How low have expectations for Boyd Gaming sunk when the CEO can claim on the latest earnings conference call that “This was a solid quarter for our operations” and “Growth resumed in our Nevada business, as our Las Vegas Locals and Downtown Las Vegas operations both achieved positive (cash flow) comparisons.”. Really??? Revenue increased by 1% in both segments and the company posted a loss again. Shareholders need to demand something more aggressive from Boyd Gaming. The core problem is the Boyd family controls about 30 percent of the company’s stock, and the family doesn’t seem willing to do anything radical to shake this company out of its slump.
What about conversion into a Real Estate Investment Trust (REIT)? Boyd’s CEO has told investors last week that the company will study the possibility of spinning off real estate into a REIT, but that the process seems long and complicated, and the company won’t provide shareholders with updates until the internal study is completed. Management cites the capital structure (i.e. high debt levels) as one reason why REIT conversion might not be possible. Well, why doesn’t Boyd clean up its balance sheet and then grow from a position of strength? Borgata is a large part of Boyd’s revenues, and is doing better than the Atlantic City market as a whole. Now that MGM has re-obtained a gaming license, now is a good time to sell Boyd’s 50% share of Borgata to MGM. Boyd can use the cash to shore up its balance sheet.
What about the mid-western/Peninsula properties, can they be traded to GLPI, and Boyd can take back shares in return? This would shore up Boyd’s balance sheet as well. The nice thing about writing a blog about gambling is I can throw out wild and crazy ideas.