Tunica is Dying a Slow Death

Sam's Town:  a false wall hides the shuttered second floor.

I've been fascinated by struggling businesses all my life.  When I was a teenager I watched as Century Plaza Mall and Eastwood Mall in Birmingham slowly ceased to exist.  Rather than just be stunned by their demise, I wanted to know what happened.  How did a thriving mall - one of which was once the largest enclosed mall in the South - completely shut down?

Lately I've been studying an entire region that seems to be headed in the same direction.  Before casinos came to town, Tunica, MS sat in the poorest county in the U.S.  The per capita income was $6,500 in 1990 and unemployment sat at 13.1%.  New casinos promised to change things.  And it did, for a while.  While the population of the area only grew slightly, a consequence of poor infrastructure, per capita income expanded to $16,153 in 1994 (it has stagnated since, and was only $15,549 in 2013).  Though there wasn't a population boom, there was improvement in local facilities as gaming tax revenues funded a new jail, courthouse, arena and expo center, expanded library and airport, and other municipal buildings.

Alas, the tides have once again turned.

Gambling

 Demolition: the only activity at the shuttered Harrah's.

Mississippi gambling revenues are at their lowest in 27 years.  In 2007, non-tribal revenues in Mississippi hit a record $2.89 billion.  In 2013, they were $2.13 billion.  Remove the healthier Gulf Coast casinos from the comparison, and you see a 33% drop in revenues from 2007 to 2013 in the Mississippi River gambling market, from $1.58 billion down to $1.07 billion.  In 2014, revenues fell 7.8% at river casinos to $988 million.

Tunica is a place you go to gamble.  That's it.  There's no movie theater.  No bars or nightlife district.  You have to go to Memphis, 40 miles away, for that.  Today, even the casinos are struggling to stay afloat.  In June 2014, Harrah's shut down, laying off 1,300 employees.  It was once the largest casino between Las Vegas and Atlantic City, and the closest to nearby Memphis.

Other casinos continue to struggle.  There isn't one strip of casinos here like there is in Vegas.  There's the still-strong powerhouse of Gold Strike, Horseshoe, Tunica Roadhouse and Bally's.  These are the closest for those driving from Memphis, and weekend business is booming.  Weekdays are much slower.  Continuing southward, the Fitz sits alone and between the other casinos.  The Tunica Queen Riverboat cruise, adjacent to the Fitz, offered dinner cruises along the Mississippi River.  It shut down in July.  The southern-most casinos are the closest to the city of Tunica (all the "Tunica" casinos are actually located in an area called Robinsonville).  Sam's Town, Resorts and Hollywood Casino are all clustered together at the end of Casino Strip Resort Boulevard, and seem to be struggling the most based on parking lot counts.  Sam's Town has closed its second floor casino, shuttered retail space, and not maintained its hotel.  Many sleeping rooms still feature CRT-style televisions, poor Internet connections, and dated furnishings.

Retail

Rue 21: it's so bad, a sign promises they won't close.

Two malls in Birmingham closed because other malls opened in newer parts of town.   This is happening now in Tunica.  The largest retail development is the Casino Outlets, which opened in 1999.  Today, only a handful of stores remain, and the center is about 80% vacant. Tanger Outlets is building a 310,000 square foot center in Southaven, 26 miles away in the Memphis area.  When it opens in November, will any retailers remain at Tunica's outlet mall?

Continue south to Downtown Tunica, and more of the same.  Besides a small Piggly Wiggly, one may shop for groceries at Dollar General, or perhaps one of the convenience stores.  Many buildings sit empty.  The Main Street area has a beautiful courtyard, but only a smattering of antique stores, discounters and a couple of banks and restaurants.  Most of the buildings are for government offices, with an emphasis on welfare services such as WIC and subsidized healthcare.  The nearest Wal-Mart, CVS or Walgreens are 20 miles away.

Other Casualties

Westgate Resorts: a concrete pad with exposed pipes.

Other businesses in Tunica are threatened.  A number of hotels, including Microtel, Quality Inn, Days Inn and Best Western, are located nearby.  These hotels serve the almost exclusive purpose of housing gamblers.  It was hard not to notice the empty parking lots at these hotels.  Outside of weekends, only a handful of cars were parked outside.  Westgate Resorts, a timeshare close to the Gold Strike, is a testimony to overly ambitious plans.  The development was literally halted in mid-construction, and only a handful of units were ever built.  Those units that were finished are in disrepair, with ailing roofs and poor reviews.  The property is ranked 18 of 19 hotels in Tunica on Trip Advisor.

With gambling establishments now operating throughout the United States, Tunica is no longer relevant.   The leaders in this region made an all-in wager that gambling alone would make Tunica thrive.  That focus, and the complete lack of alternatives, is killing this town.  It is probably too late to revive the gaming industry here.  Adding other entertainment such as a theme park or cinema is unlikely.  One possibility is manufacturing.  A few small plants dot the agricultural landscape already.   Inexpensive land along with highways already in place, coupled with cheap labor, could attract companies to this area.  To be certain, the only sure bet around Tunica is that the gaming industry will continue its slow demise.  I wager that another closure, likely in the southernmost area of the market, will happen in a matter of time.

