Bally’s Insiders Benefit from A’s Move, Bought Stock in Advance of MLB Vote
Posted on: November 19, 2023, 01:00h.
Last updated on: November 20, 2023, 12:44h.
Bally’s (NYSE: BALY) insiders apparently gobbled up shares of the previously downtrodden stock in advance of Thursday’s Major League Baseball (MLB) owners’ vote. That tally paved the way for the Oakland Athletics (A’s) to move to Las Vegas, where the gaming company operates the Tropicana.
That unanimous vote seals the fate of the Tropicana, confirming the venerable Strip venue will be demolished so that a new MLB stadium can be built and readied in advance of the 2028 season. In April 2021, Bally’s acquired Tropicana’s non-real estate assets from Gaming and Leisure Properties (NASDAQ: GLPI) in a transaction valued at $308 million.
Before Thursday’s vote, high-ranking Bally’s executives, including CEO Robeson Reeves and George Papanier — president of the operator’s land-based casinos arm — feasted on the previously flailing stock. From Nov. 3 through Nov. 9, 10 Bally’s insiders bought 81,500 shares of the regional casino company, valued at more than $760,000, according to Bloomberg data.
Reeves and Papanier combined to purchase 40,000 of those shares. Buying Bally’s stock on Nov. 3 proved to be a shrewd move, because it closed at $9.32 that day before surging to $11.23 yesterday. The stock is up 21.93% over the past month, but still down 42% year-to-date.
A’s Move Could Lift Bally’s
With Las Vegas gaining an MLB team — the city’s fourth professional sports franchise, and second coming from Oakland — Bally’s clarifies how to proceed with the Tropicana.
In our view, this is a positive development, as it provides clarity for BALY with regard to the plans for the Tropicana, as BALY had opted not to implement operational changes until after the MLB vote,” wrote Macquarie analyst Chad Beynon in a new report to clients.
Bally’s has options. It could develop a new casino resort adjacent to the new stadium, or it could sell its lease on Tropicana to another gaming company. Gaming and Leisure will compensate the regional casino operator as part of the MLB stadium deal.
“We believe clearing this hurdle will now allow management to assess the various paths forward for the redevelopment of the property, which could include building a large resort, finding a partner, etc. We are holding our valuation for now, but overall, we believe this solidifies a better runway to deleverage and grow the company,” Beynon added.
Other Beneficiaries of A’s Move
Beynon has an “outperform” rating on Bally’s with a $15 price target, which implies upside of 33.5% from the Nov. 17 close. The Macquarie analyst also sees other Strip operators benefiting from the A’s moving to Las Vegas.
That group includes MGM Resorts International (NYSE: MGM) and Caesars Entertainment (NASDAQ: CZR) — the largest Strip operators — along with Golden Entertainment (NASDAQ: GDEN) and Wynn Resorts (NASDAQ: WYNN).
“In addition, we believe this news represents an incremental catalyst for Las Vegas as a whole that will bolster the entertainment draw of the city, which would benefit operators such as MGM, CZR, WYNN, and GDEN,” Beynon concluded.
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Just an easy question here. Some have said the answer is not quite as easy. Who realizes that Bally's Corporation does not even own that former Macy's department store in State College right now? Who owns it? The current property owners of that store might fail to see the humor when some local photographers along with the senior leadership of Bally's shows up with shovels in hand to "break ground" at a place that Bally's doesn't even own yet. How will those ownership arrangements be quickly sorted out before then? Oh, perhaps they already have. It kinda sounds like a promise to me.
Two well-known Penn State alums from New Jersey were in State College, PA yesterday for the Penn State/Rutgers football game. After the victory by the Nittany Lions, the two loyal Penn State fans from Jersey had dinner with two former classmates who are now prominent leaders of major concrete and steel construction companies in Pennsylvania. The Penn Staters mentioned they have seen on the Bally's website that a brand-new Bally's casino was planned NEAR the Nittany Mall in State College. They also shared their disappointment about missing the very recent $1.91 surge in Bally's stock mentioned above. They lamented over missing that strategically wise investment opportunity and then quickly turned their focus to their Plan B. With that planned casino near the mall being just four miles from the main Penn State campus, the Penn Staters asked their lifelong friends if now the time right is to invest heavily in local concrete and steel suppliers. The two construction magnates advised, "Absolutely not! There is no major new construction being planned. The casino will not be located NEAR the Nittany Mall, it will actually be located INSIDE the Nittany Mall and will be built in a vacant former Macy's department store there. The potential investors expressed real surprise since the Bally's website has posted since 2021 that the future casino near Penn State would be near the Nittany Mall, not IN the Nittany Mall. They thanked the two construction industry magnates for that timely advice and said they would watch for increasing revenue at the temporary Bally's Chicago casino and adjust their investment plans accordingly. After all, who goes to a former Macy's store for an enjoyable and memorable casino experience?
Take a look at Bally's stock price movement over the past two years - the real story here is how a company run by a supposed hedge fund genius could destroy so much of its shareholders' money in such a short time!