Posted on: May 9, 2023, 05:22h.
Last updated on: May 9, 2023, 05:39h.
The Tropicana Las Vegas Hotel and Casino could be on borrowed time as the Oakland Athletics are reportedly altering their property choice for a new stadium in Sin City.
Citing unidentified sources with knowledge of the matter, Howard Stutz of The Nevada Independent reported Tuesday that the A’s and Bally’s (NYSE: BALY), Tropicana’s operator, have an agreement under which the casino hotel will eventually be torn down to make way for a Major League Baseball (MLB) stadium.
The allure of the Tropicana site is clear: by placing the ballpark there, the $500 million in public financing from Nevada taxpayers the A’s and MLB are seeking declines to $395 million. News of the potential A’s/Bally’s partnership emerged less than weeks after reports surfaced the team was in talks with Red Rock Resorts (NASDAQ: RRR) regarding roughly 40 acres at the intersection of I-15 and Tropicana. Soon thereafter, it was reported the club and Red Rock reached a binding agreement.
While Bally’s operates Tropicana, Gaming and Leisure Properties, Inc. (NASDAQ: GLPI) owns the land on which the integrated resort resides. Following the sale of the non-land real estate assets to Bally’s last September, the casino operator and GLPI entered into a 50-year lease agreement with an initial term of $10.5 million per year.
Bally’s, GLPI Could Be Winners if A’s Move Forward
It’s possible that the A’s again change their minds and opt for another site. Earlier Tuesday, reports emerged that the team is also considering the land currently occupied by Rio Hotel & Casino as a stadium site.
Should the team move forward with the Tropicana, Bally’s and GLPI stand to benefit. The real estate investment trust (REIT) could generate significant proceeds by selling its last chunk of Strip land. Some of that would be directed to Bally’s because the operator needs to be compensated for being ushered out of its only Las Vegas venue.
Bally’s could also benefit because if a transaction with the A’s materializes, the operator won’t need to allocate capital to enhancing Tropicana.
Regardless of the MLB club’s decision, Tropicana could be heading for a tear-down. Last year, Bally’s Chairman Soo Kim told reporters the company is eyeing significant changes at Tropicana and that demolition and rebuilding of the property are possible.
Red Rock Not Necessarily a Loser
Following news of the A’s/Red Rock accord, analysts gushed over the price the casino operator could fetch for the land it was to sell to the team. That pact also included a provision by which the A’s could acquire another eight acres from the gaming company in the future, implying there could be more financial benefits for Red Rock and its investors.
Should the MLB club proceed with Tropicana or Rio, that doesn’t necessarily mean Red Rock is a loser in this situation.
It owns close to 100 acres near Allegiant Stadium, home of the NFL’s Las Vegas Raiders. That’s a desirable location for a casino resort and, by some estimates, that land is worth upwards of $6 million an acre or more.