Mohegan Sun casino layoffs in Connecticut get mixed reaction in Palmer
Published: Friday, September 28, 2012
Associated Press file | Jessica Hill
The Mohegan Sun casino is seen earlier this year in Uncasville, Conn. The casino is laying off more than 300 employees and replacing its CEO, the Mohegan Tribal Gaming Authority's chief executive said Thursday.
PALMER News that Mohegan Sun casino laid off more than 300 employees and replaced its chief executive officer doesn't worry some proponents of the Connecticut-based company's plan to build a resort casino here.
But others are questioning whether or not Mohegan, which has long wanted to build a casino off Thorndike Street (Route 32), has the financial means to make the project happen, and if this is a sign that the market already is saturated with too many casinos.
Town Council President Philip J. Hebert said he was called personally by Paul I. Brody, Mohegan's vice president of development, about the layoffs.
Hebert said he's not sure what to think of the news, but wondered if there are already too many casinos for any of them to be prosperous.
"Has the industry become too saturated?" Hebert questioned.
Brody said the Connecticut casino is facing competition from the new Resorts World Casino at the Aqueduct racetrack in New York City, but he said what is happening in Connecticut has no impact, and no relevance, on the company's plans for Palmer.
"It's really a very different set of circumstances," Brody said.
The downsizing will help match the volume of business in Connecticut, he said.
Stephen Norton, a gaming consultant from Illinois and a director of the company leasing land in Palmer to the Mohegan Sun, also said the layoffs are separate from the company's casino plans for Palmer.
"That's good management -- bringing employment in line with supply and demand," Norton said of the layoffs. [Since Mr. Norton has had his share of bankruptcies, he should know.]
Mohegan is one of several casino operators competing for the sole Western Massachusetts casino license. Under the state gaming law approved in November 2011, three casino licenses and one slot parlor license will be awarded. The state gaming Commission, which is overseeing the process, has announced a draft master schedule that calls for granting a license for a casino or a slots parlor by February 2014.
"I think they are still viable, assuming they find the right financial partner," At-large Town Councilor Paul E. Burns said.
Brody said they are still working on identifying a financial partner.
Both Norton and Iris L. Cardin, co-chair of Quaboag Valley Against Casinos, said they are concerned that Mohegan has yet to announce a financial partner for Palmer.
Cardin said "it's looking bad" for Mohegan.
"They need to just cut and run and leave us alone," Cardin said.
Burns, a casino proponent, said it would show Mohegan's commitment and truly show evidence of its viability if the $400,000 gaming application fee was paid. One competitor for the Western Massachusetts license - MGM Resorts International, which has a proposal for Springfield's south end - has paid the fee.
Brody said they still plan to pay the fee when the application is submitted, which may be as soon as December.
Town Manager Charles T. Blanchard said Mohegan has indicated its commitment to the town, and its desire to expand to the Massachusetts market. Blanchard said studies are ongoing to evaluate a casino's impacts on traffic the town. This week, consultants interviewed department heads about fiscal issues.
Wonder if they made available the Citizens' Casino Study Report indicating the cost to host Mohegan Sun would be $18 MILLION to $39 MILLION annually, not including the $50 MILLION to bring water from the Quabbin.
Said District 4 Town Councilor Donald Blais Jr. about Mohegan, "I'm not too worried . . . I think they'll be alright."
Jennifer L. Baruffaldi, a spokeswoman for the pro-casino group, Citizens for Jobs & Growth in Palmer, said she remains positive about the Palmer project. She said Mohegan has the same struggles as other casino operators. [Ms. Baruffaldi is a very pleasant person lacking education in financial reporting. Because Mohegan Sun's debt is publicly traded, their SEC filings are available online for review.]
Edward S. Harrison, chairman of the Western Massachusetts Casino Task Force, a neutral group, questioned if bringing casinos to Massachusetts makes sense if the casino industry is having difficulty.
"Is it really going to be profitable?" Harrison said.
Harrison asked what will happen if the casinos are built, then the companies resort to layoffs.
Mitchell G. Etess, the chief executive of the Mohegan Tribal Gaming Authority, told The Day of New London that the layoffs affect workers in nearly every department and job level. About 8,000 employees remain. Etess blamed the layoffs on the weak economy and competition from the New York City casino.
“You have to put this in the context of the amazing decline in business we’ve experienced,” Etess told The Day.
James Ferrerra III, Springfield City Council president, said the layoffs do not surprise him.
"Casino companies are not immune to the economic climate out there," Ferrerra said.
Etess told The Day of New London that Jeffrey Hartmann will be replaced by Bobby Soper, chief executive officer of Mohegan Sun at Pocono Downs in Wilkes-Barre, Pa. Hartman, a Mohegan Sun executive since 1996, was the casino’s chief executive officer since 2011.
Staff writer Dan Ring contributed to this report.
http://www.masslive.com/news/index.ssf/2012/09/reaction_to_mohegan_sun_layoff.html
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