LEASES

12 Months Ended

Sep. 30, 2021

Leases [Abstract]

LEASES

LEASES:

Lessee

    The Company leases real estate and equipment under various operating and finance lease agreements. The leases have remaining terms ranging from approximately one month to 50 years and do not contain any material residual value guarantees or restrictive covenants. Rental payments under these lease agreements are fixed and/or variable based on periodic adjustments for inflation, performance, usage or appraised land values. Variable components of lease payments are not included in the calculation of right-of-use assets and liabilities.

    The Company’s lease arrangements contain both lease and non-lease components. For instances in which the Company is a lessee, the Company accounts for both lease and non-lease components as a single lease component for substantially all classes of underlying assets (primarily real estate and equipment). Leases with an expected or initial term of 12 months or less are not recorded on the Company’s consolidated balance sheet.

    Information related to weighted average lease terms and discount rates is as follows:

	September 30, 2021
Weighted average remaining lease terms (years):
Operating leases	22
Finance leases	19
Weighted average discount rates:
Operating leases	8.67	%
Finance leases	7.76	%

The components of lease expense are as follows (in thousands):

	For the Fiscal Years Ended
	September 30, 2021		September 30, 2020
Operating lease expense	$	45,458	$	38,414
Short-term lease expense	33,438		27,121
Variable lease expense	17,427		12,922
Finance lease expense:
Amortization of right-of-use assets	4,459		2,401
Interest on lease liabilities	5,059		1,547
Less: sublease income (1)	(23,147)		(20,791)
Total	$	82,694	$	61,614

_________

(1)Represents income earned by the Company from the rental of hotel, convention or retail space at the MGE Niagara Resorts and the Earth Hotel Tower at Mohegan Sun, both of which are leased properties.

    Supplemental cash flow information related to lease liabilities is as follows (in thousands):

	For the Fiscal Years Ended
	September 30, 2021		September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Payments on operating lease obligations	$	20,747	$	22,844
Payments for interest on finance lease obligations	345		889
Payments on finance lease obligations	1,145		1,298
Total	$	22,237	$	25,031

    Maturities of right-of-use lease obligations are as follows (in thousands):

	Operating Leases		Finance Leases
Fiscal years:
2022	$	41,588	$	11,056
2023	38,600		12,235
2024	40,215		11,805
2025	39,690		11,405
2026	39,977		11,307
Thereafter	807,442		160,135
Total future lease payments	1,007,512		217,943
Less: amounts representing interest	(587,806)		(103,245)
Plus: residual values	—		327
Present value of future lease payments	419,706		115,025
Less: current portion of lease obligations	(9,616)		(5,836)
Lease obligations, net of current portion	$	410,090	$	109,189

On June 18, 2021, the Casino Operating and Services Agreement was amended to provide for, among other things, a change in the payment schedule for fixed and variable lease payments relating to the Fallsview Casino Resort facility, which were originally due during the closure of the MGE Niagara Resorts, to the last twelve months of the lease term. As of June 18, 2021, fixed and variable lease payments owed to the Ontario Lottery and Gaming Corporation were recorded within current portion of right-of-use operating lease obligations and due to Ontario Lottery and Gaming Corporation. This change was accounted for as a lease modification and, accordingly, as of June 18, 2021, resulted in a reduction in right-of-use operating lease assets of $55.9 million and corresponding reductions in current portion of right-of-use operating lease obligations, due to Ontario Lottery and Gaming Corporation and right-of-use operating lease obligations, net of current portion of $30.1 million, $10.4 million and $15.4 million, respectively.

Lessor

The Company leases space at its facilities to third parties. Remaining lease terms for these non-cancelable operating leases range from approximately one month to 21 years. Rental income under these lease agreements is fixed and/or variable

based on percentage of tenant sales or periodic adjustments for inflation. Rental income is recorded within hotel and retail, entertainment and other revenues. For instances in which the Company is the lessor, and the class of underlying asset represents retail space, the Company accounts for both the lease and non-lease components, such as common area maintenance and tenant services, as a single lease component. In all other instances, non-lease components are accounted for separately in accordance with applicable guidance, most commonly ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. 

