Q4 2023 Mohegan Gaming & Entertainment Earnings Call

Participants

Carol K. Anderson; Senior VP & CFO; Mohegan Gaming & Entertainment

Jody Madigan; COO; Mohegan Gaming & Entertainment

Raymond Pineault; President & CEO; Mohegan Gaming & Entertainment

Thayne D. Hutchins; Treasurer & Member of Management Board; Mohegan Gaming & Entertainment

David Levine; VP; MidOcean Partners LLP

David Richard Hargreaves; Research Analyst; Stifel, Nicolaus & Company, Incorporated, Research Division

James Forristall Kayler; MD; BofA Securities, Research Division

Kevin Coyne; Deputy Director of Global Credit Research; Lord, Abbett & Co. LLC

Luis Ricardo Chinchilla; Research Analyst; Deutsche Bank AG, Research Division

Michael Patrick Kerrane; Senior Fixed Income Research Analyst; Truist Securities, Inc., Research Division

Presentation

Operator

Greetings, and welcome to the Mohegan Fourth Quarter 2023 Earnings Call.
(Operator Instructions) As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host, Thayne Hutchins, Treasurer of The Mohegan Tribe. Thank you. You may begin.

Thayne D. Hutchins

Thank you, Melissa. Good morning, everyone, and thank you for participating in our call. Joining me today are Ray Pineault, our CEO; and Jody Madigan, our COO; and Carol Anderson, our CFO.
Before we begin, I would like to remind everyone that our comments today may contain forward-looking statements made under the safe harbor provisions of the federal securities laws, and actual results may differ materially from any predictions contained in these statements.
In addition, our comments may also refer to non-GAAP financial measures. A reconciliation of these measures to corresponding GAAP financial measures can be found in our press release, which is available on our website under the Investor Relations section at www.mohegangaming.com. On behalf of the Mohegan Tribal Council and Management Board, I would like to congratulate the Mohegan team on another outstanding year.
In fiscal year 2023, our properties and digital operations generated the highest annual net revenues in the company's 27-year history and achieved the second highest adjusted EBITDA. With the addition of Mohegan INSPIRE in South Korea, which held a soft opening on November 30 and the expansion of our Digital business, we are excited for the continued growth of the organization.
I would also like to welcome Joffre Wells to our leadership team. Joffre recently joined the Mohegan as Vice President of Capital Markets, Investor Relations and Corporate Treasurer. It sounds like he's going to be busy and brings extensive capital markets experience to Mohegan. In this role, Joffre will manage the company's capital markets transactions become Mohegan's primary Investor Relations contact and will oversee the corporate treasury department. Welcome to Joffre.
And I'd just like to say happy holidays, everybody, and I'll turn it over to Mr. Ray Pineault.

