GAMBLING BEYOND NEVADA: Station to develop tribal property

Las Vegas locals gaming power Station Casinos has reached a deal to develop and manage a casino for a Michigan Indian tribe, the company and a Western Michigan tribe were to announce this morning.

The proposed Gun Lake project would mark Station's first casino east of the Mississippi and would cement tribal casino management as the company's second business sphere, after its bread-and-butter Las Vegas locals franchise.

Station plans to spend "less than $200 million" to build the casino for a Michigan tribe, which has almost finished the federal approval process for putting the proposed casino site into trust.

"We expect to be up and operating in 2005," said Station Chief Financial Officer Glenn Christenson, who believes the deal validates the company's tribal management franchise. "We continue to develop ways to bring money back to Las Vegas."

Station President Lorenzo Fertitta said the deal solidifies the company's commitment to tribal casino development and management.

"There is a tremendous amount of support for the Gun Lake Tribe and for a gaming project," Fertitta said of feedback from government officials and opinion leaders in Michigan.

The casino would be built in an existing 192,000-square-foot building, originally a recycling center, on a 145-acre site on U.S. Highway 131 in Wayland, about 25 miles north of Kalamazoo and 20 miles south of Grand Rapids.

About 1.8 million adults live within a 50-square-mile radius of the site, and the nearest casinos are about 80 or 90 miles away in Mount Pleasant, Mich., and northern Indiana, Station executives said.

Station proposes to build a casino that will have as many as 2,500 slot machines, 75 table games, a buffet and other restaurants, and an entertainment venue.

The deal calls for Station to spend $6 million for a 50 percent stake in a Michigan limited liability company, MPM Enterprises, which has a casino management deal with the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, a federally recognized tribe commonly known as the Gun Lake Tribe.

Station may also have to pay another $12 million for its MPM interest in years six and seven of the seven-year casino management deal.

The deal calls on Station to arrange for development and construction financing. Station expects to advance the tribe $10 million to $15 million for the acquisition of the land and other development costs.

Funds advanced by Station would be repaid from the project financing or from gaming revenues.

Under the seven-year management deal, MPM would receive 30 percent of the project's net income.

Station would gets 50 percent of the first $24 million MPM earns each year under terms of the deal, 83 percent of the next $24 million, and 93 percent of any fees in excess of $48 million.

The original MPM partners would get the remaining money.

The deal was announced hours after Thursday's market close. Station shares closed at $29.44, down 1 cent.

Station executives announced plans Oct. 30 to accelerate spending on the pursuit of additional tribal management deals.

Station is already on track to earn as much as $75 million from the first year operation of Thunder Valley, the Sacramento, Calif.-area casino the company manages for the United Auburn Indians.

The company also expects to begin realizing revenue in 2006 or 2007 from a deal to develop and manage a tribal casino about an hour's drive north of San Francisco, in Sonoma County.

Christenson said the Michigan opportunity provides a clear view for investors who want to understand the company's growth strategy.

With Thunder Valley opening last June, a Green Valley Ranch expansion and the Gun Lake project expected to open in 2005, Red Rock Station in Summerlin slated to debut in 2006 and the Graton Rancheria project in California penciled in for 2006 or 2007, Christenson said the company's planned growth is better defined than that of most competitors.