Tuesday, November 30, 2010

Credit Rating Agency Downgrades Mohegan Gaming Authority Debt

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A report was issued yesterday by Moody's Investor's Service, a Wall Street credit rating agency, that is expected to announce a downgrade in the Mohegan Tribal Gaming Authority's debt.

A second major Wall Street credit ratings ageny, S&P, cut the rating on MTGA debt to 'CCC,' according to Bloomberg News. The credit rating reflects the highly speculative nature of MTGA's debt.

S&P is anticipating MTGA's "increasingly likely" need to restructure its debt load. Of MTGA's approximately $1.6 billion of total debt, $925 million will be due for repayment in 2012. Bank debt accounts for $675 million of the $925 million amount while the other $250 million represents senior subordinated notes bought by investors and registered with the Securities and Exchange Commission. The $250 million was borrowed in 2002 and has an 8 percent coupon rate.

The credit downgrades come on the heels of MTGA's announcement last week that it lost $26.3 million in the months of July through September. A major factor in the loss was a result of writing off $66.4 million, spent primarily on a stalled hotel project, which MTGA determined "did not have any future benefit."

About three weeks ago, MTGA annnounced publicly that it retained Blackstone Advisory Partners as a financial advisor. According to The Day newspaper, Blackstone also works with some of the holders of debt owed by the Mashantucket Pequot Tribe.

The Mohegan Tribe's gaming arm also announced a shuffling of executives last week. Today, MTGA filed with the federal Securities and Exchange Commission the following report on those changes:

"On November 23, 2010, the Mohegan Tribal Gaming Authority (the “Authority”) announced certain changes to its senior executive management structure effective January 1, 2011. Mitchell Grossinger Etess, age 52 and President and Chief Executive Officer of the Authority and Mohegan Sun, will be ceding day-to-day responsibilities of Mohegan Sun to Jeffrey E. Hartmann, age 49, who will become President and Chief Executive Officer of Mohegan Sun. Mr. Hartmann is currently the Executive Vice President and Chief Operating Officer of the Authority and Mohegan Sun. Mr. Etess will continue as the President and Chief Executive Officer of the Authority. Raymond Pineault, age 44, will become Executive Vice President and Chief Operating Officer of Mohegan Sun to replace Mr. Hartmann. Mr. Pineault is currently Senior Vice President of Casino Operations for Mohegan Sun."

Wednesday, November 24, 2010

It's Official: New York Signs Over Land In The Catskills To Stockbridge-Munsee Mohicans

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New York Gov. David Paterson settled a 23,000-acre, 14-year old land claim with the Stockbridge-Munsee Band of Mohicans on Monday by transferring rights to the Tribe for 333 acres in the Catskill Mountain location of Sullivan County and 1.84 acres in Madison County.

The federal government must still approve taking the land into trust for the Tribe as reservation land.

The Stockbridge-Munsee Mohicans moved from Stockbridge, MA, to settle on land that is now Madison County in 1785 at the invitation of the Oneida Indian Nation but later removed to Wisconsin, the current location of the Tribe's reservation.

Representatives of the Oneida Nation are upset over the deal and said it should be investigated. “The deal made by Governor Paterson and Madison County leadership with the Stockbridge Munsee was shrouded in secrecy,” said Mark Emery, an Oneida Nation spokesman.

The land deal brings the Stockbridge-Munsee Mohicans one step closer to their goal of building a casino in the Catskill Mountains as well as reclaiming aboriginal lands. The principals of Trading Cove Associates, the group that built and managed the Mohegan Sun Casino, are partners of the Stockbridge-Munsee in their quest to build a casino about ten miles from the Monticello Racetrack in the Catskill Mountains.

U.S. Senator Chuck Schumer joined Paterson when the agreement was announced. "This compact is not a guarantee, but it's the closest we've come. Our message to the Department of Interior is simple: Just say yes," said Schumer.

Tuesday, November 23, 2010

Editorial: Etess To Be Replaced By Hartmann As Mohegan Sun CEO

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During this morning's conference call with analysts on the Mohegan Tribal Gaming Authority's fourth quarter loss, it was announced that MTGA CEO Mitchell Etess will be replaced as the CEO of Mohegan Sun by the authority's chief operating officer Jeff Hartmann.