Raymond Pineault

Thanks, Thayne. Good morning, everyone, and thank you for joining our fiscal 2023 fourth quarter earnings call. After I provide a few opening remarks, I will turn the call over to Jody to provide a review of our operating results. Carol will provide a financial update, and then we'll open up the call for questions.
Earlier today, we posted the earnings release and the supplemental earnings deck for the quarter ended September 30, 2023, on our website. As Thayne mentioned, we had another very successful year. Net revenues increased $81.7 million or 5.1% to $1.67 billion, our highest annual total of Mohegan's 27-year history. In addition, the adjusted EBITDA of $399.9 million was the second highest ever.
Our digital operations continue to help drive Mohegan's growth. Mohegan Digital Connecticut's online net casino gaming win was $42.8 million in the fourth quarter compared to $26.5 million in the prior year, an increase of approximately 65%.
In addition, adjusted EBITDA was $12.1 million for the period, an increase of $9 million from the prior year. Mohegan Digital Connecticut continues to produce strong and profitable results. In Canada, registrations on our digital platform increased 17% on a quarterly sequential basis, and gross gaming revenue increased over 20% for the same period. The monthly average revenue per user also continues to outperform in the Ontario market. While we're pleased with the results from our properties across the entire enterprise, we're particularly encouraged by the continued growth in our digital gaming business unit.
In addition, we are extremely excited about the opening of our newest venture Mohegan INSPIRE Incheon, South Korea and the property's ability to drive additional growth for the organization. Mohegan INSPIRE had a soft opening on November 30 with a plated event for approximately 800 guests in the convention center for the USO Korea, which was followed 2 days later with the Melon Music Awards, which is a nationally televised music award event that attracted over 12,000 arena attendees. I'm happy to report that our team performed flawlessly for the event and the reviews we received from the attendees of both events in person and as reviewed on social media, have all been raving about the quality of product, property to service and our team.
In addition to the convention space in the arena, the soft opening also included hotel rooms and three towers, the Splash Bay Pool, Signature Restaurants and Aurora, a state-of-the-art indoor dining entertainment street. As we've indicated from the outset, Mohegan INSPIRE will have a balanced mix of gaming and non-gaming performance. The first two events have demonstrated the appeal of our non-gaming amenities and we look forward to the continued strength of the arena and ballroom along with other nongaming amenities the property will offer as it become operational. Additional openings of retail in the casino were expected to occur in early 2024, with additional amenities to follow in the second quarter -- second calendar quarter of 2024.
Turning to New York. Mohegan and as part of Soloviev Group are continuing to bid process for casino license in New York City. As mentioned in previous calls, the proposed development notice Freedom Plaza, is located on the Manhattan East side and is intended to become an entertainment district or offering a world-class casino, luxury hotel, residential towers and other exciting amenities. Conceptual drawings of the proposed project are included in our supplemental earnings deck.
If our joint bid is successful, Mohegan will be responsible for co-developing and operating the casino and resort portion of the project. As noted in the past, due to our confidential commitment to our partner, we cannot discuss any details regarding the deal structure. However, we will disclose more information in the quarters as they become available.
While I'm extremely pleased with our results and strong revenue growth, I want to point out that adjusted EBITDA for fiscal 2023 was down approximately $4 million from prior year due to a number of factors, including low table hold of Mohegan Sun in the fourth quarter and our recent equity ownership change in Niagara Resorts. Jody will provide you more detail on the impact of those results in a few moments.
Finally, as I'm sure, if not all of you are aware by now, Carol decided not to renew our employment agreement, and as such, her last day with Mohegan will be in March 2024. I would be completely remiss if I did not take a moment and thank Carol for all her tremendous contributions, she has made over the past 3-plus years. Her leadership, commitment, knowledge, work ethics, attention to detail and more beyond reproach and I'd personally miss Carol as part of our team. Carol truly embodies the Mohegan way and exemplifies the spirit of aqua.
I wish Carol nothing but the greatest of success enjoy in whatever endeavors she undertakes in the future. I am confident Carol will be successful in any challenges to pursue as failure is not an option with Carol. Our search for replacement has already commenced and I am exceptionally pleased with the interest we have already received in the position, and I'm confident we'll fill the position in short order with a highly qualified individual.
I would like to conclude by saying that Carol will be remembered for all her contributions, personal touch and ability to connect with all people at all levels of the organization. Again, I want to thank Carol and wish her the best of luck in whatever future pursuits she undertakes.
Let me turn the call over to Jody.

