Chris Ripley, Sinclair Broadcast Group President & CEO and George Papanier Ballys Corporation President & CEO join Yahoo Finance Live to discuss their new sports-betting partnership.
BRIAN SOZZI: A big tie-up this week between media giant Sinclair Broadcast Group and casino operator Bally's Corporation. The 10 year deal we'll see Bally's in Sinclair more closely to capitalize 10-year sports betting and I gaming joining us to discuss is Sinclair Broadcast Group president and CEO Chris Ripley and Bally's Corporation president and CEO George Papanier. Good morning to you both.
Chris, let me start with you here. I'm just going to tick through some of the things that you are receiving as part of this deal. You have a naming rights fee. You can get a 15-- or you will take a 15% stake in Bally's, also an option to get 15% more. As an investor looks at this deal, how does this change your financial trajectory moving forward?
CHRIS RIPLEY: Well, look, there's really two key things about this deal that make it so great. First, we're taking and bringing together the largest collection of sports rights in North America that can be regionalized and localized on a state-by-state basis. That's really important because when you take a look at national players like ESPN, they have lots of sports, but they can't put sports betting on there. You only see fantasy. And we're combining that with Bally's, who as you point out, has-- we're going to have a significant stake in.
And Bally's is an up-and-coming player here. They had a leading-access footprint, which means they're going to be 50% more profitable than online players who pay others for their footprint at maturity. They have an end-to-end technology stack that's built for the US, and they have a complementary land-based casino portfolio with a large player database. So we think it's a great combination, putting those two together. It's going to be really powerful to make a new leader in the sports betting space. And by having a big stake in Bally's, that is going to have a huge economic benefit to our shareholders.
MYLES UDLAND: And George, I'd love to get your thoughts from the casino side and where you think we're at in this sports betting cycle and some of the dynamics that you think have played out last couple of years. And obviously, this a longer-term deal, so you-- I would assume you believe this is quite early in that process of a maturing market in the US.
GEORGE PAPANIER: Well, first, thanks for having us. And if I could just take a step back, you know, we just announced two pivotal transactions, which were just the last two pieces of a complex puzzle for us to become the first omnichannel gaming operator in the US. You know, we have-- we had capital, so we certainly like operate with a low balance sheet. We had high levels of liquidity, and that allowed us to continue to build our portfolio of bricks-and-mortar assets, which now put us pending licensing at 14 casinos in 10 states. And that led us to the access to these markets, which allows us to now, you know, go into these markets for sports betting and i-gaming.
Then we also had the brand, which we just added about a month ago, which is the Bally's brand, which we will now use over both our bricks-and-mortar side, as well as our interactive technologies. Then we added these two less integral pieces of the puzzle, which were the tech stack, which was the deal that we did with Bet.Works we announced yesterday for 100% interest and ownership of a proprietary tech stack, which was critical for the last step, which is where we are today, which is this media relationship with Sinclair.
BRIAN SOZZI: Chris, do you think this alleviates some of the concerns on the Street on-- the 21 regional sports networks that you received from Disney as part of their spin-off-- do you think this alleviates some of the concern on the Street about how you extract value from those key assets?
CHRIS RIPLEY: Look, we are on a path to transform sports and, more specifically, the RSNs through direct-to-consumer, through gamification, and through fandom-based community features. So this is a major cornerstone for us in that transformation, and it does, I think, answer a lot of questions, in terms of the intrinsic, underlying value of these sports rights, which are extremely valuable.
MYLES UDLAND: And so Chris, just following up on that, given the uncertainty-- or actually, I guess, relative certainty we see in professional sports-- but changing of those kinds of schedules and there's been a lot of-- you've had to jump through a lot of hoops to get those games on the air. Are you guys, I guess, as bullish as you've ever been on the value of those assets, even with a very strange spring and I think still a somewhat uncertain season, especially for, you know, the baseball, basketball, hockey rights that are so integral to those networks?
CHRIS RIPLEY: Well, look, I think, if anything, COVID has proven the value of sports. And our main programming post-COVID was the regular season of baseball. And our ratings and our revenue, advertising revenue per game were up during that period even though there was a bunch of double-headers. They were at different times. There's lots of reasons for people not to tune in, and our-- and they tuned in in record numbers for us.
And I think when things get back to normal, which I expect there could still be some shifting of the seasons next year-- obviously, basketball is starting here in late December. And we're going to-- I think you'll see that viewership will be strong when things get back on a normal pattern.
BRIAN SOZZI: George, you-- you and your team have spent the pandemic really getting some very attractive assets on the cheap. As you take a step back, how do you think the casino industry will emerge from the pandemic?
GEORGE PAPANIER: Sure. So you know, this is certainly unprecedented. But if you look over the last 20 years, you know, we had to deal with a couple of critical events as well, including 9/11 and the really long-in-duration Great Recession. So you know, the industry has proven itself to be pretty resilient.
And you know, once we were allowed to start opening again-- and our first property opened in May and then within a month after that, we had all our entire portfolio opened, we felt there would be some pent-up demand, and there certainly was. But it's allowed us to kind of evolved to where we're now dealing with the pandemic. And it's forcing us to go with much less amenities than we have historically opened with. But as a result of that, we're seeing improvements in our margins. So we think some of that is sustainable long term.
As far as, you know, how we see ourselves continuing to operate with the pandemic, we've always had the interest of the health of our employees and our customers first. We're going to continue to adhere to CDC as well as our-- the departments of health, states departments of health guidelines. And you know, it's going to-- might be a little rocky from now through the point where we actually can hopefully be able to utilize these vaccines and the therapeutics. But you know, we think, again, the industry is resilient. And you know, we're going to just continue to evolve, and you're seeing some of that with the evolution to sports betting and i-gaming, which we're preparing ourselves for to be very competitive in that space.
BRIAN SOZZI: Chris, last one to you before we let you go. Live sports is back. Hopefully live sports will stay back in 2021. Any update on you being back on YouTube TV and Hulu?
CHRIS RIPLEY: No updates there. But I am optimistic now that we have dates for the return of live sports.
BRIAN SOZZI: It's definitely good to see sports back. And again, congratulations on this deal. Sinclair Broadcast Group president and CEO Chris Ripley and Bally's Corporation president and CEO George Papanier. Have a good weekend, guys.
GEORGE PAPANIER: Thank you. You too.
CHRIS RIPLEY: Thanks, Brian.