods reported total October slot revenue of $54.8 million. Both casinos pay the state of Connecticut 25 percent of these amounts.

Sunday, November 15, 2009

Extras Needed For Filming At Mohegan Sun

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The following article was in The Day newspaper today:

Mohegan -The producers of a Ben Affleck movie are seeking extras for a scene taking place Monday at Mohegan Sun.

C.P. Casting Inc. of Boston is seeking adult men and women, 21 and older, to work as background extras. Extras need to provide their own transportation to the casino and may be asked to arrive, ready to work, as early as 6:30 a.m.

The movie, "The Town," is based on the book, "Prince of Thieves" by Chuck Hogan. The movie stars and is being directed by Affleck.

If you're interested in applying, and you're available from early in the morning to late in the evening Monday, send an e-mail to thetowncasino@gmail.com. If you are chosen, you'll have to provide ID and documentation to prove you can work in the United States.

Saturday, November 14, 2009

Photos: Native American Veterans Honored By Mashantucket Pequot Nation


Trudy Lamb Richmond


Stan Harris, Mashantucket Pequot War Chief


Honoring Mohegan Veteran Bill Baker (pictured on left in photo)


Candace presents sweetgrass to veterans


Blanket Dance to honor veterans

Native American Veterans Honored By Mashantucket Pequot Nation

Native American Veterans Honored
By Bill Donehey (Mohegan), U.S. Army Veteran
November 14, 2009

Mashantucket, CT. - The sixth annual ceremony to honor Native American veterans for their military service took place Saturday, November 14, 2009 at the Pequot Museum at Mashantucket, CT. Native American veterans were treated to a lunch of salad, lasagna, fresh fruits and cookies at The Mashantucket Tribally sponsored event, hosted by Trudy Lamb Richmond, director of public programs at the Pequot Museum.

The ceremony was held in the main gathering space, the heavy rain cascaded down the glass enclosure as if the creators’ tears were being shed for those veterans unable to be present for the recognition they so richly deserved.

The main speaker was Mashantucket War Chief Stan Harris, U.S. Navy veteran. Mr. Harris was introduced by his son a former marine and desert storm warrior. Stan talked about the day his son embarked for overseas duty and how he stood and watched as his plane became a distant speck in the sky. Only then would he leave the airport. From that moment on each night as he lie in bed praying to the creator to keep his son safe did he understand what sacrifice meant. The first phone call he received from his son was the day he knew his boy was changed forever, Stan asked “how you doin' son?” Silence for a moment and then his usually energetic and enthusiastic son replied in a soft quiet tone, “I’m ok I guess”, Stan sensed something was wrong and asked, “Son? What is it?” and his son replied “I killed someone today…” His son had been changed forever.

When Stan’s son returned home Stan knew he had to do something to help him readjust, so they went to the drag races at the local fair grounds. a beautiful day for father and son bonding, good food, beautiful cars and friendship, suddenly overhead the roar of four fighter jets in formation flew over. Stan looked up to admire the sight, his son meanwhile dove on the ground rolling for cover under a table. His son had been changed forever…

Stan told the audience that to be a veteran, whether it was being a cop on the street fighting a war on crime or the teenage soldier in Iraq, Afghanistan or other parts of the world, the word veteran means sacrifice and we all need to appreciate them. Appreciate them for our ability to roam as we please, to go shopping, the movies, go to any church we want to worship in and if we please, to take for granted the freedoms we enjoy. Stan and his son sacrificed for our country and they were never the same.

Friday, November 13, 2009

New Restaurant At Mohegan Sun To Open Next Saturday

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Celebrity chef Bobby Flay's second restaurant at the Mohegan Sun casino is scheduled to open to the public next Saturday, according to the Boston Globe. The 276-seat Bar Americain at Mohegan Sun replaced Fidelias Restaurant.

Thursday, November 12, 2009

Mohegan Sun Pays To Have Name On Pennsylvania Arena

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The following installment of The Tribe In The Media is an article in Pennsylvania's The Morning Call regarding the Mohegan Sun's purchase of naming rights for an 8,300-seat arena that is close to the Tribe's Pennsylvania racetrack-slot parlor.

Mohegan Sun bets on arena's concert draws
Posted by John J. Moser
The Morning Call
November 12, 2009

The 8,300-seat arena sports and entertainment arena near Wilkes-Barre has its fourth name in its 10-year history.

