Foxwoods Fortunes Decline

The Mashantucket Pequot tribe that owns Foxwoods Resort Casino and MGM Grand At Foxwoods in Connecticut has seen a reversal of fortunes in recent years. Though members of the tribe used to receive hefty living stipends, the payments have ceased while the casino struggles to pay down a $2 billion debt load.

The troubles began when the tribe underwent a major expansion of Foxwoods in 2005. A 4,000-seat theater, hotel rooms, restaurants, shops and more floor space were added to the complex, building up the property to nearly 20 times its original size.

The casino had prospered for years, drawing gamblers from across the region, but the Pequots were in for a shock when the new and improved Foxwoods debuted in 2008.

Tribal Chairman Rodney Butler recently told the New York Times that, given Foxwood’s previous successes, expansion just seemed like the next logical step.

“Every consultant, every analyst and every banker on the planet encouraged us to keep getting bigger,” Butler said. “If it wasn’t for that, I’d say, ‘jeez, maybe we’re just idiots.’ But these were smart people. Then we opened the doors at the MGM Grand, and five months later, Lehman crashes and the world falls apart.”

These days, instead of luxury cars and living stipends, the tribe has opened a food pantry and offers career counseling services to members.

A plan is in place, however, to help ease the casino’s debt load. Foxwoods CEO Scott Butera told the Times the Pequots are in talks with lenders to reduce the casino’s debt load to about $1.7 billion, with lower interest rates.

There’s also more expansion in the works, with plans for a 300,000-square-foot retail center and outlet stores. Still, Butera told the paper that as more and more players enter the casino business, Foxwoods is likely to see smaller returns in the future.

“We can still have a great business,” he said. “We just can’t have the same business we used to have.”