Newshoggers Archive: bonds

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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Tuesday, September 29, 2009

Casino saturation and failures

By Dave Anderson:

The Pittsburgh River' Casino looks like it is officially on the path to being a boondooggle.

And it is not just me making that conclusion.

The Pittsburgh Post-Gazette reports that the Rivers Casino ownership structure is facing a credit downgrade from S&P because the slots parlor is making way less money than anticipated. [h/t Chris Briem]

Standard & Poor's downgraded the credit rating for casino affiliate Holdings Gaming Borrower one notch yesterday, from B to B-minus, citing concerns about the Rivers' "weak operating performance" and its ability to meet debt service payments if there's no change in fortunes....

"It's not as if they're just marginally below [expectations]. They're meaningfully below," said Craig Parmelee, who manages Standard & Poor's gaming and lodging team.

Later on in the article, S&P officials say it is typical to see about a third of all casinos go bankrupt in their original ownership configurations. That is the historical rate under normal conditions. However we are not under normal conditions of consumer non-spending. I think it is likely that the Rivers Casino may go bankrupt sometime during the summer of 2010.

I am not a lawyer, but from my understanding of corporate bankruptcies, everything is under reconsideration in bankruptcy. Seniority of obligations provides some protection for some interested parties, but previous contracts and obligations are moot if the bankruptcy judge decides that is the most viable course forward. This is important because the casino has an annual $7.5 million dollar payment to the Sports and Exhibition Authority for the Penguins arena bonds. I have no idea what the seniority status of the SEA; my bet is that they are fairly low on the totem pole. We may find out the value of the implied moral guarantee contained in the Commonwealth Lease afterall.

The other portion of the article I enjoyed were the reasons why the Rivers Casino is having trouble. An amazing and unanticipated confluence of events such as three casinos within fifty miles, including two with table games were unanticipated competitors, the Steelers suddenly decided to play football in a stadium that is right across the parking lot from the casino, and suburbanite fear of urban areas were all unanticipated factors that have contributed to weaker than expected performance at the Rivers. Whocodaknown.

This should not be surprising. Nate Silver in his Esquire gig looks at gambling and makes the reasonable conclusion that the industry is now a mature industry that is not an automatic profit center with solid and guaranteed annual growth irrespective of the broader circumstances. Almost every major metro area is within a few hours of at least a major slots parlor if not a full-service casino now.

But desperate state governments looking to casinos to bail them out of their budget nightmares are likely to be disappointed. The same may be the case with trying to tap other "sins" for revenue. Nationally, sales of alcohol for off-premises consumption were down significantly last year, an unprecedented 9.3 percent in the fourth quarter, according to the Commerce Department.

Alcohol consumption can at least be expected to bounce back a bit � right? � but a lot of the potential customers of the new casinos may be tapped out. The year 2008 was the first time in history that total casino gaming revenues declined throughout the United States (by about 5 percent according to industry estimates).

Just about everyone who wants to gamble in the United States is already a morning's drive away from being able to do so; with the possible exception of isolated Texas, states that open new casinos will mostly be stealing customers from one another...

Whowouldathunkit.... operating a generic product in an area that is approaching saturation with a target audience that is flat broke and has minimal truly discretionary entertainment income to spend would lead to significantly lower than expected revenue. Absurd I tell you, absurd.....