PENN Entertainment, Inc. (Nasdaq: PENN), entered into an agreement with ESPN, Inc. and ESPN Enterprises, Inc., for U.S. online sports betting.
According to the deal, PENN has secured the exclusive right to the ESPN Bet trademark for online bet in the U.S. for an initial 10-year term. This period may be extended for an additional 10 years upon mutual agreement.
In addition, PENN sold 100% of the Barstool Sports, Inc., common stock to David Portnoy, who founded Barstool in 2003. The company also has the right to receive 50% of the gross proceeds received by Portnoy in any subsequent sale or other monetization event of Barstool.
Barstool Sports is one of the most influential sports, lifestyle and entertainment media brands on the internet. With a 20-year history, Barstool creates innovative, comedic content with distribution on multiple platforms, including podcasts, video, social, live events, pay-per-view and subscription.
PENN Entertainment had completed the acquisition of the remaining interest in Barstool Sports for approximately $388m in February 2023 after acquiring a 36% stake in the company in February 2020.
Thanks to Dave Portnoy, Erika Ayers, Dan Katz and their team, Barstool scaled its digital presence across 16 jurisdictions in the U.S. Now, according to Jay Snowden, PENN Chief Executive Officer and President, “the divestiture allows Barstool to return to its roots of providing unique and authentic content to its loyal audience without the restrictions associated with a publicly traded, licensed gaming company.”
The overall synergistic relationship due to the deal enables the combination of a leading gaming operator and #1 U.S. sports media platform, the efficient customer acquisition through exclusive ESPN access and integrations, a state-of-the-art proprietary tech that provides first rate product offering & user experience, and value creation 500 million to $1 billion+ Interactive Adjusted EBITDA potential with retail cross-sell upside.
ESPN Bet will be integrated with ESPN’s broad editorial, content, digital and linear product, and sports programming ecosystem and will benefit from PENN’s operational experience, market access and proprietary technology platform, which debuted in the U.S. in July 2023.
The online Barstool Sportsbook will be rebranded ESPN Bet in the Fall of 2023, with theScore Bet to continue to operate in Canada. ESPN Bet, operated by PENN Interactive, will benefit from exclusive promotional services across ESPN platforms including programming, content, and access to ESPN talent. The online product will include a Hollywood-branded integrated iCasino where permitted.
According to the deal, PENN will make $1.5 billion in cash payments to ESPN paid over the initial ten-year term and grant ESPN approx. $5001 million of warrants to buy approx. 31.8 million PENN common shares that will vest ratably over 10 years, in exchange for media, marketing services, brand and other rights provided by ESPN. Upon ESPN Bet meeting certain U.S. online sports betting market share performance thresholds, ESPN could receive bonus warrants to purchase up to an additional approximately 6.4 million PENN common shares.
PENN Entertainment, Inc., together with its subsidiaries, is a North American provider of integrated entertainment, sports content, and casino gaming experiences. As of June 30, 2023, the company operated 43 properties in 20 states, online sports betting in 17 jurisdictions and iCasino in five jurisdictions, under a portfolio of brands including Hollywood Casino®, L’Auberge®, Barstool Sportsbook® and theScore Bet Sportsbook and Casino®. The portfolio is further bolstered by PENN PlayTM customer loyalty program, which offers approximately 27 million members a set of rewards and experiences across business channels.
Bristol, CT-based ESPN is a multinational, multimedia sports entertainment company featuring a broad portfolio of multimedia sports assets with over 50 business entities. Reaching fans across television, digital media, audio, print and more. The company is 80 percent owned by ABC, Inc., an indirect subsidiary of The Walt Disney Company. The Hearst Corporation holds a 20% interest in ESPN.