But the company wasn’t profitable, and its stock is down 95% from its IPO price.īut when you put price aside, the most critical piece of this acquisition will now be seeing if Penn Entertainment can creatively use Barstool’s audience and reach to meaningfully lower customer acquisition costs for its sports gambling business. The esports and entertainment company bragged about its 350 million social media followers and went public at a $1 billion valuation last year. But $551 million seems like a pretty good price for a profitable company currently generating ~$200 million in annual revenue. Of course, we don’t know Barstool’s expenses, margins, or operating profit. And when you combine that with the potential opportunity created through the legalization of sports betting, it’s no surprise that Penn Entertainment came calling in 2020.Īnd it appears that Penn got a great deal. (Barstool’s 2019 Revenue Breakdown via RoundHill Investments)īarstool’s transition from a Boston-based newspaper to an online media company generating $100 million in annual revenue is objectively impressive. This valued the company at more than $100 million (up from ~$15 million just two years prior), and it allowed Barstool to double its staff, invest in more pay-per-view events, grow its podcast network, and continue to market alcohol brands. The Chernin Group then doubled down in 2018 and invested another $15 million in Barstool. They hired Erika Ayers as CEO six months after the deal They established Barstool’s headquarters in New York City They formalized Barstool’s processes to run like a legitimate business The Chernin Group includes some of the world’s best investors across sports, media, and technology, and they made several changes that helped Barstool become a $550 million company today: This was invaluable for Dave Portnoy and Barstool. The deal reportedly valued the company at just $10 to $15 million, and two of Chernin’s best investors/operators (Mike Kerns and Jesse Jacobs) joined Barstool’s board of directors. Still, the big change came in 2016 when The Chernin Group (TCG) purchased a 51% stake in Barstool Sports. He hired Chicago’s Dan “Big Cat” Katz in 2008 and New York’s Kevin “KFC” Clancy in 2009, who are both still with the company today - and Barstool started to make a little money. Portnoy then started hiring bloggers outside of Boston to expand. He also inserted fake ads of big companies to try and get their competitors to advertise in the paper, and he spent four years building a loyal fanbase in Boston strictly as a print-only publication.īut then Barstool shifted to online content in 2007, and everything changed.īarstool launched its website as a blog in 2007 after a man that moved from Boston to New York asked Portnoy if they could build a website for him to read the content. Portnoy wrote the newspaper himself and often signed off under pseudonyms to make the paper look like a bigger company than it was. Portnoy purchased 100 news racks ( i.e., containers ) that he placed in Boston subway stations, and he hand-delivered newspapers from the back of his Chevrolet Astro Van. The newspaper started out black and white and eventually upgraded to color. “For the Common Man, by the Common Man,” Portnoy branded as the company’s mission statement. The initial idea was to create a newspaper that provided news and advice on fantasy sports and gambling. (Barstool Sports: Founder Dave Portnoy (left) & CEO Erika Ayers (right))īarstool is a large media company today, but the business has humble beginnings.ĭave Portnoy was in his mid-20s when he left his consulting job in 2003 to start Barstool Sports out of his Boston home. We’ll talk about the synergies that Penn Entertainment might realize through the acquisition, and we’ll also take a look at what’s happening in the broader sports media space. So today, we’ll explore how Barstool went from a local newspaper to a $550 million media company. And with more than 50 million Americans betting a record $16 billion on this year’s Super Bowl alone (a 110% increase from 2022’s record), Penn believes Barstool’s audience gives them the necessary firepower to compete with FanDuel, DraftKings, and MGM. Now, this deal has been in the works for several years, and a lot has changed since Penn’s first investment in 2020.įor example, Barstool is now generating ~$200 million in annual revenue. That means Penn paid $551 million for complete control of Barstool Sports.Ģ020: Penn pays $163 million for 36% of BarstoolĢ023: Penn pays $388 million for 64% of Barstool The entertainment and gambling company paid $163 million for a 36% stake in 2020 and recently exercised its option to purchase the remaining 64% of Barstool Sports they didn’t already own for $388 million. Penn Entertainment has officially completed its acquisition of Barstool Sports and now owns 100% of the brand.
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