Lease income consists of the following (in thousands):

	For the Fiscal Years Ended
	September 30, 2021				September 30, 2020
	Hotel		Retail, Entertainment and Other		Hotel		Retail, Entertainment and Other
Fixed rent	$	53,904	$	5,226	$	42,473	$	7,160
Variable rent	—		5,314		—		4,176
Total	$	53,904	$	10,540	$	42,473	$	11,336

Future fixed rental income that the Company expects to earn under non-cancelable operating leases, exclusive of amounts under contingent escalated rent clauses, is as follows (in thousands):

Fiscal years:	Operating Leases Fixed Rental Income
2022	$	5,281
2023	4,634
2024	4,214
2025	2,956
2026	2,599
Thereafter	5,617
Total	$	25,301

    Due to the evolving nature of COVID-19 and the related economic uncertainties, the Company cannot be certain that the contractual future fixed rental income presented above will be realized in its entirety.

    The portions of Mohegan Sun, including the Sky Hotel Tower and the Earth Expo & Convention Center, and Mohegan Sun Pocono that are leased to third parties under operating leases are recorded within property and equipment, net as follows (in thousands):

	September 30, 2021		September 30, 2020
Property and equipment, at cost	$	491,673	$	484,143
Less: accumulated depreciation	(218,873)		(198,080)
Property and equipment, net	$	272,800	$	286,063

LEASES

LEASES:

Lessee

    The Company leases real estate and equipment under various operating and finance lease agreements. The leases have remaining terms ranging from approximately one month to 50 years and do not contain any material residual value guarantees or restrictive covenants. Rental payments under these lease agreements are fixed and/or variable based on periodic adjustments for inflation, performance, usage or appraised land values. Variable components of lease payments are not included in the calculation of right-of-use assets and liabilities.

    The Company’s lease arrangements contain both lease and non-lease components. For instances in which the Company is a lessee, the Company accounts for both lease and non-lease components as a single lease component for substantially all classes of underlying assets (primarily real estate and equipment). Leases with an expected or initial term of 12 months or less are not recorded on the Company’s consolidated balance sheet.

    Information related to weighted average lease terms and discount rates is as follows:

	September 30, 2021
Weighted average remaining lease terms (years):
Operating leases	22
Finance leases	19
Weighted average discount rates:
Operating leases	8.67	%
Finance leases	7.76	%

The components of lease expense are as follows (in thousands):

	For the Fiscal Years Ended
	September 30, 2021		September 30, 2020
Operating lease expense	$	45,458	$	38,414
Short-term lease expense	33,438		27,121
Variable lease expense	17,427		12,922
Finance lease expense:
Amortization of right-of-use assets	4,459		2,401
Interest on lease liabilities	5,059		1,547
Less: sublease income (1)	(23,147)		(20,791)
Total	$	82,694	$	61,614

_________

(1)Represents income earned by the Company from the rental of hotel, convention or retail space at the MGE Niagara Resorts and the Earth Hotel Tower at Mohegan Sun, both of which are leased properties.

    Supplemental cash flow information related to lease liabilities is as follows (in thousands):

	For the Fiscal Years Ended
	September 30, 2021		September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Payments on operating lease obligations	$	20,747	$	22,844
Payments for interest on finance lease obligations	345		889
Payments on finance lease obligations	1,145		1,298
Total	$	22,237	$	25,031

    Maturities of right-of-use lease obligations are as follows (in thousands):

	Operating Leases		Finance Leases
Fiscal years:
2022	$	41,588	$	11,056
2023	38,600		12,235
2024	40,215		11,805
2025	39,690		11,405
2026	39,977		11,307
Thereafter	807,442		160,135
Total future lease payments	1,007,512		217,943
Less: amounts representing interest	(587,806)		(103,245)
Plus: residual values	—		327
Present value of future lease payments	419,706		115,025
Less: current portion of lease obligations	(9,616)		(5,836)
Lease obligations, net of current portion	$	410,090	$	109,189

