Analyst suggests Bally’s may consider selling Tropicana land to help finance Chicago project

Bally’s Corporation may contemplate the sale of the land housing the shuttered Tropicana to bolster financing for its ambitious Chicago casino venture, according to insights from a Las Vegas-based analyst.

Colin Mansfield, Vice President of Credit Research for CBRE Credit Research in Las Vegas, indicated in a report to investors on Monday that Bally’s could explore divesting the Tropicana site to contribute to funding its Chicago project. The report comes amid uncertainty surrounding a bid by hedge fund Standard General (SG) to acquire Bally’s, a move that Mansfield views as having "less than a 50 percent" chance of success.

SG, Bally’s largest shareholder, made an offer of $15 per share to purchase all remaining shares and privatize the company on March 11. Other investors have urged Bally’s to rebuff the bid. 

“The offer is round two for SG attempting to take Bally’s private, with the first attempt at $38 a share in 2022,” Mansfield said in his report, as per Las Vegas Review-Journal. “There are still several unknowns, but we assign a less than 50 percent chance the deal is accepted.”

Bally’s has acknowledged an $800 million shortfall in financing for its Chicago project, slated to commence construction later this year following the launch of a temporary casino in the city last fall. Mansfield underscored that the SG bid compounds the pressure on Bally’s credit profile, particularly as the company grapples with downgrades from three credit-rating agencies.

“At the surface, we believe the SG offer creates more noise and may distract from Bally’s Chicago financing efforts," said Mansfield, as reported by Review-Journal.

The fate of the Tropicana site remains a focal point for Bally’s, with nine acres of the property designated for the construction of a $1.5 billion Major League Baseball stadium for the relocation of the Oakland Athletics to Las Vegas. However, uncertainty looms over the project as a legal battle ensues over public funding, with a Nevada Supreme Court ruling expected imminently.

The Athletics, which ultimately are responsible for building the stadium, have received $380 million in public funding from the Nevada Legislature. However, private group Schools Over Stadiums is fighting to overturn the Legislature by putting the stadium question on November’s ballot.

Mansfield emphasized that while the Tropicana site represents a net-negative asset for Bally’s, its potential value has appreciated since its acquisition. Bally’s has indicated a willingness to consider selling the site, with management citing a price point of $9 million per acre, potentially yielding over $300 million in proceeds.

“In its (third-quarter 2023) earnings call, management expressed its willingness to sell, stating ‘at the right price they would unload anything,’ when speaking to the option of the Tropicana site,” Mansfield said, as per reports.

Strip land valuations vary widely, with examples such as Genting Group’s $7 million per acre purchase of the Resorts World Las Vegas site in 2013 contrasting with Tilman Fertitta’s $45 million acquisition of 6 acres on Las Vegas Boulevard.