Etess is a marketing genius, Hartmann is a financial guru. The changeover to Hartmann is a relief. Hartmann knows the operations and adds a strong financial perspective that is needed in these precarious times.

The Tribe is fortunate to have someone like Jeff ready to take the helm.

Etess will focus his energy toward developing new business opportunities for MTGA.

The changeover will take effect January 1, 2011.

Note: This article was updated to reflect that Etess will be replaced as CEO of Mohegan Sun. Etess will continue to retain the title of CEO of the gaming authority.

Flash: Mohegan Gaming Authority Reports $26.3 Million Loss In 4th Quarter

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The Mohegan Tribal Gaming Authority reported a $26.3 million loss for the fourth quarter of fiscal 2010.

The fourth quarter is the period of July 1 through September 30, the busiest three months of the year for the gaming company.

Last year, MTGA reported a profit of $66.4 million for the same three months.

Three unusual transactions had a material effect on the bottom line number:

1) This year's loss includes a $58.1 million impairment charge related to halting the hotel construction. The pit of steel and cement in the ground that was to be a hotel was basically written off, finally.

2) MTGA expensed $9.9 million during the quarter that related to severance packages resulting from the mass layoffs that took place over the summer.

3) The loss would have been $52 million and not $26.3 million had it not been for the accounting treatment of the Trading Cove contract, which allowed MTGA to add $26.5 million to the fourth quarter's bottom line under the assumption that Trading Cove (which is paid 5 percent of Mohegan Sun's revenues, not including revenues generated in the Casino of the Wind area or anything off the reservation) will be paid less over the course of the 15-year contract that ends on December 31, 2014.

Had MTGA not booked the above three transactions, MTGA would have ended up with a profit of about $15 million for the quarter. This figure is comparable to last year's fourth quarter where profits were reported at $66.4 million but that figure included a $45.7 million adjustment related Trading Cove. Had that annual adjustment of $45.7 million not been included, then profits in the fourth quarter of 2009 would have been $20.7 million.

Distributions from MTGA to the tribal government are not taken into account when determining MTGA's profits and losses. The distributions reduce a balance sheet item, retained earnings, and are not deducted as an expense. "Distributions to the Tribe totaled $61.5 million and $71.5 million for the fiscal years ended September 30, 2010 and 2009, respectively," according to the press release.

Here is what the report said about the stalled hotel project on the reservation: "During the quarter ended September 30, 2010, the Authority re-evaluated its options with respect to the new hotel element of the project, and based on a modified plan, which encompasses a smaller hotel to be located closer to the existing hotel, determined that certain assets did not have any future benefit to the Authority. Accordingly, the Authority recorded a $58.1 million impairment charge during the quarter ended September 30, 2010."

Gaming revenue at Mohegan Sun fell 1.1 percent to $265 million and non-gaming revenue was abourt $64 million, an increase of 8.1 percent over the same three-month period in the prior year. A decline in slot revenue at Mohegan Sun was bolstered by an increase in table game revenue for the quarter. At Pocono Downs, slot revenue increased 1.6 percent over the fourth quarter in 2009.

Total debt was reported at $1.64 billion and interest expense for the entire fiscal year was $116 million.

The figures in the press release are not audited yet. The fourth quarter's financial statements, which will be audited and also include the balance sheet and statement of cash flows, are expected to be released at the end of December.

Friday, November 19, 2010

Foxwoods Philadelphia Casino Plan To Become Harrah's Philadelphia Project In Three Weeks

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Pennsylvania's gaming regulatory body, the Pennsylvania Gaming Control Board, gave investors in the stalled Foxwoods Philadelphia casino project a three-week deadline, possibly their last chance, to show that a deal has been inked with Harrah's Entertainment and that financing will be available to make the casino a reality.

The investors that hope to keep the gaming license, called the Philadelphia Entertainment and Development Partners, includes Foxwoods and high-profile Philadelphians with close ties to Pennsylvania Gov. Ed Rendell, whose term as governor ends in January.

