We've got some more color on the sequential decline in participation units, the Haddrill contract amendment, and other tidbits.
- Hadrill’s new contract:
- He was originally brought in to “turn around” the Company. Now the board wants him to focus on strategic initiatives and growing BYI
- Compensation structure was changed to align his incentives to focus on creating “longer term value” and getting him paid in case the company gets bought out before he sees the fruits of his labor. Hmmmm....
- You know our thoughts here (see the Footnoted post, "BYI: WHY THE NEW HADDRILL CONTRACT?" from 8/13/09)
- WAP/LAP installed base decreased in the quarter and over the last few quarters because the company hasn’t released new content in quite a while. Over the last few months they’ve issued several new titles to go on their Millionaire 7’s and Quarter Millionaire platforms. Management believes that over time the base of WAP/ LAP games should increase.
- Daily & Rental Fee games decrease
- Mostly in low fee rental & daily fee games, many of which got converted to for sale or weren’t earning enough to make it worthwhile to keep out there. Based on our estimate these types of games contribute an immaterial amount to the gaming operations business
- We estimate that there are roughly 6,500 “premium” rental & daily fee games earning on average $50/day, 2000 Seminole games (in a sale leaseback type arrangement) earning around $20-25/ day, and the balance earn around $10/ day
- Increase in Centrally Determined games was driven by Mexico & Washington
- Decrease in deferred revenue:
- Management is trying to be more cognizant not to “bundle” systems and slot sales to avoid unnecessary deferral of revenues
- A large portion of system sales are “add on” products to existing system which aren’t subject to deferral accounting since deferral revenues are more often associated with new system sales
- Apparently, management’s ommission of quarterly detail was accidental