Penn National Gaming (Penn) based in Pennsylvania recently closed a deal with digital sports media brand Barstool Sports.
According to the company press release, Penn agreed to the valuation of Barstool at $450 million. The casino operator will shell out $163 million for a 36% stake in Barstool.
In another three years, another $62 million will increase the stake to 50%. Once that transaction is complete, Penn National will be the controlling owner.
Penn to use Barstool branding with major growth potential
Penn has come far from its humble roots as a racetrack in South Central, PA. It plans to use the Barstool brand for the online sportsbook and online table games. The already established Hollywood Casino app will remain as the brand for online slots.
Jay Snowden, Penn National Gaming president and CEO, plans on using the Barstool Sports audience to ascend and capture a large share of the PA online gambling market.
With its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National and will enable us to attract a new, younger demographic, which will nicely complement our existing customer database. In addition, with 66 million monthly unique visitors, we believe the significant reach of Barstool Sports and loyalty of its audience will lead to meaningful reductions in customer acquisition and promotional costs for our sports betting and online products, significantly enhancing profitability and driving value for our shareholders.
Penn’s focus on national growth is nothing new. The company is not just a Keystone State operator, but has planted flags in 18 other US states.
Legalized sports betting states among them include:
Controversy surrounding Barstool
Barstool has certainly enjoyed a meteoric growth since its humble beginnings. According to Forbes, the company, founded by Dave Portnoy, started out by handing out free black-and-white gambling tip sheets at subway stations through Greater Boston. It has now grown into a media behemoth and is certainly enjoying even greater success with the Penn deal.
In 2016, the Chernin Group purchased Barstool for around $10-$15 million. Then, the Chernin group increased the popularity of Barstool despite the cancellation of its high profile ESPN show.
On the one hand, Barstool is known for a vulgar, misogynistic culture with a founder who has unapologetically degraded women, passing it off as humor. On the other hand, their audience is still growing with its popular sports and comedy material.
Taking the good with the bad
Their content successfully caters to the young male demographic which translates well into Penn’s growth plan. Also, Penn’s stock soared after the partnership announcement was made.
However, Barstool is shunned and will likely always be shunned by certain organizations for their reputation. For example, Barstool was escorted out of NFL Opening Night and unwelcome during Super Bowl.
But that’s not to say the deal won’t turn out favorably for Penn in terms of new customer acquisition.