In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Sunday, September 13, 2009

Foxwood Casino Debt Problems

by Calculated Risk on 9/13/2009 10:30:00 AM

The "everyone was doing it" excuse ...

“Yes, we spent too much money. Of course we made mistakes. We made the same mistakes that everyone else has made across the country,’’
Roland Fahnbulleh Jr., [a Pequot tribal member].
From the Boston Globe: The wonder, and the fall (ht Lisa)
... casinos rode the wave of easy credit to success in the years leading up to the recession, and Foxwoods was no exception. The Pequots, who had to go to Malaysia to fund the initial $60 million casino because no one else would lend to them, soon had banks lining up with loan offers as Foxwoods raked in customers - and their cash. The tribe quickly expanded the resort, adding hotels, restaurants, and shops to the complex, which now stands at 4.7 million square feet, nearly 20 times its original size. The Pequots also spent big to acquire nearby businesses and invest in other industries, such as shipbuilding -an expensive effort that later flopped.
But by the time the MGM Grand at Foxwoods debuted in May 2008, the recession was well underway, and gambling receipts were dipping sharply nationwide. ... Now, the shimmering tower stands as a symbol of excess, with unbooked rooms, empty stores, and a sparsely populated gaming floor.
This has some interesting twists because many of the employees are members of the tribe and have lost their jobs. Plus there are payouts to the tribe members ... but the rapid expansion, with too much debt, are common stories.