Agreement with the Mohegan Tribe

The Mohegan Tribe of Connecticut—owners of the second-largest casino in the country—is playing a major role in the development of the proposed Cowlitz casino-resort.

According to an article that appeared in Forbes magazine June 20, 2005, Cowlitz casino developer and tribe member David Barnett approached the Mohegan Tribe for help in early 2004.

In July 2004, the Mohegan Tribal Gaming Authority (MTGA) formed Mohegan Ventures-Northwest, which became one of what are now three members in Salishan-Mohegan LLC. The other members of Salishan-Mohegan are Cowlitz developer David Barnett (“Salishan Company”) and the Mohegan Tribe.

In September 2004, this partnership of Barnett and the Mohegans entered development and management agreements with the Cowlitz Tribe for a casino project.

The Mohegan Tribe's September 2004 news release said:

Under the terms of the Development Agreement, the Authority will carry out all activities that are necessary to develop the Project, including facilitating the Cowlitz Tribe's acquisition of land into trust by the United States Department of the Interior, assisting the Cowlitz Tribe in the negotiation of a compact with the State of Washington, negotiating financing of the Project on behalf of the Cowlitz Tribe and administering and overseeing the planning, design, development, and construction of the Project.

In return, Mohegan Ventures-Northwest would receive 3 percent of total project costs.

If the casino were to come to fruition, the management contract would have Barnett and the Mohegans splitting 24 percent of net revenues. Initially, 54.15 percent of that was going to Mohegan Ventures-NW with the remainder to Salishan, Barnett’s company. According to Forbes, "In this deal the Mohegans could clear $12 million in a one-time development fee, plus another $25 million in revenue per annum for seven years from the casino operations." That is $175 million over seven years.

However, in October 2006, Salishan transferred 2.85 percent of its membership interest to the Mohegan Tribe “in exchange for the Mohegan Tribe’s guarantee of the Salishan Credit Facility,” according to an MTGA filing with the U.S. Securities and Exchange Commission. Now the breakdown is as follows:

Mohegan Ventures-NW—49.15 percent

Salishan Company—43 percent

Mohegan Tribe—7.85 percent

For more information, see Note 15 in the 2005 MTGA annual report and the MTGA’s SEC filing for the quarter ending Dec. 31, 2006.