Dave Portnoy, the controversial founder of Barstool Sports, has repurchased the media brand from Penn Entertainment for a mere dollar, according to a regulatory filing published on August 16.
Penn Entertainment initially acquired a 36% stake in Barstool for $163 million in 2019, with a subsequent investment of $388 million earlier this year to secure the remaining interest. However, this venture took an unexpected and costly turn. In the wake of the buyback, Penn Entertainment anticipates a staggering loss of up to $850 million on this endeavor.
Despite the significant financial setback, Penn Entertainment still retains the right to earn 50% of any future proceeds should Portnoy choose to sell or monetize Barstool. Portnoy himself seemed undeterred by the rocky journey, expressing his unwavering commitment to the brand.
In a video statement following the announcement, Portnoy conveyed his resolute determination: “For the first time in forever, we don’t have to watch what we say, what we do – it’s back to the pirate ship. I am never going to sell Barstool Sports ever. I’ll hold it until I die.”
The decision to sell Barstool back to its founder was a reflection of the complex challenges that arose from the partnership between Penn Entertainment and the media company. Regulatory concerns emerged as Penn sought sportsbook licenses, with Portnoy’s controversial reputation casting a shadow over the stock’s performance. Both parties agreed that Portnoy’s ownership was the natural fit, given the nature of Barstool’s content and the difficulties posed by regulations.
The sentiment was highlighted by Penn Entertainment CEO Jay Snowden, who mentioned that being part of a publicly held highly regulated licensed gaming company made it clear that they were not the natural owner. Additionally, the company disclosed its intentions to enhance its connections with other media outlets, a decision that would result in incurring additional costs.
The unravelling of the Barstool deal comes as Penn Entertainment secures a lucrative 10-year deal with ESPN for a new online betting app. Despite the financial losses and regulatory setbacks, both Portnoy and Penn Entertainment seem optimistic about their respective futures.
Two days ago ESPN and Penn Entertainment announced they will be collaborating to launch the ESPN BET sportsbook through a rebranding effort across 16 states, backed by a $1.5 billion cash investment and additional warrants. The integration aims to provide seamless betting within ESPN’s digital ecosystem, catering to sports fans’ desires for informative content and convenient betting. This partnership signifies ESPN’s strategic entry into the sports gaming market, expanding its betting-oriented programming and coverage.