Station in fourth Calif. tribal deal

Friday, March 5, 2004 | 11:37 a.m.

Station Casinos Inc. today said it has signed an agreement with a Central California tribe to develop and manage a $225 million hotel-casino near the city of Madera, Calif., further cementing the company's reputation as a premier Indian casino partner.

The deal with the North Fork Rancheria of Mono Indians, signed in the past several weeks, marks the company's fourth management contract with a California tribe. Station Casinos has a fifth casino contract with a tribe in Michigan.

An official for the Las Vegas locals' casino giant said opportunities still exist for future tribal deals but that the company is being selective in order to work with tribes that have the best casino prospects.

Company officials haven't yet determined the timeline for the proposed casino, which could take up to four years because of environmental approvals.

The casino would have about 2,000 slot machines, up to 75 table games, 200 to 300 hotel rooms, restaurants and entertainment venues. It would be located on Highway 99 just north of Madera, which is about 20 miles northwest of Fresno, Calif.

More than 450,000 people live in the cities of Fresno and Madera, while about 800,000 people live in Fresno County, which is home to several other tribal casinos.

Station Casinos will receive a fee of 24 percent of the casino profit for each year of the seven-year contract. Station Casinos expects to loan the tribe funds to build the casino, with the obligation repaid with gaming revenue, Station Casinos Chief Legal Officer Scott Nielson said.

The North Fork Rancheria, which has about 1,300 members, is one of the state's largest tribes and received federal recognition in the early 1980s, Nielson said. The company will now work with the tribe in obtaining land for a casino.

The tribe's claim is different from those of other tribes that have been accused of "reservation shopping" for lucrative casino sites in California, he said.

Such tribes already have reservation land but attempt to purchase land that would be more lucrative, he said.

Station Casinos helped the United Auburn Indian Community obtain land for the now-operating Thunder Valley Casino near Sacramento. The company also is assisting the landless Federated Band of Graton Rancheria obtain land for a proposed casino. Both tribes were recognized by the federal government but didn't have reservations.

The tribe's restored status with the federal government means the tribe may not need prior approval from the state to build a casino, Nielson said. The Department of the Interior would still need to decide wether to give the tribe land for a casino. Also, Nielson said, the tribe would still need to negotiate a compact with Gov. Arnold Schwarzenegger.

Government officials are "excited about the prospect of this investment. Madera County is a relatively poor area," he said. "I think in every project you can anticipate opposition."

Since the opening of Thunder Valley last June Station Casinos has been contacted by several tribes and people with connections to tribes about developing casinos, Nielson said.

"There are a number of different tribes that either want to relocate and we don't think is legally possible ... or their tribal government is not well defined," he said. "We've stayed away from those situations."

The company's tribal business and Las Vegas casino opportunities make it one of the few companies in the gaming business with a clearly-defined pipeline of new projects, analysts say.

"This (contract) just adds to the growth story for (Station) as the company builds an even stronger position in the California market," Goldman, Sachs & Co. analyst Steven Kent wrote in a research note today. "We continue to believe that (Station) is the best operator story in the casino industry with same-store sales growth, unit growth opportunities and a leadership position in management contracts for tribal gaming."

In January, Station Casinos announced an agreement with the Mechoopda Indian Tribe of Chico Rancheria to develop a casino for less than $80 million near Chico, Calif., 80 miles north of Sacramento. Like Station's three other tribal partners in California, the Chico Rancheria needs land for a casino as well as a state compact before it can open.