David Portnoy buys Barstool Sports for $1, rebrands to ESPN Bet

In a surprising turn of events that sent shockwaves through the sports betting industry, casino giant PENN Entertainment announced last week that they will rebrand Barstool Sports in partnership with ESPN. This $2 billion deal marks an extraordinary challenge, but if anyone can do it, it must be Barstool Sports!

The founder of Barstool Sports, David Portnoy, stands out in this as a symbol of innovation and controversy. As the founder, Portnoy has redefined sports media and created a community with millennials and Gen X that is as admired as it is debated.

So what led to the rise of Barstool? How did Portnoy’s collaboration with Penn and now ESPN come into existence? Read on to explore the man, the brand, and the recent shifts in the sports betting industry.

Who is David Portnoy?

Nicknamed “El Presidente,” David Portnoy is an entrepreneur, internet celebrity, and the creator of Barstool Sports. He was born on March 22, 1977, and was interested from a young age in sports and gambling. Portnoy’s vision led to the creation of a platform that would blend sports, pop culture, and digital media like never before. For many outside of gambling, he is also known on Barstool Sports media for rating pizza nationwide with his famous catchphrase, “One bite, everyone knows the rules.”

As a native of Swampscott, Massachusetts, he launched Barstool Sports in 2003 by handing out four-page magazines around Boston to commuters. His unique take on sports, humor, and ability to connect with fans have made him a well-known figure in the digital sports media landscape.

@stoolpresidente The #disneyboys ♬ original sound – Dave Portnoy

What is Barstool Sports?

Barstool Sports is more than a media company; it’s an internet sensation that has shifted how fans consume sports and media. Initially created as a print publication, Barstool quickly transformed into a digital powerhouse known for its raw and unfiltered content. Launched in 2003, the company will be celebrating their 20th anniversary on August 23rd, 2023.

Barstool reaches millions of fans daily through their podcasts, blogs, videos, and social media. On the Barstools channels, they provide humor, insights, and an unconventional take on what’s going on in the sports world. While some praise its fresh approach, others criticize its tone and content, making it a hot topic of discussion.

20 years.
500+ employees.
Countless memories.

Celebrate 2 decades of the Pirate Ship with some of the all-time moments, characters and videos.

Watch the Barstool Sports 20th Anniversary Awards next Wednesday (8/23) LIVE from House of Blues Boston pic.twitter.com/oiXuZurKvX

— Dave Portnoy (@stoolpresidente) August 14, 2023

The Barstool-Penn Partnership

In January 2020, Barstool started a strategic partnership with Penn National Gaming. This is a deal that would push the boundaries of sports entertainment and gambling for the whole industry. This $163 million investment gave Penn a 36% stake in Barstool, marrying the world of digital media with sports betting.

The collaboration has since generated a series of Barstool-branded sportsbooks and apps, making waves in the betting industry. However, the journey was not without challenges.

The Portnoy-Risk by New York Times

In November 2022, the New York Times launched a series of articles to highly criticize the American sports betting industry. One of the articles was a comprehensive 4000-word piece that specifically targeted David Portnoy and Barstool Sports.

The New York Times criticized Portnoy for encouraging recklessness among his large following. The Times further detailed how Portnoy encourages his betting practices without responsible gambling and shows off his personal wagering of thousands on gambling for his following.

According to NYT, the regulators in states like Nevada were reported to be increasingly uncomfortable with Portnoy, and the Nevada Gaming Control Board even revealed an ongoing investigation into Penn’s compliance with gambling regulations, including its due diligence into Barstool and Portnoy before their 2020 partnership.

Considering the NYT articles that targeted the sports betting industry were ill-informed with the sole purpose of making the industry look bad, we advise taking the information from the NYT with a grain of salt. The industry was also shamed and criticized in their articles for trying to self-regulate responsible gambling, so the NYT journalist was never out to paint an accurate picture of the industry or David Portnoy.

You are the worst. You NYT people won’t ever beat him. Now I’m going to use Barstool even more

— Starbull (@trade_set) November 20, 2022

From Barstool to ESPN Bet

On August 8, PENN’s CEO, Jay Snowden, disclosed the explosive news of this collaboration, revealing plans to integrate ESPN Bet with ESPN’s entire ecosystem, including its editorial, content, digital, and linear product and sports programming.