Jody Madigan

Thank you, Ray. Before I get going on, I also like to echo Ray's comments. Carol has been with the organization for almost 3 years. She's done some incredible things. I think her professionalism was putting structure in the organization and the ability to move the project forward and on Korea, on refinancing has been great for the organization. I know her team really values and appreciates her and she will be missed. I think she'll do great things in the future and I can't thank her enough for everything she's done for the organization.
On that note, at Mohegan signing Connecticut, fourth quarter net revenues of $224.2 million decreased $12.5 million or 5.3% from the prior year. Gaming revenues decreased $15.1 million or 9.9% compared with prior year, primarily due to lower gaming volumes and table hold, which was partially offset by growth in nongaming revenues during the period. Non-gaming revenues increased $2.6 million or 3.1% over the prior year, primarily driven by food, beverage and entertainment revenues.
During the period Mohegan Sun Arena hosted notable as such as Jonas Brothers, Machine Gun Kelly, Old Dominion and Jeff Dunham, along with Connecticut Suns regular and postseason home games.
Hotel revenues increased by $789,000 or 3.2% over the prior year. Hotels achieved a quarterly ADR of 157 and occupancy of 96%. The property generated adjusted EBITDA of $56.3 million and an adjusted EBITDA margin of 25.1%, normalized for table hold, adjusted EBITDA would have been $72.4 million for the period with an adjusted EBITDA margin of $30.1 million, up $4.4 million and 175 basis points from the prior year period.
Mohegan Pennsylvania, net revenues of $62.8 million decreased $1.9 million or 2.9% from the prior year. The decrease is primarily attributed to lower gaming volumes and partially offset by stronger non-gaming growth. Non-gaming revenues increased 12.6% driven by higher food, food and beverage and hotel revenues. Adjusted EBITDA was $13.8 million with an adjusted EBITDA margin of $21.9 million.
At the Niagara Resorts, they generated net revenues of $88.7 million and grew $4.1 million or 4.9% compared with the prior year. Gaming revenues, which are net of gaming taxes were $54.7 million, a decrease of 11.7%, while non-gaming revenues of $34 million increased $50.2 million -- 50.2% over the prior year. The non-gaming growth is primarily attributed to entertainment revenues generated by the OLG Stage, which was recently ranked the #1 entertainment venue in Canada by Pollstar Magazine in both gross sales and tickets sold.
Niagara Resorts adjusted EBITDA was $14.1 million for the quarter with an adjusted EBITDA margin of 15.9%. Note that these results and results moving forward reflect noncontrolling interest adjustments related to our equity partners conversion of a convertible demerger of a 40% equity ownership in MGE's Niagara Entertainment Inc. on July 31, 2023. Adjusted EBITDA before noncontrolling interest adjustments was $18.8 million, an increase of 5.2% from prior year's adjusted EBITDA of $17.9 million with an adjusted EBITDA margin of 21.2%, which was flat prior to the prior year.
At ilani in Washington net revenues increased 10.6% from prior year. Gaming revenues grew 8.5%, while non-gaming revenues grew 26.1%. The hotel, which opened in April this year is helping drive increased (inaudible) to the property as reflected in the property's year-over-year growth. Atlantic City Resorts Casino's hotel net revenue decreased 10.2% compared to prior year as the property experienced a decline in gaming volumes and a favorable table hold in the period. Non-gaming revenues were flat to prior year. Mohegan Casino Las Vegas, net revenues were down $2.7 million or 41.7% compared with the prior year, primarily due to unfavorable table hold. The adjusted EBITDA loss of $3.1 million was down $2.5 million or nearly 434.2%. Normalized for table hold, adjusted EBITDA would have been $1.8 million for the period, up $483,000 from the prior year.
With that, I will now hand it over to Carol for a review of some of our other financial information.

