Annual reports highlight COVID-19’s impact on casinos’ bottom lines

COVID-19’s impact cost the southeastern Connecticut casinos dearly during the fiscal year that ended Sept. 30, 2020, annual reports posted late last month show.

Foxwoods Resort Casino reported net revenues of $539.2 million for the period, a 31.6% decline from the $787.8 million it tallied the previous fiscal year.

Mohegan Sun’s net revenues fell to $715.7 million in fiscal 2020, down 27.9% from $992 million. Mohegan Gaming & Entertainment, the corporate entity that operates Mohegan Sun and the Mohegan Tribe’s other gaming enterprises around the world, had total net revenues of $1.11 billion, a decrease of 16.7%, according to the MGE annual report filed last week with the U.S. Securities and Exchange Commission.

A week earlier, in a quarterly report for the period from July 1 to Sept. 30, 2020, MGE said “steep increases in infections in virtually all of our markets globally” had slowed progress in construction of a $1.5 billion resort it’s developing in Incheon, South Korea. COVID-19’s resurgence also has delayed the opening of MGE’s Canadian properties and its new casino in a Las Vegas hotel.

“Looking beyond the virus, however, we remain quite positive as our business has been optimized to benefit from what we foresee to be significant pent-up demand for leisure consumption in the months and years ahead,” Mario Kontomerkos, MGE’s chief executive officer, said in the quarterly report.

MGE’s net revenues tumbled 29% in the quarter.

The annual reports attribute the casinos’ financial setbacks to the pandemic, which caused Foxwoods and Mohegan Sun to close in mid-March and has kept them from resuming full operations since reopening June 1.

“The closure of our property and phased opening has had a material impact on our operating results …,” Foxwoods, owned and operated by the Mashantucket Pequot tribe, says in its annual report, dated Dec. 22 and posted on the website of the Electronic Municipal Market Access system. The report shows the casino’s gross gaming revenue plunged 30% to $458.2 million in fiscal 2020, while gross nongaming revenue fell 39.3% to $125.8 million.

Gaming generated 78.5% of Foxwoods’ total gross revenue, the report says.

MGE, which temporarily suspended operations at all of its North American properties in March, reopened Paragon Casino Resort in Marksville, La., and ilani Casino Resort in Ridgefield, Wash., both of which it manages for other tribes, on May 20 and May 28, respectively. It reopened Mohegan Sun Pocono in Wilkes-Barre, Pa., on June 22 and Resorts Casino Hotel in Atlantic City, N.J., on July 2.

Mohegan Sun Pocono closed again Dec. 11 and reopened this week. MGE’s facilities in Niagara Falls, Ontario, Canada — the Fallsview Casino Resort and Casino Niagara — remain closed.

“Like other integrated resort operators, these business disruptions have had a material adverse impact on our financial condition, results of operations and cash flows,” MGE says in its annual report.

MGE says that as of Sept. 30, it employed about 11,000 people worldwide, about 70% of them full time. The total was down from about 12,000 the year before, reflecting the pandemic’s impact on business. Mohegan Sun’s employee count was 5,790.

Foxwoods, according to its report, employed about 2,511 full- and part-time employees as of Sept. 30.

Foxwoods also reported the Mashantuckets had obtained a $54.4 million federal grant under the Coronavirus Aid, Relief and Economic Security, or CARES, Act and that the tribe had awarded the casino grants totaling $20.2 million to offset the financial impacts of the pandemic. The casino primarily used the funds to offset unemployment benefits and health care costs.

At the end of the fiscal year, the Mashantuckets’ long-term debt was just shy of $2 billion, including a loan with outstanding principal of more than $255 million that was set to mature Dec. 31, 2020. MGE’s long-term debt totaled $2.02 billion.

Both tribes sought to increase liquidity during the fiscal year.

According to the MGE report, Kontomerkos, the company’s CEO, received total compensation of $949,288 in the fiscal year. In accordance with SEC rules, the report compares the CEO’s compensation to that of the company’s “median employee.” MGE determined the median employee’s compensation to be $25,646, resulting in a “CEO Pay Ratio” of 37 to 1. In fiscal 2019, the ratio was 43 to 1.

Foxwoods’ report does not list executives’ compensation.

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