Barstool Sports sells to Penn National in a $450 million deal
A media firm has develop into a sports activities betting firm: The proprietor of Barstool Sports has agreed to promote the favored and controversial digital sports activities writer to Penn National Gaming, a regional playing operator.
The deal values Barstool, which has its roots as a rowdy Boston sports activities weblog based in 2003, at an eye-popping $450 million.
This is the deal we advised you about earlier this month, when Recode reported that The Chernin Group, which purchased a majority stake in Barstool in 2016, was shut to promoting the corporate to Penn National.
The Wall Street Journal has been briefed on the main points, that are scheduled to be formally launched Wednesday morning: Penn National will first purchase a 36 % stake in Barstool for $163 million in money and inventory — valuing the corporate at $450 million. Three years later, the on line casino firm can pay one other $62 million to carry its stake to 50 %, with the power to purchase controlling possession for an quantity to be decided on the time.
An individual briefed on Barstool’s enterprise estimates the corporate generated between $90 million and $100 million in income final yr, with the vast majority of that coming from podcasts, merchandise gross sales, and playing offers.
It’s a beautiful deal for the digital media business, coming as many publishers are retrenching after a spherical of in the end disappointing Facebook-fueled optimism and funding. And it’s a huge payoff for the Chernin Group, which had reportedly invested some $25 million to purchase controlling stakes in Barstool in 2016 and 2018; folks acquainted with Barstool estimate that Chernin owned round 60 % of the corporate prior to as we speak’s deal.
That deal exists fully due to a Supreme Court choice: In 2018, a court docket ruling legalized sports activities playing in the US, however left it up to particular person states to determine in the event that they needed to approve of sports activities betting, and below what phrases.
Since then, there’s been a rush by each media corporations and the playing business to capitalize on what they each assume can be a growth in on-line betting. Right now, the first winners appear to be Draft Kings and Fan Duel — two corporations that had spent enormous sums of selling cash a few years in the past, after they had been working as “daily fantasy” sports activities video games.
The day by day fantasy bubble deflated, however the funding these corporations made exposing themselves to a younger viewers appears to have paid off. Industry executives say these two corporations are out-performing older, extra established playing manufacturers in states the place on-line sports activities betting is authorized.
Penn National, which runs or owns dozens of low-profile casinos and inns across the US (its best-known property stands out as the Tropicana in Las Vegas), appears to assume it may well use Barstool’s model to carry visitors to its casinos and a web-based betting app it needs to launch. And Barstool has discovered an proprietor that’s unlikely to be nervous about its model and content material, which is each well-liked and oftentimes deliberately abrasive.
Barstool co-founder Dave Potnoy is predicted to keep on on the firm, together with CEO Erika Nardini and different workers. Earlier this month, Barstool agreed to a settlement with the National Labor Relations Board, which regarded into expenses that Portnoy had damaged labor legal guidelines by tweeting threats to fireplace workers that attempted to arrange a union. The settlement “calls for the deletion of the tweets and removal of other anti-union material created by the company,” Bloomberg reported.