Sunday, January 25, 2009

Desperate to attract guests; MotorCity Casino throwing in Red Wings tickets, transportation

According to the Website, MotorCity Casino is giving away Detroit Red Wings tickets in travel packages designed to entice guests to stay at the one-year-old 400-room MotorCity Casino Hotel:

Detroit's Greektown and MotorCity Casino are not doing as well as last year. Either are Indiana's. This is the time to look to these places for vacation deals. At MotorCity Casino there are overnight packages that include a variety of perks like food credit and Red Wing hockey game tickets.

And an article published on 1.25.09 in the Columbus Dispatch confirms the Red Wings ticket give-away too:

You know the economy is in bad shape when Americans stop gambling.

Like just about every other industry, casinos have taken a big hit recently...

Detroit's Greektown Casino filed for bankruptcy protection in the spring. Revenue was down more than 7 percent at the casino last year. Revenue was also down at Detroit's MotorCity Casino by more than 3 percent in 2008...

MotorCity Casino in Detroit is offering several overnight room packages for $149 with a $50 food credit, $159 with two $30 gaming vouchers or $179 with two tickets to a Red Wings hockey game, including a shuttle to Joe Louis Arena...

Michael Ilitch and his wife Marian are owners of the Stanley Cup winning Detroit Red Wings NHL franchise and their company Olympia Entertainment retains the management contract for Joe Louis Arena. Marian Ilitch is the owner of Detroit's struggling MotorCity Casino. Ilitch Holdings, Inc. is the umbrella company for all Ilitch owned enterprises. Among other companies in the Ilitch Holdings family are also the Detroit Tigers and Little Casesar Enterprises, Inc.

During a recent six-week period, Moody's twice downgraded the credit ratings for Ilitch-owned CCM Merger, Inc., a parent of MotorCity Casino. In 2005, Ilitch financed the acquisition as well as renovation/expansion of MotorCity Casino through borrowing/offerings totalling at least $1 billion. The new credit rating, "Caa," implies investments in the casino parent are now "judged to be of poor standing and are subject to very high default risk."

In September 2008, Ilitch injected $25 million in cash into the casino venture to escape a violation of lending covenants (debt-to-EBTIDA ratios). But at the end of 2008, when 4th quarter disclosures were made, it was revealed CCM Merger had violated those loan covenants. As a remedy, Ilitch is seeking to amend those lending covenants, loosening the debt-to-EBTIDA ratios -- apparently higher now than it was during the $300 million construction project. However, investors are demanding Ilitch inject further cash into the casino company and oppose amending the loan covenants.

Revenues reported by MotorCity Casino in 2008 were the lowest reported since 2005 -- before the gambling hall was expanded and a 400-room hotel addition was complete. And in December 2008 alone, MotorCity Casino's revenues fell 11.5%.

MotorCity Casino Hotel: Detroit Red Wings Package

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