JOHNSON CITY — On May 22, representatives of Traditions Resort & Casino, LLC announced the establishment of a strategic relationship with Gaming & Leisure Advisors, LLC, a New York state, for-profit subsidiary of Seneca Gaming Corp. (SGC). According to SGC spokesman Phil Pantano, Gaming & Leisure Advisors would be paid a management fee for “running […]
JOHNSON CITY — On May 22, representatives of Traditions Resort & Casino, LLC announced the establishment of a strategic relationship with Gaming & Leisure Advisors, LLC, a New York state, for-profit subsidiary of Seneca Gaming Corp. (SGC).
According to SGC spokesman Phil Pantano, Gaming & Leisure Advisors would be paid a management fee for “running the gaming floor and associated amenities, including valet parking, restaurants, and retail.”
The fee would be determined on a percentage basis, but there was no disclosure of whether it was based on revenues, profits, or another benchmark. Neither SGC nor Traditions committed to stating the length of the agreement, other than it was “long-term,” but did say that at this point SGC has no equity position. William Walsh, the CEO of Traditions, says he had interviewed more than a dozen operators before choosing SGC.
Traditions Resort & Casino is owned by the Walsh family. The Traditions facility currently includes a golf course, conference center, hotel, and spa. Traditions
Resort & Casino is pursuing a gaming license from New York State, one of four available Upstate. Upon receipt of the license, the resort and conference center proposes to invest $150 million to build a casino and to make other planned additions. According to Walsh, the expansion is projected to create 1,100 jobs in the community in addition to hundreds of construction jobs. Details of financing the expansion have not been released.
Seneca Gaming Corp.’s scope
SGC is a wholly owned, tribally chartered corporation of the Seneca Nation of Indians. In 2002, the Nation entered into the Nation–State Gaming Compact with New York State, which granted the Nation the exclusive right to build and operate three, Class-III, gaming facilities in Western New York. In August of that year, the Nation chartered SGC to manage its gaming operations.
In 2002, the Seneca Nation also chartered the Seneca Niagara Falls Gaming Corporation, a subsidiary of SGC, which opened Seneca Niagara Casino on Dec. 31, 2002, and a 26-story hotel on Dec. 30, 2005. In August 2003, the Nation chartered the Seneca Territory Gaming Corporation as a subsidiary of SGC to manage the Seneca Allegany Casino in Salamanca (STGC). STGC opened the Seneca Allegany Casino on May 1, 2004, and an expanded casino and hotel on March 30, 2007.
The Nation chartered the Seneca Erie Gaming Corporation, another SGC subsidiary, in September 2003. In October 2005, the Seneca Nation acquired 9 acres of land in the Inner Harbor of downtown Buffalo and opened a temporary Seneca Buffalo Creek Casino in July 2007. The facility was expanded in 2008 and 2010. In March 2012, SGC unveiled a re-designed, $130 million permanent casino which was officially opened in 2013. SGC also operates the Seneca Hickory Stick Golf Course in Lewiston, N.Y.
Today, SGC, headquartered in Niagara Falls, employs about 4,000 people and operates about 6,500 slot machines; 150 table games; 1,000 hotel rooms; multiple restaurants; two multi-purpose, entertainment and special-event facilities; and related retail amenities, including a crystal outlet and candle shop in Niagara Falls.
“The [capital] investment is well over $1.2 billion to date, and SGC invests [on average] $30 million a year to upgrade its facilities,” says Pantano. He goes on to say that “the annual payroll is more than $133 million, and SGC spends in excess of $100 million a year with vendors in Western New York.” The Business Journal News Network estimates that SGC’s annual revenue is between $400 million and $500 million. The three Seneca properties attract about 15 million visitors annually.
Since April 2009, Seneca Gaming Corp. has been led by Catherine A. Walker, the company’s current president and CEO. Starting in April 2008, Walker had served as COO. Before joining SGC, her career included management roles at Trump Hotels & Casinos, Harrahs, and Players Lake Charles LLC. She began her career on the legal staff of the New Jersey Gaming Commission. David Sheridan was appointed CFO in July 2008. He formerly worked as the CFO of the Oneida Indian Nation, including responsibility for the Turning Stone Resort & Casino. Sheridan is a CPA who started his career at PricewaterhouseCoopers in Syracuse. Kirstin Lowry Sommers was appointed general counsel at SGC in December 2011. Before joining SGC, she was a litigator whose work included complex commercial and securities matters.
SGC’s rapid growth was financed by $500 million of 7.25 percent senior notes, due in May 2012. The company refinanced its obligations in November 2010 through the issuance of a combination of a new $325 million in senior notes and a new $225 million senior-secured credit facility. The funds were used to retire the original debt including a $50 million, senior-secured line-of-credit. The initial blend rate was less than 7 percent, a reduction in the cost of SGC’s borrowing. The $225 million, five-year bank credit facility was completed with a syndicate of six banks. The 8.25 percent senior notes are scheduled to be retired in 2018. Tribal Financial Advisors acted as financial advisor to SGC on securing the financing.
A first
The agreement between Traditions and Gaming & Leisure Advisors is SGC’s first contract to manage a casino not owned by the Seneca Nation. But it’s not the only recent move by SGC. In March, the company spent $2.75 million to buy 32 acres of land in Henrietta, near Interstate-390. SGC says it has no plans yet to develop the area, but it is large enough to contain a gaming destination complete with casino, hotel, entertainment facilities, restaurants, retail, and other amenities. The Seneca Nation’s compact with New York state limits the tribe to three venues, which are already in operation. When asked whether the Seneca Nation was in contact with Gov. Andrew Cuomo to allow a fourth venue, Pantano responded with no comment.
Competition
Traditions and SGC are vying with two competitors for the gaming license. Jeff Gural, who owns Tioga Downs Racino in Nichols (Owego County), has also paid $1 million for the privilege of applying for a license. On June 6, he announced the “all-in” coalition of regional business and government leaders who support his bid. According to an article in the Ithaca Journal, Gural says he has support from 29 towns and villages, seven labor unions, 10 chambers of commerce and tourism councils, 22 economic-development organizations, and numerous businesses. Tioga Downs expects to invest $90 million in the project, including a 140-room hotel.
Rochester–based Wilmorite Corp. has also applied for a gaming license. The company proposes to build a $350 million facility in Tyre in Seneca County, with 2,000 slot machines, 100 gambling tables, and a 200-room hotel.
In a teleconference on June 9, Traditions Resort’s Walsh indicated that applications for the gaming license were due by June 30. He said that SGC had been a big help in completing the forms. He went on to say the oral presentations were set for the week after Labor Day and a final decision would be rendered no later than October. “If we are successful,” says Walsh, “Traditions is ready to break ground in a few days and open [the doors] within a year.”
Contact Poltenson at npoltenson@cnybj.com