Bally's mulls Standard General's corporate buyout amidst potential project overload

Rhode Island-based Bally's Corp. finds itself at a crossroads as it weighs a corporate takeover bid amidst a slew of ambitious projects and financial constraints.

The buyout offer from Standard General, Bally's largest shareholder at a 23% share, comes as the operator grapples with a multitude of challenges, including an $800 million shortfall for the construction of a planned casino in Chicago.

In addition to the Chicago venture, the company is embarking on a new resort development tied to a Major League Baseball stadium in Las Vegas, at the soon-to-close Tropicana Tropicana site, and vying for a casino bid in downstate New York.

According to Brendan Bussmann, a Las Vegas-based gaming analyst, the extensive list of costly endeavors may be stretching the company's resources thin. "It's about execution, and right now that seems to be in the balance," Bussmann remarked, as reported by the Las Vegas Review-Journal.

In a recent Securities and Exchange Commission filing, Bally's Corp. revealed the formation of a special committee tasked with evaluating the preliminary proposal from Standard General to acquire all outstanding shares of the company at $15 per share. Standard General, a New York-based hedge fund led by chairman Soo Kim, previously attempted to acquire Bally's Corp. in 2022 but was rebuffed by the company's board.

Meanwhile, concerns persist over Bally's Corp.'s ability to complete the construction of Chicago's first and only casino, a $1.3 billion project slated to open by September 2026. The company's focus on the Chicago endeavor has cast a shadow over its plans for the Tropicana site in Las Vegas, where a new resort development is in the planning stage.

Questions surrounding the financial viability of the Oakland A's stadium project, which includes a $380 million public contribution approved by the Nevada Legislature, complicate the team's potential relocation. The contribution faces a legal challenge from the Schools Over Stadiums group. The Nevada Supreme Court will hear oral arguments on April 9 in the case.

As the company navigates through this challenging period, industry experts warn that its ambitious expansion plans may prove to be more than it can handle at this juncture.

Standard General's proposed takeover for the remaining shares at $15 each puts the company's valuation at approximately $648 million. While this offer stands as a premium to the current share price, it marks a substantial decrease from Standard General's bid of $38 per share in 2022.