Mohegan Sun reports poor fourth quarter, poor fiscal year
By any measure, Mohegan Sun had a poor fourth quarter and an equally poor fiscal year based on results released Friday by the Mohegan Tribal Gaming Authority. Most indices fell double digits. But company wide, the decreases were lessened by growth at the Pocono Downs casino in Plains, Pa. Results were also tempered by cost reductions at both locations.
Overall, net income for the fourth quarter ending Sept. 30 declined 23.7 percent to $66.4 million, and fell 20 percent to $119.3 million for the fiscal year. Gross slot revenues dropped 7.7 percent for the quarter to $254.8 million, and slid 3.4 percent for the year.
Table games accounted for the largest percentage decline in revenues, a reflection of a fall off in high-limit play, and a reduction in consumer spending fueled by the recession, the company said in release Friday. Table game revenue plummeted 24.9 percent to $72.4 million for the quarter and 18.3 percent for the fiscal year, also ending September 30. Pocono Downs has no table games.
Non-gaming revenues were off 14.5 percent for the quarter and 14 percent for the year.
The company lays blame for the declines to the national economic recession and increased promotional spending by competitors, partly offset by lower operating costs and expenses primarily reflecting the cost containment program implemented during the second quarter of fiscal 2009. The decrease in net revenues was the result of the declines in both gaming and non-gaming revenues again offset some by a reduction in promotional allowances. Gaming and non-gaming revenues were adversely impacted by the national economic recession and increased promotional spending by competitors.
"I am very pleased with our fourth quarter and fiscal year operating results, especially given the challenging economic conditions we have faced over the past 12 months," said Mitchell Grossinger Etess, President and CEO of the Authority.
Slot revenues at Mohegan Sun declined during the quarter as a result of lower slot handle due to reduced consumer discretionary spending on activities such as gaming, leisure and hospitality likely caused by the national economic recession. The number of Mohegan Sun's rated slot player trips declined 2.2% in the quarter and 2.3 percent for the year, while spending per rated slot player decreased 9.8 percent as compared to the fourth quarter of fiscal 2008 and 8.2 percent for the year.
Increased promotional spending by competitors, as well as additional gaming and hotel capacity added by Foxwoods, following the May 2008 opening of its MGM Grand at Foxwoods, also may have contributed to the decline in slot revenues. Additionally, slot revenues were impacted by unfavorable winter weather conditions and reduced entertainment events at the Mohegan Sun Arena.
During the quarter ended Sept. 30, 2009, the number of Mohegan Sun's rated table games patron trips increased 2.5 percent, while spending per rated table games patron decreased 27.1 percent as compared to the fourth quarter of fiscal 2008, reflecting the decline in high-limit table games play, as well as the overall reduction in consumer spending likely caused by the national economic recession. The fiscal year results were not much better. Patron trips rose 5.1 percent, but spending per customer tumbled 21.2 percent.
The decrease in food and beverage revenues for the quarter and the fiscal year was primarily attributable to a double digit reduction in the number of meals served at Mohegan Sun-owned food outlets, which in turn resulted from the May 2009 closure of Fidelia's Restaurant, which was replaced by Bobby Flay's Bar Americain in November 2009. The July 2009 opening of Fran Pepe Pizzeria Napoletana and the September 2008 opening of Jimmy Buffett's Margartavile Restaurant, and the temporary closure of the Mohegan Sun Earth food court and the remodeling of Birches Bar & Grill also contributed to the fall off.
Hotel occupancy remained stable, increasing slightly from 96.4 to 96.7 percent for the quarter and from 93.6 to 95.4 percent for the fiscal year. But revenue per available room for the quarter slipped to $91 compared to $102 in the fourth quarter and to $88 from $105 for the year. The company credits pricing pressures from competitors and the opening of the MGM Grand at Foxwoods for the decline.
A decrease in entertainment revenues resulted from a reduction in the number of shows at the Mohegan Sun Arena, including fewer headliner shows, primarily due to scheduling dates reserved for the Connecticut Sun basketball team which were not utilized.