Barstool Sports in Negotiation with DraftKings for a Lucrative Betting Deal
In a significant turn of events, Barstool Sports is currently in discussions with DraftKings to forge a sports betting partnership. This potential collaboration could prove highly profitable for Barstool, with estimates suggesting an annual worth in the low eight figures. However, fans and industry insiders will have to wait for the details as Barstool is bound by a lock-up agreement that prevents any deals from being finalized until after the Super Bowl.
Dave Portnoy Back at the Helm of Barstool Sports
Barstool Sports has seen a return to familiar leadership as Dave Portnoy has retaken control of the company. In a surprising twist, Penn Entertainment has divested its stake in Barstool, selling it back to Portnoy for a nominal fee of $1. This comes after Penn's substantial investment into Barstool, where they initially acquired a 36% share for $163 million and subsequently the remaining 64% for $388 million.
Penn's initial strategy was to leverage Barstool's brand to boost their own sportsbook operations. However, this move did not yield the expected results, leading to a shift in direction for Penn. They recorded an $850 million write-off from the Barstool acquisition, illustrating the significant impact of the underperforming strategy.
New Horizons: Penn Partners with ESPN Following Barstool Sale
Following the sale of Barstool, Penn Entertainment has embarked on a new venture, partnering with ESPN to launch ESPN Bet. This marks a strategic pivot away from their previous association with Barstool and towards a fresh collaboration with a different media giant in the sports industry.
Despite relinquishing ownership of Barstool, Penn Entertainment retains a financial interest in the company's future success. Should Portnoy decide to sell Barstool, Penn is entitled to receive half of the gross proceeds from the sale, ensuring they maintain a stake in the company's fortunes.
Barstool's Ambitions in the Betting Industry
While Barstool cannot engage directly in the betting market until the current NFL season concludes, the company has clear intentions to make a strong re-entry into the sports betting sphere. Barstool's plans include expanding its footprint through strategic partnerships, which will likely enhance its influence and presence within the industry.
The company has never strayed far from its roots in sports gambling. Even without a direct betting platform, Barstool continues to offer gambling advice and picks, staying connected to its core audience. As Portnoy himself states, "I would still argue that [sports betting] is a huge part of what we do today. Our crew bets obsessively on games, we always have... But I think you'll see, into next year, that we start to establish ourselves back in that space."
DraftKings Scaling Back Marketing Spend
On the other side of the negotiation table, DraftKings has shown signs of recalibrating its approach to marketing. After a period of aggressive investment, totaling $1.19 billion in fiscal 2022, DraftKings has reduced its marketing spend for the first time in over three years. This strategic pullback coincides with the end of its marketing partnership with ESPN, which has since allied with Penn for ESPN Bet.
The potential partnership between Barstool and DraftKings comes at a critical juncture for both companies. For DraftKings, it represents an opportunity to collaborate with a brand that has a strong and loyal following in the sports community. For Barstool, it offers a chance to regain a foothold in the lucrative betting market, building on its existing popularity and expertise in sports gambling content.
As the industry awaits the outcome of these negotiations, one thing is certain: the landscape of sports betting continues to evolve rapidly, with media brands and betting platforms alike seeking innovative ways to capture market share and engage with sports fans across the nation.