Penn National Buys Stake In Media Company Barstool Sports

Penn National Buys Stake In Media Company Barstool Sports
© USA Today

Penn National Gaming announced Wednesday that it will purchase a 36% interest in the sports media platform Barstool Sports, Inc., becoming the controversial outlet's “official gaming partner for up to 40 years.” It also acquired the right to deploy El Presidente's brand on retail sports and iCasino products.

Penn National will pay $163 million in cash and convertible stocks, according to a Penn National release.

Barstool founder Dave “el Presidente” Portnoy said in a release: “This opportunity is a dream of mine and why I started Barstool Sports in the first place. Barstool Sports has a deep sports and gaming history and from the moment we met Jay [Snowden, Penn National president and CEO] and the Penn National team, we knew this could be an exciting and game-changing partnership and we can't wait to get started.”

Penn National has the option to increase its ownership stake to approximately 50% after three years with an incremental investment of about $62 million. Portnoy and Barstool employees will continue to own 28% of the company.

Penn National, based in Wyomissing, Pennsylvania, has more than 40 properties in 19 markets including seven — Illinois, Indiana, Iowa, Michigan, Mississippi, Nevada and Pennsylvania — where sports betting is legal. Many of the company's properties operate under the Hollywood Casino brand.

"This exciting new partnership with Barstool Sports reflects our strategy to continue evolving from the nation’s largest regional gaming operator ... to a best-in-class omni-channel provider of retail and online gaming and sports betting entertainment," Jay Snowden, president and CEO of Penn National, said in a release. "With its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National and will enable us to attract a new, younger demographic, which will nicely complement our existing customer database.

"In addition, with 66 million monthly unique visitors, we believe the significant reach of Barstool Sports and loyalty of its audience will lead to meaningful reductions in customer acquisition and promotional costs for our sports betting and online products, significantly enhancing profitability and driving value for our shareholders.”

Penn National has been aggressive in reaching deals with media companies and other sports-betting operators like theScore and PointsBet since the middle of last year.

The initial 36% investment by Penn National is comprised of roughly $135 million in cash and $28 million in shares of non-voting convertible preferred stock. The deal values Barstool Sports at $450 million.

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