The December 10 deadline was given to the investors at a gaming board meeting yesterday. The PEDP group showed the state gaming board new illustrations of what the South Philly casino would look like under their tentative plans. The first phase, projected to cost $275 million and open for business in the summer of 2012, would include 1,500 slot, 80 table games and three restaurants.

Should the investors produce the required documents to meet the December 10 deadline, the group still would require gaming board approvals for a change in ownership, financing, design modifications and a gaming license extension.

Wednesday, November 17, 2010

N.Y. Governor's Office Issues Statement That It Is Ready To Settle Land Claim With Stockbridge-Munsee Band of Mohicans

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A spokesperson for New York Gov. David Paterson said yesterday that the administration is close to settling a land claim with the Stockbridge-Munsee Mohicans that would result in a one-acre reservation in Madison County, N.Y.

The one-acre parcel would settle the Stockbridge-Munsee Mohican's 24,000-acre land claim in Madison County.

The Tribe's last attempt to secure land in New York was rejected by the Bureau of Indian Affairs in January 2008 when the BIA rejected about a dozen land-into-trust proposals that sought lands for off-reservation casinos. The BIA rejected the Stockbridge-Munsee Mohican land-into-trust proposal because the land sought in the Catskill Mountains was too far from their land base in Wisconsin. The BIA's rejection of several land-into-trust proposals marked the first use of a controversial policy that denied land applications based on their distance from a tribe's reservation base.

The details of the land claim settlement plans are not yet public but the distance from the town of Stockbridge, located in Madison County, to the Catskill Mountain location where the Tribe wants a casino and owns land, is about 150 miles. The distance could be slightly less, depending on which parcel is targeted for settlement.

The developers of a possible Stockbridge-Munsee Mohican casino are the principles of Trading Cove Associates, the group that developed and managed the Mohegan Sun casino and, later, purchased and expanded the Twin Rivers slot parlor in Rhode Island.

The proposed casino location in Bridgeville, in the Catskill Mountains, is less than 100 miles from New York City and the Mohegan Tribe's casino in the Pocono Mountains of Pennsylvania.

Despite an MSNBC commentator's description this morning on the Morning Joe show describing the Tribe as the Milwaukee Braves, the Tribe settled in the town of Stockbridge, N.Y., in the late 1700's and claims the land was illegally taken.

Tuesday, November 16, 2010

Mohegan Gaming Authority To Release 4th Quarter Operating Results On Tuesday, Nov. 23

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The Mohegan Tribal Gaming Authority will release its fourth quarter operating results on Tuesday, November 23, 2010. The period to be reported on will be for the three months of July through September, which is the last quarter in fiscal year 2010.

The operating results will show how table games have impacted the Tribe's casino in Pennsylvania. Table games at the Pennsylvania facility began in the month of July.

A conference call with financial analysts will also be on Tuesday, Noveember 23.

Monday, November 15, 2010

Foxwoods Slot Revenue Increases 4.5% In October, Mohegan Sun Slot Revenue Declines 4.2% In October

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Foxwoods reported a 4.5 percent increase in its October slot machine revnue when compared to the same month last year while Mohegan Sun reported that its slot machine revenue fell by 4.2 percent in October.

Foxwoods reported slot machine revenue, the amount lost by customers at the machines, of $57.2 million in October while Mohegan Sun’s October revenue fell 4 percent to $60.3 million.

Both tribal casinos pay the State of Connecticut 15 percent of their slot machine revenue.

Friday, November 12, 2010

Mohegan Gaming Authority Expected To Release 4th Quarter Profits As Soon As Next Week

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If last year is any indication, then the Mohegan Tribal Gaming Authority could release its fourth quarter results from operations as early as next week. The results from operations report is essentially a glimpse at profits, in this case the profits for the three-month period of July through September.

Last year, MTGA released the figures on November 20 but the release date this year could be different from last year's date. We have not confirmed the release date (the Feather News is considering an investment in a telephone in the upcoming year, which we are told is a useful tool in the reporting industry). The three-month period, which is MTGA's last quarter in the fiscal year that ended on September 30, is also expected to be the busiest quarter of the year given the seasonal nature of gambling in the Northeast.

