The Sinclair Broadcast Group, a dirigent of regional sports networks that carries the Bally’s branding, is poised to liquidate a substantial stake of 7.91 million shares of the popular gaming company’s stock. Sinclair’s decision to sell off the shares was reported in recent SEC (Securities and Exchange Commission) documentation where Bally’s notified investors of its intent to facilitate the sale on behalf of SBG Gaming, LLC, a subsidiary of Sinclair.
Adding intrigue to the story, the disclosure reveals intriguingly that the yield from the sale is intended to be funneled directly to the Selling Stockholder, and won’t be benefiting the casino company’s coffers.
In context, as of March 20, Bally’s had 40,426,353 shares of common stock outstanding which means that Sinclair’s sell-off amounts to a whopping 16.37% of the total shares.
A bit of a history lesson; in late 2020, Sinclair’s entry into the world of stock ownership with Bally’s was brokered in a multifaceted deal involving the naming rights of Sinclair’s Regional Sports Networks (RSNs). Reportedly, the gaming company coughed up a cool $85 million over a decade-long period for those naming rights. It was a win-win for Sinclair who not only netted a 15% equity stake in Bally’s but also earned an entitlement to ramp up their stake by another 15% so long as certain fiscal goals were attained.
The RSNs themselves have a rather interesting tale; Sinclair bought them from Walt Disney for $10.6 billion back in 2019. The hefty acquisition came as part of a mass divestment by Disney to court the favor of regulators for its 21st Century Fox acquisition.
Facing financial hurdles post-acquisition, Sinclair and business partner Soo Kim, who is the Chairman of Bally’s, reportedly put forth an $850 million bid last November hoping to regain control of bankrupt Diamond Sports Group, the holding company for the Bally’s-branded RSNs.
The timing of the sell-off set the rumor mills churning as it comes on the heels of Soo Kim’s Standard General hedge fund extending a takeover offer of $15 a share for Bally’s.
Notably, Sinclair’s reasoning behind the stock divestment isn’t mentioned in the SEC filing. It appears that the media giant is keeping its cards close to its chest as evident by its radio silence so far about its plans for the proceeds from the sale.
In the SEC filing, Bally’s stated, “The Selling Stockholder will act independently of us in making decisions with respect to the timing, manner, and size of each sale. Such sales may be made on one or more exchanges or in the over-the-counter market or otherwise, at prices and under terms then prevailing or at prices related to the prevailing market price or at negotiated prices.”
This development hints at an unpredictable future, carving a narrative that has stock market observers, and presumably Bally’s shareholders, keenly watching the next move in this masterful chess game in the world’s financial empire.
