Mohegan: Earnings 'dismal'; Etess optimistic
Mohegan - Though downward trends dominated a discussion Thursday of the Mohegan Tribal Gaming Authority's quarterly earnings, there also was some talk of future growth and ongoing improvements at the authority's casinos.
The authority, which hosted a conference call for investors and industry analysts, reported that its net income, or profit, for the three months that ended Sept. 30 totaled $14.8 million, a 68 percent decline over the same period the previous year. By another measure, one authority officials consider a better barometer of performance, the decline was not so steep. Adjusted EBITDA - earnings before interest, taxes, depreciation and amortization - was down 10.5 percent.
"Generally, I'm an optimist, and as dismal as many things seem, I feel very positive about a lot of the things happening here," Mitchell Etess, the authority's chief executive officer, said in an interview after the conference call.
Etess pointed to pending changes in the restaurant lineup at Mohegan Sun, the authority's flagship casino in Uncasville; the performance of Mohegan Sun at Pocono Downs in Wilkes-Barre, Pa., where adjusted EBITDA was up 5.2 percent and where a hotel is under construction; and the authority's deal to manage Resorts Casino Hotel in Atlantic City, where major changes are taking place.
Mario Kontomerkos, the authority's chief financial officer, said during the call that he expected Mohegan Sun to break ground within the next three to six months on a hotel, a project that's been in the works for years.
July, August and September were indeed dismal. Overall, net revenues for the authority were $351.8 million, down 5.8 percent over the same quarter in fiscal 2011. Gaming revenues of $313.8 million were down 6.9 percent and nongaming revenues of $63.3 million were down 5.6 percent.
Hotel revenues bucked the trend, climbing 10.8 percent at Mohegan Sun, reflecting a shift in occupancy to higher-paying transient guests.
At Mohegan Sun, the quarter ended with an announcement that the casino was laying off about 330 employees and replacing its chief executive officer, incurring $12.5 million in severance charges. The layoffs and other moves, including changes in the mix of slot machines, changes in employee health benefits and the replacement of certain casino-owned food and beverage outlets with those owned by third-party operators, will save the casino at least $20 million in fiscal 2013, the authority said.
While competition from Resorts World Casino at Aqueduct racetrack in New York City has hurt Mohegan Sun's business, "the economy, particularly in Connecticut, continues to be a major issue." Etess said. "Clearly, it's the economy."
Etess said the loss of nongaming revenue resulted in part from weaker entertainment offerings. Fewer top acts meant fewer tickets sold and lower ticket prices. He said Mohegan Sun plans to close off part of its arena at times in the future, a move that will enable it to attract acts that typically play 4,000-seat venues as well as those that play 8,000-seat halls.
"Having said that, I think between now and April, we'll have maybe the most high-profile acts we've ever had," Etess said.
The authority reported that distributions to the Mohegan Tribe totaled $12.5 million for the quarter, compared to $23.4 million in the same quarter of fiscal 2011. The distributions are expected to total $50 million in fiscal 2013.
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