Mohegan Tribal Gaming Authority

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Mohegan Tribal Gaming Authority

One Mohegan Sun Boulevard
Uncasville, Connecticut 06382
U.S.A.
Telephone: (860) 204-8000
Fax: (860) 204-7167
Web site: http://www.mohegansun.com

Private Company
Incorporated: 1995
Employees: 5,703
Sales: $682.1 million (1999)
NAIC: 713210 Casinos; 722110 Full Service Restaurants; 722213 Snack and Non-Alcoholic Beverage Bars; 711310 Promoters of Performing Arts, Sports, and Similar Events with Facilities

The Mohegan Tribal Gaming Authority operates the Mohegan Sun casino for the Mohegan Tribe of Indians of Connecticut. The Mohegan Sun casino offers a variety of gaming options in a spectacular setting of Native American motifs. With 176,000 square feet of gaming space, the casino provides more than 3,000 slot machines, high-stakes bingo, and 150 game tables, including blackjack, craps, roulette, baccarat, Caribbean stud poker, pai gow, and 42 poker tables. Mohegan history and culture infuse the casino’s interior design and place names. Natural elements inside the casino include a 30-foot waterfall and flaming urns as well as lifelike animals, trees, and rocks. The casino is set along the tribe’s traditional trading cove on the Thames River in southeastern Connecticut. In the tribe’s native language, “Mohegan” translates into “wolf people” and “sun” translates into “rock.”

The Endurance of the Mohegans

The development of the Mohegan Sun casino rested on U.S. government recognition of the Mohegan Tribe of Indians of Connecticut as a sovereign people. The Mohegans began the petition process in 1978, but the government rejected the petition in 1989. Although the Mohegans traced their history to cooperation with English settlers during the 1630s, lack of evidence of tribal activities during the 1940s and 1950s led to federal rejection of sovereignty. The Mohegan system of female authority that dominated that period had been overlooked by federal employees who had focused their research on male leadership. Under Chief Ralph Sturges, elected in 1992, the tribe reinvigorated its campaign to gain federal recognition. That same year RJH Development and LMW Investments of Connecticut and Slavik Suites, Inc. of Michigan proposed the idea of developing a casino with the Mohegans. The three companies formed Trading Cove Associates (TCA), which provided the Mohegans with financial support, tribal attorneys, and advisors to assist in the effort to gain official recognition.

While the petition process continued, TCA and the Mohegans addressed the issue of obtaining state approval for development of the casino as well as obtaining more land for the small reservation. The Mohegans had partially terminated their reservation in 1861, because Mohegan overseers had permitted the theft and desecration of tribal land. By 1872 only the burial grounds and the Mohegan Church remained on the reservation roles, preserving approximately 150 acres. The Mohegans claimed the State of Connecticut had ignored the 1790 Trade and Intercourse Act, which protected Mohegan land rights.

In negotiations with the state in 1993, TCA and the Mohegans settled these centuries-old land disputes. The Mohegans dismissed its land claims and the state conceded the right of the Mohegans to seek economic independence on their traditional reservation through their choice of development. The Mohegans and TCA secured the option to purchase the 240-acre site of the United Nuclear Corporation (UNC), a dormant nuclear manufacturing facility located on part of the tribe’s original reservation, and began to plan and design the casino.

The Mohegans gained federal recognition as a sovereign people in March 1994, opening the way to casino development. Sol Kerzner, head of Sun International, became involved with a 50 percent interest in TCA, bringing a certain savvy from that company’s world-renowned casinos and resorts. The tribe and TCA settled issues related to development of the casino with the nearby town of Montville. The Mohegans agreed to pay $3 million toward infrastructure improvements and usage and to pay $500,000 annually in lieu of other tax arrangements. In a compact with the State of Connecticut the Mohegans pledged a Slot Win Contribution of 25 percent of annual slot revenue to the State.

