Some details have emerged regarding Dave Portnoy regaining full ownership of Barstool Sports, including one crazy nugget.
On Tuesday, Portnoy announced that he had regained full ownership of Barstool Sports, the company he founded in 2003. Portnoy had previously sold a majority ownership stake in the company to The Chernin Group, which later sold the company to Penn Entertainment, a gambling company. Earlier in 2023, Penn exercised an option to purchase Barstool Sports in full.
But Penn and ESPN announced a partnership where Penn’s sportsbooks and sports betting mobile web application would be rebranded from Barstool to ESPN BET. As part of the deal, Penn divested itself of its ownership of Barstool Sports.
So what’s the crazy detail about Portnoy regaining full ownership of Barstool Sports — a company valued at over $600 million as recently as January? Ready for this? Portnoy got the company back for no immediate monetary cost. Seriously.
In a press release announcing the news of their partnership with ESPN, Penn shared the terms of the deal that returned ownership of Barstool Sports to Portnoy.
“PENN sold 100% of the Barstool Sports, Inc. (“Barstool”) common stock to David Portnoy in exchange for certain non-compete and other restrictive covenants. PENN also has the right to receive 50% of the gross proceeds received by David Portnoy in any subsequent sale or other monetization event of Barstool,” the statement said.
Though Portnoy did not have to pay an immediate price to get his company back, he will have to give 50 percent of future proceeds to Penn if he sells the company. That explains why Portnoy said in his video announcement Tuesday that he won’t be selling the company. Barstool also will now have certain non-compete covenants. That likely means Barstool Sports will not be able to promote competing sportsbooks.
Prior to being purchased by Penn, several different sportsbooks advertised with Barstool Sports. The terms of the new deal will restrict Barstool Sports’ ability to take on/promote gambling companies. That potentially will hurt their advertising revenue.
But does Portnoy care about that? Likely not. He gets his company back, while also maintaining ownership of whatever stock he held for PENN. That means if Penn’s partnership with ESPN works out, Portnoy and many of his Penn stock-holding Barstool employees will benefit.
Barstool Sports will also likely be changing its focus. Under Penn’s ownership, Barstool’s primary purpose was to help promote/advertise and gain gambling users for the parent company. Now, Barstool will be able to return to its original focus: creating content.
