Monday, May 16, 2011

Mohegan Sun Slot Revenue Falls 3.3% In April, Foxwoods Slot Revenue Increases 9.3%

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Updated 3

Mohegan Sun reported today that its slot machine win for the month of April fell by 3.3 percent to $61.6 million while Foxwoods reported $57.1 million in April slot win, an increase of 9.3 percent compared to last April.

Foxwoods gave out $8.1 million in free slot play in April to attract customers while Mohegan Sun gave out $5.1 million in free play to its slot machine patrons.

The state of Connecticut's cut of the the tribal April slot win, which is the amount lost by customers at the machines, is about $31 million.

A major credit rating agency downgraded Mohegan Tribal Gaming Authority debt last week because the authority, in part, has yet to refinance $925 million in debt that comes due next year. A lower credit rating translates into higher interest rates the authority will pay on future borrowings. MTGA currently pays $120 million in annual interest expense on its approximately $1.6 billion debt load.

"The Authority does not have sufficient funds to repay its outstanding indebtedness and its ability to otherwise refinance or replace its outstanding indebtedness is limited," according to today's MTGA quarterly report (10Q) to the Securities and Exchange Commission (SEC).

Today's SEC report covers the first three months of 2011, which is the second quarter of MTGA's fiscal year. The report includes the quarterly earnings figures announced on May 5 in addition to the authority's balance sheet and statement of cash flows. MTGA reported a respectable $25 million in profits for the first three months of 2011, up from about $20 million for the same three months in the prior year. The casino's operating expenses were lower across every reportable category.

MTGA distributions to the the tribal government, as opposed to any reimbursement payments or fees, are not deducted from the casino's reported profits.

Today on the Mashantucket Pequot Reservation, drink servers and bar porters at Foxwoods are voting under tribal law on whether they want to be represented by United Food and Commercial Workers Local 371. Last year, the same class of employees voted 190-145 in favor of the union under an election held pursuant to federal law. The results of that election are under appeal and have delayed management's bargaining with the union. Today's election is being held under tribal law and, if the employees once again choose union representation, is expected to facilitate the bargaining process.

Some employees at Foxwoods, including table game dealers, have already opted for union representation. No employees are represented by unions at Mohegan Sun.


Note:
1. SEC report at:
http://www.sec.gov/Archives/edgar/data/1005276/000119312511140966/d10q.htm

2. Moody's downgraded the MTGA corporate family debt rating and probability of default rating from Caa2 to Caa3, a designation that means there is a substantial risk of default, and downgraded all MTGA long-term debt ratings to a "negative" outlook. Standard & Poor's Ratings Services, another major credit rating agency, continues to keep MTGA on its CreditWatch list. S&P cited, among other reasons, limited clarity around MTGA's refinancing plans."


3. Beverage workers at Foxwoods voted to unionize under tribal law by a 133-90 margin on the same day this article was written.