Mohegan Plans Expansions Despite Downgraded Debt Rating

Mohegan Plans Expansions Despite Downgraded Debt Rating

ICTMN Staff
5/20/11

While weighted down by debt, the Mohegan Tribal Gaming Authority plans to develop a $600 million casino and racing facility in the New York Catskills, reported the Associated Press on May 5.

The Mohegan Tribe’s gaming arm partnered on the project with Concord Associates, headed by Westchester, New York developer Louis Cappelli, who owns the 116-acre site in Thompson, New York, reported The Republican.

Mohegan Tribal Gaming Authority CEO Mitchell Etess told The Republican that Mohegan's downgraded debt by Moody's Investors Service does not deter him, given Mohegan's strong earnings from the most recent quarter. The lowered rating is based on weak consumer demand for gambling in the Northeast, its $675 million line of credit set to expire in March 2012 and a separate debt of $250 million due the following month, reported the Associated Press on May 9.

"It's a good example to people," Etess told The Republican of the Catskills casino. "We're clearly out there and doing projects."

The operators of the Mohegan Sun in Uncasville, Connecticut and Pocono Downs in Plains Township, Pennsylvania, are also banking on Massachusetts approving gambling. The authority has sought a gaming license in Massachusetts and optioned 152 acres of property in Palmer, according to The Republican. The gaming authority announced the planned Catskills casino the day after Etess testified about the Palmer project on Beacon Hill in Boston, Massachusetts, during a hearing on gambling bills before the Joint Committee on Economic Development and Emerging Technologies.

The proposed Catskills destination is “very similar to Palmer in terms of size and scope,” Etess told The Republican.

The Catskills casino, slated to open by spring 2013, would be built on the site of the historic Concord Hotel. The popular ’50s and ’60s destination in the Borscht Belt shut down in 1998 and was demolished in 2008, stated the AP.

The Sun would run day-to-day operations of the project, known as “The Mohegan Sun Concord.” It would include 2,100 video lottery terminals and capacity for up to 450 electronic table game positions, a 258-room hotel, a harness horse racing track, and five restaurants, stated the press release. “This project, under the powerful Mohegan Sun brand, will become a catalyst for the Catskills to regain its status as a world-class resort destination,” Etess said in a statement.

While the upstate casino claims political backers like State Senator John Bonacic, who said he is “100 percent in support of this tremendous economic development opportunity,” in a statement, the Catskills gaming resort is strongly opposed by nearby competition including members of the New York Gaming Association, a trade group that represents New York’s racinos, reported Gambling Compliance. The Mogehan Sun Concord also faces potential legal threats from Empire Resorts, owner of Monticello Raceway, a racing and video lottery complex centrally located in the resort region.

The Concord Resort development team also includes investment bank Jefferies & Co. and Marnell Architecture, whose design accolades include the Borgata in Atlantic City, New Jersey.

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