Penn CEO: Barstool Sportsbook ‘Drama’ Expected In Wake Of Firing

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The CEOs of Penn Entertainment and Barstool Sports declined Thursday to directly address the latest inflammatory comments made by the face of Barstool Sportsbook, Dave Portnoy.

Portnoy took to Twitter the night before Penn’s first-quarter earnings call to rant about the firing of Barstool’s Ben Mintz over a video in which he rapped a racial epithet.

In his nearly six-minute rant, Portnoy made it clear that Mintz would not have been fired if it was his call. Penn – specifically CEO Jay Snowden – made it clear to Portnoy that sports betting and gaming licenses could be on the line if the company did not take action, Portnoy said.

Portnoy pegs dropping stock to Mintz

Between Penn’s earnings report and the controversy with Mintz and Portnoy, PENN stock is taking a hit. PENN opened Thursday down 6.2% from Wednesday’s close and is still dropping, with the stock down more than 10% when the conference call ended.

Portnoy took a screenshot of Penn’s falling stock and said “That’s Mintzy.” Based on comments in his video, Portnoy expected a backlash against Penn:

“I told Penn and I told Jay, you risk alienating – you’re fighting to save the Barstool brand to use, there may be nothing left to protect if you go through with this. But again, Penn’s a multi-billion dollar company, we’re a small part of it, and they think the whole thing was at risk.”

The hashtag #notmybarstool trended on Twitter Thursday afternoon.

Snowden: Barstool Sportsbook means more will ‘pop up’

Snowden did not say much about the issue but noted that this probably is not a surprise for those paying attention.

“It’s something that happened inside the company that we dealt with. We felt like we dealt with it appropriately.

“And I would also say that you’ve been following us and the relationship, and I think the public markets and the financial communities have gotten to know Barstool pretty well over the last three-plus years and there’s going to be some drama sometimes. There’s going to be some things that pop up here and there, and we’ll manage through those as we always have.”

Barstool CEO: brand is ‘authentic’ and ‘unapologetic’

Barstool Sports CEO Erika Nardini was on the call, now that Barstool is a wholly owned subsidiary of Penn. She praised Barstool’s approach to the “culture of its content.”

“This is a company that’s authentic, it’s a company that’s unapologetic, it’s a company that exists on the internet 24/7 and that’s part of what makes Barstool Sports interesting is that we are not particularly corporate in how we think about the culture of our content,” Nardini said.

“Now there’s certain lines you don’t cross. There’s guardrails that exist. Those have obviously increased now that we’re in a highly regulated category and we knew that going into the Penn acquisition, we knew it prior to that going into the Penn investment. And what we really believe is there is no place like Barstool Sports to make content.”

Portnoy detailed Snowden’s response

Snowden noted the company would not address internal personnel issues when asked about the issue on the conference call. Portnoy had already explained much of Snowden’s thinking on Twitter:

“And it’s not just Jay – and by the way I love Jay, I trust Jay. I think Jay and I think about the world very similarly, a lot of the same views on the world. So I don’t think he’s doing it out of spite or because he has some perverted, or – I think he’s doing what he has to do and the board is doing what they have to do to protect Penn Entertainment. I still fucking disagree with it but that’s their decision to make.

“I told them, I go, if this was me and the state wanted to pull a license because of this I’d put it on blast 100-fold. And I’d be like ‘this is what we’re dealing with?’ And our crowd would rally and we’d become stronger. He said ‘you know what that’ll do? They’ll just pull the license everywhere potentially.’”

When asked if there were any clarifications Penn wished to make about Portnoy’s statement, a spokesperson told LSR to “refer to the comments made today on our earnings call by Jay and Erika on the matter.”

Accountability is new for Barstool personalities

It is easy to see why Portnoy may be unhappy about Penn’s choices. This kind of conduct seemingly went unchecked with Portnoy at the helm, with him making controversial comments himself.

The Resist Programming Twitter page posted a thread of some of Portnoy’s most controversial moments on Nov. 4, 2021. Those videos include him saying then-49ers quarterback Colin Kaepernick looked like a terrorist, as well as multiple instances of him using racial epithets in songs or impersonations.

Oh, about the PENN earnings report

This is not the first time an issue concerning Portnoy has distracted from the story of a quarterly report, though this is the first time the issue has been internal.

Penn reported growth in its interactive segment with $233.5 million in revenue and an adjusted EBITDA loss of $5.7 million, which is an improvement from the $10 million loss in the first quarter last year.

Penn’s rewards program, which recently rebranded to PENN Play, added 350,000 new customers in the first quarter. Of that 350,000, 63% signed up through online channels.

Barstool Sportsbook marketing push coming

There is no point in marketing a product that is “substandard” compared to other products on the market, Snowden said.

The launch of proprietary technology for theScore Bet brand in Ontario had the positive impact Penn hoped it would. The platform allows for personalized marketing, which has led to a 118% increase in six-month retention and a 26% cross-sell into the casino product.

Penn still expects that switch to come in July with a marketing push to support it before the NFL betting season.

“I think you’ll see us transition when we have a product that we believe stands up well to the competition,” Snowden said. “That will be more aggressive in getting some marketing dollars dedicated towards getting new people into the ecosystem.”