The Mohegan Tribal Council, the tribe’s governing body, constituted the Mohegan Tribal Gaming Authority (MTGA) in July 1995 to represent the tribe in the development and management of the Mohegan Sun casino, including oversight of the fair and proper operation of the games. MTGA hired TCA to oversee development and construction of the casino. MTGA’s Business Board handled day-to-day operations and legal issues related to the development of the casino; the board consisted of two representatives from the tribe and two representatives from TCA. MTGA later changed the structure to a Management Board, composed of nine members of the Tribal Council. Once the casino opened, management arrangements between TCA and MTGA involved a 14-year contract for operations management and marketing and a seven-year contract (a legal limit) for gaming management, with TCA receiving a management fee and up to 40 percent of profits.

Financing for construction of the $280 million casino came from two sources, through the capital market and a debt-investment from Sun International. MTGA obtained $175 million through a private placement of Senior Notes, which guaranteed a 13.5 percent return on investment and a share of future profits. Sun International loaned $90 million in Subordinated Notes to MTGA to purchase the UNC land and to secure financing for equipment. MTGA obtained approval from the National Indian Gaming Commission and the Bureau of Indian Affairs and broke ground in November 1995. The Mohegans celebrated the event with a ceremonial blessing of the ground and traditional dancing.

Intending to complete construction of the casino within one year, the Mohegan Sun employment office opened in January 1996. In April the company began one of several employee education programs with the Slot Technician School. By summer, training was under way for craps, blackjack, and other table games. From more than 25,000 applicants the Mohegan Sun hired more than 5,000 employees, including many former employees of UNC. Employee uniforms incorporated buckskin aprons and vests bearing tribal symbols.

The interior design of the casino reflected the Mohegan’s cultural heritage. The main center of the building replicated a wigwam, being circular in shape with aluminum poles covered in bark-colored spackle to represent tree trunks. The four en-trances to the casino corresponded with the four compass directions, with each section of the structure correlating to tribal themes on the four seasons. For instance, the east corresponded with spring, so traditional spring motifs dominated the eastern portion of the casino. The carpet pattern of colorful wildflowers not only evoked the feeling of spring, but helped patrons identify their location within the casino. Pictures on the ceiling banshells included strawberries, dogwood blossoms, and fish (spring being the tribe’s traditional season for fishing). Giant canvas wall hangings, made to look like animal skins, also portrayed the season’s cultural associations, such as hands holding corn for planting, giving thanks to the Spirit of the Corn. The 13 lunar moons were depicted in their appropriate places throughout the casino; the Maple Sugar Moon represented the first moon of spring when the ice thaws and maple syrup flows from the trees. The Secret Guide offered an interpretation of the cultural symbols found throughout the facility.

The Mohegans planned to use the profits from the casino to preserve their tribal heritage and to care for the 1,100 members of the tribe. They hoped to reclaim sacred artifacts and to revive their language. They planned to build housing and a medical center for elderly members of the tribe, to give scholarships to young members, and to provide health insurance for all members. Many young Mohegans returned to the reservation with development of the casino. Contrary to J. Fenimore Cooper’s 1826 novel, The Last of the Mohicans, the Mohegans had not disappeared but had endured and discovered a means of rebirth.

1996 Grand Opening and Immediate Success

When the Mohegan Sun opened on October 12, 1996, gaming facilities at the casino included a high-stakes bingo hall, 2,500 slot machines, including high-limit slots, and 170 game tables. The bingo hall converted to an 1,800-seat events center, hosting its first major boxing event in December. The Wolf Den, a 24-hour lounge in the center of the casino, featured live music every night and seating for 350 people. The Mohegan Sun catered to families with a 6,000-square-foot KidsQuest Family Entertainment Center, which provided hourly child care for children four to 12 years of age while parents gambled; children’s activities included nonviolent video arcade games, a Kiddie Theater, and Barbieland, a master-planned community for Barbie dolls.

After its first 20 days in business, the Mohegan Sun counted $21.2 million in slot revenues alone. First-year profits, for fiscal year September 30, 1997, reached $36.9 million with an average daily slot win of $327. The casino counted more than 20,000 customers daily and more than 30,000 patrons on weekends.

