Barstool Sports was designed to offer a take on the sports gambling industry that would be, at times, edgy and controversial. The online media platform has covered all things sports since 2003 and, if the adage “the squeaky wheel gets the grease” is to be believed, Barstool’s outspoken nature has paid off in a big way. The rumors of a potential sale of the company to Penn National have now been confirmed, and the amount of money exchanging hands makes this one of the most lucrative media deals in recent history.
According to the Wall Street Journal, Penn National is prepared to hand over $163 million to buy 36% of the company. The amount includes $136 million in cash and another $28 million in stock, and, if everything goes according to plan, Penn National will have the ability to increase its stake to 50% within three years. It will also have first rights to buy the company outright at that time.
As a result of the deal, Barstool’s value now sits at about $450 million. This is proving to be very lucrative for The Chernin Group, an investment firm that injected $10 million into the company in 2016 and another $25 million two years later. Not a bad return on investment.
It should also prove beneficial for Penn National as legalized sports gambling continues to roll out across the US. According to its available financial data, Barstool picked up between $90 million and $100 million in revenue last year from merchandising, contests and advertising. This gives the gambling operator a relatively short period to see the positive side of its investment. Not that Penn National is too concerned – its third-quarter turnover last year was around $1.35 billion.
With the deal now being finalized, some changes are certainly going to come, and more details should be released today. However, Barstool co-founder Dave Portnoy and CEO Erika Nardini, as well as others, are expected to remain on to help keep the company moving forward. Eventually, Penn National may decide to make certain personnel changes, but only after getting in and exploring all of the operations.
It’s more than likely a dream come true for Portnoy. Back in 2003, Barstool Sports got its start as a simple blog meant to serve the local Boston sports crowd. Growing into a powerhouse worth $450 million shows how far it has come.
It’s a safe bet that this isn’t the last acquisition of the type to be seen. As sports gambling in the US continues to be legalized by more states and more interest is being put on the activity, similar deals will be found. Some are already out there, with both DraftKings and FanDuel reportedly in talks with other entities that could see them add their resources to gambling powerhouses to create entities that run the entire gambit of everything related to gambling.