Sunday, November 11, 2007

Underway with no way on

Look at all the news since the election. The stock market has been pummelled, oil is cracking $100/bbl and locally the powers that be have solved all issues relating to the casino. Anyone believe that?

Anyway, the real news is that construction of the casino will begin within the month. I suspect that bodes ill for the local weather forecast. It would be Don Barden's luck if there was a blizzard around then. The magical timeline is now that the casino will open in 16 months. Just a bit longer, but still on the short side compared to the 14 month projection originally thrown out there. 14 months from early in the spring I think it was. Call it a mobile target.

Another number thrown out there was that delays have supposedly cost $300 million dollars. $300 million to Don Barden? $300 million to government at all levels? It's all a little squishy. How long have the delays really been? if they really thought they were going to start construction within a month after winning the license, then the delay has been what? 11 months? Assuming that at least internally they factored in a few months to get started, the delay is more like 6 months I would say. and I bet that 300 million is more of a gross number than net to the taxpayer, but who really knows?

The most objective study I have seen on this (scanned here) esimates that the Pittsburgh city casino will bring in $317 million in it's first year, ramping up to $407mil annually in year 5. So I figure Barden is using a slighly higher rate of earnings, and the longer range of what the 'delay' has been to come up with his $300 million "cost of delay" number. But at least the number of zeros is in line.

The calculation of the $317 mil. number is interesting. It starts from an estimated 20 million total "gamer visits" to all regional gambling venues over the course of a year. With an average cost (i.e. amount you lose) of $61. That produces $1.2 billion per year in total regional revenue split among all local venues which include some of the WV and new PA casino/racino operations. So the 300-400 million here is our 'market share of that pie as it were. The details are in that report if you are interested.

But if nothing else, the Isle of Capri hasn't had a local media mention in months and Mario has recently received all his back pay... . That is kind of progress in itself. When does the arena construction ramp up?


Blogger Matthew said...

So how much of that revenue represents "new money" coming into the Pittsburgh region versus a wealth transfer of the money that is already here?

Monday, November 12, 2007 10:58:00 PM  
Anonymous Anonymous said...

A complicated question, no doubt. That said, the Phila. Inquirer continues to point out that monthly year-over-year slots revenues continue to fall at Atlantic City casinos. It is believed that this drop-off comes from PA slots players staying home to play. If the Pittsburgh and Meadowlands slots parlors mostly capture slots money that otherwise would have gone out-of-state to West Virginia or Niagara Falls or elsewhere, that would seem to be a net positive.

Tuesday, November 13, 2007 12:15:00 PM  

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