Carol K. Anderson

Good morning, everyone. I want to start by saying thank you for the incredibly kind words, Ray, Jody, everybody in the Mohegan organization, including our Tribal Council. It has truly been an honor and a privilege to serve in the CFO role for Mohegan. I look forward to facilitating a very successful transition with my successor but you're still stuck with me for a few more months. So with that, I would like to walk through a few highlights from our operating results for the fourth quarter.
Consolidated net revenues of $444.3 million, increased 7.6% and consolidated adjusted EBITDA of $88 million, decreased 11.7% year-over-year. Our consolidated adjusted EBITDA margin of 19.8% was 178 basis points lower than the pre-COVID September 2019 quarter and 474 basis points lower than the prior year quarter. At our Connecticut property, the adjusted EBITDA margin of 25.1% was 84 basis points lower than pre-COVID September 2019 quarter and 243 basis points lower than the prior year quarter. As Jody mentioned, low table hold had an approximately 500 basis point impact on adjusted EBITDA margin.
In Pennsylvania, the adjusted EBITDA margin of 21.9% was 346 basis points higher than a pre-COVID September 2019 quarter and 150 basis points higher than the prior year quarter. Niagara Resorts adjusted EBITDA margin of 15.9%, was 472 basis points higher than the pre COVID September 2019 quarter and 527 basis points lower than the prior year quarter. As Jody mentioned, adjusted EBITDA margin for the Niagara Resorts, excluding the noncontrolling interest adjustments was 21.2% or flat to the prior year quarter.
On the balance sheet at quarter end, cash and cash equivalents totaled $217.3 million. Total debt, including capital leases and excluding unamortized debt issuance cost and discounts was $3.27 billion, up $176.2 million from $3.1 billion in the June quarter. The increase primarily relates to financing activity from the development of Mohegan INSPIRE, including additional draws under the project finance facility as well as the Niagara Resorts refinancing that took place in August, which included an incremental CAD 100 million return on capital loans. As mentioned on our previous earnings call, a portion of the proceeds from that return on capital loan were utilized to provide distributions totaling approximately CAD 60 million or approximately USD 45 million equivalents to Mohegan.
The capital distribution to Mohegan represents a repayment of substantially all of its initial investment in Niagara Resorts. The total leverage ratio under the Mohegan credit agreement was 4.79x, a decrease of 0.35x from the end of the June 2023 quarter. This is the Mohegan restricted group's lowest reported total leverage ratio since the second quarter of fiscal 2019. We had $78 million drawn on our $263 million of revolving credit facility and after factoring at approximately $2.8 million in outstanding letters of credit, we had approximately $182 million available for borrowing under the Mohegan credit facility.
As previously announced, we had agreed to make additional investments of up to KRW 155 billion or approximately USD 119 million equivalent to fund costs to complete Mohegan INSPIRE. The remaining KRW 89 billion of that amount or approximately USD 68 million equivalent was contributed in September 2023. And now that we have completed the soft opening and are closer to concluding the remaining portions of the project, we do not anticipate having to make additional investments to complete the construction and development of the project. From a cash flow perspective, distributions to the Tribe, totaled $27.3 million for the quarter, and capital expenditures totaled $274.3 million for the quarter, with the majority related to development costs for Mohegan INSPIRE.
Lastly, I would like to thank those who attended our Investor Day in September as well as those who helped make the event a success. The event provided investors, analysts and Mohegan executives a chance to meet and interact. We look forward to hosting future investor events and continuing to build and maintain relationships with the financial community.
We are also very excited to have Joffre Wells on board as he will be very active in our Investor Relations initiative going forward. For those who could not attend the Investor Day, a replay of the live video broadcast and copy of the presentation are available under the Investor Relations section of our website.
Now we'll open up the call for questions. I'll turn things over to Melissa, our operator.

Question and Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Ricardo Chinchilla with Deutsche Bank.

Luis Ricardo Chinchilla

Congratulations on the opening of INSPIRE Korea. And if I may speak on behalf of the investment community, Carol, you'll definitely be missed and we wish you the best on your future endeavors. That aside, I was wondering if you guys could comment a little bit on the revenue cadence of the INSPIRE Korea? And if you still expect the property to be cash flow positive in 2024, given the challenging macro backdrop and the phase opening of the property.

Jody Madigan

Ricardo, this is Jody. Thank you for the question. So I was fortunate enough to be there at opening and could not have been more thrilled with how it went. We did two very large events opening week. We did a very high-end USA banquet event, and then 2 days later, we did a 15,000-seat show with 30 K-pop artists that's called it the Melon Awards, which is essentially the Korea version of the Grammy. To do that opening week, it's a little daunting but the team pulled it off tremendously.
Post that weekend, we've seen good foot traffic on the weekends. Our hotel occupancy is kind of where we thought it would be. I think we're seeing really good in beverage covers. As you guys know, there was a little bit of a phase opening with that. So we obviously, we know we budgeted it that way, too, but we're not fully ramped. So we have a couple more things coming in early Q1 -- calendar Q1 of '24 on the gaming side. And then shortly thereafter, there will be some additional non-gaming probably Q2 of 2024 that will finish the project out.
But I am pleased, I think everybody is pleased with what we've seen so far. I think we're as excited as we have ever been about the project. And to answer your question, I do believe we will be cash flow positive by the end of the year.

