Penn Entertainment Finishes Barstool Acquisition
Penn Entertainment formally takes over 100% ownership of Barstool Sports after paying $388 million for the remaining 64% it didn't already own. This acquisition completes the deal Penn initiated three years ago, when they bought a 36% stake for $163 million. With this acquisition, Penn also became Barstool's official gaming partner for 40 years.
Back in 2020, Penn agreed to increase their stake in Barstool to 50% for another $62 million, but last August they exercised their rights to own 100%. Initially, Penn agreed to spend $450 million for 100% ownership, but the recent $388 million transaction combined with the original $163m deal brings the total to $551 million.
Barstool's co-founder and controversial figure David Portnoy, along with some early staffers and professional investors like The Chernin Group, made significant gains from the Penn deal. In 2016 and 2018, TCG invested $25 million in Barstool, valuing the media property between $10 million and $15 million at the time, then $100 million later on.
The Media-Betting Synergy
When the deal was announced in 2019, it represented one of the most blatant intersections of media and gambling in the history of both fields. Recently, analysts questioned whether Penn overpaid for Barstool, while others believed the move was a smart decision by the regional casino operator to better reach younger demographics. While there have been controversies, such as Portnoy’s outburst against the Supreme Court's decision to overturn Roe v. Wade and a series of "hit pieces" published by Insider revealing his personal life, Barstool has still shown growth since teaming up with Penn.
In the span of three years, Barstool's audience has increased by a substantial 194% and they've had 1.6 billion total podcast downloads. They've also revealed that Barstool Sports now has over 875K video uploads on various platforms, leading to 128 billion video views, and their advertising revenue has skyrocketed by 160%. Furthermore, they've sold over 5 million units of apparel since partnering with Penn and have become the official sponsor of a college basketball tournament and the Arizona Bowl, a mid-level college football bowl game.
Penn has also benefited from their relationship with Barstool, rebranding their online and retail sportsbooks with the Barstool name. This has allowed Penn to utilize the Barstool brand and various personalities (which include Portnoy) in entering the sports wagering market while avoiding hefty promotional spending. In the fourth quarter, Barstool Sportsbook reported a small profit and Jay Snowden, Penn's CEO, stated that they're seeing strong growth among the 21-44 demographic – many of whom are presumed to be Barstool fans.
However, Penn stocks are struggling to return to their heights from mid-2020 to early 2021. In March 2021, their shares peaked at $142, while they currently close at $32.33.
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