Profits were slim over the summer months last year. The Feather News reported on November 20, 2009, " Profits (or net income) for the fourth quarter [of fiscal year 2009], 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."

Basically what that means is that even though MTGA pays out money to Trading Cove Associates, the manner in which the accounting is done allowed MTGA to treat the transaction as adding to profits. In a nutshell, during the fourth quarter of every fiscal year, the accountants estimate what the total remaining payout to Trading Cove will be up until the contract ends on December 31, 2014 (which is recorded as a liability on the balance sheet) and since the payouts over that entire period were estimated to be lower than previous estimates, they take that difference and it goes to the fourth quarter's bottom line.

And, poof, a bad year looks much better on paper. It is impossible to understand MTGA's financial statements without a clear understanding of the accounting treatment of the Trading Cove contract.

In 2001, when the expansion first opened, MTGA had a bad year and the accounting treatment of the Trading Cove contract added to profits in that year also even though MTGA paid money out to Trading Cove. But the closer MTGA gets to that 2014 contract end date, the smaller the adjustments will be to the estimated remaing Tracing Cove payout.

Thursday, November 11, 2010

Editorial: Veteran's Day Tribute

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I continue to be surprised that despite the tragic treatment of Indians since colonization, our Indian nations are always cognizant of the value of military service given by Indians on behalf of the United States of America.

Indian veterans carry the flag of the United States side-by-side with with their tribal flags or staffs at the head of many tribal ceremonies. Or, in military parlance, at the point position.

More Indians have died serving the United States in battle than any other ethnic group, on a per capita basis. Yet Indian lands appropriated through colonial conquest is recognized as the foundation of land title law in the United States. Go figure.

Mohegans, as well as Indians of other tribal nations, have served this country in every war since the Revolutionary War.

The warrior tradition runs deep in Indian Country, predating the colonists, and plays a large part in explaining what to many is a value system difficult to comprehend given the history between the nations. Even if the U.S. flag flies over this land, it is still the land where we come from and the land that is to be protected.

As a military veteran - formerly a military cop, demolition specialist, and combat engineer officer - I want to extend my best wishes to the other veterans reading this, pause to remember those who gave their lives, and wish those in battle a safe return.

Wednesday, November 10, 2010

Rhode Island's Twin River Slot Parlor Emerges From Bankruptcy With Debt Cut In Half

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The Twin River slot parlor in Lincoln, R.I., emerged from bankruptcy yesterday with new owners and a balance sheet that is about $300 million lighter in debt.

Over the 17 months that Twin River was under bankruptcy protection, besides slicing its debt almost in half, the facility's owners convinced the state to allow it to remain open 24 hours a day and to eliminate its money-losing, dog-abusing greyhound races.

Twin River is now owned by a group of banks and financial firms.

Twin River was not successfull, however, in convincing the governor to approve a bill that would have resulted in a referendum on allowing table games.

Mashantucket Pequots Elect Two Tribal Councilors, Appoint New Foxwoods Casino CEO

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The Mashantucket Pequot Tribe elected current councilor Marjorie Colebut-Jackson and former councilor Fatima Dames to the Tribal Council on Sunday.

The Tribe also named Scott Butera to the position of president and chief operating officer of the tribally-owned Foxwoods Casino. Butera, a former investment banker and chief operating officer for Trump Hotels & Casino Resorts, will leave his job as the president and CEO of Tropicana Entertainment. Butera will replace Foxwoods' current interim president, William Sherlock.

Saturday, November 6, 2010

Mohegan Tribe's Don Chapman To Participate In NY Stock Exchange Opening Bell Ceremony

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Don Chapman, the senior advisor on Native American affairs to the U.S. Secretary of Commerce, will be part of the New York Stock Exchange's opening bell ceremony on the morning of November 11. Chapman will participate along with Navajo Code Talker veterans.

Chapman is believed to hold the highest ranking federal office of any Mohegan tribal member.

