Penn CEO says adding Strip property ‘would be nice’ if price right
Penn National Gaming isn’t ruling out a potential acquisition of a Strip property in the future, but don’t expect them to jump into any sort of high-priced bidding war.
Asked during a Thursday earnings call about the importance of owning a destination property on the Strip, Penn President and CEO Jay Snowden said that “it would be nice to have one in the portfolio,” but stressed the company would not be a bidder in “an irrational competitive bid process.”
Last year saw a string of multibillion-dollar acquisitions of Strip resorts, capped by MGM Resorts International announcing that it was selling the operations of The Mirage to Hard Rock International for $1.075 billion.
Penn was an unsuccessful bidder to acquire The Cosmopolitan of Las Vegas when MGM Resorts International announced in September that it agreed to buy the resort’s operations for $1.625 billion.
And more sales are likely on the horizon. Caesars said in November that it intends to sell off one of its eight Strip properties in the early part of 2022, with most analysts looking at Planet Hollywood as the asset most likely change hands. Caesars recently announced a multimillion-dollar rebranding and renovation project for Bally’s, which will soon become Horseshoe Las Vegas.
Penn National Gaming operates the M Resort in Southern Nevada and two casinos in Jackpot. It currently operates Tropicana Las Vegas, but that is set to end when Bally’s Corp. completes its acquisition of the property later this year.
“With all of that said, we have the balance sheet that not every company can do. So if the price is right, if the property is right for us and location is something we’re comfortable with, we would probably take a look at it and at minimum kick the tire,” Snowden said.
Penn on Thursday reported net income of $44.8 million, 26 cents per share, on revenue of $1.57 billion for the quarter that ended Dec. 31. In the same quarter of 2020, Penn reported net income of $12.7 million, 7 cents a share, on revenue of $1.03 billion.
J.P. Morgan analyst Joseph Greff, in a note to investors Thursday, said that company’s revenue and cashflow were slightly above expectations, and that the impact of the COVID-19 omicron variant proved to be less than first anticipated.
“PENN indicated that it experienced some Omicron-related softness in late December, which, it noted, has abated late last month, though the degree of the impact from Omicron in December was surprisingly more modest than we had expected,” Greff wrote.
More Barstool Sports problems
Snowden started out the earnings call by addressing new accusations levied against Barstool Sports founder Dave Portnoy, and lamented the timing of the latest allegations lining up with the company’s earnings report release.
“I first wanted to address the article about Dave Portnoy that dropped last night from the same paywall subscription-based publisher as the last article which also happened to be on the same day as our earnings call exactly three months ago,” Snowden said.
Business Insider published an article Wednesday detailing the accounts of three women who accused Portnoy of sexual misconduct.
It also published an article in November in which other women made similar claims, which analysts attributed as the main cause for Penn’s stocks plummeting more than 20 percent the day of their third quarter earnings call.
Portnoy has denied the claims in both articles in lengthy videos posted to his social media accounts.
Penn National currently owns a 36 percent stake in Barstool Sports. It will pay another $62 million to bring its stake to 50 percent next year and will have the opportunity to purchase controlling ownership,
Snowden said that the accusations were from “anonymous sources made about Dave and his personal life,” and asked that analysts “keep today’s call focused on Penn and our earnings release.” No analysts asked about the newest allegations against Portnoy on Thursday’s call.
Nevada has no Barstool sportsbook locations, but its partnership with Penn already has the attention of the state’s gaming regulators.
During a December Gaming Control Board meeting to license Penn’s new chief financial officer, board Chair Brin Gibson made that clear.
“I want to make sure that you understand that I am concerned with Barstool Sports,” Gibson said during the hearing. “I’ve sent to your company a request for information on the vetting of those issues by your compliance committee. And I’d like to see the report by the date that I noted.”
Control board members Philip Katsaros and Brittnie Watkins said they echoed Gibson’s concerns.
Penn’s stock, traded on NASDAQ, closed down .74 percent, or 34 cents, a share at $45.33.
Contact Colton Lochhead at clochhead@reviewjournal.com. Follow @ColtonLochhead on Twitter.