Luis Ricardo Chinchilla

Perfect. Moving to the domestic assets. I was wondering if you could please comment on, if there -- if you have seen any change in spend per visit over the last 3 months? And a lot of your competitors have been talking about some cost pressures, your normalized margins were very strong in the quarter. But is there something that we should be aware of with regards to margins going into 2024?

Jody Madigan

Yes. So again thank you for the question. So I think for our Northeast properties, we've seen a slight dip in rate of trips in the last quarter but that's been offset by a little bit of increase in spend. So from a cost pressure perspective, we're not releasing it from our customers on a wallet perspective. From an inflation purchasing power, again, to your point, on a normalized margin, I think we would have been above where we were last year. EBITDA consolidated and restricted level would have been $1 million year-over-year.
So I think we're doing fine. I don't anticipate anything in '24 right now, that is shopping out what we've seen so far from a consolidated perspective that causes me concern on a cost perspective.
Obviously, with everybody else we're keeping our eye on the macroeconomic level to make sure that trips and spend are where we want them to be. And as you see in the earnings, we got beat up pretty good on table game hold. So obviously, we're being mindful of that on a going forward basis for '24 as well. But sometimes that's up, sometimes that's down, right?

Luis Ricardo Chinchilla

Perfect. One last one for me. I was wondering if the company could comment a little bit on the refinancing strategy for the second lien paper that is due in a couple of years?

Carol K. Anderson

Sure. I can take that one, and thank you, Ricardo, for the very kind words at the top of your remarks. We are continuing to evaluate the entirety of the capital structure, one of the things that I'm very pleased about bringing Joffre on board. He has a lot of huge experience, understanding the space and helping to work through how we think about addressing the capital stack. But that is something that will continue to remain in dialogue with both internally as well as with our financial advisers.

Operator

Our next question comes from the line of James Kayler with Bank of America.

James Forristall Kayler

Good, good. Carol, you'll be missed also. Thank you for all your help over the years. I just -- I want to circle back on like the trends at the sort of core assets. I guess on the slot side in Connecticut, it does feel like the slot business is like down kind of low single digits. And I guess I'm just trying to get a sense for like do we think that's just some normalization coming off of like a bump post COVID? Or is there something going on in the competitive environment? Do you have a sense for sort of Foxwoods. So can you give us a sense for Foxwoods with sort of promotional cadence and/or your competitors in the Rhode Island and Massachusetts?

Jody Madigan

Thank you, James. Appreciate the question. So for Connecticut specifically, we have noted that Foxwoods promotional spend has gone up a little bit. We're mindful of that. We're not going to play the chase game. I think there's a little bit of normalization coming off of COVID bump. But we haven't really seen much of our market share as a percentage of Connecticut is relatively in line with where it has been historically. So we're watching what Foxwoods is doing. But we're -- at this point, we're not really sort of counter attacking all that much. We are looking at analysis of our player database.
We're not seeing much high in loss going on in slots. If anything there's a little bit of lower end. So you can argue there might be a little inflationary impact to that. But again, our rate of terms overall are just slightly down in the Northeast and the average spend per customer is up. So I think anything you're probably just seeing a little bit of bleeding at the lower end.

James Forristall Kayler

Very good. And then just on the table games and the hold. I mean, it obviously was a pretty big swing that you called out there. I mean, that's $16 million, I think. The -- like, I was looking just at the last few quarters, like hold kind of been in this like, 13 -- mid- to high 13% area. I guess what is normalized hold? And like is there any risk that, that number has changed with like customer mix? Or is it just the last few quarters have been unlucky?

Jody Madigan

Yes. So keep in mind, on a net basis, to this contrary in there, right? So there's free play and there's comps and things of that. We actually kind of look at it from a hold perspective on a gross basis, right? So on a gross basis, we're down a little bit. If you actually look at the last 8 quarters, I would say 6 to 8 have been at or above what normalized hold should be. Last fourth quarter, we had 1 gentleman come in and beat us pretty good. This quarter, specifically, bluntly, we just couldn't win for about 6 weeks straight. All the high-end play that came in just towards up. We had the best in the (inaudible) in surveillance and (inaudible) wise. We ran down all the play. We looked for all the things to make sure it was all above board and it was. There was no collusion, nothing going on. We just had some players. We got lucky on us for a while. It happens, unfortunately.
So I would tell you that on a net basis, I would think that we want to be somewhere in the 14.5%, 15% range. But again, it depends on promotional base of what's going on. If you do a lot of concerts and you have comp tickets going out that can bring your net table game hold down. So sometimes it's a little skew, depending on what's going on, on the property. But hopefully, that answers your question.

