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Mohegan's Rising Sun

Today we go behind the scenes to learn about how The Mohegan Gaming Tribal Authority is transforming their business to be a major player in the casino resort business.

Friday, January 11, 2013
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Today Editor-In-Chief Glenn Haussman brings you an interview with Mitchell Etess. For those few of you not in the know, Etess is the CEO of the Mohegan Tribal Gaming Authority. The Authority is one of the leaders in the gaming business with properties in Connecticut, Pennsylvania and most recently they landed a deal to manage Resorts in Atlantic City where they are Buffetizing the place. That is, bringing a Jimmy Buffet’s Margaritaville Casino and Restaurant to the property as well as the beachside Landshark Bar & Grill.

If that’s not enough, the Authority also owns the Connecticut Sun, a premier WNBA team that plays at Mohegan Sun’s arena. And Etess is also CEO of that organization. He’s also a lifelong hotelier who grew up at Grossingers, the famed Catskills resort. We speak with Etess to learn all about the company’s overall strategy and positioning and have some fun talking about the good old days too.

For the full interview be sure to listen to the podcast, but for a quick excerpt read below.

Glenn Haussman: I’m so delighted to be able to speak to you. I’ve been following this company since before you even had a hotel here and it’s amazing how much this organization is really grown over the number of years. Not only do you guys have the casinos, but you even own a basketball team.

Mitchell Etess: I’m the only casino executive that’s also interviewing basketball coaches.

Glenn Haussman: Right, which is very funny because also in your capacity, you are the CEO of the Connecticut Suns. So we’re up here, we’re in Connecticut and this is your first property. Really, really, really beautiful work you did. For those of you out there listening, just think David Rockwell and you’ll get a really good idea of what this place looks like. He really has imprints all over it, but this was not good enough for you guys. You guys managed to get involved in Pennsylvania and now you’ve got a management deal to run resorts in Atlantic City. Tell me a little bit about the strategy. How you got into Pennsylvania and then we’ll go from there.

Mitchell Etess: The tribe always wanted to expand beyond the confines of Connecticut. We knew we had built a great brand here so the idea was to always capitalize on the brand and also to geographically diversify because we knew ultimately there would be a little more competition here. Pennsylvania enacted their gaming law and we found a place that we knew if we owned it we would get the license and we did that. We went in and we bought the Poconos Race Track from Penn National and we became the first casino to open in Pennsylvania under their gaming law, which is very interesting. An Indian tribe as a commercial operator, which we are, when we’re not here, we’re a commercial operator everywhere else but Connecticut. It’s like any other gaming company; it just has to be owned by an Indian tribe. Open that up, work with the gaming commission, expanded that about two years later and now we’ve extended again as we have a hotel under construction there right now.

Glenn Haussman: And there is a conference center too from what I understand?

Mitchell Etess: 20,000 square feet of flexible space for conventions, conferences, even some entertainment, so we’re very excited about that. That’s expanding on and it’s really been great. We’ve expanded the band there, it’s close enough to New York, it’s close enough to this part of the region that our brand meant something and so that was a big step for us. And we’re now commercially operated in another jurisdiction unlicensed.

Glenn Haussman: Right, and that’s pretty cool and let me tell you, Pennsylvania is the place to be and you guys had such smarts to get in there because that to me, has been the biggest bright spot in the casino gaming industry in the last ten years.

Mitchell Etess: Pennsylvania has done very well. It has really shown what can happen and the state has done well. They had a high slots tax rate but they gave a very reasonable table tax rate and it’s done very well for them. And so they’ve learned how to work with the industry and they’ve seen the ups and downs of it and that’s been good, it’s great. So we continue to expand and we always wanted to be in the northeast and we managed to get into a situation where we were able to get into Resorts International.

Glenn Haussman: I know. I feel like Merv Griffin is going to walk in here. [Laughter]

Mitchell Etess: He’s not? And go in there and buy a percentage ownership of it and manage it and expand the brand. And now the key is there. We have three properties really in the northeast, really where people can use their rewards points at all properties and we’re starting to market that, three ways and really take advantage of that.

Glenn Haussman: I think that’s really great because what you are doing now as far as I see the strategy and correct me if you think I’m incorrect here, is you are mitigating the fact that so many jurisdictions have introduced gambling. When you first opened up here, it was just this state.

Mitchell Etess: We were basically alone and then all of a sudden Pennsylvania and New York have slots and racetracks and so we needed to keep growing in order to maintain our market share and continue to further our brand. And that’s really what is behind this. It’s our goal is a long-term financial wherewithal of the Mohegan tribe and my goal is to continue to develop opportunities for them in places where it is meaningful and that are good deals for us. So we continue to try and expand and to work on things and hopefully we continue the process.

