Mohegan Sun faces financial peril in losing bid for Boston area casino to Wynn Resorts, Moody's Investor Service warns
Mohegan Sun CEO Mitchell Etess, center, bites his nails as the Massachusetts Gaming Commission debates in Dorchester Tuesday. Wynn Resorts bested Mohegan Sun for the lucrative Boston-area casino license, based largely on the strength of its $1.6 billion project's economic development potential. The Massachusetts Gaming Commission voted 3-to-1 Tuesday to award the license to the Las Vegas casino giant, which wants to turn a heavily polluted, former chemical plant site on the Mystic River waterfront in Everett into a gleaming resort casino. (Jessica Rinaldi / Boston Globe)
By
on September 18, 2014
on September 18, 2014
By STEPHEN SINGER
and PHILIP MARCELO
BOSTON — Mohegan Sun faces financial peril after losing out to Wynn Resorts in its bid to open a casino in the Boston-area, a Moody's Investor Service analysis warns.
In a note to investors Wednesday, analyst Keith Foley said the loss "heightens our concerns" about the Mohegan Tribal Gaming Authority's ability to refinance its debt at an interest rate and terms equal to or better than what it's now paying. He said the Connecticut-based casino company is highly leveraged and could face significant debt repayment just as Wynn's Massachusetts casino opens sometime in 2017.
Foley said Mohegan Sun's long-term financial prospects "would have improved materially" had its proposed $1.1 billion casino at the Suffolk Downs horse racing track, which straddles East Boston and Revere, been chosen for the lone Boston-area casino license. Massachusetts gambling regulators instead went with Wynn's $1.6 billion plan to redevelop the industrial waterfront in Everett.
"At a minimum, we believe this would provide a substantial hedge against potential losses at its Connecticut casino," which generates the bulk of the company's revenue but is suffering as competition expands in the region, he wrote. Foley said there's now greater pressure on Mohegan Sun to succeed in other efforts to diversify its revenue base, such as pursuing a casino license in Philadelphia.
Elsewhere, Foley said he expects the gambling market in Boston to perform significantly better than most other U.S. markets, which would benefit Wynn.
He said Boston residents have a "high propensity" to gamble, citing the number of Massachusetts residents who visit Connecticut's Indian casinos. Boston also has the business, entertainment and transportation infrastructure to draw travelers from outside the region and internationally, Foley said.
In a related development, the Massachusetts Gaming Commission, which awarded Wynn a casino license earlier this week, says it will look for ways to keep thoroughbred horse racing in the state now that Suffolk Downs is expected to close, following Mohegan Sun's loss.
The commission, which will take up the issue on Sept. 25, said it will consider every option to preserve the industry. It also plans to help Suffolk Downs workers find other employment and workforce training.
Suffolk Downs' Chief Operating Officer Chip Tuttle, in a statement, dismissed the promises as "empty posturing." New England's lone thoroughbred horse racing track has said the live racing season that ends Sept. 29 will be its last. It will offer simulcast betting until at least November.
"This is one of those cases where the Gaming Commission's actions speak louder than their words," Tuttle said. "The Commission's actions Tuesday made clear how little value they place on these jobs and these people."
http://www.masslive.com/business-news/index.ssf/2014/09/mohegan_sun_faces_financial_peril_in_los.html
Mohegan Sun faces financial peril in losing bid for Boston area casino to Wynn Resorts, Moody's Investor Service warns
With no resort casino license, Suffolk Downs set to close by end of 2014, hundreds to lose jobs
Foxwoods Resort Casino CEO Scott Butera to resign in October for non-casino gaming gig
Suffolk Downs workers told track closing because of losing bid for Massachusetts casino
Eastern Massachusetts casino license formally granted to Wynn Resorts for entertainment complex on Mystic River in Everett
and PHILIP MARCELO
BOSTON — Mohegan Sun faces financial peril after losing out to Wynn Resorts in its bid to open a casino in the Boston-area, a Moody's Investor Service analysis warns.
In a note to investors Wednesday, analyst Keith Foley said the loss "heightens our concerns" about the Mohegan Tribal Gaming Authority's ability to refinance its debt at an interest rate and terms equal to or better than what it's now paying. He said the Connecticut-based casino company is highly leveraged and could face significant debt repayment just as Wynn's Massachusetts casino opens sometime in 2017.
Foley said Mohegan Sun's long-term financial prospects "would have improved materially" had its proposed $1.1 billion casino at the Suffolk Downs horse racing track, which straddles East Boston and Revere, been chosen for the lone Boston-area casino license. Massachusetts gambling regulators instead went with Wynn's $1.6 billion plan to redevelop the industrial waterfront in Everett.
"At a minimum, we believe this would provide a substantial hedge against potential losses at its Connecticut casino," which generates the bulk of the company's revenue but is suffering as competition expands in the region, he wrote. Foley said there's now greater pressure on Mohegan Sun to succeed in other efforts to diversify its revenue base, such as pursuing a casino license in Philadelphia.
Elsewhere, Foley said he expects the gambling market in Boston to perform significantly better than most other U.S. markets, which would benefit Wynn.
He said Boston residents have a "high propensity" to gamble, citing the number of Massachusetts residents who visit Connecticut's Indian casinos. Boston also has the business, entertainment and transportation infrastructure to draw travelers from outside the region and internationally, Foley said.
In a related development, the Massachusetts Gaming Commission, which awarded Wynn a casino license earlier this week, says it will look for ways to keep thoroughbred horse racing in the state now that Suffolk Downs is expected to close, following Mohegan Sun's loss.
The commission, which will take up the issue on Sept. 25, said it will consider every option to preserve the industry. It also plans to help Suffolk Downs workers find other employment and workforce training.
Suffolk Downs' Chief Operating Officer Chip Tuttle, in a statement, dismissed the promises as "empty posturing." New England's lone thoroughbred horse racing track has said the live racing season that ends Sept. 29 will be its last. It will offer simulcast betting until at least November.
"This is one of those cases where the Gaming Commission's actions speak louder than their words," Tuttle said. "The Commission's actions Tuesday made clear how little value they place on these jobs and these people."
http://www.masslive.com/business-news/index.ssf/2014/09/mohegan_sun_faces_financial_peril_in_los.html
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