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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Friday, August 13, 2010

First year FAIL at the Rivers

By Dave Anderson:


The Pittsburgh Rivers Casino has been a white whale of mine for several years, both at the 'Hog and at my old blog, Fester's Place.  I have been very skeptical of the idea that slots gambling would be the regional municipal and state government revenue savior that its proponents.  The Rivers have been open for a year now, so it is time to see if the proponents were anywhere close to right with their projected revenue levels. 


Revenue projections were aggressive as the state and S&P thought the Rivers could take in $300 per machine per day in average gross terminal revenue after winnings were paid out.  The owners thought they could take in $350 per machine per day in average gross terminal revenue.  The Tribune Review has a brief update of total revenue for the first fifty one weeks of operation:


"As of Aug. 1, the Rivers' revenue since opening was about $217 million," said Frank Gamrat, a senior research associate with the Allegheny Institute for Public Policy in Castle Shannon. "The owners projected $427 million in revenue in its first year, and the Gaming Board projected $362 million. The casino's not living up to its hype."

The Rivers Casino falling short of targeted revenue is not a new story. It is something that a couple of bloggers (Chris Briem and myself) have picked up on since the second week of operations. I think the revenue data shows that the Western Pennsylvania market is fundamentally saturated. Those losses can be split between the Rivers Casino and the Washington Downs racino. Since the Rivers got over its opening day, G-20 and Steelers football season jitters, the two casinos basically split the market, with the Washington Casino having a slight edge. 


GTR SWPA
The Rivers has slightly cannibalized the Washington Downs casino, but most of the business appears to be add-on business as the North Hills and the Allegheny River Valley enter into reasonable driving distance.  For the past twelve months, the Rivers has pulled in $217 million dollars in gross terminal revenue while the Washington Downs has pulled in $255 million dollars in GTR.  Between the two casinos, that is a revenue level slightly greater than the state's projection for the two casinos but significantly below the owners' projections. 


The big problem is that the Rivers Casino revenue was supposed to save Allegheny County from making any hard decisions.  The Rivers were supposed to pay for most of the new Penguins' Arena, it was supposed to pay for the revitalization of the Hill District, it is now supposed to fund the city's Carnegie Library system, it is one of the most valuable pieces of taxable real-estate in the Pittsburgh school district.  It was supposed to solve a significant number of problems. 


With revenue at $217 million for the first year, the Rivers owes the state, county, city and school district over $130 million dollars in a variety of taxes.  Additionally, the Rivers committed another $7 million dollars for the Penguins arena.  That left the Rivers $80 million to cover debt service (initially scheduled for over $55 million dollars), advertising, utilities, insurance and most importantly $25 to $30 million dollars in wages/benefits for its employees.  Whoops, that is a bit of a problem.   


The Rivers' ownership group has re-arranged the financing and equity structure of the deal.  They pumped in another $100 million in cash, while some of the senior debt-holders saw their debt swapped out for equity.  S&P considers these moves a selective default on the debt obligations.  These moves were neccessary because the second year debt service costs were jumping to $75 million dollars from $55 million dollars, and the Rivers needed the additional cash to install table games. 


At current revenue rates, and underperformance on the table games, the Rivers will continue to limp along as its fixed cost structure is too high for it to work.  There are not too many re-arrangements that are plausible left for the Rivers to free up additional cash flow without increasing revenue from slots play.  The Rivers looks like it overpromised reletative to what it can deliver in terms of cash pay-outs to local governments and authorities. 


First year FAIL!






All the revenue data is from the Pennsylvania Gaming Control Board.



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