Monday, October 2, 2023

Dave Portnoy said he bought back Barstool Sports, the brash sports and pop-culture media company he founded, from Penn Entertainment for “pennies on the dollar.”

In fact, Portnoy paid 100 pennies for Barstool Sports. That’s after Penn Entertainment, a casino and online gambling operator, paid a total of about $550 million to acquire 100% control of Barstool — just a few months before deciding to cut Barstool loose.

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“Penn sold 100% of the outstanding shares of Barstool to David Portnoy in exchange for a nominal cash consideration ($1.00 dollar) and certain non-compete and other restrictive covenants,” the company disclosed in a 10-Q filing Wednesday.

Penn said in the filing that the deal with Portnoy for Barstool will result in a “pre-tax non-cash loss” of between $800 million and $850 million — inclusive of $705 million to $720 million in goodwill and intangible assets write-offs — related to the disposal of the business, to be incurred in the third quarter of 2023.

Penn has the right to receive 50% of the gross proceeds received by Portnoy in any subsequent sale or other monetization event of Barstool. Portnoy said Tuesday that he will “never” sell Barstool.

The extreme fire sale of Barstool Sports back to Portnoy came as Penn entered into a major deal with ESPN to rebrand the online sports-betting business from Barstool Sportsbook to ESPN Bet. Under the terms of the deal with ESPN, Penn will pay $1.5 billion in cash to ESPN over a 10-year term and grant ESPN approximately $500 million in warrants to purchase 31.8 million Penn common shares that will vest over 10 years in exchange for media, marketing services, brand and other rights.

According to an Aug. 8 video announcement from Portnoy, “we underestimated just how tough it is for myself and Barstool to operate in a regulated world.”

“We got denied [gambling] licenses because of me,” Portnoy said. “So the regulated industry [is] probably not the best place for Barstool Sports and the type of content we make.”

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