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Good and Bad News from Mohegan Sun

Posted on September 17th, 2010

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After announcing a huge layoff involving 355 casino employees, the president and chief executive officer of tribal casino operator Mohegan Sun, Mitchell Etess, said that the bad news would be stopped, at least in that aspect. He divulged that there will be no new round of layoffs just a day before the previous one was announced. This bit of bittersweet good news, however, was balanced with another bit of bad news, this time on the revenue front. With the news of no more job cuts for a while came the pronouncement that August saw another month of a decline in revenues generated by slot machines. Etess, to dispel rumors that additional layoffs will follow after the first one in the coming months, said that the downsizing that was announced at the start of the week should be enough as of the moment, on the condition that the plight of the economy does not go down in the coming periods.

It was only last Tuesday when Mohegan Sun announced that the company will be ridding itself of 475 positions because of apparent redundancy. This decision will leave 355 of its employees without employment. The difference of 120 workers with redundant jobs will be offered new opportunities still in the casino. Etess reiterated that as of the coming week, no more layoffs are in the offing. He adds, “We believe the reductions we’ve made are sufficient to meet our plans and we will be fine moving forward. That having been said, who knows how bad the economy will be in the distant future? We wanted to do this as quick as possible and begin the healing as soon as possible. It would be imprudent to put people through this again. That would have no value to anybody.” He adds that if one looks at the events from the standpoint of business, laying off employees in one wave after the other does not make sense. He adds, “If we thought there were additional savings to be achieved (through more layoffs), we’d be saving it as soon as possible.”

After the glum announcement made on Tuesday regarding employment layoffs, Wednesday saw the company reporting more bad news. Revenues of Mohegan Sun’s slot machines totaled to $67 million which is less compared to figures of the same month in 2009 by 2.8 percent. This is far better though, compared to figures generated by Foxwoods Resort Casino, which includes the MGM Grand at Foxwoods. The casino reported wins for August at only $59.2 million, which has decreased by 6.3 percent from figures of the same month la year ago. These decreases follow slightly more favorable results from July, when both casinos reported gains. It was for July 2010 that both Foxwoods and Mohegan Sun had reported increases for the first time since May 2008. The two casinos though, should not feel singled out, as all 11 casinos in Atlantic City reported declines I slots revenue, with all their losses combining to an 11.3 percent fall. Etess was quick to point out that July 2010 results were good because the month has an extra weekend day, while August 2010 had a weekend day less. He added that if the two months were combined, the decrease would only be by half a percent, which would be flat, and therefore not so dreary-looking as the 2.8 percent drop.

Meanwhile, Foxwoods’ chief marketing officer Robert Victoria did admit that there were less people who went to their casinos in August compared to July, especially during the last two weeks of the last month. Foxwoods hopes to turn the tide in the coming month when new attractions will be introduced in the next few weeks. A luxury bowling lounge named High Rollers will be opened to the public on Fiday. Another attraction will start operations on October 7 – a stand-up comedy bar by the name Comix. Of the revenues from slot machines that both casinos amassed in August, they also had to allocate a portion to the government. The State’s Division of Special Revenue got $17.3 million from Mohegan Sun. Mohegan Sun usually remits close to 25 percent of its slots revenue to the state. Meanwhile, Foxwoods contribution to the state’s coffers amounted to $16 million.