Earlier this week, Barstool Sports founder Dave Portnoy announced that he bought back his pop culture and media company from Penn National Gaming. After purchasing 100% of Barstool Sports in February of 2023, Penn has decided to part ways with the company after striking a huge deal with ESPN.
Overview
The deal between Penn National and Portnoy involved Penn selling 100% of its outstanding Barstool shares back to Portnoy for cash considerations of $1. The result of Penn dropping Barstool will be a “pre-tax non-cash loss” of approximately $850 million. The expense will be incurred by Penn National in the third quarter of 2023. Additionally, Penn has the right to receive 50% of any sale or monetization of Barstool Sports. However, Portnoy already stated that he will never sell the company.
ESPN & Penn National
The surprising selling of Barstool back to its founder was due in large part to Penn National Entering a major deal with sports media giant ESPN. Part of this deal involves the rebranding of Penn’s online sports betting business from Barstool Sportsbook to ESPN Bet. Additionally, Penn will pay $1.5 billion in cash to ESPN over a period of 10 years and also grant them $500 million in warrants to purchase approximately 32 million common shares of Penn. These shares will then be vested over the next 10 years so ESPN can exchange them for media, marketing, and branding rights.
Wrap Up
In a social media video released earlier this week, Barstool founder Dave Portnoy said, “We got denied [gambling] licenses because of me, so the regulated industry [is] probably not the best place for Barstool Sports and the type of content we make.” Barstool is a unique media outlet that has managed to stay relevant in the sports and gambling industries for several years. Now that the company is not under Penn National anymore and back to its roots, it will be interesting to see what direction Portnoy decides to take Barstool in.