Company Perspectives:

Every nation has a spirit. As you walk our Homeland, we invite you to join in our Mohegan spirit. You have entered a place where the rocks and trees tell tales of a far off time. Here, beside the Thames River, the Mohegans lived for centuries. During your stay in Mohegan territory, we invite you to learn our ancient ways by experiencing our stories and symbols.

The Mohegan Sun’s promotional campaign involved grand events designed to attract a diverse customer base. Musical entertainment at the events center included Al Jarreau, Ringo Star, Pam Tillis, and Tony Bennett. The Wolf Den, featuring state-of-the-art sound and light technology, hosted Grover Washington, Jr., Duran Duran, Blondie, and other popular recording artists. “The Biggest Wedding Under the Sun” took place in the Wolf Den on Valentine’s Day 1997, when 95 couples exchanged wedding vows and received a Mohegan tribal blessing. With the addition of six Let It Ride-The Tournament tables, the Mohegan Sun became the fourth venue to offer the game, holding its first tournament during the summer of 1997. The Mohegan Sun also sponsored Hartford’s annual Fourth of July Riverfest celebration and other local events. In January 1998, the casino hosted a ten-day series of culinary classes given by 15 chefs from the Mohegan Sun and Sun International resorts.

Television advertising focused on the casino’s interior ambiance, the friendly staff, and the glamor and excitement of gaming. After showing a collage of images from the casino, a chauffeur stated, “You’ll find it easy to get here, but very hard to leave.” A dealer followed, “We keep the lines short and the action non-stop. It’s the Mohegan Sun way.” The advertisements targeted audiences in New York, Massachusetts, Connecticut, and Rhode Island. Cities within 125 miles of the casino included New York City, Boston, Providence, and Hartford, as well as many wealthy suburbs.

In February 1998 the MTGA announced changes to its relationship with TCA in conjunction with the announcement of the Mohegan Sun’s expansion plans. The two organizations agreed to terminate TCA’s management contracts effective January 1, 2000. The Mohegans agreed to pay TCA five percent of gross profits for 15 years beginning on that date. TCA and MTGA announced a new partnership agreement involving a $450 million expansion of the casino into a hotel and casino resort destination. Expansion plans included a 1,500-room luxury hotel, 100,000 square feet of casino and entertainment space, and a meeting and convention center.

The MTGA continued to expand gaming and services within existing facilities at the Mohegan Sun. In May 1998 the company added 500 new slot games, with 100 machines replacing existing slots; customer and technology-driven changes required an unusually early adjustment. A state-of-the art RaceBook opened on Labor Day for wagering on live Jai-Alai and horse and greyhound racing from Florida, California, Illinois, Kentucky, and New York. In addition to 300 wall-to-wall televisions, RaceBook provided 200 personal wagering terminals with 13-inch television monitors and computerized, self-service betting. The Micro-Brew Pub opened adjacent to the RaceBook area, featuring Sachem’s Ale and Matahga Lager, both named for past Mohegan Chiefs. The new Uncas Pavilion, a temporary structure holding 5,000 seats, hosted several events in 1998, including a Heavyweight Title boxing match, Oktoberfest activities, and concerts by Lynyrd Skynyrd and The Steve Miller Band. A 16-pump Citgo gas station and convenience store opened on the reservation in December.

Advertising for the Mohegan Sun continued to focus on the ambiance and service. In “Winning,” the camera followed an elegantly dressed couple from their limousine, through the casino, to a blackjack table. The voiceover stated, “The Mohegan Sun…. Nothing even comes close.” In “Details,” a montage of images accompanied the voiceover, “To make a big impression, it helps to remember that the little things really aren’t so little…. Experience the difference the Mohegan Sun way.” Print advertisements in New York and New England supplemented the television advertisements.

