Thursday, July 29, 2010

Flash: Mohegan Gaming Authority Announces About 50% Decline In 3rd Quarter Profits

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The Mohegan Tribal Gaming Authority reported a 50.5 percent decline in profits for the months of April through June compared to the same three-month period last year.

In its third quarter report issued today, MTGA reported profits (net income) of $11.6 million. These profits do not take into account distributions to the Tribal government. While the report does not detail the distributions for the three-month period, the report estimated that distributions to the Tribal government for the 12 months of fiscal year 2010 would be $59 million.

MTGA officials attributed the overall decline in profits in large part to a lower hold percentage in table games. Table game revenue declined 11.2 percent and slot revenues fell 3 percent for a combined gaming revenue decrease of 4.9 percent to $321 million. Non-gaming revenue fell 8.7 percent to $61.1 million.

MTGA's Pocono Downs racino in Pennsylvania continues to generate losses after taking into account interest expense related to that facility. The report states, "The total cost to add table game and poker operations is forecast to be approximately $34.4 million, inclusive of the $16.5 million one-time table games authorization fee, $15.9 million in renovation costs and $2.0 million in pre-opening costs and expenses."

Table games were opened to the public earlier this month, just days after the quarter reported upon had ended.

Keith Foley, a gaming analyst for Moody’s Investor's Service was quoted in a Bloomberg News article today entitled "Casinos Still Facing Default Risk After Restructuring Debts," said that the Mohegan Tribal Gaming Authority "need(s) overall business conditions to improve, not just stabilize to generate sufficient cash flows to refinance debt on less-than-onerous terms."

The weighted average interest rate on MTGA's debt increased slightly from 6.9 percent to 7 percent for the quarter.