Station inks deal
with Michigan tribe

Nov 25, 2003 7:30 AM

Hoping to duplicate the success of its Thunder Valley casino in California, Station Casinos has penned a deal to develop and operate a tribal casino in Michigan.

The new casino will be built on 145 acres of land about 25 miles north of Kalamazoo. The casino is projected to include 2,500 slot machines, 75 table games, a buffet, specialty restaurants and a showroom for entertainment.

The casino will be owned by the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, which is also commonly known as the Gun Lake Tribe.

The tribe has formed a holding company, MPM Enterprises, to operate the casino. Nevada-based Station will develop, build and manage the casino.

The agreement calls for Station to initially pay $6 for a half interest in MPM. An additional $12 million may be paid by Station in the sixth and seventh year of the casino’s operation.

"We are extremely excited to be a part of this project," said Frank J. Fertitta III, chairman and chief executive officer of Station. "The tribe has outstanding local support, and MPM and the tribe have moved this project a substantial way through the process of having land placed into trust on the tribe’s behalf.

"We look forward to being part of a project that will help the Gun Lake Tribe attain self-sufficiency and economic independence," Fertitta said.

Under the terms of the agreement, Station will arrange for or actually provide the financing of the casino, which is estimated to cost about $200 million.

Moreover, Station will advance $10 million to $15 million for the acquisition of land and other development costs.

Station will be repaid for its out-of-pocket costs with long term financing or from the casino’s gaming revenues.

Like its deal with the Thunder Valley casino near Sacramento, Station will also receive a management fee. An overall fee of 30 percent of the casino’s net income will be paid to MPM. Station’s portion of the fee will be 50 percent of the first $24 million earned, 83 percent of the next $24 million, and 93 percent of fees in excess of $48 million.

Station’s management contract runs for seven years.

"We are excited about the talent and resources that Station Casinos bring to this project," said Barton LaBelle, spokesman for MPM Enterprises. "We searches exhaustively for an operating partner that had values that matched those of the Gun Lake Tribe and ourselves. We have found that partner."

Tribal officials expressed optimism over the prospect of building a casino in Michigan.

"The Tribal Council is very excited about moving our casino project forward on behalf of our tribal membership, supporters and the estimated 4,300 jobs that will be created," said D.K. Sprague, tribal chairman. "The management expertise Station adds to MPM will not only maximize revenue for the tribe, state and local governments, but will be an excellent fit because Station is a responsible operator with strong ties to local communities and charities."