The MTGA continued to update its slot offerings at the existing casino. In May 1999 the company installed Wolf Den Hits, a link-progressive slot game. Custom designed for the Mohegan Sun, the slot game featured lifelike replicas of wolves on a rock outcropping. Howls emanated from the wolves when a patron hit the jackpot. Slots played an important role in rising revenues at the casino, as average daily slot win increased from $361 per day in fiscal 1998 to $430 per day in 1999.

Revenues for fiscal year ended September 30, 1999 increased to $682 million, from $583.2 million in 1998, but the Mohegan Sun’s financial activities resulted in a loss of $39 million. This was actually an improvement over a loss of $332 million in 1998. Both years’ losses related to agreement relinquishment payments to TCA, and 1999 losses also stemmed from debt extinguishment fees. MTGA expected to be profitable in the future as operating margins continued to improve. Players Club, which offered points based on game play toward food, merchandise, day care, and gasoline, counted more than 1.2 million members at the end of fiscal 1999.

Into the Future with Project Sunburst

The MTGA reorganized its financial debt in preparation for expansion of the Mohegan Sun, dubbed “Project Sunburst.” The company paid its original development debts and secured lower interest debt with the issuance of $200 million in Senior Notes and $300 million in Senior Subordinated Notes. Construction began in May 1999 when the MTGA broke ground on a parking garage and a $30 million Employee Center.

The Mohegans hoped to lure quality employees for the new resort with progressive employee benefits, including the Employee Center. The facility provided covered parking, a stateof-the art fitness center, a wellness center, a post office, a dry cleaning service, a banking facility, and a computer and training center. Tribal themes extended into the interior design of the Employee Center.

Key Dates:

1992:: Development, hotel interests approach Mohegan Tribe with casino idea.
1994:: Federal recognition of tribe’s sovereignty accelerates development.
1995:: Mohegan Tribal Gaming Authority (MTGA) is formed to represent tribe in casino development, management.
1996:: Mohegan Sun casino opens less than one year after construction begins.
1998:: MTGA announces plan to expand with luxury hotel, convention facilities, and arena.
2000:: MTGA assumes management of Mohegan Sun.

In February 2000 the Mohegans unveiled final plans for expansion, which had itself expanded into an $800 million project. Hoping to attract business and leisure travelers as well as gamblers, Project Sunburst involved a 34-story luxury hotel with 1,200 guest rooms, including 175 suites. Convention and meeting space included a 40,000-square-foot ballroom (the largest in New England), 30 meeting rooms holding up to 5,300 people, and a business center with computer workstations and electronic equipment rental. To 2,300 square feet of existing retail space, Project Sunburst added 275,000 square feet of premium space. MTGA planned a world-class spa with a 16,000-square-foot swimming pool and a 12,500-square-foot sun terrace. Staff at the spa, salon, and fitness center included personal trainers and nutritionists. KidsQuest added a 10,000-square-foot adventure arcade and accommodations for children as young as six weeks old. New gaming space housed 2,000 slot machines, Keno, and 75 game tables. The ambitious plan included more than 20 new dining options and a 10,000-seat arena with retractable seating for exhibition space. Construction on the arena began in February 2000 and MTGA expected the arena to be completed in the fall 2001.

Design elements of Project Sunburst extended from the Mohegan tribal motifs of the original casino, expressing ele-mental and celestial themes. A Tree of Life at the walkway between the two facilities represented the past, present, and future of the Mohegan tribe. The roots symbolized the tribe’s ancestors and the branches, with sparkling beaded canopies, signified the future generations. Thus the original Casino of the Earth connected to the new Casino of the Sky, with its 115,000-square-foot planetarium, the largest working planetarium dome in the world. Wombi Rock, at the center of the casino, was to be made of translucent alabaster and onyx and to house a three-story lounge with a dance floor. Restaurant designs incorporated water, earth, sun, and air motifs as did the interior of the 300-seat cabaret. The hotel, with reflective glass and towers bursting from the center tower, exemplified the celestial dimension of Project Sunburst. MTGA expected Project Sunburst to be completed in April 2002 during the Moon of the Peeping Frogs, a time of rebirth in the Mohegan tribal calendar.