Chapman also took part in his federal capacity today in a ceremony to unveil a 2,400-pound sculpture of an Indian on the James River in Richmond, VA. The dedication, which marks the statue's removal from its previously controversial spot at the minor leage baseball stadium of the Richmond Braves, also kicks off Native American History Month.

Wednesday, November 3, 2010

Blumenthal Wins Senate Seat As Republicans Take Control Of House Of Representatives

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Connecticut Attorney General Richard Blumenthal beat Linda McMahon yesterday to capture the retiring Sen. Chris Dodd's seat in the U.S. Senate.

Sen. Dodd, who has been extremely supportive the Mohegan Tribe, will leave the Senate at the beginning of January.

Repubicans won control of the U.S. House of Representatives yesterday and picked up more seats in the U.S. Senate, which will inevitably lead to a greater discussion over future legislation.

Democrat Dan Malloy was declared the winner over Republican Tom Foley in the election for governor of Connecticut.

Gov. Deval Patrick won re-election in Massachusetts and Andrew Cuomo will be New York's next governor.

Monday, November 1, 2010

Native Veterans Invited To Ceremony At Mashantucket Pequot Museum On Nov. 13

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The annual ceremony honoring Native Veterans will be held at the Mashantucket Pequot Museum and Research Center from 12:00 until 2:00 on November 13. Information on the event can be found below:

Selected November events posted by the museum are as follows:

Saturdays, Nov. 6, 20, & 27, 1 & 3 pm
November Films Honoring Native Veterans
The Pequot Museum is screening three films, each about an hour long, to recognize and honor Native warriors in the armed forces of the United States and Canada. Free with Museum admission, free to Museum members.

Nov. 6, 1 & 3 pm: Forgotten Warriors. Canadian aboriginal soldiers fought for their country only to return home to face discrimination, including the loss of tribal lands to returning non-Native veterans. A National Film Board of Canada production.

Nov. 20, 1 & 3 pm: Warriors. The story of Native Americans who served in Vietnam, including their experiences after the conflict. A MacArthur Foundation Library Video Project, the film is distributed by the Native American Public Broadcasting Consortium.

Nov. 27, 1 & 3 pm: Navajo Code Talkers. Navajo tribal members played a crucial role during World War II as radio operators in the Pacific Theater. A MacArthur Foundation Library Video Project, the film is distributed by the Native American Public Broadcasting Consortium.

Saturday, Nov. 13, 12-2 pm
Honoring Native Veterans Ceremony
Join Mashantucket Pequot and other Native veterans in a ceremony acknowledging the contributions of all members of the armed services. Guest speaker discusses code talkers; Mystic River Drum provides honoring-the-flag songs. The public is invited; Native veterans register for the event by calling (860) 396-6954 by Nov. 10. Free with Museum admission; free to Museum members.

Saturday, Nov 13, 2:30-3:30 pm
Comanche Code Talkers of World War II
In conjunction with the Honoring Native Veterans Ceremony and the Mashantucket Gallery's exhibit, Native Words, Native Warriors, Dr. William Meadows speaks about Native American code talkers in WW I and WWII. Free with Museum admission, free to Museum members. The Smithsonian Community Grant program, funded by MetLife Foundation, is a proud sponsor of this public program.

Saturday, Nov. 20, 10-11 am
Pequot War: Technology & Tactics
Join Museum Research Director Dr. Kevin McBride and military historian David Naumec to gain insights into the weapons and tactics used during the Pequot War. Examine artifacts from the Mystic Fort and other sites recovered during 2010 field work. Demonstrations show the warfare used by each side in the war. Free with Museum admission, free to Museum members.

Saturday, Nov. 20, 1-5 pm
Battlefields of the Pequot War Bus Tour
Museum Research Director Kevin McBride leads a tour of battlefields, routes of march and retreat, and campsites of the Pequot War of 1636-1638. Examine historical records and physical evidence relating to the war, use a military terrain model to help plot battlefield sites, and take a bus to the sites that have been identified and studied in Groton and Stonington. Dress for the woods and difficult terrain. Rain or shine. Limited to 25, ages 12 and older. $30/$25 Museum members. Call (800) 411-9671 by Nov. 13 to register.