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MotorCity Casino Hotel is making financial preparations in case of a second shutdown due to the COVID-19 pandemic. The downtown Detroit casino has received approval from the Michigan Gaming Control Board for its debt restructuring during a special virtual MGCB meeting, according to a report from Crain’s Detroit Business.
MotorCity’s new plan would mean a move from $15 million revolving credit to $45 million, giving the casino extra financial insurance in case of another government-issued shutdown in Michigan, the report said.
All four MGCB board members voted unanimously on Oct. 26 to approve the deal.
“If there were a second closure, we could last over 18 months,” Bruce Dall, MotorCity president, said during the virtual meeting, according to Crain’s. “Quite frankly, if things were that bad, and it went 18 months, I think we’d have bigger issues or problems to deal with.”
Under MotorCity’s new deal, the casino‘s financing will consist of $570 million with the combination of a five-year term loan and unsecured notes, the report said. MotorCity’s previous deal included $282 million in term loan and $200 million in senior unsecured notes.
Pandemic Hit Detroit Casinos Hard
As expected, the pandemic had a negative impact on Detroit’s three commercial casinos once they reopened. In the first month of reopening after the COVID-19 shutdown, MGM Grand Detroit, Greektown Casino and MotorCity each reported losses for August in a year-by-year comparison. All of the casinos reopened at 15% capacity.
Total, the Detroit casinos reported $69.3 million in aggregate revenue for August with each reporting a loss compared August 2019. Revenue was down 46% at MGM Detroit to $28.6 million, 37.5% to $25 million for MotorCity and 41.5% to $15.7 million at Greektown.
September’s numbers were a little better, with $87.9 million in revenue between the three casinos, up 26.8% from August, but still down 55.2% from September 2019’s $157.3 million. Compared to the same month last year, revenue was down 22.3% at MGM Detroit to $36.1 million, 17.3% to $32.2 million at MotorCity and 27.2% to $19.6 million at Greektown.
Following Gov. Gretchen Whitmer’s executive order on July 29, casinos were allowed to reopen under strict health and safety guidelines. MotorCity and Greektown reopened on Aug. 5, while MGM Grand reopened to the public on Aug. 7.
The amount of taxes paid to the state was also impacted during the shutdown. In August, the three Detroit casinos paid $5.6 million in taxes, down from $9.7 million for the same month last year.
Over the past two decades, Detroit casinos have paid more than $2.2 billion to Michigan.
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