The rebranding is a significant overhaul, impacting the Barstool mobile app, website, and mobile browser site. These platforms are legal and live in 16 states across the U.S., in places like Illinois, Pennsylvania, Colorado, Indiana, and Michigan.
The deal came just five months after PENN agreed to take control of Barstool following a $388 million deal.

Over the next ten years, PENN is set to make over $1.5 billion in payments to ESPN, also granting around $500 million of its shares to ESPN. Additionally, ESPN will be able to elect a PENN board member after the first three years of the partnership.

Portnoy’s $1 Deal for Reacquisition of Barstool

Adding intrigue to the narrative is the sale of Barstool Sports back to its founder, David Portnoy. The outspoken founder acquired all of PENN’s shares in Barstool’s merchandise and common stock, acquiring Barstool back for a single $1. This act indicates Portnoy’s readiness to steer Barstool Sports in a new direction. Essentially, it will also speeds up Barstool’s departure from its former parent company.

Penn sold Barstool at the same time as announcing the ESPN Bet partnership, resulting in a 15% increase in Penn’s shares. Penn will retain the right to 50% of the gross proceeds if Portnoy sells or monetizes Barstool in the future.

@stoolpresidenteHow braindead are my employees?♬ original sound – Dave Portnoy

The Deal’s Financial Implications

PENN’s daring move to double down on ESPN Bet comes with a price. With a total expenditure of $2 billion on licensing between Barstool and ESPN, PENN faces an admission of defeat on its Barstool Sports investment.

They sold the company back to Dave Portnoy for $1, just three years after paying $550 million for Barstool Sports. As a result, Penn Entertainment will get a pre-tax non-cash loss of between $800 million and $850 million related to the disposal of the business.

On the other hand, PENN’s ambitious goal is to grab a 20% market share with ESPN branding and integration.

@barstoolsports Dave Portnoy was FLABBERGASTED 🤣 @Viva La Stool @Dave Portnoy ♬ original sound – Barstool Sports

Challenges and Competition

The road to success is packed with challenges for Barstool. Currently, companies like FanDuel and DraftKings dominate nearly 70% of the online sports betting business. Jay Snowden’s expectation for PENN to carve out a 20% market share seems unrealistic, given their 5% stake at present.

While the deal grants ESPN a massive haul for its name, many strings are attached. But most importantly, PENN’s product needs to show improvement. Any market share above 10% would be a success for the company. Still, that success would have to justify the $150 million yearly paid to ESPN.

A Gamble Worth Watching

The rebranding of Barstool to ESPN Bet, in addition to Portnoy’s reacquisition of Barstool Sports, creates a daring, high-stakes situation in the sports betting industry. The question is, can they handle the pressure?

The success of this venture will require strategic integration, innovative technology, and the ability to resonate with sports fans. Considering Fox Bet just went into the grave, there are no guarantees that a sports brand will succeed in the sports betting industry.

The financial implications, potential risks, and challenges for present a complex landscape that will continue to shape the future of PENN Entertainment, Barstool, ESPN, and the broader sports betting market.

As fans and industry experts watch how this unfolds, the countdown to ESPN Bet’s unveiling later this year is filled with excitement and anticipation. Only time will reveal if this gamble will pay off or become another cautionary tale in the high-stakes world of sports betting.

Emergency Press Conference – I Bought Back Barstool Sports pic.twitter.com/dmUk0eNowx

— Dave Portnoy (@stoolpresidente) August 8, 2023

If you feel that your gambling habbits are getting out of control, you can always call the National Problem Gambling Hotline at 1-800-522-4700. The call is anonymous, and the phone hotline is available 24/7/365. You can also text the number 1-800-522-4700 or enter the website chat here. Help is always possible from NCPG, even if you have played at an illegal site. Follow our Online Gamblers Academy to learn how to have fun responsibly!

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Catie Di Stefano

Catie Di Stefano has worked in the gambling industry since 2011 for major brands like Hard Rock Hotel & Casino, Gaming Innovation Group and Betsson Group. She started in customer support at age 19 and has since worked her way through VIP, CRM and Marketing. Today, Catie is passionate about educating players on consumer rights and the best approaches for legal play in the United States as the Director of Community Marketing at OnlineGamblers.com. Catie was born in Indonesia but grew up in Sweden. Currently, she resides in Spain with her two daughters.

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