Mohegan Gaming has $100 million plan to weather impact of competition
Mohegan — Facing the impact of imminent competition, Mohegan Gaming & Entertainment executives told investors Wednesday that they expect to implement more than $100 million worth of “long-term revenue and cost improvements” over the next four to five years to help the company “weather the storms” on the horizon.
Of immediate concern is MGM Springfield, the nearly $1 billion resort casino set to open Aug. 24 in western Massachusetts, some 70 miles from Mohegan Sun, MGE’s flagship property.
Encore Boston Harbor, Wynn Resorts’ $2.5 billion casino project, is scheduled to open in Everett, Mass., next year.
During a quarterly conference call, MGE’s chief financial officer, Drew Kelley, and the chief operating officer, Tom Burke, outlined MGE’s cost-savings plan without providing specifics. The plan comprises more than $40 million related to the gaming mix at the company’s casinos and the anticipated introduction of sports betting; about $20 million stemming from development initiatives, including new luxury hotel rooms at Mohegan Sun; $20 million derived from new promotional efforts; and $20 million related to “other” initiatives, including “outsourcing opportunities.”
Pressed for details, the MGE executives for the most part demurred.
“This is a very well-thought-out plan,” Kelley said. “Many of the initiatives are in place or are being put in place. ... We are in the beginning innings.”
He said it's difficult to accurately gauge what MGM Springfield’s impact will be until it’s open. He noted that smoking will be prohibited at the Massachusetts casinos, “a major factor” for gamblers.
During the quarter that ended June 30, MGE posted net revenues of $344.9 million, a 1.5 percent decline over the same period the previous year. Mohegan Sun’s net revenue for the quarter essentially was flat, totaling $270.4 million, while MGE's Mohegan Sun Pocono in Wilkes-Barre, Pa., reported net revenue of $68.3 million, a 3.9 percent decrease.
Adjusted EBITDA, defined as net income, or profit, before interest, depreciation, amortization and other costs, was up 3.8 percent at Mohegan Sun and down 9.3 percent at Mohegan Sun Pocono.
MGE reported positive results at properties it manages, including the Cowlitz Indian Tribe-owned ilani Casino Resort in Washington state, and Resorts Casino Hotel in Atlantic City. MGE earned $4.2 million in fees from ilani and more than $900,000 in fees from Resorts.
During the quarter, Mohegan Sun's $80 million Earth Expo & Convention Center opened.
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