Wednesday, May 12, 2010

Perpetual Money Machines

Haven't checked in on casino revenues in a bit. Looks like the take is pretty solidly in an ever-narrower range. In fact the revenues look to be about as stable as they have been since the grand opening, but is it enough to actually make money?  Something Fester is on the case of... in fact Fester is the one who pointed out to me things may be more dire down at the casino than I was thinking.  Given their current revenue levels, is the casino burning cash, and if so how much? 

So if recent weeks represent a potential steady state, this is what I think the numbers add up to.

Weekly Gross Terminal Revenues: $4.7mil
After taxes:  $2.1mil  = $109mil annually.

Just to start, what must be coming out of that $109mil annually?
  • Bond payments:  $55mil
  • Payment to SEA for arena bonds: $7mil
  • Property taxes (which they are appealing):  $6mil
  • Adjustment to make up for $10mil guaranteed to City annually:  $5mil
That right there adds up to $73 million annually netting $36mil all of which is before you account for the little things like the payroll for 1,100 employees which are advertised to all be with benefits.  Seems like that gets you down to even right there or even below??  Then there are are utility costs, marketing, and other operating expenses, let alone investment and maintenance to keep up the property... I just don't see how they are not burning cash, but I would love to hear any refinements on the math above. I think they are on public record saying they were buring down their interest reserve accounts pretty quickly in the fall when their revenues were even lower, so there can't be a big cushion there.

Long run everyone is counting on table games I know... but there is also Ohio's looming entry into the whole gaming world which will counter that. Then there supposed to be a Lawrence County casino that is in limbo, but you would think would have to eat into the revenues of nearby venues. Even WV is going to try and adapt if it sees itself losing market share in the future. Finally, there is the recurring thought of legalizing video poke games which is awfully problematically given the casino licenses... but mark my words with the state budget forecast so dire it will be talked about again, possibly pretty soon. Actually, it's never not talked about...  just talked about more quietly sometimes.


Anonymous MH said...

On the other hand, with .25% interest on savings accounts and a stock market where it appears everybody not crooked is drunk, blackjack is starting to seem like a better investment strategy.

Wednesday, May 12, 2010 8:40:00 AM  
Blogger C. Briem said...

Hey, if this town can't produce a good card counting scandal I will be disappointed. Probably will be a lurker here.

Wednesday, May 12, 2010 8:42:00 AM  
Anonymous MH said...

I've tried, but I can't get past three decks before I lose count.

Wednesday, May 12, 2010 12:05:00 PM  

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