A public changing of the guard at MTR Gaming Group Inc. was experienced Oct. 31 during a conference call with analysts and shareholders, as the company bid farewell to longtime chief Ted Arneault and welcomed his successor Robert Griffin.
Arneault, who earlier this year announced his exit from the Chester, W. Va., company, told listeners MTR Gaming Group was being left in good hands.
“There is still a lot of fine-tuning to do with what these guys are experts are in,” said Arneault, who will officially be replaced by Griffin Nov. 1. “When we started this 15 or 16 years ago, we had 300 employees and now we have close to 4,000. We had $25 million in sales and now we will get close to ($500 million). It's been obviously a very turbulent time to be in the gaming markets, but we still have assets that will greatly enhance the value of this company -- core assets that are going to do nothing but improve. MTR Gaming is in great shape. And I am poised to help them in any way.”
Griffin, a 25-year veteran of the gaming industry who comes to MTR Gaming from Isle of Capri Casinos, said his initial focus would be a continuation of recent plans put into place, which include cutting costs and eliminating non-core assets. The company in July identified its core assets as its flagship Mountaineer Casino, Racetrack & Resort in West Virginia; Presque Isle Downs & Casino in Pennsylvania; and Scioto Downs, a harness track in Columbus, Ohio.
“Clearly we believe there is room for improved margins through labor and expenses here at Mountaineer,” he said. “I believe we have marketing opportunities at (Presque Isle Downs), and I believe that table games are starting to take hold.”
A total of $13.2 million in revenue on table games at Mountaineer Park helped account for a 15% overall increase in revenues to $77.3 million at the racino, which realized a $4.2 million decline in slots revenue. Net revenues at Presque Isle Downs’ increased to $51.5 million, up 10% compared to the same period 2007 due to increased slot play, the company reported
“With Bob's experience in gaming, I think you are going to see that market attacked,” Arneault said. “As we bring incremental table gaming, it brings in incremental slot customers. I think we are well positioned in that area.”
MTR Gaming recorded a quarterly loss of $8.2 million, but included a one-time impairment charge of $11.2 million in writing down assets of two recently-designated non-core assets, the 90% interest the company owns in Jackson Harness Raceway in Michigan, and a 50% interest in Running Aces Harness Park in Minnesota. MTR Gaming also modified its projected net loss for 2008 to be about $14.6 million.
The company also reported it paid down $13 million in debt, and achieved credit facility coverage ratio requirements. It was reported that MTR Gaming has an agreement to sell excess land near Presque Isle Downs for $1.3 million, and a "firm" $3.4 million offer for unused land it holds in West Virginia.
"Basically, the way we are looking at it is, if we don't need (excess land) to run our facilities, we are going to sell it to reduce debt," said David R. Hughes, MTR Gaming's chief financial officer.
An analyst again asked about the intentions of the Jacobs family, which owns about 16% of MTR Gaming stock, and is looking to add more, according to recent disclosures with the Securities and Exchange Commission. Jacobs family holdings, which are headed by MTR Gaming board director Jeff Jacobs, include Colonial Downs in Virginia, which is on the sales block.
“That's a question you would have to address with them right now,” Arneault told the analyst. “We think it is all positive. I've worked with Jeff (Jacobs) for the last 13-14 years, so this is nothing new at all. I think they see it as a great opportunity in an area that they know and understand. So I think they are looking at in no differently than other major investor would.”
In June, Jacobs indicated he wanted to increase the family's share in MTR Gaming, tendering an offer to purchase up to $5 million of Arneault’s personal stock holdings by next January.