The gaming operator Bally’s Corp has revealed that it plans to downsize its digital workforce by 300 employees in a bid to ease recurring expenditures and streamline operations. Executives also said the company is exploring the potential sale of its lease on the Tropicana Las Vegas.
The announcements were made during the Q3 earnings call for Bally’s, which saw its stock price plummet 14.8%. The company posted third-quarter revenue of $632.5 million and a $61.8 million loss, causing its stock to slide $1.15 per share during the period, as reported by The Washington Post.
Bally’s attributed its less-than-stellar outlook for the third quarter to an array of factors, including delays in the launch of Chicago’s temporary casino in Medinah Temple.
Bally’s Open to Offers for Tropicana’s Lease
Perhaps most surprising to many analysts was the revelation that Bally’s may be open to selling their lease on its iconic Tropicana Las Vegas. During the third-quarter earnings call with analysts, CEO Robeson Reeves, President George Papanier, and Chairman Soo Kim floated the idea that the lease could be up for sale given an attractive offer.
More specifically, the executives said that while Bally’s had no current plans to sell the Tropicana lease, the company would be open to considering offers that value the property at a minimum of $9 million per acre.
This came up when Barclays’ Equity Research Analyst Brandt Montour inquired during the earnings call whether Bally’s would consider selling the Tropicana lease to generate liquidity for financing other projects, debt repurchases, or equity buybacks.
The Rhode Island-based operator currently owns the lease for the casino property at the southeast intersection of Las Vegas Boulevard and Tropicana Avenue.
The Tropicana has been a staple of the Las Vegas Strip since 1980, but its outdated facilities and declining revenue have raised questions about its long-term viability. There were plans to demolish the aging structure and build a new casino resort.
However, it’s in a holding pattern waiting for Major League Baseball (MLB) to greenlight Oakland A’s move to build a stadium on a 9.5-acre plot of land on the Tropicana site.
The Future of Tropicana Las Vegas is Uncertain
Bally’s acquired the lease for Tropicana Las Vegas on the Strip in 2021, paying nearly $150 million in cash. The deal was officially closed in 2022, giving the operator a 50-year lease to operate the iconic casino or any future gaming property on the Tropicana site.
The job cuts and potential Tropicana lease sale come amidst plans by Bally’s to redevelop the land currently occupied by the aging casino resort.
Longer-term, Bally’s has proposed demolishing the existing Tropicana and constructing a new $3.5 billion integrated resort complex on the prime Las Vegas Boulevard site. However, without clear approvals or timelines, this large-scale project remains in the planning stages.
Waiting for MLB Approval of Oakland A’s Move to Vegas
Plans are in motion for Oakland Athletics to get MLB approval to relocate to Las Vegas. The baseball team has announced that it’ll build a state-of-the-art domed ballpark on a nine-and-a-half-acre plot within the Tropicana site.
As noted by Sports Illustrated, Rob Manfred, the commissioner of MLB, has confirmed that the vote on Oakland A’s relocation will take place when the team owners congregate in Arlington, Texas, from November 14th through 16th. Bally’s will know for sure that A’s will develop the Tropicana site if 75% of the owners vote yes.
The transition process is not expected to be swift. The Oakland Athletics are obligated to provide Bally’s with a one-year notice before commencing construction on the baseball stadium in Las Vegas.
The notification could occur as early as this year or as late as early 2024. Upon receiving the notice, Bally’s will need to formulate a plan for the future of the Tropicana property.
Bally’s Q3 Revenue Misses Expectations
For the period ending September 30th, 2023, Bally’s generated total revenue of $632.5 million, narrowly missing Wall Street projections of $634.54 million. The company reported a net loss of $1.15 per share compared to analyst estimates of a $0.15 loss.
The regional casino operator reported disappointing third-quarter financial results, driven by weakness across multiple properties, with executives exploring potential portfolio changes.
Bally’s Atlantic City hotel and casino properties – Bally’s Atlantic City and Showboat Atlantic City Hotel & Casino – saw revenue decline 6.5% year-over-year as the city continues to face intensifying competition. The company’s Riverboat Casino & Hotel in Evansville, Indiana, also needed to improve its performance.
Ballys Kansas City’s, which recently opened its revamped 35,000-square-foot casino, reported revenue of $41.5 Million.
Executives cited delays in opening a temporary casino in Chicago due to regulatory hurdles as dampening results. Ongoing issues generating strong returns at the aging Tropicana Las Vegas also dragged on performance this quarter.
Bally’s Plans to Layoff 300 Digital Workers
In response to the pared financial outlook, Bally’s executives announced plans to reduce headcount within its interactive division by 300 positions. CEO Reeves Robeson stated that this decision is primarily driven by a strategic shift towards consolidating its digital operations and streamlining its technology infrastructure.
The company expects to realize significant cost savings through this workforce reduction. The news of headcount cuts follows a January announcement by Bally’s indicating a potential workforce reduction of up to 15% within its digital unit.
Summing Up
Bally’s Corporation reports a stock plunge during an earnings call with analysts. It plans to cut 300 digital jobs following a disappointing third quarter while also leaving the door open to potentially selling the lease on the Tropicana Las Vegas casino hotel. Whether these moves will ultimately lead to Bally’s resurgence or further challenges remains to be seen.
