Penn to Own 100 Percent of Barstool Sports

Penn Entertainment announced in an SEC filing that it is exercising its option to purchase all of the remaining shares of its sportsbook partner, Barstool Sports, for $387 million. At left, Jay Snowden, CEO, Penn National, Erica Nardini, CEO, and Dave Portnoy, president, Barstool Sports celebrate the initial buy at the Nasdaq closing bell.

Penn Entertainment, formerly Penn National Gaming, is exercising its option to buy all remaining shares of its sportsbook partner Barstool Sports, which will now become a wholly owned Penn subsidiary.

Penn first purchased 36 percent of Barstool common stock in February 2020 for $161.2 million. That purchase agreement gave them the option to pay an additional $62 million to push its ownership in Barstool to half, and another $325 million to buy out the remaining half of the sports betting and media company’s stock.

The company, now known as Penn Entertainment, announced it had acquired the 50 percent stake in a previous filing with the U.S. Securities and Exchange Commission (SEC), and said in a new filing last week that it has exercised the “call rights” to bring its ownership of Barstool to 100 percent.

Dave Portnoy, the flamboyant founder and president of Barstool Sports, started the company in 2003 as a gambling newspaper. From there, the company created a blog and grew to feature videos, podcasts and online content, normally dealt with an irreverent, humorous flair that has generated a cult-like following among its mostly college-aged fans, and has made Portnoy an internet celebrity—he is affectionately known as “El Presidente” to his followers.

Barstool has since expanded into the sports betting industry, first with its mobile Barstool Sportsbook app in 2020, and now with retail locations across numerous states, primarily on the East Coast. According to Penn, the Barstool app has more than 72,000 registered customers in Pennsylvania alone and has generated nearly $300 million thus far.

The company’s growth has been impressive, but not without controversy, as regulators in Nevada and Indiana are currently looking into allegations of violent sexual misconduct lodged against Portnoy, reported by the Insider news site.

Portnoy, who has denied the allegations, has sued the news outlet, claiming the reported interactions with five women were consensual. “There will be no settling,” Portnoy wrote in a February blog. “No amount they can pay me to get them off their backs. I won’t rest till I put these people out of business.”

Penn CEO Jay Snowden said in March that the company stands by Portnoy.

In addition to Portnoy reaping the benefit of the $450 million valuation of the company—his net worth is estimated to hover around $100 million—the other main shareholder of Barstool Sports is The Chernin Group (TCG), a California-based investment firm specializing in media companies. TCG made a $25 million investment in Barstool in 2016 and 2018, valuing the media property at $10 million-$15 million, and then at $100 million.

The Barstool acquisition is the latest diversification into the media and sports verticals that led Penn National to change its name to Penn Entertainment. Last year, the company acquired TheScore, a Canadian digital media company, for $2 billion. In a note to clients last week, Roth Capital analyst Edward Engel predicted that Penn Interactive, which includes Barstool and TheScore, could achieve profitability by the fourth quarter of this year.

The acquisition is expected to close by February 2023.