On June 18, 2021, the Casino Operating and Services Agreement was amended to provide for, among other things, a change in the payment schedule for fixed and variable lease payments relating to the Fallsview Casino Resort facility, which were originally due during the closure of the MGE Niagara Resorts, to the last twelve months of the lease term. As of June 18, 2021, fixed and variable lease payments owed to the Ontario Lottery and Gaming Corporation were recorded within current portion of right-of-use operating lease obligations and due to Ontario Lottery and Gaming Corporation. This change was accounted for as a lease modification and, accordingly, as of June 18, 2021, resulted in a reduction in right-of-use operating lease assets of $55.9 million and corresponding reductions in current portion of right-of-use operating lease obligations, due to Ontario Lottery and Gaming Corporation and right-of-use operating lease obligations, net of current portion of $30.1 million, $10.4 million and $15.4 million, respectively.

Lessor

The Company leases space at its facilities to third parties. Remaining lease terms for these non-cancelable operating leases range from approximately one month to 21 years. Rental income under these lease agreements is fixed and/or variable

based on percentage of tenant sales or periodic adjustments for inflation. Rental income is recorded within hotel and retail, entertainment and other revenues. For instances in which the Company is the lessor, and the class of underlying asset represents retail space, the Company accounts for both the lease and non-lease components, such as common area maintenance and tenant services, as a single lease component. In all other instances, non-lease components are accounted for separately in accordance with applicable guidance, most commonly ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. 

Lease income consists of the following (in thousands):

	For the Fiscal Years Ended
	September 30, 2021				September 30, 2020
	Hotel		Retail, Entertainment and Other		Hotel		Retail, Entertainment and Other
Fixed rent	$	53,904	$	5,226	$	42,473	$	7,160
Variable rent	—		5,314		—		4,176
Total	$	53,904	$	10,540	$	42,473	$	11,336

Future fixed rental income that the Company expects to earn under non-cancelable operating leases, exclusive of amounts under contingent escalated rent clauses, is as follows (in thousands):

Fiscal years:	Operating Leases Fixed Rental Income
2022	$	5,281
2023	4,634
2024	4,214
2025	2,956
2026	2,599
Thereafter	5,617
Total	$	25,301

    Due to the evolving nature of COVID-19 and the related economic uncertainties, the Company cannot be certain that the contractual future fixed rental income presented above will be realized in its entirety.

    The portions of Mohegan Sun, including the Sky Hotel Tower and the Earth Expo & Convention Center, and Mohegan Sun Pocono that are leased to third parties under operating leases are recorded within property and equipment, net as follows (in thousands):

	September 30, 2021		September 30, 2020
Property and equipment, at cost	$	491,673	$	484,143
Less: accumulated depreciation	(218,873)		(198,080)
Property and equipment, net	$	272,800	$	286,063

LEASES

LEASES:

Lessee

    The Company leases real estate and equipment under various operating and finance lease agreements. The leases have remaining terms ranging from approximately one month to 50 years and do not contain any material residual value guarantees or restrictive covenants. Rental payments under these lease agreements are fixed and/or variable based on periodic adjustments for inflation, performance, usage or appraised land values. Variable components of lease payments are not included in the calculation of right-of-use assets and liabilities.

    The Company’s lease arrangements contain both lease and non-lease components. For instances in which the Company is a lessee, the Company accounts for both lease and non-lease components as a single lease component for substantially all classes of underlying assets (primarily real estate and equipment). Leases with an expected or initial term of 12 months or less are not recorded on the Company’s consolidated balance sheet.

    Information related to weighted average lease terms and discount rates is as follows:

	September 30, 2021
Weighted average remaining lease terms (years):
Operating leases	22
Finance leases	19
Weighted average discount rates:
Operating leases	8.67	%
Finance leases	7.76	%

The components of lease expense are as follows (in thousands):

	For the Fiscal Years Ended
	September 30, 2021		September 30, 2020
Operating lease expense	$	45,458	$	38,414
Short-term lease expense	33,438		27,121
Variable lease expense	17,427		12,922
Finance lease expense:
Amortization of right-of-use assets	4,459		2,401
Interest on lease liabilities	5,059		1,547
Less: sublease income (1)	(23,147)		(20,791)
Total	$	82,694	$	61,614

_________

(1)Represents income earned by the Company from the rental of hotel, convention or retail space at the MGE Niagara Resorts and the Earth Hotel Tower at Mohegan Sun, both of which are leased properties.