How We Spent Under $500 for a 7 Night Vacation

We love to travel, but our budget is limited.  Some deal with a limited budget by splurging on one nice vacation each year.  That's how Mom did when we were little.  Mom would receive credits from her court-reporting service that she would redeem for Disney tickets or lodging at a beach condo.  She had a savings account just for our annual vacation and put a little away each paycheck to cover travel, meals and entertainment.

I've found creative ways to keep our vacation costs down, but we like to travel more than once a year.   Last week we spent 7 nights away from home, and it cost less than $500.  Here's how:

Getting There

One of the biggest expenses of any vacation is travel.  With gas prices lower this year, we almost drove to Williamsburg, VA.  However, the 700+ mile drive was a deterrent.  Fortunately we have a discount carrier, Allegiant, available to us from the St. Pete/Clearwater airport.  For 2 round-trip tickets I paid $290.  I redeemed MyVegas points for assigned seating.  We picked an exit row that gave us a huge amount of legroom.  Allegiant charges for luggage, but we didn't pay anything because our CabinMax bags fit under the seat in front of us.

Our Splurge

One downside to flying Allegiant is that they don't fly every day.  We would have to arrive a day before I would check-in to the timeshare.  I made the best of the situation by booking a nice hotel outside of Washington, D.C.  I could have redeemed Hilton Honors points for a free room, but the weekend rate for the Hilton Tyson's Corner was just $89, so I opted to bank my points for another trip.  Parking was free and we used the MetroRail to visit D.C.  

Lodging and Local Transportation

Besides the great deal I got for buying a car from Hertz, another benefit I received was a free weekly rental from their fleet.  Our Toyota Camry cost us nothing but gas and airport facility charges.  Our hotel in Williamsburg was a timeshare we mystery shopped.  The hotel was a deluxe condo, with a full kitchen, living and dining room, bedroom, balcony and bathroom with both a shower and an oversized tub.  The room was completely free, and I was paid $163 for attending and recording the three hour timeshare presentation.

Entertainment

Washington, D.C. is a great value for visitors:  virtually every site has free admission.  While only there one night, we spent two full days there.  We visited two Smithsonian buildings, the National Botanical Gardens,  the grounds of the Capitol and the National Archives.  In Williamsburg, I received two tickets to Colonial Williamsburg for $10 each (this was the gift I chose for attending the timeshare presentation).  Our Sea World passes got us into Busch Gardens at no charge, including free parking.  We enjoyed Busch Gardens so much that we visited four times.  We also used our reciprocal garden benefits to visit the Norfolk Botanical Gardens.  It was one of the nicest gardens we've visited.

Meals

The last big expense is food.  Since we had a full kitchen, we opted to stock up on groceries, alcohol and treats.  We spent $75 at Walmart, which was more than we'd spend at home because we treated ourselves to cake, ice cream, beer and wine.  We ate at Chili's one night ($26 for two), Longhorn ($16 w/ coupon), fast food twice ($10) and had beer at a bar in D.C. ($30).  I earned $25 for performing one McDonald's mystery shop.

Bottom Line

While I am listing everything, we used gift cards for much of this, which reduced our cash outlay.  As a further bonus, I didn't pay full price for the gift cards.  For example, I bought a $100 gift card to Walmart using my American Express, which gave me a $30 credit.  For our visit to Chili's I received free gas and a 5% credit card benefit for purchasing the gift card.  The Longhorn gift card was free from a points redemption at MyPoints.

Flight:  $290

Car and Rail:  $83

Hotel:  $99

Food:  $157

Entertainment:  $20
Less Compensation for Recording Timeshare Presentation and $25 for McDonald's shop:  ($188)

Total for 7 nights vacation:  $649 - $188 = $461

Free Premium Passes to Sea World and Busch Gardens Parks

A couple years ago, shares of Carnival Cruise Lines were pounded after the deadly sinking of the Costa Concordia and a major fire on the Carnival Triumph.  While other investors sold their shares and ran in the other direction, I sniffed opportunity.

We are always looking at ways to save money on vacations and entertainment.  Who pays full price, anyway?  Recently I discovered a low-risk method to "pay" for two premium passes to all 10 Sea World/Busch Gardens parks - for two full years.

These premium passes weren't cheap:  I paid $1,085 all-in for two passes valid for 24 months.  As an investment in our entertainment, this has the potential to be a great value.  If we visit once a month (we live near Busch Gardens Tampa Bay, so this is not unrealistic), admission will cost us about $23 per ticket.  The premium passes also include parking, which saves us at least $15 each time we visit.

