MTR Gaming, which recently reported an annual loss of $11.4 million for 2007, said the company has put itself into position to deal with challenges from neighboring gaming states, particularly at its namesake Mountaineer Racetrack, Casino & Resort in Chester, W. Va.
“We anticipated we would have additional competition from other states, and in anticipation of that, we moved Mountaineer to become a destination resort,” said company chairman and chief executive officer Ted Arneault.
The executive said a variety of initiatives were put into place to face those challenges, including the opening of Presque Isle Downs in Pennsylvania – which in 2007 had its first full year of slots at pari-mutuel facilities – and the legislative battle in West Virginia to secure table games, which went into operation at Mountaineer last December.
Arneault, who spoke abstractly about his announced decision to step down as CEO at the end of the year, called the fourth quarter in particular a “perfect storm,” with financial strains from gaming-state competition, the nation’s weakened economy, and the costs to obtain table games.
“It did occupy time, money, and resources,” Arneault said, noting the company also felt the effects of shedding “non-core” assets in two Las Vegas casinos.
MTR Gaming registered a loss of nearly $8.6 million in the fourth quarter alone, about 75% of its loss for the year. The company had posted net income of about $41.8 million in the last four years.
Arneault said the 10-day-old strike involving about 200 unionized workers at Mountaineer ended April 7 at 4 p.m., about a half-hour before the beginning of the conference call. Workers walked off the job March 29 after negotiations over pay and health benefits fell apart.
“We have had a verbal agreement between the parties,” Arneault said of what he called a pending three-year contract. “We think it is a great package for our employees; certainly it’s one we can live in, and feel very comfortable with. No matter what, you hate to have your employees out on a picket line like that. We think it will have … a positive psychological effect on our employees, a positive psychological effect on our customers.”
After not addressing his pending departure in his opening remarks, Arneault was twice asked by analysts for elaboration on the timing of his exit as CEO after 13 years. Arneault said the situation was “nothing new,” and said MTR Gaming was “really looking at that to see what changes would be best for the company,” saying it a corporate succession plan could have him still leading the company for up to three more years.
“I think it would only be prudent at this time for the board to say OK, what’s the best way to further penetrate this market, to develop a process whereby we have a complete package of succession alternatives,” he said. “I think that’s what they are looking at. I can’t really speak for the board, but I know the process has been initiated.”
MTR Gaming Group prior to the conference call provided corporate guidance for 2008 where it said it hopes to realize $5 million in net income, and a 15% increase in net revenues to $504 million.
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