When Arthur M. Goldberg took over as chairman of Bally Manufacturing Corp., he set out a plan to avert bankruptcy and restructure the debt-laden firm over a three-year period.
”It`s been 21 months, and we`re ahead of the plan,” Goldberg says. ”At this rate, we`ll do the restructuring in less than two years.”
After piling up losses in five of six quarters through the end of 1991, Bally posted profits in the first two quarters this year.
”Our first job was to stabilize the company,” says Goldberg, a New Jersey investor and businessman who replaced Robert E. Mullane in October 1990 in a palace coup. ”Now we`re ready for Phase 2.”
Goldberg wants to double the number of health clubs operated by the Bally`s Health & Tennis unit over the next five years. ”And that`s a conservative figure,” he adds. The unit runs 310 clubs under various names, including Chicago Health & Racquet Club, and plans to open 25 to 30 clubs this year.
While the clubs now are company-owned, Goldberg says the firm may sell franchises. He also is thinking about licensing products and selling sweat shirts, athletic shoes and other related items in the clubs.
”I want to create a training college in Chicago, near our company headquarters, where we will train club managers and personnel, as McDonald`s does with restaurant managers,” he says. The school could start within a year.
”And I want to expand our casino operations. We have made a proposal in Chicago. We`re one of the finalists for a casino in New Orleans. We`re also looking at opportunities to manage three casinos on Indian reservations, and our hope is that one contract might be finalized soon.”
Bally`s Grand Inc., another subsidiary, sold a casino and resort in Reno, Nev., to a unit of Hilton Hotels Corp. for about $83 million last month. Bally`s hopes to use the money to upgrade a Las Vegas casino that, like the Reno facility, is operating under Chapter 11 of the Bankruptcy Act. A hearing on that plan is scheduled for Sept. 15.
Bally`s expects to get a management contract to run the Las Vegas casino for 10 years at $3 million a year, Goldberg says. The firm also owns two casino hotels in Atlantic City.
Can the parent company, which seemed destined for bankruptcy only a year ago, finance that kind of expansion program?
”I think we`ll have the capital, both self-generated and from external sources,” Goldberg says. ”Both of our businesses have the potential for enormous growth.”
The way Goldberg describes it, Bally was almost a terminal case when he took over the reins from Mullane.
”Bally had $1.9 billion in debt in 1990, which we knew we couldn`t service,” Goldberg says. ”All of it was inherited from the previous management. Our bank lines were frozen, and we had to stop paying interest on our corporate debentures. We had a severe cash-flow problem.”
To raise cash, Goldberg last year sold a corporate jet and two subsidiaries, which made fitness equipment and lottery machines. He also sold stock in Bally Gaming International, which makes slot machines and other gaming devices, through two public offerings, in November and mid-July. Bally now owns only 22 percent of the unit`s stock.
Goldberg says the debt is down 48 percent, to about $1 billion, which he calls ”very serviceable at this point.” The firm is negotiating to resolve the defaulted debt, he says, possibly by issuing common stock to creditors in place of future interest payments. Last month, Bally paid off the rest of a $110 million bank line that was due in February 1993.
A footnote: Goldberg replies, ”Absolutely not,” to repeated rumors that Bally might move its headquarters from Chicago, where it has 1,800 employees. Goldberg says he is looking for an apartment along the lakefront, where he likes to jog.
Like father, like daughter?
The late Morrie Mages, who ran a chain of sporting-goods stores in Chicago, would be proud. His daughter Lili Ann Mages Zisook is a partner in a sports apparel and merchandise store called Sports Images, opening in Wilmette`s Plaza del Lago shopping center this weekend. She worked with her father in his downtown store for 18 years.
BUSINESS BEAT: TCF Bank has applied to take over a branch office that Cole Taylor Bank has operated in a Cub Foods store in Arlington Heights. TCF has offices in seven other Cub Foods stores in the Chicago area.
– Economist Brian Wesbury says the U.S. economy ”can be characterized as doing the dog paddle. We are not sinking, but we don`t stand a chance of winning a gold medal.”
