By Ken Davison
In the closing days of 2008, both the Mohegan Tribe and Seneca Indian Nation of New York submitted their casino financial statements to the Securities Exchange Commission.
The most profitable of the two tribes' gaming operations is that of the Seneca's operations despite the Mohegan Tribal Gaming Authority taking in over twice the dollar amount in gross revenues.
In fiscal year 2008, the Senecas reported a profit of close to $103 million on gross revenues (before expenses) of about $750 million. The Mohegan Tribal Gaming Authority (MTGA) had an adjusted profit of $80 million on gross revenues (before expenses) of $1.7 billion.
The Senecas operate three casinos in New York. The Mohegan's figures include the casino on the reservation in Connecticut and the Pocono Downs racetrack-slot parlor in Pennsylvania. The Mohegan's profit of $80 million has been adjusted by reducing the reported profit (net income) of $149 million by $69 million that related to lower estimated payments to its former casino management company, Trading Cove Associates.
Despite higher profits (net income), as adjusted, the Seneca Gaming Corporation, distributed slightly less to its tribal government than the Mohegans. The Senecas received $66 million from its gaming operations while the Mohegans received $80 million (not including reimburseable costs).
These distributions to the tribal governments are not deducted from the reported profits. Technically, these distributions reduce the owner's equity (capital) - a balance sheet account - and do not affect the income statement. In other words, the $80 million paid to the Mohegan tribal government has not been deducted from the $80 million adjusted profit figure noted above.
Seneca Gaming Corporation's long term debt as of September 30, 2008 - the last day of its fiscal year - was close to $500 million while MTGA's debt was three times that amount at $1.55 billion. MTGA also owed about $100 million in construction related payables.
Seneca Gaming Corporation's interest expense for the twelve months of fiscal year 2008 was $37 million while MTGA's interest expense for fiscal year 2008 was $93.8 million.
If MTGA's adjusted profits were calculated by deducting the full amount paid to its former management company, Trading Cove Associates, then MTGA's profits would be significantly lower than those reported above. Due to the accounting method used, much of what is paid to Trading Cove Associates every year is not included in the year in which it is paid.
MTGA paid Trading Cove Associates $76.1 million in fiscal year 2008, down from $77.5 million in fiscal year 2007. MTGA pays Trading Cove Associates five percent of its gross revenues at Mohegan Sun, except from revenues generated at the Casino of the Wind. The Feather News will report more fully on MTGA's costs related to Trading Cove soon. Look for an update to this article.
The Senecas pay the state of New York 22 percent on its slot machine revenues. MTGA pays the state of Connecticut 25 percent and the state of Pennsylvania (and other related regulatory payments) about 60 percent on slot machine revenue.
Seneca Gaming Corporation's President and Chief Operating Officer, E. Brian Hansberry, earned total compensation of $908,141 (comprised of $360,000 base salary, $532,500 bonus and $15,641 in other compensation). MTGA's Chief Operating Officer, Mitchell Etess, earned a total of $1.6 million in fiscal year 2008, comprised of a base salary of $1.2 million, bonus of about $372,000 and other compensation of about $61,000.
The Seneca Nation has partnered with the Aquinnah Wampanoag Tribe in their efforts to open a casino in Massachusetts.
The Seneca Gaming Corporation's financial statements can be found at the following link: www.secinfo.com/d11MXs.t2Cqb.htm#1stPage
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