Mohegan Sun Reports Double-Digit Earnings Decline | News

From the Hartford Courant

Mohegan Sun Reports Double-Digit Earnings Decline

By MARK PETERS, Hartford Courant

May 7, 2008, 11:41 AM EDT

A slowdown in the economy reached the thousands of slot machines at Mohegan Sun this winter, as the casino reported today a double-digit decline in earnings for the first three months of the year.

The casino reported an overall $84 million in earnings before interest, income taxes and other expenses related to financing - a common measure of operating profits. That represents a 10.6 percent decline from same period last year, when operating profit was $96 million. It represents income from gambling, entertainment, food and lodging at the Connecticut resort casino.

Mohegan's overall revenue from slot machines - its largest source of revenue - was $214 million during the first quarter of this year, down 2.6 percent from $220 million in the first three months of 2007.

But Mohegan's quarterly report to bond investors did include bright spots when looking past slot machines.

The casino saw a 6.4 percent increase in revenues from table games, to $102 million for the recent quarter. Revenues also increased in the non-gambling business at Mohegan Sun, with food and beverage up 2.6 percent to $23 million; the hotel up 5.6 percent to $12 million; and retail and entertainment up 20 percent to $31 million, fueled by an increase in the average price per ticket at the Mohegan Sun Arena.

In addition to lower slot machine revenues, the casino blamed the profit decline on higher costs for advertising, employee healthcare benefits, and other expenses.

"While the overall gaming industry experienced some pressure from the economy," said Mitchell Etess, president and chief executive officer of Mohegan Sun, "we outperformed our peers and maintained more than our fair share of slot revenues in the northeast gaming market."

The state of Connecticut receives 25 percent of slot revenues from Mohegan Sun and Foxwoods Resort casinos. Foxwoods does not give quarterly earnings reports, but its monthly reports to the state show sharper declines in recent months.