However, $23 per ticket to visit a premiere theme park isn't good enough for a Frugal Miser.  Before pulling the trigger on this purchase, I found an attractive investment in Sea World (NYSE:  SEAS).  Truth be told, I was first attracted to the company's stock, which then lead me to investigate the most cost-effective way to get tickets for the parks.  What made the stock appealing was the healthy dividend and the fact the company's shares have been negatively affected by what I think is a temporary problem (similar to Carnival two years ago).  At today's price, each share of SEAS yields 4.8%.  Compare that to a bank CD:  a 24 month CD pays less than 1% interest.  Assuming the dividend is safe, buying 645 shares of Sea World (an $11,000 investment) earns enough in cash dividends to pay for our passes.  At the end of two years, I still own the 645 shares, which I could sell, likely at the same price or better than the stock trades today.

As a value investor, I never pay "full price" for stock in a company.  Two years ago, Carnival stock fell following a series of misfortunes.  Just as I suspected, that company has completely rebounded.  I think Sea World is experiencing a similar situation.  A documentary (Blackfish) hurt attendance, which is down by the low single digits.  However, shares of the company have fallen 52% in the last two years.  Risks are primarily that attendance figures continue to decline, either due to internal problems or another economic recession.  The company has a lot of debt and the dividend is currently higher than earnings.  Both of these issues need to be addressed.  My thesis is that the debt is easily serviceable and the dividend can be covered by improved attendance at the parks. This Frugal Miser smells opportunity.  On Monday I purchased 650 shares of SEAS at $17.67/share.

Looking Back at my Free Cruises for Life Idea

In May of 2013, I posted my plan  to receive free cruises for the rest of our lives.  More than two years have passed and I thought I would evaluate whether this plan was successful.

The idea was to purchase enough shares in Carnival Cruise Lines (NYSE:  CCL) so that the dividend paid for a free cruise every time we take one.  At the time I posted the article, shares were trading in the $34 range and paid a $.25 quarterly dividend.

How have I done?  In a word:  Outstanding.  Stock in Carnival is now at $53/share, and the quarterly dividend was recently increased to $.30.  I have a paper gain of $19 per share, and have collected $2/share in dividends.  I ended up buying just 200 shares, not the 1,000 that I originally intended.  The $3,800 paper gain, along with $400 in dividends, could pay for seven 7-day cruises for two at the price I paid for the cruise we are taking in December.

Did you get that?  In exchange for investing $6,800, over two years I have received the equivalent of 7 week-long cruises.  I could cash out today, receiving 100% of my money back, plus my gains.

My Frugal Miser - July Expenses: $9,925

I spent more than I brought in last month.  We paid for the IKEA cabinets (over $2,500) and I paid off my dental implant.  I also put a $500 deposit down on a December cruise and bought Platinum 2 Year Passes to Sea World and Busch Gardens.  Those passes work out to $23/month each, which is a big gamble on my part that we will divert our future entertainment spending towards theme parks.  The passes cover all 10 parks across the country as well as free parking.  We've already visited Sea World in Orlando last week and will spend some time at Busch Gardens in Williamsburg, VA this week.

I began driving for Uber last month.  I earned $1,302.  Since I bought a car just for Uber, I will be able to track depreciation and other vehicle expenses.  I don't plan to break out my spending on fuel though - too complicated.

July Expenses:  $9,925

$1,276 Auto ($79 for gas, $148 for depreciation, $687 for Uber Car depreciation, $362 for service)

$38 Bank Fees

$47 Clothing

$0 Computer

($2) Entertainment (movies, gambling, alcohol) - income this month

$185 Food

$0 Gifts Given

$3,378 Household/Housing/Home Repair

$141 Health and Dental Insurance

$0 Investment Expenses

$2,470 Medical/Dental

$20 Miscellaneous

$0 Personal Care

$0 Subscriptions

$0 Taxes
$83 Uber Expenses (excluding fuel and depreciation)

$228 Utilities

$1,920 Vacation and Recreation

July Expenses, Excluding Vacation and Home Repairs:  $4,637

My Frugal Miser - July Income: $7,461

The house I listed in March remains unsold, but I do have an offer on it.  My agent is working to improve the offer, as it was too low for me to accept as-is.  The empty townhouse was rented in record time.  This is a new management company and they did an outstanding job finding a new tenant.  My handyman also did excellent work getting the property in rent-ready condition.  I will receive rent from this one starting in August.

The incompetent management company for two of my townhouses is holding the rent to pay to have trees trimmed.  The trees do not belong to me but are hanging onto my property.  Lastly, my tenants at the condo only paid $500 ($150 short) as one of them lost his job.  Bottom line:  I received NO rent on 4 properties, and a reduced amount on a 5th.  It was a tough month.

July was my first month driving for Uber.  I grossed $1,302.  On Monday I will go over the expenses I had.

July Income $7,461

$1,795 Mystery Shopping
$1,302 Uber
$4,346 Rental Income

$18 Other Sources

Notes:.  

• I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.
• I don't include changes in investments from capital gains/losses or dividends.  Most of my investments are in retirement accounts anyway, but this category will grow as I start selling my rental properties and I will probably change this policy.
• I include merchandising and hospitality work in the mystery shopping category since the companies that I shop for provide this extra side work.