Farewell. The Flying Pig Has Left The Building.

Steve Hynd, August 16, 2012

After four years on the Typepad site, eight years total blogging, Newshoggers is closing it's doors today. We've been coasting the last year or so, with many of us moving on to bigger projects (Hey, Eric!) or simply running out of blogging enthusiasm, and it's time to give the old flying pig a rest.

We've done okay over those eight years, although never being quite PC enough to gain wider acceptance from the partisan "party right or wrong" crowds. We like to think we moved political conversations a little, on the ever-present wish to rush to war with Iran, on the need for a real Left that isn't licking corporatist Dem boots every cycle, on America's foreign misadventures in Afghanistan and Iraq. We like to think we made a small difference while writing under that flying pig banner. We did pretty good for a bunch with no ties to big-party apparatuses or think tanks.

Those eight years of blogging will still exist. Because we're ending this typepad account, we've been archiving the typepad blog here. And the original blogger archive is still here. There will still be new content from the old 'hoggers crew too. Ron writes for The Moderate Voice, I post at The Agonist and Eric Martin's lucid foreign policy thoughts can be read at Democracy Arsenal.

I'd like to thank all our regular commenters, readers and the other bloggers who regularly linked to our posts over the years to agree or disagree. You all made writing for 'hoggers an amazingly fun and stimulating experience.

Thank you very much.

Note: This is an archive copy of Newshoggers. Most of the pictures are gone but the words are all here. There may be some occasional new content, John may do some posts and Ron will cross post some of his contributions to The Moderate Voice so check back.


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Thursday, June 3, 2010

Rivers Casino in virtual default

By Dave Anderson:



One of my hobbyhorses over the past few years has been the utter dependency of local municipal finances on the success of the Pittsburgh Rivers Casino where success is defined as taking lots of money from suckers. The casino is supposed to fund the Penguins' arena, pay off several large infrastructure bond issues, breathe life into the Hill District, and give a massive injection of general revenue to the city of Pittsburgh, Allegheny County and the Pittsburgh Public School District.  The state and the bond rating agencies projected the casino would make about $300 per slot machine per day once winnings were paid out.  The owners projected they could make $350 per machine per day.  Neither figure has ever been achieved over a course of a week.  



In January, I argued that the casino's fixed costs were unsustainable.  Those costs consumed 95% or more of the then projected gross terminal revenue.  



The casino owes $55 million for construction bonds, $7.5 million for the Penguins Arena bonds, and $6 million for municipal, school and county property taxes.  Using the previous 55% GTR rate, the casino needs to still generate $154 million in GTR to cover fixed costs.  However the casino needs to come up with an additional $12.4 million host municipality/county tax payments.  That eats up another $27 million dollars in GTR.  Fixed costs will consume roughly $181 million dollars in GTR.  

$181 million dollars is significantly more in fixed costs than projected gaming operating revenue for the first year of operations.

Games can be played with cash flow and shifting payments to the future, but those games can only take the casino so far before bankruptcy is the most plausible option.









Casino revenues have improved since that post, so fixed costs are most likely slightly less than total revenue after winnings are paid out.   

The Pittsburgh Post Gazette reports that the ownership structure is already playing games with cash flow and shifting payments as the two largest investors have just kicked in another $100 million dollars in cash:




a group of existing investors that plowed another $108 million into the casino in a bid to firm up its financial footing.


The casino also restructured debt to address financial concerns and credit downgrades precipitated by lower-than-expected slots revenues at the North Shore venue. 

In an announcement Wednesday, the casino said the recapitalization would reduce its senior debt by more than 45 percent and result in "improved financial stability...."   
In an update released hours after the Rivers announcement, Standard & Poor's downgraded the rating of casino affiliate Holdings Gaming Borrower from CCC to SD, or selective default. It marked the third downgrade since the casino opened in last August.

Standard & Poor's stated it viewed the buy back of some of the senior debt and the accompanying restructuring of other obligations as "tantamount to a default," given the "distressed financial condition" of the company...




This is not bankruptcy, yet, but that is a distinct possibility. And if that does occur, then we'll probably see a cascade of municipal finance implosions as everyone has been counting on the casino to balance their books.

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1 comment:

  1. John BallardJune 7, 2010 at 12:59 AM

    Yo, Dave.
    Looks like spam is getting more sophisticated. Steve got one of these yesterday at another post. Phrases like "Keep it up the good going" don't have the ring of someone whose mother tongue is English. Probably not bot calls, so call centers abroad may be spamming on the side.

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