Analysis: What’s Next For Barstool Sports After Full Acquisition By Penn?

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Barstool Sports

As Penn Entertainment completes its acquisition of Barstool Sports, the company continues to place its faith in the media aspects of the brand it now fully owns.

Penn announced Friday it completed its $388 million acquisition of outstanding interest in Barstool Sports. The Pennsylvania-based company closed on an initial 36% stake of Barstool in 2020 for $163 million in hopes of creating a standout sports betting brand.

“We are extremely pleased to welcome Barstool Sports fully into the PENN Entertainment family,” PENN Entertainment CEO and President Jay Snowden said in a release Friday. “Barstool is a proven, powerful media brand with an authentic voice and vast, loyal audience that provides us with a strong top of funnel for new customer acquisition and organic cross-selling opportunities across our growing interactive division.”

The final portion of the deal was made public through an SEC filing in August 2022 and confirmed during Penn’s fourth-quarter earnings call last week. Penn stock dipped approximately 1% to $32.33 Friday, well off the one-year high of $51.35 in February 2022.

Barstool Sportsbook outside top tier

When the initial deal was announced in 2020, Penn executives talked up the potential customer funnel the Barstool media channels provided with many millions of followers. The hope was the large fanbase could help curtail marketing costs; however, in Penn’s call last week, Snowden said marketing spend would increase this year.

With that in mind, there are big hopes for the Barstool Sportsbook brand. However, in the second half of 2022, the operator controlled just 5% of the market in states that report sports betting figures by sportsbook.

Barstool Sportsbook is live in 15 markets, and the company continues to open Barstool-branded bars and in-person sportsbooks. Penn expects its interactive segment to turn a profit by the fourth quarter this year.

Penn talks up Barstool Sports growth

While the sportsbook struggles to make up ground against the sports betting leaders, Penn remains excited about the media potential of Barstool. Since the initial announcement in 2020, Barstool has grown its audience 194%, according to Penn. 

The company also touted 1.6 billion podcast downloads and 128 billion video views across social media channels. That audience growth has helped increase ad sales 160%, according to Penn.

Along with the audience growth, Penn also mentioned: 

Barstool’s unique challenges for Penn

While Penn seems to enjoy the marketing boosts it receives from the Barstool media brand, it does not come without its challenges. Barstool founder Dave Portnoy remains a polarizing figure at the center of multiple controversies, including alleged sexual misconduct detailed by Business Insider.

Portnoy, however, will be hard to keep at a distance, as many of the brand’s fans are also strong supporters of the founder. Snowden told the Massachusetts Gaming Commission in December the Barstool Sports media entity should be viewed as a comedic brand separate from Barstool Sportsbook.

The media company also recently led Penn into discipline from regulators in Ohio and Massachusetts. Regulator concerns stemmed from a Barstool College Football Show near the University of Toledo campus which potentially promoted sports betting to underage viewers, as well as Portnoy’s portrayal in a 2022 New York Times article.

Ohio regulators settled on a $250,000 fine with Penn, while an MGC investigation into Barstool is ongoing.

Penn remains bullish on acquisitions

In 2021, Penn purchased Canada-based sports media and gaming company Score Media and Gaming for $2 billion. At that time, Penn executives noted the “volumetric savings” by combining aspects of Barstool and theScore.

Along with marketing savings, Penn expects to have Barstool Sportsbook on theScore’s in-house trading platform by July. In July 2022, Penn shut down theScore’s US sports betting app, shifting its full focus to Ontario sports betting.

“Barstool, combined with theScore’s reach and highly engaged user base, creates a massive digital footprint and ecosystem that will serve to propel Barstool Sportsbook and our uniquely integrated media and gaming business,” Snowden said. “Further, the Barstool Sportsbook will greatly benefit from the upcoming migration to our proprietary technology stack, a move that will significantly enhance the overall product offering and deliver meaningful upside.”

Up-and-down since Barstool Sports deal

With Friday’s deal, Penn has invested more than $500 million in acquiring Barstool Sports.

Following the initial stake in January 2020, Penn stock climbed from $25.96 per share to an all-time high of $130.47 in March 2021. Similar to several other gaming companies, like DraftKings, Penn slid back down to earth following the peak to its current price.

Penn shares are up nearly 10% year-to-date.