Mohegan Sun’s Mitchell Etess sees better days ahead despite economic downturn

Born into a family of hoteliers, Mitchell Grossinger Etess brings literally a lifetime of experience in the hospitality industry to his role as chief executive officer of the Mohegan Tribal Gaming Commission and president and chief executive officer of Mohegan Sun. Etess joined Mohegan Sun as a member of the casino resort’s pre-opening team in 1996 as senior vice president of marketing. Shortly thereafter, he was promoted to executive vice president of marketing and was responsible for marketing, food and beverage, sports and entertainment and hotel operations  In August 2004, Etess was elevated to president and chief executive officer to oversee the overall management and operation of Mohegan Sun. In April 2006, Etess was appointed chief executive officer of the Mohegan Tribal Gaming Authority (MTGA), an instrumentality of the Mohegan Tribe who own and operate Mohegan Sun.  In this position, Etess is responsible for the overall management and operation of Mohegan Sun at Pocono Downs, a harness racetrack located in Pennsylvania and five off-track wagering facilities located in Pennsylvania. Etess also serves as chief executive officer of the Connecticut Sun, the WNBA’s professional women’s basketball franchise, which is owned and operated by Mohegan Sun and calls Mohegan Sun Arena home.  With the Connecticut Sun, Etess oversees team operations on behalf of the Mohegan Tribe, representing the ownership in all matters pertaining to the day-to-day functioning of the franchise on the administrative and basketball sides of the organization. He talked with Casino Journal Associate Editor Craig Berosh.

Casino of the Wind in Connecticut and the permanent facility at Pocono Downs in Pennsylvania opened this summer. Can you give us an update on how those properties are performing as well as an update on Project Horizon?

Etess: We are very pleased with the way that the Casino of the Wind has been received. There is no doubt that the return of poker and [the addition of] Jimmy Buffett’s Margaritaville restaurant has become great attractions. Project Sunrise at Pocono Downs has also been very well received in the market and has brought a great array of nongaming attractions, which has significantly enhanced the offering there. Of course, given the state of the economy and the impact that it is having on our industry, it’s somewhat difficult to determine financially what these are individually contributing. We are very confident, in both cases, that both additions are having positive impacts on our performance. Our focus on Project Horizon is on renovating our Earth food court, renovating some new food options there and reopening the Winter entrance as soon as possible, hopefully no later than July 1.

How has the company attempted to create synergy between the Connecticut and Pennsylvania properties or do you perceive them as more individual entities?

We have really been focusing on creating operational efficiency between the two properties, utilizing purchasing power as well as IT resources and some marketing resources as well. Due to the distance, there isn’t a tremendous amount of crossover in play; however, we have been attempting to convince our Mohegan Sun at Pocono Downs customers, who make trips to Atlantic City, to replace those Atlantic City visits with Pocono Downs visits.

How do you personally put the current economic climate in the gaming industry into historical perspective?

“Unprecedented” is the word that comes to mind when most people talk about what is happening in the economy today.

Which individual economic factors are having the biggest negative effect on business at Mohegan Sun or is it a cumulative effect of many?

My opinion is that it has been somewhat exasperated here in our market by the direct impact of gas prices on Connecticut casinos because so much of our business is drive-in as well as the increase in product when you look at the slot machines that have been added from Yonkers up to Twin Rivers. So, in some ways, at least in this part of the country, it is been something of a perfect storm where the gas prices started impacting business, which made it more difficult for the market to accommodate its full supply, which then led into the full economic meltdown. All things being equal, there certainly have been better times, and I think there will be better times ahead.

Aside from Project Horizon, how has the economic downturn affected the company’s long-term plans? Are there expansion opportunities that you can share that still look attractive and are being considered?

Obviously, right now the capital markets are tough, but I think when things straighten out we are still desirous of attempting to continue to develop the tribe’s interests in Connecticut and Pennsylvania, but clearly right now that is difficult for us as well as every other gaming company.

How are the effects of an economic downturn different for a property like Mohegan Sun compared to a property in Atlantic City or Las Vegas?

Every market is affected somewhat differently. Mohegan Sun is primarily a drive-in destination with a regional market so the impacts on us are somewhat different than they are in Las Vegas, but, in reality, we are all suffering from the same thing, which is when people have less money, or feel like they have less money, they are forced to make decisions on how they spend that money. They are altering the things in their lives that are discretionary, which is going over to Mohegan Sun or taking a vacation to Las Vegas. Although there’s a lot of difference between Mohegan Sun, Las Vegas and Atlantic City, we are all seeing the results of the same impact on the emotional psyche of our customers.

What is Mohegan Sun’s short-term strategy from a corporate or operational standpoint to offset decreases in customer visits and play?

We have been focused for a long time on becoming as efficient as possible. We saw this happening and have reduced our work force by attrition by about 700 employees since last November in a way that we do not believe has affected service. We’ve looked at everything in our operation from a purchasing and utilization standpoint and are doing everything we can to weather the storm.

There are initiatives in surrounding areas in the Northeast United States that could bring increased competition to the area. What is Mohegan Sun’s outlook on such an environment?

There are always a lot of things happening. I don’t believe that there’s any new active legislation in any of our surrounding areas. Right now there’s nothing tangible, but we’re keeping our eye on all developments. 

Is there any good news out there right now? What is your opinion on when conditions will improve for the gaming industry?

There’s not a tremendous amount of good news right now. For us there are some positive things. As we speak today, gas prices are as low as they have been in some time. That’s positive. Up here in New England, we were concerned about further impact of increased heating oil prices; hopefully it’ll have the same impact on that. There are some people that are somewhat encouraged that the new administration in Washington will bring about some positive aspects in the economy, but we’ll have to wait and see.

What is your sense on how a new White House administration will affect the gaming industry?

I personally don’t know Mr. Obama’s position on things related to gaming. I would hope from a macro standpoint that if he could just bring about a positive change on the country and the economy and get things on track, then that will have a long-term benefit.