Barstool Sports is close to selling to a casino company you've never heard of
Friday 10th January 2020
Barstool Sports, the high-profile, controversial, and fast-growing sports media company, may soon have a new owner: A low-profile casino operator.
Sources say The Chernin Group, which currently owns Barstool, is in advanced talks to sell a majority stake in the company to Penn National Gaming, a publicly traded, regional gambling company that operates 41 properties in 19 states.
Barstool was last valued at more than $100 million, but a potential purchase price could be much higher, and might create the biggest media-gambling tie-up in the US since the Supreme Court legalized sports betting in 2018.
Recode has asked representatives from Barstool and Penn National for comment. The Chernin Group has declined to comment.
The Big Lead had previously reported that Barstool was looking at a deal to sell itself to a gambling company.
The deal would tie Barstool, a well-known company with a passionate audience, to a casino company you may have never heard of, which is part of the logic of the tie-up: Industry observers expect Penn National, which operates properties like the Hollywood Casino in Bangor, Maine, and the Greektown Casino-Hotel in Detroit, to adopt the Barstool brand for at least some of its operations.
The most logical use of Barstool's brand would be to help Penn National move into online sports betting, which the Supreme Court blessed on a state-by-state basis in May 2018.
Since then, a host of media companies have tried to capitalize on what they think will be a sports betting boom by creating their own betting-centric properties, as well as by making deals with traditional casinos like Caesars and online betting companies like DraftKings and FanDuel. (Vox Media, which owns this site, has a deal between DraftKings and Vox's SB Nation sports property.)
Barstool already has a Barstool Bets site, which publishes sports-betting stories and videos, and runs free sports-betting games; the company also has deals to direct its users to betting operations like MGM Resorts.
Until now, the biggest media and sports betting deal we've seen in the US has been Fox Corp's purchase of a little less than 5 percent of The Stars Group, an online gambling company, for $236 million last year; the two companies launched a Fox-branded sports betting unit a few months later.
Other media transactions in recent years have been driven by a desire to gain scale to fight against tech companies (like AT&T's purchase of Time Warner, and Disney's purchase of much of Fox) or because of fire sales of startups that had planned to grow alongside Facebook and ended up running out of money (like Mashable and Mic). But Barstool is different: It is growing quickly, has a passionate audience that likes its off-color approach to covering sports and pop culture, and doesn't appear to have cash flow problems.
Barstool founder Dave Portnoy, who is still the company's best-known talent, sold a majority stake in his company to The Chernin Group for a reported $10 million in 2016; in 2018, Chernin put another $15 million into the company at a reported valuation of more than $100 million.
The deal could be a windfall for both Portnoy and Chernin. And it could also solve a problem for Chernin, a media investment and holding group run by former Rupert Murdoch lieutenant Peter Chernin. Barstool is beloved by its audience, but it is reviled by lots of media commentators, who grimace at the publishers' frat-boy persona. Barstool pits itself against everyone from the NFL to ESPN to people who have a problem with stories like "Josh Duhamel Compared His New Smokeshow Girlfriend Audra Mari to Patrick Mahomes," which is currently featured on the site's homepage.
Portnoy himself is a controversial face for the company. Last summer, via Twitter, he threatened to fire any employee who talked to union organizers. That prompted an investigation by the National Labor Relations Board, which is still open.
That brand has created problems for Chernin's executives who have grown weary of defending their investment in Barstool. (For the record, their usual defense is that people who criticize Barstool probably don't read or watch what Barstool makes, and what the company does is similar to Howard Stern's show.)
It may also have limited possible acquirers for the company; conventional wisdom is that media companies that want to do business with pro sports leagues like the NFL wouldn't be able to buy the Barstool for fear of offending their current or future partners. Or even offending their own employees: In 2017, ESPN launched a Barstool-branded chat show, then canceled it after a single episode after blowback from the sports programmer's on-air talent. "I erred in assuming we could distance our efforts from the Barstool site and its content," former ESPN President John Skipper wrote at the time.