But Mohegan Sun at Pocono Downs casino is betting on the arena’s success, anteing up to keep its name on the building for its next decade, officials said Wednesday.

The arena, which since 2003 has been Wachovia Arena at Casey Plaza, will become Mohegan Sun Arena at Casey Plaza as of Jan. 20. Luzerne County Convention Center Authority voted Wednesday to award the naming rights for an undisclosed sum.

“The Mohegan Sun brand is synonymous with great entertainment so it’s perfect for us to support the region and community by being the naming rights partner with the premier destination for live performances in Pennsylvania,” Mohegan President Bobby Soper said.

Authority Chairman Pat Judge said that “of all the companies we negotiated with over the last year, Mohegan Sun emerged as the strongest partner.” He did not say who else sought the naming rights, but said the sponsorship money will be reinvested in the building.

The arena opened in November 1999 as the Northeastern Pennsylvania Civic Arena and Convention Center, and two months later, First Union Bank became the first naming rights partner until Wachovia Bank acquired First Union in 2003.

Its 10th anniversary season this year featured Elton John, AC/DC, Jeff Dunham, Barry Manilow, The Dead and Walking with Dinosaurs. In past, it has offered Neil Diamond, The Eagles, Simon and Garfunkel, Cher, Bon Jovi, Trans-Siberian Orchestra, Rod Stewart and Bette Midler.

Wednesday, November 11, 2009

Las Vegas, Atlantic City Report Slower Declines In Revenue

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The state of Nevada reported a decline of 9 percent in its casino revenues in September compared to the same month last year while Atlantic City's casino revenue fell by 6.5 percent in October.

The Las Vegas strip, included in the state of Nevada's statistics and the number one gambling destination in the country, reported a 3.6 percent decline in revenues which is the lowest monthly decline in the last 15 months.

Atlantic City's decline marked the second consecutive month that revenues declined by single digits. In September, Atlantic City's casinos reported a decline of 5.8 percent compared to September 2008.

Tuesday, November 10, 2009

Rhode Island Slot Parlor To Begin Round-The-Clock Gambling

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Rhode Island's Twin River racetrack-slot parlor will begin 24-hour gambling, beginning November 19th.

Rhode Island Governor Don Carcieri gave permission last week for Twin River to extend its hours on the weekdays. Twin River currently operates 24-hours a day on weekdays and holidays but was seeking the round-the-clock gambling on weekdays also as an effort to stem losses.

Time Change For Spirit Lake Intertribal Social This Saturday

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The Spirit Lake Foundation's intertribal social this Saturday will begin at 2 p.m. and not at noon as was previously publicized. The social will be held at the City Municipal Building, 295 Meridian Street, Groton, CT. and will last until 8 p.m.

The Mystic River Singers will be the host drum. The event will feature Indian singing, dancing, food, arts and crafts.

Friday, November 6, 2009

The Latest News On Possible Hotel On Mohegan's Pennsylvania Property

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This installment of The Tribe In The Media is an article in Pennsylvania's Time Leader newspaper on a possible hotel at the Mohegan racetrack-slot parlor in Pennsylvania.

November 5

Lot eyed for casino’s proposed hotel
First public hearing for Mohegan Sun’s 300-room conference center/hotel set for Nov. 16.
By Jerry Lynott
Times Leader
November 5, 2009

PLAINS TWP. – Right now, there’s not much there except some pavement, landscaping and room for approximately 325 cars.

The parking area west of the main entrance of the Mohegan Sun at Pocono Downs is being eyed as the site for a 300-room hotel and conference center.

A preliminary land development plan includes an architectural drawing of a nine-story hotel and accompanying 25,000 square feet of convention space and meeting rooms.

Plains Township Zoning Hearing Board will hold a meeting at 8 p.m. on Nov. 16 to consider Mohegan Sun’s request for a variance that allows it to connect the proposed hotel and conference center to the adjacent 300,000-square-foot casino.

The plan, submitted to the township last month, is the start of the process to obtain permits for the project, said Bobby Soper, president and chief executive officer of Mohegan Sun.

Soper Wednesday said that there has been no decision to build and stressed the drawing is conceptual. Once Mohegan officials have an understanding of what they want the final design to be, they can move forward, he said.

