By Dan Ring, The Republican
Despite a downgrade of its heavy debt, the Mohegan Sun is expanding into New York with a casino in the Catskills that would complement the company’s proposal for Palmer.
Mitchell G. Etess, chief executive officer of the Mohegan Tribal Gaming Authority, said the company is set to operate and manage “The Mohegan Sun Concord,” a planned $600 million resort at the site of the former Concord Hotel in Thompson, New York. The New York casino is scheduled to open in the spring of 2013.
“It’s very similar to Palmer in terms of size and scope,” Etess said.
The planned expansion into New York comes as an agency downgraded the ratings of Mohegan’s debt, citing declining gambling revenues, increased competition and the possibility of additional competition if Massachusetts approves casinos. While it is hurt by debt, the Mohegan authority is also moving ahead with new efforts.
“It’s a good example to people,” Etess said of the New York project. “We’re clearly out there and doing projects.”
Etess said he might be more concerned about the report on debt by Moody’s Investors Service in New York if not for his company’s strong earnings during the most recent quarter.
The planned New York casino was announced the day after Etess testified about the Palmer project on Beacon Hill during a hearing on gambling bills in front of the Committee on Economic Development and Emerging Technologies. Legislators in Massachusetts are again moving to approve casinos after a bill failed last year at the last minute.
A separate company – Paper City Development – is proposing a casino for the Wyckoff Country Club off Interstate 91 in Holyoke.
Etess said the Catskills casino is a logical expansion for the Connecticut-based company. He said it would be a regional destination, much like the planned Palmer casino on 152 acres of leased land off Exit 8 of the Massachusetts Turnpike.
Etess said his company is still searching for a financial partner for Palmer. He said the company has been talking with between 15 and 20 possible investors over the last 20 months.
“It’s a very attractive opportunity to people in the investment community because it’s a location that can provide return,” Etess said. “And there’s many organizations looking to invest capital.”
Etess said there is “a huge appetite” to invest in Palmer with Mohegan, but the company could sew up a deal with a partner only if casinos are legalized in Massachusetts and the specifics of a new law are available.
He said it’s possible Mohegan might have more than one financial partner in Palmer. He said the company’s project for Palmer remains unchanged.
“It’s the same as it has been since 2009,” he said. “A 600-room hotel, slots, tables, restaurants .. a theater enough to give the amenity to your guests but clearly not be competitive with .. theaters and so forth in Springfield.”
The New York casino would include a 258-room hotel, a 75,000-square-foot casino with 2,100 video lottery terminals and up to 450 electronic table game positions, five restaurants, retail space, harness race track, grandstand and simulcast and 10,000 square feet of ballrooms and meeting space.
Etess said more than $100 million has already been spent in New York on site preparation, foundations and curtain wall, demolition and environmental cleanup.
Concord Associates, owned by New York developer Louis R. Cappelli, will develop the Catskills project with Marnell Co. of Las Vegas.
Etess said he was disappointed in the report by Moody’s. The rating agency on Monday said the Mohegan authority has “a significant capital structure issue” because it has yet to refinance $925 million in debt.
The authority owns the Mohegan Sun casino in Uncasville, Conn. and a harness track and slot machines at Pocono Downs in Pennsylvania.
“The Moody’s downgrade came after we had a great earnings report,” Etess said. “Our financial performance is very positive.”
The Mohegan authority on May 5 reported $25.2 million in net income for the quarter ending March 31, a 26 percent increase from the same quarter a year ago. Gaming revenues for the quarter declined slightly from last year to $316 million.
In an e-mail, Kathleen C. Norbut of Monson, an adviser to United to Stop Slots in Massachusetts, said the downgrade of Mohegan Sun’s debt raises questions about the financial sustainability of potential slot barns and casinos in Massachusetts.
Norbut also suggested that proposed revenues from casinos could be reduced if Congress approves U.S. Rep. Barney Frank’s bill to legalize and regulate online gambling in the United States.
Norbut and others are seeking approval of a bill by Sen. Stephen M. Brewer, D-Barre, that calls for the governor to commission a comprehensive, independent analysis of the costs and benefits of casinos.
“When is Beacon Hill going to conduct a transparent discussion of the costs and impacts of expanding predatory gambling by an industry that is and has been in decline?” Norbut asked in her e-mail.
The gaming market in the Northeast is growing increasingly competitive, and prompting investments in new projects, according to a report in April by the Center for Policy Analysis at the University of Massachusetts at Dartmouth.
The recession of 2008 and 2009 took a toll on the industry, the report said. The market appears to be stabilizing this year, but last year was the fourth consecutive year-to-year decline in gaming revenues for the two Native American casinos in Connecticut, the report said.
The casino industry in New England employs 19,200 people at the Foxwoods Resort Casino in Ledyard, Conn. and the Mohegan Sun, two race track casinos in Rhode Island and a slot barn in Bangor, Maine, the report said.
Pennsylvania has 10 full-blown casinos. New York has 11,500 video lottery terminals at eight race track casinos and is planning further expansions, the report said.