James Forristall Kayler

Very helpful. One last one for me. Just on Korea. I mean, first, congratulations on the phase 1 opening. I guess just level set like is the budget sort of unchanged? Is the project fully funded? And can you remind us what the gaming factors are to actually open the casino portion of the project and what the timing is there?

Raymond Pineault

So let's say, let's break that down. So, number one, as Carol said in her comments, the project essentially complete with some punches items remaining and then we have some future development with third parties as we've talked about coming online in the first and second quarter of next year. There's no anticipation of having the need to fund additional capital for the project to complete all additional phases -- all additional parts of this phase.
The casino license has to be issued by MCST. The license has been submitted officially. However, we do have to complete the 5-star hotel process, which I can happily report is well underway, and we're expecting a completion of that in very short order. We do anticipate having a casino license in the first calendar quarter of 2024 and ramping up from there. So -- and then there's a few additional -- some of the retail coming online and a few other things that will be happening in the second quarter. So we'll continue to ramp. We'll continue to see things open sequentially over the next 2 quarters, and we are in line to move forward with getting our casino license and having submitted all the material at this point.

Jody Madigan

And James, I would just add to that, that is in line with what we budgeted as well. So that was, that's in line with what we anticipated from a timing perspective.

Operator

Our next question comes from the line of David Levine with MidOcean Partners.

David Levine

I echo all the nice things said about Carol, so best of luck. On -- some of my questions have been answered. But first one on digital, is this $12 million? I know it's somewhat seasonal but is this $12 million the right run rate, you guys have made kind of comments that you expect future growth. I guess my question would be, if you're focused on profitability and less so on kind of marketing, is, are you confident in future growth in that context given it's been so profitable? Or would you have to spend more to get more growth? How would you kind of contextualize that?

Raymond Pineault

So I would say the simple answer is, yes, we're confident in continued growth and we already anticipate continued growth moving forward. The last year was a tremendous year for us, and we were exceptionally pleased with the performance of our digital team, and we anticipate growth to continue. We've made some comparisons to other jurisdictions, and we believe the market still has plenty of room to grow, and we anticipate that to continue to happen in digital.

David Levine

Awesome. What about the launch. I saw the news launch of Fanatics, the sports betting component. Can you kind of just comment on that? I didn't see anything that was sort of like iGaming, which I know is like the real profit center, I think. So any kind of comment on that?

Raymond Pineault

Yes. I mean, so we've had a third competitor in the state for a long time. And the prior operator had announced quite a while ago that they were leaving and the state was looking for replacement. IGaming is not permitted with the third operator. So it's really going to be us and our competitor across the river that are going to continue to operate the iGaming portion of it. Fanatics is coming into the market, no different than the third operator. I think we'll continue to get our fair share, working with the highly renowned investment business FanDuel for the sports book part of the digital gaming. So I'm confident whether it's Fanatics or any other third party, we'll continue to compete in the FanDuel portion of it and they won't be in the iGaming portion of competition in Connecticut.

David Levine

Very good. Then on Niagara, is there a reason why you guys kind of harp on the noncontrolling piece to the margin? I understand that. I think the other investor owns 40%, I believe, of the equity in it. But in terms of what the property is actually generating, like the 21% margin it's sort of the right way to think about performance, right? I mean I think we kind of appreciate that you guys own 60% and they own 40%. but from like an EBITDA and margin perspective, it's really the 21% margin that investors should kind of focus on?

Carol K. Anderson

Yes, David, it's -- sure. It's a good -- and thank you all for the kind words, I've enjoyed our conversations over the years. From a Niagara perspective. I think you're absolutely right. We want to -- we have to include the noncontrolling interest impact, but we do want to make sure that there's still clarity as to how the property itself is performing. So until we get through the comparative noise from a noncontrolling interest impact, we'll probably continue to give it both ways. So that you can understand how the core property is continuing to perform.