    Supplemental cash flow information related to lease liabilities is as follows (in thousands):

	For the Fiscal Years Ended
	September 30, 2021		September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Payments on operating lease obligations	$	20,747	$	22,844
Payments for interest on finance lease obligations	345		889
Payments on finance lease obligations	1,145		1,298
Total	$	22,237	$	25,031

    Maturities of right-of-use lease obligations are as follows (in thousands):

	Operating Leases		Finance Leases
Fiscal years:
2022	$	41,588	$	11,056
2023	38,600		12,235
2024	40,215		11,805
2025	39,690		11,405
2026	39,977		11,307
Thereafter	807,442		160,135
Total future lease payments	1,007,512		217,943
Less: amounts representing interest	(587,806)		(103,245)
Plus: residual values	—		327
Present value of future lease payments	419,706		115,025
Less: current portion of lease obligations	(9,616)		(5,836)
Lease obligations, net of current portion	$	410,090	$	109,189

On June 18, 2021, the Casino Operating and Services Agreement was amended to provide for, among other things, a change in the payment schedule for fixed and variable lease payments relating to the Fallsview Casino Resort facility, which were originally due during the closure of the MGE Niagara Resorts, to the last twelve months of the lease term. As of June 18, 2021, fixed and variable lease payments owed to the Ontario Lottery and Gaming Corporation were recorded within current portion of right-of-use operating lease obligations and due to Ontario Lottery and Gaming Corporation. This change was accounted for as a lease modification and, accordingly, as of June 18, 2021, resulted in a reduction in right-of-use operating lease assets of $55.9 million and corresponding reductions in current portion of right-of-use operating lease obligations, due to Ontario Lottery and Gaming Corporation and right-of-use operating lease obligations, net of current portion of $30.1 million, $10.4 million and $15.4 million, respectively.

Lessor

The Company leases space at its facilities to third parties. Remaining lease terms for these non-cancelable operating leases range from approximately one month to 21 years. Rental income under these lease agreements is fixed and/or variable

based on percentage of tenant sales or periodic adjustments for inflation. Rental income is recorded within hotel and retail, entertainment and other revenues. For instances in which the Company is the lessor, and the class of underlying asset represents retail space, the Company accounts for both the lease and non-lease components, such as common area maintenance and tenant services, as a single lease component. In all other instances, non-lease components are accounted for separately in accordance with applicable guidance, most commonly ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. 

Lease income consists of the following (in thousands):

	For the Fiscal Years Ended
	September 30, 2021				September 30, 2020
	Hotel		Retail, Entertainment and Other		Hotel		Retail, Entertainment and Other
Fixed rent	$	53,904	$	5,226	$	42,473	$	7,160
Variable rent	—		5,314		—		4,176
Total	$	53,904	$	10,540	$	42,473	$	11,336

Future fixed rental income that the Company expects to earn under non-cancelable operating leases, exclusive of amounts under contingent escalated rent clauses, is as follows (in thousands):

Fiscal years:	Operating Leases Fixed Rental Income
2022	$	5,281
2023	4,634
2024	4,214
2025	2,956
2026	2,599
Thereafter	5,617
Total	$	25,301

    Due to the evolving nature of COVID-19 and the related economic uncertainties, the Company cannot be certain that the contractual future fixed rental income presented above will be realized in its entirety.

    The portions of Mohegan Sun, including the Sky Hotel Tower and the Earth Expo & Convention Center, and Mohegan Sun Pocono that are leased to third parties under operating leases are recorded within property and equipment, net as follows (in thousands):

	September 30, 2021		September 30, 2020
Property and equipment, at cost	$	491,673	$	484,143
Less: accumulated depreciation	(218,873)		(198,080)
Property and equipment, net	$	272,800	$	286,063