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First-ever drop in revenues forces Mohegan to cut pay

01:00 AM EST on Tuesday, January 13, 2009

By Benjamin N. Gedan

Journal Staff Writer

The Mohegan Sun casino is slashing the salaries of its nearly 10,000 employees, after seeing slot revenues drop last year for the first time since it opened 13 years ago.

In a statement, the casino said top executives will lose 10 percent of their wages; middle management will give up 7.5 percent of income and hourly employees will see their paychecks shrink by 4 percent.

Bonuses will also be eliminated, as well as contributions to employee retirement accounts, one of the benefits Mohegan Sun has cited in boasting of its “reputation as one of the premier employers in the region.”

Mohegan Sun and its chief competitor in Connecticut, Foxwoods Resort Casino, are important employers of Rhode Island residents. Both are struggling financially.

Late last year, Foxwoods fired its chief executive officer, Patricia Irvin, along with at least 700 other employees. Slot revenue at Foxwoods, one of the world’s largest casinos, has dropped consistently for the last several years.

Mohegan Sun, a 240-acre complex in Uncasville, has never ordered layoffs since its opening in 1996. But as the national economy soured last year, it began shrinking its work force by not filling vacancies.

The total staff, 9,800 employees, is down 600 since last November. Those reductions would have been even deeper if not for the opening of the casino’s first live poker room last August, where 200 employees help operate 42 tables.

The casino plans to reduce the hours of operations in some areas, among a variety of cost-cutting measures in response to “unprecedented market conditions.” The salary cuts take effect Feb. 1.

The combination of falling home values, rising unemployment and turmoil on Wall Street have helped disprove the conventional wisdom that gamblers will keep gambling even in times of economic troubles.

In recent months, Mohegan Sun has seen fewer visitors, and its more loyal customers are making shorter visits, wagering less money and cutting back on their eating and drinking. “The market and the economy have been deteriorating, and it’s made us take steps to offset that,” Mohegan Sun’s chief executive officer, Mitchell Etess, said in an interview yesterday. “Everyone always thought casinos would be more resistant to economic recessions. We’re beyond a recession here.”

Rhode Island’s casinos, a key source of state revenue, are also suffering. After undertaking a $225-million renovation and expansion project, Twin River has struggled to keep up with its loan payments. Slowing slot revenue is not helping the casino’s efforts to stay afloat.

At Mohegan Sun, many employees recently began paying more for their health care coverage, though their benefits have not changed.

Mohegan Sun spokeswoman Cathy Soper said the casino does not disclose the average salary of its employees.

For their part, the top executives can afford the pay cut. Etess earned $1.6 million in the last fiscal year, including a $372,035 bonus, according to federal filings. The chief operating officer, Jeffrey E. Hartmann, was paid $1.5 million.

“These are difficult times for the entire Mohegan family,” Bruce “Two Dogs” Bozsum, chairman of the nine-member Mohegan Tribal Council and a resident of South Kingstown, said in the statement. “Sacrifices are being made by the employees of Mohegan Sun, our Tribal Government, and by the members of our tribe.”

bgedan@projo.com

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