By Chairman and Chief Executive Officer Marc S. Cooper
Michael Sellinger joined Solomon Partners this spring as a Partner in our Capital Advisory Group, bringing deep restructuring experience and a pragmatic perspective on how companies and stakeholders navigate periods of financial stress. We discussed what he is seeing in the bond and loan markets, how restructuring advisory fits into Solomon’s platform, and how technology is reshaping certain industries like casino gaming and radio broadcasting.
Michael, you’ve spent more than 25 years in leveraged finance and restructuring. What drew you to Solomon?
I’ve spent my career in leveraged credit — particularly, how capital structures are designed, and what happens when a company’s balance sheet no longer makes sense given its cash flows.
What attracted me to Solomon was the opportunity to bring 25+ years of restructuring experience to a platform with industry depth and M&A expertise. I’m working closely with Vinod Chandiramani to build our restructuring advisory practice — helping issuers and their stakeholders when a company needs to address its liabilities. In recent years, I have largely focused on working with hedge funds, Collateral Loan Obligations (CLOs), insurance companies, and other credit investors to navigate complex situations.
With Solomon’s breadth of industry coverage and financial sponsor relationships, I anticipate there will be incremental opportunities to also work more with issuers and their owners. I believe the most effective advisors for companies are the ones who understand what motivate creditor behaviors in a distressed situation.
What are you currently focused on?
I work across industries and focus on where the challengers are. Distress can be caused by a variety of factors, including industry-specific catalysts like regulatory changes, technological obsolescence, and input commodity price shocks. Company-specific causes of distress include the overlevering of a capital structure and poor management or strategic decisions. The catalysts for these companies to address their balance sheets are covenant violations, liquidity pressures, and looming debt maturities that cannot be refinanced in the public or private markets on economically viable terms.
Technology is moving quickly, especially around artificial intelligence. How are you thinking about the opportunities and risks?
There is a lot of justifiable excitement when it comes to AI, but there is still a lot of uncertainty. In some respects, it feels like the early Internet era in the late 1990s: we can see an emerging technology will fundamentally change the economy but accurately predicting who the long-term winners and losers will be in a specific industry, and on what timeline, is less clear.
In my opinion, the difference with AI today versus the earliest days of the internet is that large, well-capitalized companies already have a head start and are investing on astounding levels. Their scale and access to capital can create a virtuous cycle that increases their market-leading positions. Potential regulation is another key variable playing out in real time.
Some of the questions many of us are contemplating are, “How will AI change the competitive dynamics in a specific industry?”— and “Will a company’s capital structure still makes sense in that environment?”
What are you watching most closely in casino gaming?
When people hear “casino gaming,” they usually picture the Las Vegas Strip or large destination resorts. However, much of the US market is comprised of smaller regional casinos — facilities that customers drive to after work or on the weekend. These can be commercially owned or Native American assets.
In mature regional markets, competition is fierce, and sustaining cash flow can be difficult, so stakeholders need to understand whether the capital structure will continue to fit an evolving business.
Online gaming is another big story. “Online gaming” is most often used to refer to online sports betting, which is now legal in approximately 40 states. To contrast, “iGaming,” the provision of typical casino games like blackjack, roulette, and slot machines via the internet, is only legal in eight states.
In those states that have legalized iGaming, we are watching closely to understand how the online offering is either growing the market or cannibalizing existing physical operations. Moving to the internet creates operating leverage but also raises questions related to regulation, responsible gaming, and consumer protection.
You’ve also been watching predictive markets. Why do they matter to gaming?
The recent rise in predictive markets shows how quickly the competitive landscape can be altered by regulatory forces. Sports betting companies have spent years and billions of dollars buying licenses, building brands, and developing customer relationships under a state-sanctioned framework.
The current debate centers on whether “event contracts” sold by predictive markets constitute federally regulated financial derivatives under the Commodity Futures Trading Commission’s purview or whether sports betting products should solely be governed by state gaming laws.
There are two legal cases currently being litigated in Michigan and New York that investors are monitoring closely. This uncertainty was not something that was contemplated when existing capital structures in the industry were designed.
You mentioned radio earlier. What is putting pressure on that business?
Radio broadcasters create content and distribute it across a defined geographic area under FCC licenses. That regulatory overlay matters, especially in restructuring. But the bigger issue is that radio competes in a market where advertisers have more measurable, targeted alternatives.
Advertisers want to know exactly who they reached and how their target customers’ behaviors were influenced. Online advertising provides far more feedback, and out-of-home advertising has become more dynamic and data-driven, as our colleague Mark Boidman often points out. Radio cannot currently provide that same level of attribution, so the medium is less attractive than it was pre-internet.
When you step back from gaming, radio, and other legacy industries, what is the common thread?
Technology. Technological advances create opportunities but also test the assumptions built into existing business models and capital structures. In casino gaming, it has increased consumer access and new competition. In radio, it has changed both the advertiser’s toolkit and the consumer’s habits.
If technology changes revenue growth, margins, competitive position or capital intensity, the capital structure may need to change too.