Penn Entertainment started its acquisition process of Barstool Sports several years ago. But it recently completed it after getting David Portnoy's 64 percent share it had. Reports claim that this was equal to $388 million and Penn now owns 100 percent of the property.
The gaming company began finalizing the deal in 2020 after paying $163 million in stock and cash to buy Portnoy's 36 percent interest in the media property. The 2020 agreement's terms state that Penn Entertainment had the right to pay an extra $62 million to increase its Barstool Sports to 50 percent in the first three years.
Barstool Sports appointed Penn Entertainment as its gaming partner for four decades. The gaming company exercised its right to buy all Barstool shares. Thus, it became a Penn State fully-owned subsidiary.
2020 reports claimed that Penn planned to pay $450 million, for Barstool's full acquisition. Even so, the latest news indicates that Penn Entertainment paid $388 million and the initial $163 million. So, it parted with $551 million in total.
Some Barstool workers and Portnoy benefited from the property sale. The Chermin Group (TCG) invested $25 million in Barstool Sports in 2016 and 2018.
It is a Californian company that concentrates on media firms. TCG valued Barstool at $10 million, later to $15 million, and eventually at $100 million.
How Did the Partnership Benefit Barstool Sports?
The property deal was a unique partnership between a gaming and media company. Some analysts criticized Penn for over-investing to procure Barstool in 2020. They accused the casino operator of making a crafty move to broaden its young players' clientele.
Still, Penn Entertainment has faced several challenges of late such as Portnoy's controversy criticizing the Supreme Court last June on social media about its ruling to overturn Roe versus Wade.
Insider, a local financial publication wrote several articles about Portnoy's proclivities a few months before the court's ruling. Barstool's founder didn't get any criminal charge lawsuit. He called his content "hit pieces" and later sued Insider.
New data indicates that Barstool is reaping from its deal with Penn. Barstool Sport's audience has increased to 194 percent, had 1.6 billion recorded podcast downloads, had a 160 percent ad sales increase, and delivered more than 875K videos on social media.
Barstool Sports sold over five million apparel units since it collaborated with Penn. Also, it is the Arizona Bowls and a college basketball tournament's official sponsor.
Is the Partnership Ideal to Penn?
Penn Entertainment retail and online bookies have a Barstool name. Also, Penn has greatly benefited by leveraging Barstool and individuals like Portnoy to venture into the sports betting market.
Barstool Sportsbook made a small profit in Q4. Jay Snowden, Penn Entertainment's CEO stated that they are optimistic to increase the 21-44 demographic, and most of them are Barstool diehards.
Penn's stock dropped between 2020 and 2021. But, the shares increased to $142 in March 2021. The current gaming equity is about $32.