EXECUTIVE SUMMARY, AND RECOMMENDATIONS
In mid 1988, Bally Manufacturing owned four casino hotels. The establisments were located in Atlantic City, New Jersey, and in both Las Vegas and Reno, Nevada. Bally also manufac tured slot machines, lottery ticket machines, German wall machines, and exercise equipment. Bally also owned and oper ated a nationwide chain of fitness centers (under the names Jack LaLanne, Health & Tennis Center, and Scandanavian Health Spa), and the Six Flags theme park chain.
By self definition (according to the case), Bally Manufac turing was in the gaming business. This business, for Bally, included both the operation of gambling establishments, and the manufacture of gaming equipment. In spite of Bally's self definition as being in the gaming business, the company also conducted major operations in games manufacture, and in the operation of leisure activities, such as fitness centers, and theme parks.
The recommended strategies for Bally as of mid 1988 were to: (1) divest the arcade game operations; (2) sell that part of its gambling equipment business segment involving the development and production of lottery games; (3) continue in the hotel/casino business; (4) maintain both Nevada and New Jersey hotel/casino establishments; (5) continue to target high rollers for some hotel/casino operations; and (6) continue to target low rollers for some hotel/casino operations.
With respect to divesting the company's arcade game opera tions, Bally should have begun the process in the third calen dar quarter of 1988, with a plan for completion of the action by the end of the first calendar quarter of 1989. In order to successfully divest these operations, the company should have been prepared to accept less than the then current value of the operations. With respect to selling that part of the company's gambling equipment business segment involving the development and production of lottery games, Bal...