“If and when that happens, that can easily be altered,” said Soper of the architectural drawing.

Talk of the proposed hotel has picked up with the debate over the addition of table games in Pennsylvania casinos.

The state Legislature plugged $200 million revenue from the games into the 2009-10 budget. Gov. Ed Rendell tasked lawmakers with presenting him a table games bill before Nov. 10.

Mohegan Sun has been planning to fit the games within its casino that now holds more than 2,460 slot machines.

A traffic impact analysis and parking study done for the proposed hotel and conference center included the introduction of table games and concluded there is enough space to accommodate additional parking even with the loss of the 325 spots, according to a letter Connolly Engineering Inc. of Kingston submitted to the township.

Connolly also asked that the township exempt Mohegan Sun from conducting an environmental impact study for the proposed project

“It is Mohegan Sun’s belief … that the project will not have a negative impact on the natural environment and the quality of life throughout Plains Township and its environs,” wrote Connolly.

The hotel, including the revised lobby area, will have a building footprint of approximately 82,750 square feet, according to the preliminary plan.

At 300 rooms, it would be the largest in Luzerne County. The nearby Woodlands Inn & Resort on state Route 315 has 179 rooms. The Ramada Hotel in Wilkes-Barre has 177 rooms. At 156 rooms the East Mountain Inn, also in Plains Township, rounds out the top three hotels in terms of the number of rooms.

JCJ Architecture Inc. of Hartford, Conn., which designed the $208 million Project Sunrise casino that opened last year at Mohegan Sun at Pocono Downs, prepared the site drawings for the proposed hotel and conference center.

The firm still has to compete for the job if casino management decides to build, said Brian Davis, a Wyoming Seminary graduate, Dallas Township native and lead designer for Project Sunrise. He described the Mohegan Tribal Gaming Authority that owns the casino as a very good and very demanding client.

“This is intended to be a casino/hotel that is not only extremely convenient and has all the amenities, it’s also one that is going to be part of a memorable experience,” Davis said.

An outside developer will build the structure and lease the land from Mohegan Sun at Pocono Downs, according to the preliminary plan.

Tuesday, November 3, 2009

Mohegan To Meet With Zoning Board On Possible Hotel At Pennsylvania Property

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The following installment of The Tribe In The Media is an article in the Pennsylvania Times Leader newspaper on the Tribe's meeting with town officials on a possible hotel at their Pennsylvania racetrack-slot parlor.

Mohegan Sun eyes 9-story hotel, conference center
By Jerry Lynott
Times Leader
November 3, 2009

PLAINS TWP. – Many of the details for an expansion of the Mohegan Sun at Pocono Downs still have to be worked out, but the casino and harness racing track is getting things in order for a nine-story hotel and conference center.

A hearing is scheduled for 8 p.m. Nov. 16 before the Plains Township Zoning Board for the proposed project.

Bobby Soper, president and chief executive officer of Mohegan Sun at Pocono Downs, said Monday the expansion is at the very preliminary stage.

“What we’re doing now is submitting a land development plan,” he said.

The hotel and conference center would be located next to the existing $208 million casino that opened in July 2008.

The casino owners filed a request for a zoning variance to proceed with obtaining the required permits for construction, Soper said.

Still to be decided is whether Mohegan will seek a partner to build and operate the hotel, Soper said.

“We’re not sure if there’ll be a flag tied to it,” he said.

The expansion appears to be contingent on the addition of table games to the slot machines in place at the casino.

Last week, Gov. Ed Rendell indicated he wanted legislators to have a table games bill on his desk before Nov. 10.

The games would provide an estimated $200 million in much needed revenue to the state and the figure helped with the passage of the 2009-2010 budget reached last month after a 101-day stalemate.

Since the summer, Mohegan has been planning to add poker, blackjack, roulette and craps for gamblers. In July, Soper said he believed the table games could be in place within six months of the passage of legislation approving the games.

The hotel and conference center will take longer, much to the satisfaction of Mitch Kornfeld, whose family owns and operates the nearby Woodlands Inn & Resort.

“I just hope it takes a long time,” he said with a laugh.

He acknowledged that talk of a hotel at the casino has been around for years. The passage of a table games bill will likely make it a reality.

“I think on a macro level, it’s good,” Kornfeld said. The area will benefit with the addition of the games through jobs and people going to the casino, he added.