Barstool Sports Eyes DraftKings Betting Deal Amidst Ownership Changes
Barstool Sports in Talks for a Lucrative Deal with DraftKings
In a significant turn of events, Barstool Sports is currently in negotiations for a sports betting partnership with industry giant DraftKings. This development comes on the heels of Dave Portnoy's reacquisition of control over the company he founded. The deal under discussion could potentially be worth low eight figures on an annual basis for Barstool, signaling a major financial boost for the brand.Lock-Up Arrangement Delays Betting Deal Until Post-Super Bowl
Despite the promising negotiations, Barstool Sports must navigate a lock-up arrangement that prevents the company from finalizing any betting deals until after the Super Bowl. This constraint means that any potential agreement with DraftKings will have to wait until the conclusion of the current NFL season.Penn Entertainment Sells Stake in Barstool
The backdrop to these negotiations is Penn Entertainment's recent decision to sell their stake in Barstool back to Portnoy for the nominal sum of $1. Penn had initially acquired 36% of Barstool for $163 million and subsequently purchased the remaining 64% for $388 million. However, the strategy to leverage Barstool's brand to support Penn's sportsbook fell short of expectations, prompting the sale.
Following the divestiture, Penn Entertainment has shifted its focus and formed a new alliance with ESPN to launch ESPN Bet. This move came after Penn took an $850 million write-off from the Barstool acquisition, marking a costly endeavor for the company.Profit-Sharing Agreement Tied to Future Sale of Barstool
An interesting facet of the transaction between Portnoy and Penn Entertainment is the clause stipulating that if Portnoy were to sell Barstool in the future, Penn would receive half of the gross proceeds from the sale. This arrangement ensures that Penn retains a financial interest in Barstool's success.Barstool's Restriction from the Betting Industry
Currently, Barstool is prohibited from participating directly in the betting industry until the end of the ongoing NFL season. Despite this restriction, the company remains active in the gambling sphere, continuing to provide gambling advice and picks to its audience.Barstool's Ambitions in Sports Betting
Looking ahead, Barstool is keen on re-establishing itself within the sports betting market. As Portnoy himself stated, "I would still argue that [sports betting] is a huge part of what we do today. Our crew bets obsessively on games, we always have... But I think you'll see, into next year, that we start to establish ourselves back in that space." This ambition reflects Barstool's intent to expand its presence through strategic partnerships.DraftKings' Investment and Marketing Strategy
DraftKings, a potential partner for Barstool, invested a staggering $1.19 billion in sales and marketing during fiscal 2022. Interestingly, this marked the first time in over three years that the company reduced its marketing spend. Additionally, DraftKings ended its marketing partnership with ESPN, which coincided with ESPN's collaboration with Penn for ESPN Bet.Conclusion
As the sports betting landscape continues to evolve, Barstool Sports appears poised to make a significant comeback in the industry. With the anticipated end of the NFL season, the path will be clear for Barstool to finalize its discussions with DraftKings and potentially secure a lucrative partnership. Meanwhile, Penn Entertainment's new venture with ESPN Bet suggests a reshuffling of alliances within the sports betting world. Fans and industry observers alike will be watching closely to see how these strategic moves play out in the highly competitive market of sports gambling.