David Levine

Okay. Fair enough. And then, just hypothetically, is there anything to prevent -- I know this is total hypothetical, but is there anything preventing you guys from selling that asset? Like would -- the other equity holder, I guess you'd have to both agree to it, but there's nothing like before you couldn't necessarily sell it because it was more in debenture form. Is that -- am I kind of getting that right? Like not -- obviously, you're not saying you would, but is there anything that prevents you from selling Niagara?

Raymond Pineault

So David, great question but we don't actually own Niagara. The ownership of gaming in Ontario was actually done by the province, and it's run through OLG. We are the manager and operator of the facilities. So we have an extended term contract with the OLG to continue to manage and operate Fallsview and Casino Niagara. So there's not a physical asset that we own that is subject to a sale.

David Levine

I see and you couldn't. Okay. Fair enough. And then, on Virgin Las Vegas, obviously, a relatively challenged property, I appreciate -- and that's a management contract, but I appreciate the commentary on hold there as well. But I mean, is there a thought that maybe -- is it possible to just kind of walk away from that contract? And what would happen with the capital lease on the balance sheet? Just it doesn't really seem like it's benefit to the creditors anymore? So any kind of thoughts there?

Jody Madigan

Yes. David, it's Jody. So obviously, with our partner with JCH, they're the ones who own the facility. We are just managing the casino for. And as always, we're working with them to try to buoy the property. We obviously still believe in the property, we believe we're wanting to be in Las Vegas. And so we're doing everything we can to make sure that, that property successful as we think it can be. It is a little bit challenging given that we have such limited control of the resort. But we are working closely with JCH to try to do everything we can to help the property be successful. So right now, the answer would be that we are still focused on trying to make that property be a primary asset within the Mohegan portfolio.

David Levine

Got you. And then, last question for me on the CFO -- on new CFO. Is the thought to kind of go outside the organization for that? And, does the new CFO need to kind of have investor capital markets expertise? Or do you think with the hiring of Joffre, you've kind of taken care of that piece to it?

Raymond Pineault

So David, as far as CFO search, as I said in my comments, we're well underway on the search process. We've actually been going at this for well over a month now since Carol announced that she was not going to be renewing her contract with us, unfortunately. I can tell you that several interviews with very highly qualified candidates with diverse backgrounds have been completed. They -- several are being completed for second and third interviews with executives in the organization to make sure we get the right person that has the right fit, that has the right skill sets, for the organization.
It's hard to sit here and tell you the candidates that we have interviewed come from diverse backgrounds and diverse skill set and who ultimately will be our CFO determined by a group of individuals after a number of interviews to make sure that they fit within the organization and what skill sets we particularly need moving forward.

David Levine

Okay. Yes. Thanks a lot for everything. And on Korea, all the things Jody said, sounds pretty good. The pictures look great. So congrats on getting the soft opening and best of luck.

Operator

Our next question comes from the line of Michael Kerrane with Truist Securities.

Michael Patrick Kerrane

I just wanted to quickly clarify my understanding of the Niagara Resorts adjustments. The $18.8 million property EBITDA, the adjustment that you made, I guess you're down to $14.1 million, that's not 60% of $18.8 million. Is that, is my understanding, that's because the conversion happened on July 31. And so therefore, next quarter, your margin is going to be even lower because you're going to have to adjust for the entire quarter.

Carol K. Anderson

That's correct, Michael. So the technical conversion took place on July 31 in connection with the August refinancing transaction. So it's basically 2 months of the noncontrolling interest impact that will be fully loaded going forward on the 60-40 split basis.

Michael Patrick Kerrane

Okay. I got it. That makes sense. And then, just on -- one other thing I wanted to clarify. The investment in INSPIRE, you guys said you completed the, I think you said $118 million investment, is that fully reflected in the third quarter balance sheet? Or was any of that investment made after the quarter was closed?

Carol K. Anderson

No, we concluded all of that investment before the close of the 9/30 quarter.

