The concept of media and sports wagering partnerships entered a new phase today when ESPN and Penn Entertainment (NASDAQ: PENN) announced an agreement under which the casino operator will pay a hefty sum to use the ESPN Bet brand. Barstool Sports was left out in the cold.
Barstool Sports founder David Portnoy. Following Penn Entertainment’s deal with ESPN, he now owns 100% of Barstool Sports again. (Image: Sports Illustrated)
As part of a deal that will see Penn pay $1.5 billion over 10 years to ESPN while granting the network rights to eventually own up to a quarter of its outstanding equity, the largest regional casino operator sold 100% of Barstool Sports back to founder David Portnoy, parting ways with the brash pop culture and sports media entity just months after taking full ownership of it. In February, Penn paid $388 million for the 64% of Barstool Sports it didn’t previously own, bringing the total acquisition price for Portnoy’s company to $551 million.
In a statement announcing the partnership with ESPN, Penn didn’t say anything about Portnoy or Barstool Sports, but the entrepreneur said it was difficult for his company to operate in the regulated gaming space and that Penn’s ties to him may have cost Barstool Sportsbook licenses in some states.
We underestimated just how tough it is for myself and Barstool to operate in a regulated world where gambling regulators, New York Times, Business Insider, hit pieces f*cking with the stock price,” Portnoy said in one his famous “emergency press conferences.” “Every time we did something, it was one step forward, two steps back. We got denied licenses because of me.”
Portnoy didn’t mention specific states in which Barstool Sports, the brand Penn used for its online and retail sportsbooks, was rejected for permits. He added the regulated betting industry “probably isn’t the best place” for Barstool and its bread-and-butter content.
Much Speculation Regarding Penn, Portnoy Relationship
Financial terms of the transaction between Penn and Portnoy weren’t disclosed, but casino operator maintains rights to 50% of the proceeds should Portnoy resell his company or monetize it in some other fashion.
For the first time since before The Chernin Group took a majority stake in 2016, Portnoy owns 100% of the Boston-based company he founded 20 years ago. Over the past three-plus years since Penn initially purchased part of Barstool, the casino company remained quiet about Portnoy’s various controversies, including his sexual proclivities and comments on various topics of the day.
However, analysts covering the gaming company were mixed in their views of just how much of Portnoy’s perceived antics the firm would tolerate. Though it’s never been confirmed, things may have reached a tipping in May when Portnoy fired Ben “Mintzy” Mintz earlier this month for using a racial epithet while reciting a rap song on air.
Initially, Portnoy didn’t want to let Mintz go and it’s rumored that he succumbed to pressure from Penn to fire the on-air personality to prevent trouble with regulators.
Next Moves for Portnoy, Barstool Sports
During the emergency press conference, Portnoy displayed no ill will toward Penn and said he plans to retain his shares in the casino operator because he owns “a ton of Penn stock” and believes it will experience price appreciation.
As for Barstool Sports, which could be attractive to another media or sports betting company, Portnoy said he has no plans for another sale and that he’ll hold onto the company until he dies. Now, he’ll turn his attention to “content, content, content.”
Conjuring Al Pacino in the “Godfather III,” Portnoy quipped about his return to full ownership of his company “Every time I think I’m out, they pull me back in.”
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