Speed reading the Capital Region casino presentations

capital region casino final 4 renderings

The teams hoping to win the casino license for the Capital Region made their public presentations to the state Gaming Facility Location Board Monday at the ESP. It was four hours of promo videos, powerpoint, and projections.

We watched so you didn't have to. Here's the whole afternoon in a quick scan...

Capital View Casino & Resort - East Greenbush

Capital View

Pitch paraphrased in a few sentences: Churchill Downs is a long established brand with a track record operating other successful facilities, and partnering with Saratoga Casino and Raceway allows the two facilities to work together. The project will also benefit local communities. The site has good roadway access. And look at that view.

Cannibalism: Backers repeatedly mentioned that the partnership between Churchill Downs and Saratoga Casino and Raceway would allow them to work together, growing the overall pie. They project Capital View and the Saratoga racino together can do $306 million in gross gambling revenue per year (the racino had gross gambling revenue of $159 million for fiscal year 2013/2014).

As one official said of the situation in what's probably our favorite out-of-context quote: "We can manage the cannibalization."

Out of state draw: All of the applicants addressed the issue of being able to draw customers from outside the region. Capital View estimates $217 million in gross gambling revenue -- 15 percent from out of state customers.

Local economic development: One of the hurdles for the Capital View app is negotiating the fact that the state's criteria call for the casinos to go to areas that need economic help -- and East Greenbush isn't exactly down on its luck (median household income: about $76,000 per year). So it appeared backers were pushing against the issue, citing a WSJ column that listed East Greenbush as municipality to watch out for financial trouble, and one backer mentioning that the town supervisor faces an "incredibly difficult job of leading his community back to financial stability." The presentation also pointed to the the $11 million deal with Albany -- which Albany mayor Kathy Sheehan announced she had executed Monday -- specifically mentioning that the money would go to Capitalize Albany for economic development.

Opposition: One of the board members noted during the question period that Capital View was the only project that appeared to have significant local opposition (a group has been very active in opposing the project). Backers said they're continuing to reach out to the community. But it might be noteworthy that a board member noted the opposition.

Possible veiled shot at the competition: One of the presenters, in talking about the "excellent" roadway access to the Capital View site, gave a heads up to people to watch for congestion on the Dunn Memorial Bridge -- that is, the way many people would cross the river for the Hard Rock casino in Rensselaer.

Random fact: The Capital View site plan includes space for a "kitchen garden" to help supply a "farm-to-table" steakhouse run by Mazzone.

Hard Rock Hotel Casino - Rensselaer

Hard Rock Rensselaer

Pitch paraphrased in a few sentences: Hard Rock is an internationally-recognized brand with locations in 58 countries. Rensselaer and nearby parts of Albany need the help. The riverfront site is ready to go. And we're plugged into a huge pool of money to fund this project.

Non-locals: A good portion of the Rensselaer site presentation focused on Hard Rock brand and the backers' belief that Hard Rock will be able to draw crowds from beyond the Capital Region. They're estimating that 35 percent of the project $260 million in gross gambling revenue will come from vistors from more than 90 miles away. The group says that large share is key because locals "slots in a box" casinos are struggling around the country.

The big pool of money: The Rensselaer project is being funded by Och-Ziff Real Estate, an arm of the enormous Och-Ziff hedge fund. And Och-Ziff officials said they're ready to fully fund the $280 million project themselves from their reserve of capital. So, how much money are they sitting on? An O-Z official told the board they had recently raised $1.5 billion.

Cannibalization: The Rensselaer team's estimate for how much business it would take away from the Saratoga racino: $40 million a year. (The Saratoga racino had gross gambling revenue of $159 million for fiscal year 2013/2014.)

Possible veiled shot at the competition: Backers noted the Rensselaer site has its approvals in place and is ready to go -- something the East Greenbush proposal is still working on.

Random fact: Hard Rock has 77,000 music memorabilia items, said to be the world's most valuable collection of its type, available for display at its various locations.

Howe Caverns Resort & Casino - Cobleskill

Pitch paraphrased in a few sentences: Schoharie County is a forgotten part of the state when it comes to economic development and this project would be an enormous addition. Also, our group of backers isn't glitzy like those other groups, but we know how to do resort projects in rural areas.

Tone: The Howe Caverns presentation had a different feel from the other three, maybe because its backers realize they're probably underdogs. They emphasized that they plan not to build a glitzy casino but rather a "comfortable" and "warm" "iconic" development in Schoharie region that could be a draw for families. To that end, the architecture is more lodge like and two waterparks -- indoor and outdoor -- make up a large part of the overall development near Howe Caverns.

Gravitation: The presentation included a discussion of Reilly's law of retail gravitation, which uses an analogy with gravity to model how customers will be drawn to various retail outlets in a system (hint: the bigger the outlet, the bigger the draw). Using this approach, and considering all the other (potential) casino development in the Northeast, the Howe Caverns site team figures the ceiling for gross casino gambling revenue at a facility in the greater Capital Region is $250 million a year -- if the Saratoga racino didn't exist. Taking into account the racino, the ceiling drops to $187 million.

Cannibalization: The team noted that the Saratoga racino is "highly susceptible to cannibalization" and used the model to project that a casino located in the Capital Region's core could take away as much as $50 million from the racino each year. But a casino at Howe Caverns -- because of its distance from Saratoga -- would only skim away about $15 million. (And do $131 million a year in gross gambling revenue.)