Operator

(Operator Instructions) Our next question comes from the line of Kevin Coyne with Lord, Abbett.

Kevin Coyne

Thank you for the time, and congrats to Carol and good luck in the future, and thanks for all the help. I had just a quick question. I was reading an article about Korea. I guess they had a national tourism strategy meeting last week. And they referenced the possibility of lifting a ban on certain forms of public promotion of casinos. I was wondering if you could elaborate maybe on the ban itself and then what the potential benefit would be if you have any clarity into that statement?

Jody Madigan

Thank you, Kevin, for the question. So I mean, obviously, I'm going to go at a little higher level than that, which is we definitely are keeping right ear to the ground on everything to do with domestic gaming in Korea. It would obviously be a game changer for the property if and when we were ever allowed to either promote to or allow domestic gaming. I think there are some preliminary steps sort of happening and this might be one of them to sort of test the waters along how those things go.
But I just, I would say, trust in the fact that we are definitely paying attention to and trying to help how we can get the idea of domestic gaming happening in Korea out there. So...

Raymond Pineault

So, the other thing I'd add to that, Kevin, is obviously we've modeled out and done all our projections based on the foreigners only casino and confident in the property, if you haven't got a chance to visit a truly spectacular property and confident in the performance of the property. But domestic gaming, you see other jurisdictions that are moving towards permitting domestic gaming and, obviously, that's something we would support if we, with the support of the government and doing it appropriately. So it's something we'll continue to track on as we're working in country and continuing to develop that property.

Kevin Coyne

Okay. I appreciate those comments. And I think, just a follow-up on that. So when I -- I wasn't sure if it was public promoting to locals, I thought it was just public promotion of generally the casino itself. So I think maybe based on your knowledge, it could be leading toward opening the door to locals over, and it sounds like you'd be a longer-term period of that (inaudible) happen?

Raymond Pineault

Yes, I wouldn't. I definitely wouldn't say that. I would say that, obviously, we're always so full that domestic gaming is permitted at some point in time, and we have a fantastic property that will be prepared to accommodate that. Obviously, Korea has been very restrictive on how they allow locals gaming, how they allow advertising, and we're obviously making sure that we are in compliance with all Korean laws we continue to promote and advance our facility.

Kevin Coyne

Okay. Just one question on table hold. So the numbers we see from the quarter ended 9/30. I'm not going to ask you your table hold so far in the first quarter of the fiscal year. But can you say at least that the table hold has normalized to the cadence that you referred to in the slide deck where this was truly, let's say, the 9/30 quarter was an abnormal quarter, and we've normalized back. And so?

Jody Madigan

Yes. I would tell you that it's obviously closer to normal. It's always interesting in this quarter because Christmas Eve's to New Year's Eve, make sure it breaks the quarter depending upon how you do. You have so much option that week. So a lot of it will depend upon how we do those 7 days. Assuming that we keep our head above water for that 7 days, I felt that will have a more normalized table hold for the quarter.

Operator

Our next question comes from the line of David Hargreaves with Stifel.

David Richard Hargreaves

Sorry about that. We'd love to hear about Joffre background and particularly anything in Tribal Gaming that you could offer?

Carol K. Anderson

David, it's Carol. And so just to clarify, it's Joffre and we are actually going to be issuing a release, I believe, later today or this week, providing some more particular about Joffre's background, he comes more from the buy side perspective of the world, having previously worked at both Brandywine and BlackRock, but we will be issuing that release in the relative near term. And if you have any other follow-up questions, feel free to reach out to us.

David Richard Hargreaves

When you said that you expect Korea to be cash flow positive year-end, was that 2024?

Jody Madigan

I would say, yes.

David Richard Hargreaves

And then to the extent that there are any operating cash needs between now and then, have you prefunded anything? Or would that need to be addressed as you go along?

Jody Madigan

We don't anticipate having to do that.

Operator

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Pineault for any final comments.

Raymond Pineault

Well, thank you, everybody, and thanks for joining our call. After another successful year, we look forward to Mohegan's continued growth in fiscal year 2024. Thank you again to all our team members for their hard work and dedication, and thank you for joining today's call, and have a nice day.

Operator

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.