The latest casualty of the Mashantucket Pequot Tribal Nation's worsening financial problems at its Connecticut megacasino, Foxwoods, is its tribal chairman: Michael Thomas.
Tribal councillors relieved Thomas of his duties yesterday, alleging that he "betrayed our trust" by issuing a letter to tribal members describing his plan to deal with more than $2 billion in debt.
In his letter, Thomas, who is up for reelection in November, criticized the tribe's creditors for seeking reductions in payments the tribe makes to its members in exchange for greater payments on its loans.
"Foxwoods is here to support our people not Wall Street," he wrote. "Those who put the interests of bankers and bondholders ahead of our tribal community will have to answer to me."
Six of the seven tribal councillors sent Thomas - the seventh tribal councillor - an e-mail yesterday calling for his resignation after closing his office and announcing that he had been placed on administrative leave.
"The Mashantucket Pequot Tribal Council has placed Michael Thomas, the chair of the Tribal Council, on administrative leave pending the outcome of an internal review," the council's statement said. The tribe declined further comment.
If Thomas fails to step down by Sept. 10, the council could, by a three-fifths vote, remove him from the council and conduct a special election within 30 days to fill the vacancy, according to the tribe's constitution.
The tribe is a minority investor, with a 30 percent equity, in the planned Foxwoods waterfront casino for Philadelphia. It was granted a two-year slots-license extension by the Pennsylvania Gaming Control Board on Friday.
Foxwoods' financial travails in Connecticut come at a bad time for the Philadelphia project. Pennsylvania gaming regulators told the Foxwoods team Friday that it had six months to come up with a new financing plan.
The Mashantuckets own Foxwoods Resort Casino - the world's largest tribal-owned gambling hall - and MGM Grand at Foxwoods in southeastern Connecticut. As in virtually every major gambling market in the country, Connecticut's two biggest casinos - Foxwoods and the nearby Mohegan Sun - have seen decreased revenue.
Foxwoods' slots revenue was down 13 percent in July compared with the same period a year ago, while Mohegan Sun was down 9 percent, according to Paul Young, executive director of the Connecticut Division of Special Revenue.
The New London Day reported last week that a senior tribal adviser, speaking on condition of anonymity, had indicated that the tribe was in danger of defaulting on loan terms this week - including a $700 million line of credit - and that it was seeking to restructure $2.3 billion in debt.
"We remain in compliance with our covenants and are current with regard to our debt obligations," a Foxwoods representative said today. "As we continue through this process, the tribe will be pursuing a mutually beneficial resolution with its banks and bondholders."
Lawrence Klatzkin, a gaming analyst with Chapdelaine Credit Partners, of New York, said it was unclear how the tribe's growing financial crisis in Connecticut would play out in Philadelphia. Brian Ford, president of Washington Philadelphia Investors, which has the other 70 percent equity in the casino project, said last week that it would not have an effect because Foxwoods Development Co. L.L.C. was a separate entity from the tribe.
Foxwoods' Philadelphia investors declined comment today.
"The one question is, if one is having problems with the Foxwoods entity, that goes down to the issue of the strength of the parent," Klatzkin said. "If you have a weak parent, that is a relevant factor for people looking at you as an investor."
Klatzkin said it remained unknown whether Foxwoods Development had already set aside money for the Philadelphia casino.
"If it's obligated to put up $30 million, that is a problem," he said, "but if they've already set it aside in escrow, then it's not an issue.
"It depends on how it's structured," Klatzkin said. "It may or may not be relevant. We don't have enough information."