A casino and water park? The only question from the siting board members was about the idea of pairing a casino with a family destination like a water park. The response: Well, the casino and the water parks will be separate. And having multiple amenities that appeal to a wide range of people and ages makes the resort a bigger draw for extended families.

Possible veiled shot at the competition: One of the officials from Full House Resorts -- the backing company that includes Lee Iacocca -- mentioned that they are an "ego-less" company. And people will see a regional brand on this facility, not one for his company. (The Howe Caverns presentation followed the Hard Rock presentation, which included numerous references to the glory of the Hard Rock brand.)

Random fact: They figure the facility will be able to draw on geothermal resources from Howe Caverns for the HVAC system.

Rivers Casino & Resort at Mohawk Harbor - Schenectady

Rivers Schenectady

Pitch paraphrased in a few sentences: We have a good site on the river that's part of an already-in-motion mixed use development that's connected to an urban downtown. Our operators have been successful in other urban settings. And Schenectady -- and its school district -- really needs the money.

Track record: The casino part of the backing group for Schenectady project is Rush Street Gaming. And it focused on its recent track record of opening award-winning casinos in Pittsburgh, Philadelphia, and a spot near Chicago -- all since 2009. And officials mentioned that the Mohawk Harbor project in Schenectady -- on the former Alco site -- reminded them of these other recent urban projects. And they project a casino there could generate $223 million a year in gross gambling revenue, which they believe to be the highest of any site in the region. (Though Hard Rock is projecting higher revenues.)

Need: Schenectady mayor Gary McCarthy was part of the presentation, and he stressed the economic need in Schenectady, both for the city and the school district. McCarthy cited figures indicating Schenectady has the lowest per capita income ($19k/year) of any of the potential Capital Region host municipalities.

Amsterdam: The Schenectady presentation included not one, but two mayors. Amsterdam mayor Ann Thane was also there to endorse the project. Amsterdam had been in the running for a casino until the facility board bounced its project for being incomplete. With the Amsterdam project pushed to the side, Thane said the Schenectady project offered the possibility of new jobs for people from her city. (Amsterdam is about 18 miles from Schenectady.)

Funding: Rush Street Officials said they were planning to get financing for the $300 million project, but they could totally fund the project themselves if need be. (So, if you're counting, backers for Rensselaer and Schenectady both say they have the capital already. East Greenbush and Howe Caverns would require financing.)

Cannibalization: Not a lot of talk, but officials mentioned that competition with another facility in the area (that is, the Saratoga racino) can be healthy.

Possible veiled shot at the competition: Two, though they're sort of small and might not have been shots: Rush Street chairman Neil Bluhm mentioned they focus on quality not quantity of locations (hello, Hard Rock, and your 189 locations). And he also said that capital for the project is "coming from me and my family and partners, not some fund" (hello, Och-Ziff, massive hedge fund).

Random fact: A Rush Street official said their focus on details extended to the parking garage, because that's often the first point of contact people have with a facility.
____

Earlier on AOA:
+ What the proposed Capital Region casinos could end up looking like
+ Scanning the summaries of the Capital Region casino applications

Comments

So ugly, ugly, Dirty Dancing, and ugly.

We don't need a casino or convention center.
Albany county needs a better assisted living and nursing home for the seniors.

Interesting story last night on NPR about the decline of Atlantic City and the closing of casinos because of regional competition.

I thought a casino serves as a nursing home for seniors. No?

Although I would love the Hard Rock to site in Rensselaer, I think Schenectady is a better fit. Anything that needs any component of 787 is a loser right from the start. The highway system and bridges around Albany are poorly designed to meet the needs of current capacity, let alone increased capacity. Having traveled to Connecticut casinos fairly often, it doesn't take much to be sitting in a traffic jam because the roads weren't made for the amount of traffic using them. Additionally, I don't want to see Albany get any casino money - the whole give me your support for casinos in other municipalities (even if they don't want the casino) and we'll give you money is pretty pathetic - does anyone else see these political leaders as casino money whores??

I'm not a huge fan of casinos or their operators, but Rush St. does seem to be the least evil one.

Yes, Albany needs more senior housing but who is to pay for it? Should taxes be raised? Who can pay them? Where should the money come from? The best chance for more public money is to have more business including casinos. People continue to move away and business is not prospering and governments are in deficit mode. The decision is between continued economic decline and the possibility of some economic benefit. That is the choice. Some seem to be in favor of the economic decline model. Or do they have other suggestions for economic growth? True, casinos may not be the best choice, but where are other businesses clamoring to come to upstate NY?

Great summaries! I like your "Possible veiled shot at the competition" category.

Definitely noticed a couple of those, too.

Great summaries, thanks for the insightful post. The Howe Caverns project is troubling, as it would be sited on a 110 acre parcel of farmland with beautiful views into the valley. The site is only accessible by traveling more than 2 miles on narrow county roads. It's interesting to note that the owners of Howe Caverns, who have much to gain, happen to own an aggregate supply company (quarry) and a road building company.

It should be noted, as a resident of East Greenbush, that the "excellent roadway access" for the Capital View Casino is really anything but. Route 4 is home to Walmart, Target, and Home Depot and backs up terribly at rush hour. Case in point: I live less than 4 miles from these places but it sometimes takes me over 20 minutes to get there. How on earth they think that siting a casino here would work is beyond me. Even if they provided direct access to I-90, the amount of backup due to even a stoplight would be horrendous. I haven't met a single person in EG who thinks this is a good idea.

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