4.09.08
Casinos in Detroit hit by ill economy
MGM is only gaming hall to report a slight jump; combined betting revenues flat for month.
Nathan Hurst / The Detroit News
DETROIT -- Detroit's three casinos are feeling the sting of the state's economic downturn, even with two new resort hotels and expanded floor space for gambling, according to a report Tuesday to the Michigan Gaming Control Board.
Combined, the casino revenues in March were flat, rising a meager .02 percent increase over the same period in 2007.
MGM Grand Detroit was the only one to report a revenue increase year over year, gaining 5.94 percent, from $47.4 million in March 2007 to $50.2 million this March.
In contrast, revenue dropped in March at MotorCity and Greektown casinos. MotorCity reported revenues of $41.3 million, down 3.7 percent, and Greektown showed revenues of $32.2 million, down 3.58 percent.
The casinos' report to the Gaming Control Board also revealed that gaming taxes paid by the three casinos in March totaled $11.8 million, down 21 percent from $14.97 million last March. The decline was attributed to an expected tax reduction for the MGM Grand Detroit and MotorCity casinos that followed last year's opening of their permanent complexes.
Eugene Christensen, CEO of gaming-analysis firm Christensen Capital Advisors in New York, said the paltry overall gain and downturns at MotorCity and Greektown were expected given Michigan's high jobless and foreclosure rates and consumers' worries about their financial futures.
"What you're seeing in Michigan is in line with other markets across the country," Christensen said. "Given the state of the economy, they're surviving pretty well."
The revenue declines at MotorCity and Greektown follow layoffs at the MGM Grand Detroit complex that began last month. A spokesman for the casino said the cuts would affect fewer than 100 workers, mostly people who worked in non-gaming operations.
Also decided at the Gaming Control Board's Tuesday meeting:
• Greektown Casino received approval to continue negotiating with potential equity partners that would help the Sault Ste. Marie Tribe of Chippewa Indians, the casino's owner, to comply with debt covenants imposed by the board last year. The requirements mandate the casino maintain an undisclosed debt-to-equity ratio, which it would need additional funding to maintain.
Greektown spokesman Brian Brown said the casino has been in active talks with a number of investors. The casino hopes to close on a deal that would transfer ownership of between 26.5 percent and 30.77 percent of Greektown to an investor, in exchange for cash to ensure the debt ratios are maintained. The Chippewa tribe, unlike MGM Grand Detroit and MotorCity, had to secure the majority of the financing for its hotel and expanded gaming facilities from outside investors, Brown said.
Those new facilities are expected to open in 2009.
• The board approved a request from Dubai World, the international investment arm of the United Arab Emirates, to increase its stake in MGM Mirage Inc., the parent of MGM Grand Detroit, from 9.4 percent to 14.75 percent. With that approval, Dubai World could purchase additional MGM shares on the open market. The request must be approved by regulators in states where MGM is licensed to operate.
You can reach Nathan Hurst at (313) 222-2293 or nhurst@detnews.com.
Find this article at:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080409/BIZ/804090360
MGM is only gaming hall to report a slight jump; combined betting revenues flat for month.
Nathan Hurst / The Detroit News
DETROIT -- Detroit's three casinos are feeling the sting of the state's economic downturn, even with two new resort hotels and expanded floor space for gambling, according to a report Tuesday to the Michigan Gaming Control Board.
Combined, the casino revenues in March were flat, rising a meager .02 percent increase over the same period in 2007.
MGM Grand Detroit was the only one to report a revenue increase year over year, gaining 5.94 percent, from $47.4 million in March 2007 to $50.2 million this March.
In contrast, revenue dropped in March at MotorCity and Greektown casinos. MotorCity reported revenues of $41.3 million, down 3.7 percent, and Greektown showed revenues of $32.2 million, down 3.58 percent.
The casinos' report to the Gaming Control Board also revealed that gaming taxes paid by the three casinos in March totaled $11.8 million, down 21 percent from $14.97 million last March. The decline was attributed to an expected tax reduction for the MGM Grand Detroit and MotorCity casinos that followed last year's opening of their permanent complexes.
Eugene Christensen, CEO of gaming-analysis firm Christensen Capital Advisors in New York, said the paltry overall gain and downturns at MotorCity and Greektown were expected given Michigan's high jobless and foreclosure rates and consumers' worries about their financial futures.
"What you're seeing in Michigan is in line with other markets across the country," Christensen said. "Given the state of the economy, they're surviving pretty well."
The revenue declines at MotorCity and Greektown follow layoffs at the MGM Grand Detroit complex that began last month. A spokesman for the casino said the cuts would affect fewer than 100 workers, mostly people who worked in non-gaming operations.
Also decided at the Gaming Control Board's Tuesday meeting:
• Greektown Casino received approval to continue negotiating with potential equity partners that would help the Sault Ste. Marie Tribe of Chippewa Indians, the casino's owner, to comply with debt covenants imposed by the board last year. The requirements mandate the casino maintain an undisclosed debt-to-equity ratio, which it would need additional funding to maintain.
Greektown spokesman Brian Brown said the casino has been in active talks with a number of investors. The casino hopes to close on a deal that would transfer ownership of between 26.5 percent and 30.77 percent of Greektown to an investor, in exchange for cash to ensure the debt ratios are maintained. The Chippewa tribe, unlike MGM Grand Detroit and MotorCity, had to secure the majority of the financing for its hotel and expanded gaming facilities from outside investors, Brown said.
Those new facilities are expected to open in 2009.
• The board approved a request from Dubai World, the international investment arm of the United Arab Emirates, to increase its stake in MGM Mirage Inc., the parent of MGM Grand Detroit, from 9.4 percent to 14.75 percent. With that approval, Dubai World could purchase additional MGM shares on the open market. The request must be approved by regulators in states where MGM is licensed to operate.
You can reach Nathan Hurst at (313) 222-2293 or nhurst@detnews.com.
Find this article at:
http://www.detnews.com/apps/pbcs.dll/article?AID=/20080409/BIZ/804090360
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