Bally’s Open to Selling Tropicana Las Vegas Lease, Cuts 300 Digital Jobs
Posted on: November 1, 2023, 04:30h.
Last updated on: November 1, 2023, 08:21h.
In conjunction with its third-quarter earnings report — one that sent the stock reeling to a 14.80% loss on Wednesday — Bally’s (NYSE: BALY) announced it will reduce its headcount by 300. Executives added they could be open to selling the lease on the Tropicana Las Vegas casino hotel if the price is right.
News of the job cuts comes after the Rhode Island-based regional casino operator said in January that it could reduce headcount at its interactive unit by up to 15% to cut costs.
That and a steep earnings miss contributed to Wednesday’s sell-off by the moribund stock. Bally’s said it lost $1.15 a share on revenue of $632.5 million in the September quarter. Analysts expected a loss of 15 cents on sales of $634.54 million.
Further fueling the share price plunge was updated 2023 earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) and revenue guidance.
Bally’s is adjusting the revenue guidance provided on May 9, 2023, for the remainder of the year to $2.4 billion to $2.5 billion. The guidance range for Adjusted EBITDAR is now $640 million to $655 million,” according to a statement.
The company cited delays in launching its temporary casino in Chicago, among other factors, as the reason behind the pared outlook.
Tropicana Las Vegas in Holding Pattern
Tropicana Las Vegas is Bally’s only Sin City property, and that venue is in a holding pattern as the operator, real estate owner Gaming and Leisure Properties (NASDAQ: GLPI) awaits the outcome of a Major League Baseball (MLB) owners meeting later this month.
At the conference, owners are expected to approve the Oakland Athletics (A’s) move to Las Vegas, which includes plans to build a new stadium on the Tropicana site. On a conference call with analysts, Bally’s executives said uncertainty over Tropicana’s future contributed to softness at the venue in the third quarter.
Bally’s CFO Marcus Glover told analysts that Tropicana’s current value is “enormous” and that at a compelling price, Bally’s would be open to selling its lease on the venue. CEO Robeson Reeves reminded analysts that Bally’s paid just $150 million to acquire rights to that lease, with Chairman Soo Kim adding Tropicana’s asset value has increased.
“Although we have some short-term pain, this is an extremely valuable asset,” Reeves told analysts.
Bally’s Q3 Results a Minefield
Curtailed investment at Tropicana and regulatory setbacks that delayed the opening of the temporary casino in Chicago weren’t the only blows to Bally’s third-quarter results. Weakness at the operator’s venues on the Atlantic City, N.J. Boardwalk, and in Evansville, Ind. also weighed on outcomes.
Bally’s didn’t go into detail about Atlantic City issues, but executives noted its regional casino in Evansville was hindered by more historical horse racing machines coming online in neighboring Kentucky.
We sense investors may have expected sequential improvement as BALY transitions to a variable-cost tech strategy,” wrote Stifel analyst Jeffrey Stantial in a note out earlier today. “FY23 guidance was revised lower on Chicago timing & curtailing of Tropicana operations ahead of a potential A’s relocation, with implied Q4E Adj. EBITDAR ~$20M below Consensus at midpoint. Overall, we see more negatives than positives in BALY’s Q3 results, though the bar felt low heading into earnings.”
He rates Bally’s a “hold” with a $10 price target.
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Source: casino.org
