Gambling operator buys minority stake in Barsto

[David Dennison]

Penn National Gaming to Buy Minority Stake in Barstool Sports

Penn national gaming spending $163m for a 36% stake, with an option to increase their stake in 3 years. Values company at ~$450m.

Now 36% owned by Penn
28% owned by key employees
36% owned by Chemin Group

Is Penn essentially buying fiercely loyal Barstool fans into its gambling platform? Barstool isn't worth $450m on just the value of its content. I presume the portion being sold is from key employees, but now they don't control their own company. Double edged sword, get paid, but lose control of the company and key employees are now less invested in the company (less reason to stick around).

Click to read more...

 

[David Dennison]

'We're an anomaly': Barstool Sports CEO Erika Nardini on building a 'lifestyle brand' - Digiday

Some more info on the plans from Barstools CEO

Barstool Sports founder Dave Portnoy has said that this isn’t going to change what Barstool does. But what is it going to enable you to do?
Barstool Sports is a brand that’s been around since 2003. Dave Portnoy originally started Barstool as a newspaper because he wanted to get into the casino business and they wouldn’t let him.
But what it’s really become in the last three and a half years is the fastest-growing lifestyle brand on the fastest-growing platforms on the planet. We’re now starting to inch toward 100 million consumers.
What this opportunity provides us is a couple things. Penn’s the single largest casino operator in the United States. This means every time we tour the country, we bring our entertainment shows, our golf classic, our pond hockey tournament, poker. Every time we bring ourselves to market, we now have a place to go. The second is that now the brand takes a new life of its own. The Barstool Sports brand will become Penn sports book brand. It’ll be the Barstool sports book.
It will now compete with the people we helped build. We’re going to go up against the FanDuels; we’re going to go up against DraftKings; we’re going up against MGM.

Are you worried about supplanting or making up for that revenue? Might that relationship change?
If I were them, I wouldn’t be interested in working with me because I’m going to be promoting our own sports book.
I’m not worried about supplanting that revenue. If you look at how it is today, we’ve got a show on Tuesday for PointsBet. The Saturday morning show is for FanDuel. The Sunday show is for yet another partner. Our head has to be on a swivel all the time right now. We don’t think that’s the best thing for our consumer. What this enables us to do is instead of having to do something three times, we’re going to do it with one brand. And that brand our fans know because it’s our brand.

Sounds like largely a marketing play, Barstool branding for their sports books in their casinos. She didn't have a very satiafying answer on whether this is gonna cannibalize their current gambling sponsors.

That's a lot of scratch for a marketing strategy, especially if their ad revenues take a hit. Younger men, their target demo, would rather gamble on their phones, not in casinos. Maybe that's the play, getting younger gamblers in the doors, but color me skeptical. 30x valuation from the last equity go-around.