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On Tuesday, the sports betting world received news of a bombshell agreement between PENN Entertainment and ESPN introducing a new platform called ESPN BET. The deal made headlines for a variety of reasons, most notably due to PENN’s previous partnership with Barstool Sports.
The company set in motion an acquisition of Barstool back in 2020, dishing out a reported $551 million for complete control of the entertainment and gambling brand.
PENN purchased a 36% stake at a price of $163 million in those original 2020 dealings. It then bought the remaining 64% this past February at $388 million.
Just a few months later, PENN is scrapping the partnership with Barstool as it moves into a new era with ESPN.
The Wall Street Journal reports that the new agreement is worth $2 billion total, including $1.5 billion in cash over 10 years. ESPN will now introduce a platform called ESPN BET, which “will be promoted on the broadcaster’s platforms and will have access to ESPN programming and talent.”
By teaming up with the network, PENN had to sell its ownership in Barstool Sports. A new report suggests that they gave it back to its founder for $0.
This section of the press release reads like @stoolpresidente paid $0 to get Barstool back by agreeing to sign non-competes and giving up 50% of a future sale.
So Penn paid $500M+ for Barstool and might give it back for free (if Portnoy never sells)? That’s crazy. pic.twitter.com/CzUSs57V8T
— Joe Pompliano (@JoePompliano) August 8, 2023
Joe Pompliano of Huddle Up found an interesting clause in the sale that shows a $0 purchase, though other stipulations exist.
First, Dave Portnoy had to agree to “certain non-compete and other restrictive covenants.” Second, PENN would receive 50% of a future sale.
Portnoy responded to the news with an “emergency press conference” for followers which he posted to social media.
Emergency Press Conference – I Bought Back Barstool Sports pic.twitter.com/dmUk0eNowx
— Dave Portnoy (@stoolpresidente) August 8, 2023
“PENN Entertainment and Barstool have gone our separate ways. As of this moment, while you are watching this video, I have purchased back Barstool Sports,” Portnoy said.
“We underestimated just how tough it is for myself and Barstool to operate in a regulated world.”
He also stated that he will never sell the company, which makes sense given the sale agreement.
Some called it the finesse of the century while others pondered the company’s future without the backing of PENN. We’ll see how it eventually shakes out, but right now, it seems like a win for Barstool Sport and Portnoy, as well as for ESPN.
*UPDATE*
Front Office Sports reports that the deal was actually done for $1, according to a securities filing.
Dave Portnoy bought back Barstool Sports for $1, according to a securities filing.
PENN Entertainment will record a loss of up to $850M on the deal.
The agreement includes “certain non-compete and other restrictive covenants,” and 50% of proceeds from any future Barstool sale.… pic.twitter.com/chksYcdqe5
— Front Office Sports (@FOS) August 9, 2023
PENN Entertainment will reportedly record a loss of up to $850 million on the Barstool Sports deal.