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Tropicana operator downgraded; how could this affect A’s stadium plans?

Updated March 27, 2024 - 4:50 pm

Two credit rating organizations have downgraded Bally’s Corp. just as the company is on the verge of closing its Tropicana property in Las Vegas.

In separate actions, Moody’s Investors Services downgraded Rhode Island-based Bally’s from “B1” to “B2” while S&P Global Ratings cut its Bally’s rating from “B” to “B-,” junk-bond status.

The downgrades could affect the company’s ability to borrow money for three projects it has on the horizon, including the development of a $1.5 billion, 33,000-seat Major League Baseball stadium for the Oakland Athletics, which has received permission to relocate to Las Vegas.

Current plans call for Bally’s to close the Tropicana on Tuesday to make way for demolition and, next year, the start of stadium construction.

Although details haven’t been announced, Bally’s, which operates the hotel-casino, would work with landowner and landlord Gaming & Leisure Properties Inc., and the baseball team on the project.

Ultimately, Gaming & Leisure Properties has committed 9 acres to the stadium and Bally’s hopes to build an adjoining resort to be called Bally’s Las Vegas on the remaining 26 acres of the Tropicana site.

Moody’s made its downgrade Monday while S&P Global changed its outl0ok earlier in the month when Bally’s largest shareholder, Soo Kim, and his Standard General hedge fund offered to buy the company’s remaining stock for $15 a share, around half the amount Kim offered in a similar takeover bid in 2022.

While the Tropicana project is of local concern, Bally’s has a larger and more immediate project underway, Chicago’s first and only casino, which is expected to break ground later this year after the company opened a temporary casino last fall.

Bally’s also is pursuing a downstate casino license in New York.

“Additional acquisitions or development opportunities, such as potentially developing a gaming resort facility in New York at its recently acquired golf course, or redeveloping the Tropicana casino site in Las Vegas, while uncertain, pose risk of elevating leverage for longer and would require significant capital investment,” Moody’s said in a report.

Representatives from Bally’s on Wednesday said they had no comment on the credit downgrades.

Josh Swissman, founding partner and managing director of Las Vegas-based GMA Consulting, said it’s hard to see Bally’s having the ability to tackle all three major projects.

“For years, they (Bally’s) has been growing dramatically through rapid-fire M&A (mergers and acquisitions) activity,” Swissman said.

“It takes its toll on the balance sheet when you take on projects like these and at some point, you reach a tipping point with these credit-rating companies.”

Swissman didn’t speculate on whether the Tropicana project would get done or what priority Bally’s has for each project’s completion.

“Chicago has tremendous potential. New York is early in the process, but it certainly has tremendous potential. By having one of the busiest intersections in the country at Tropicana and the Strip and adding a Major League Baseball stadium to it makes what was already an amazing piece of real estate into an amazing piece of real estate on steroids,” he said. “It may be difficult to do all three of these things.”

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.

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