Glenn Haussman: Yeah. Tell me a little bit about what is going on in Atlantic City? What made you guys want to get in there? Because a lot of people are not clambering to go into that market, but you see something different, Landry sees something different with their Golden Nugget property. What are you feeling?

Mitchell Etess: For us, it was two things. One is we always knew that we had the database to support it, that we have customers who go to Atlantic City from both properties that weren’t going to resorts.

Now if we said to them, if you can earn points or resorts that you can use at our two properties will you switch your trips? And we did a survey and they said yes.

And now they are actually saying yes by moving their trips. So that’s worked well. We also saw a big change in commitment to Atlantic City, the advertising campaign the state did, it was very, very powerful. Rebel, though it had its ups and downs, mostly downs -

Glenn Haussman: I was about to say you’re being generous.

Mitchell Etess: Did change the way certain people were looking at the way Atlantic City was and some of the things that were there. A lot of the development in Atlantic City, the walk, what they’ve done with the city, yeah, it still has a ways to go but if you compare Atlantic City to when I left there, whenever it was, thirteen years ago or fifteen years ago, whatever it was, to now, it’s night and day.

Glenn Haussman: Yeah.

Mitchell Etess: There’s a lot more development there than there ever was. The state is behind it. And then resorts itself, vintage brand, and honestly with Margaritaville coming in there, it’s amazing. So basically they’ll be a Margaritaville restaurant, a small Margaritaville themed casino area, and the Land Shark Bar and Grill on a pier on the beach.

Glenn Haussman: Nice.

Mitchell Etess: So we’re really going to dominate the beach scene there. We’ve court, re-carpeting the casino floor, and we see a tremendous about of upside for resorts, we really do. So we believe we’re going to change the perception of how people view it. Now when people are sitting around New York, Pennsylvania they are not saying, “Let’s go down to Atlantic City and party, have a good time.” Honestly, Resorts is not in their consideration set.

That changes in March or Mid-May when Margaritaville opens.

Glenn Haussman: Right, for sure. But I think the good thing about resorts is it may not be their first choice, but they’re just nothing thinking of it as opposed to having a negative reaction to it.

Mitchell Etess: Exactly right. And people like the name Resorts, and they’ll be able to go there and like but they’re just not thinking about it as “I’m a person who’s thirty five and I want to walk on the beach and have a good time.” Well, that all changes in May. Completely changes their perception of that property and the staff there is wonderful, the rooms are great, they’ve got Gallaghers, they’ve got so much there to work with. So we’re really excited about it, the employees are excited about it, and we think it’s a big opportunity.

Glenn Haussman: Before you guys came into the picture, they were moving that property into the direction of I guess being more like a 1920’s Speakeasy kind of thing?

Mitchell Etess: Mm-hmm, yeah.

Glenn Haussman: Is that still going to be maintained with the Margaritaville?

Mitchell Etess: Not really and the Speakeasy thing was really more in uniforms and music.

Glenn Haussman: Right.

Mitchell Etess: And we actually like the uniforms – [Laughter]

Glenn Haussman: Cool.

Mitchell Etess: So we’re keeping the uniforms, the carpet is changing, they’re blending the Margaritaville with kind of the art deco, you know Miami kind of feel. So it’s all going to mesh and as I often tell people, I tell many employees, “Look, it’s not like we’re putting in a heavy metal theme restaurant there, you know? Margaritaville meshes very well with the current customer base.” So we think it’s a perfect lop on of business and segments and it’s going to be very, very successful.

Glenn Haussman: Do you find you still have a good, strong, core casino gambler these days? Or have their habits changed in the last few years?

Mitchell Etess: Their habits have changed, people are spending less money, they’re coming less sometimes, they are more sensitive to offers they might get from other places, loyalty is a little less -

Glenn Haussman: Loyal?

Mitchell Etess: As it was in the past. And so that’s what’s happening. Look, I think this current downturn has been a permanent change in people. I think previous downturns, people went through the downturn, things got better, they went back to their previous spending levels. I don’t think that has really happened this time. If you used to buy Cadillac’s and then the downturn came and you bought a Chevy, in the previous downturns you bought a Cadillac when things got better. I think you’re staying with the Chevy. You’ve done well and that’s what is happening. So we’re having to readjust our business and be more savvy in our marketing and more detailed and more direct.

Glenn Haussman: Right. And one of the things I’m seeing with customers is they’re not necessarily in it for status and image with money it’s more of an experience economy. People want to collect memories -

Mitchell Etess: Mm-hmm.

Glenn Haussman: And moments and that sort of thing -

Mitchell Etess: Yeah, they do.
To hear about how the Authority will work its way into the soon to emerge Massachusetts gaming market and to hear some great stories about growing up at a premier Catskills resort be sure to listen to the podcast!

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