In 2020, PENN Entertainment acquired a 36% stake in Barstool Sports for $163 million. In February of this year, it acquired the remaining interest in the sports blog/digital media company for approximately $388 million. On paper, it looked like a dream match, but Barstool’s raunchy and irreverent content didn’t square with PENN’s operations in a highly regulated industry.
Yet while PENN may record a loss of up to $850 million as it severs ties with Barstool, all’s well that ends well.
Barstool Sports founder Dave Portnoy, according to PENN Entertainment’s recent quarterly report, just bought back the property for a single dollar. “We underestimated just how tough it is for myself and Barstool to operate in a regulated world,” Portnoy said in a video posted to X and other social channels after the sale, which made him the sole owner of the Barstool brand for the first time in nearly a decade.
PENN, meanwhile, is betting that its $2 billion, 10-year deal with ESPN will more than cover the damage. Its Barstool Sportsbook will be rebranded as ESPN Bet, giving ESPN owner Disney an inroad into the world of sports gambling. On its recent Q3 earnings call, Disney CEO Bob Iger called ESPN Bet a way to “enhance consumer engagement” with the brand—particularly among “young consumers.”
The deal will also give PENN access to the cable sports channel’s talent for promotional purposes. “ESPN Bet will be deeply integrated with ESPN’s broad editorial, content, digital and linear product and sports programming ecosystem,” said Jay Snowden, PENN CEO and president, in a statement.
What does this mean for Barstool Sports?
The quick answer is whatever Portnoy and his irreverent crew want it to mean. “For us, for Barstool, for the first time in forever, we don’t have to watch what we say, how we talk, what we do,” Portnoy said in his video announcement.
What we do know is that it’s unlikely that Portnoy will partner with any PENN competitors (e.g., DraftKings) or open sportsbooks in the near future, as the divestiture hinged on “non-compete and other restrictive covenants.”
And moving forward, what the Barstool crew looks like may change. On August 9, he posted a video on X that showed a nearly empty Barstool workspace and called out specific absent employees in a post on the site.
“No one thought to maybe show up early on day 1 of the new regime,” he wrote. “I mean seriously how fucking dumb are these people? No wonder PENN gave it back to me for pennies on the dollar.”
Of course, should Portnoy decide to sell the brand, PENN will “receive 50% of the gross proceeds received by David Portnoy in any subsequent sale or other monetization event of Barstool,” according to a statement.
However, that seems unlikely as of now. “I am never going to sell Barstool Sports ever,” Portnoy added in his announcement. “I’ll hold it till I die.”
In an interview with CNBC’s Jim Cramer and Contessa Brewer, Snowden said the transition makes sense and is the only natural way forward. “They’re not a company and a brand—I think we all came to this conclusion—that should be owned by a publicly traded, highly regulated licensed gaming company.”
