Thursday, October 08, 2009

Casino Watch

Looks like the legal tiff over payments from the casino to the SEA to pay for the arena bonds has escalated to a new level. Not a great sign.  I thought everyone was happy that Neil Bluhm had deep enough pockets to make up for the cash poor Barden. Not to imply any of this reflects anything on Bluhm's own finances, the casino is its own legal entitiy of course and you don't get to be a billionaire I figure without being a bit stingy.... So I am guessing the casino really does believe it has a case to not make the payments the SEA is expecting.  But how serious an issue are the finances over there in Chateau?  Probably poke at the cash issues at the SEA some other time. 

Dave started this tracking, I thought I would play with it a bit.  The question that may impact nearly everything in town is how profitable the casino will be in the long run. The SEA is depending on payments from the casino, the city and county need the tax revenues.

The current issue is that revenues for the slots machines at the casino during the week of the G20 were abysmal, barely $132/machine per day  Clearly that was anomalous due to the circumstances.  The immediate question is whether revenues would rebound.  The first datapoint is a) yes they did, but b) not by much.  Gross terminal revenues per slots machine averaged $162 for the week following the G20.  Up from $132 for sure, but still far far below the $351 once projected by the casino itself and $306 projected by the state. The poor efficiency of the machines is already responsible for a ratings downgrade of the casino's debt

So here is just an experiment: a Casino Watch interactive graphic.   I will try and make this an independent page at some point.  But here is the trend thus far.  I need to add to the labeling, the graph is measuring the average daily gross terminal revenues (think gross profit) per machine.

(this is working for me, but I am not sure it will work for others... Does not seem to like coming up the first call. Try 'refresh' if it is not coming up. Alternatively you could try this: 

So even if you ignore the G20 week altogether, there is a trend there.

What's it all mean?  Just some neurons making random associations among things that may or may not make sense to associate.  First I wonder if the characteristics that made Pittsburgh a less than hospitable place to support anarchist protesters are also keeping locals from fully embracing a flashy new casino?   Just a thought I will leave for the sociologists but maybe folks here might like gambling in its more traditional forms... the lottery, bingo, and whatever is going on at fundraisers (or the back room).  It certainly is worth more consideration than the only answer given by the casino itself for the poor showing thus far... some nonsense about "(Pittsburghers)  not liking to cross bridges".  

But there is something else out there.  Given that there is no real comparables for the casino property, it is likely going to be assessed for property tax purposes using metrics on the revenues and profitability of its best use... which would be the casino I imagine.  It just seems to me that given that the assessment for the parcel has not been set, the casino folks have a very clear vested interest to keep their revenues down until that assessment has been fixed.  Especially if the base year system were to set in place a valuation for a long time.  Then take into account the debate the casino is having over the timing of its payments to the Sports and Exhibition Authority.  Ditto.

So it all comes together: assessments, city and county budgets, the SEA, even the state budget now, plus arena funding and the mythos of the gephyrophobic sociology of Yinzers...  Maybe the casino = 42?


Anonymous Anonymous said...

It seems to me they are battling two difficult perceptions. First, gamblers believe that the machines at the Meadows are "looser." The mentality of a bulk of slots players is "I'm probably not going to win so at least let me play for a while." If the Meadows is perceived as letting you play longer they will continue to attract more habitual slots players. Second, there is a perception by some that the North Side is some crime ridden maze of confusion and chaos. That may be overstating it but a lot of people (I believe unjustifiably) are just afraid to go there. They need to address these perceptions if they are to ever turn their dismal performance around.

Thursday, October 08, 2009 8:33:00 AM  
Anonymous Anonymous said...

The whole casino/stadium thing looks like a terrible boondoggle. Yet another argument against making the city proper a "destination" for suburbanites. The city should belong to the people in it, not to the provincial, petty, and venal folks from the South Hills or the East Hills or what have you.

Thursday, October 08, 2009 12:41:00 PM  
Blogger Conservative Mountaineer said...

Anon 12:41...

I'll remember that when "your" City goes fully into the toilet or declares bankruptcy or has to merge with the County to survive.. Keep your own da*n debts, speaking for myself as a suburbanite.

Thursday, October 08, 2009 5:44:00 PM  
Blogger Grimace said...

The casino is pretty hard to get to, especially with all the construction (light rail extension, hotel construction, West End Circle construction) - even for someone who knows the city pretty well.

Thursday, October 08, 2009 8:53:00 PM  
Anonymous Johnnyg said...

Pittsburghers refuse to pay for parking. Gamblers refuse to pay for parking--every casino in Vegas and AC has free parking. Ergo, Pittsburgh gamblers most likely REALLY don't like to pay for parking. The Rivers casino, in my opinion, made a huge mistake in making patrons pay for parking.

Friday, October 09, 2009 8:49:00 PM  

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