Penn Leisure, Inc. (NASDAQ: PENN), formally Penn Nationwide Gaming, will train its rights to amass all of Barstool Sports activities — a sports activities and popular culture digital media firm. Penn, already a significant shareholder within the firm, will buy the final remaining shares in Barstool Sports activities by February 2023 after exercising its name rights.
Penn Leisure has been making an attempt to diversify its income streams over the previous few years away from its flagship casinos. Within the firm’s second-quarter earnings name, CEO Jay Snowden claimed that the corporate was evolving into “North America’s main supplier of built-in leisure, sports activities content material and on line casino gaming experiences.”
One of many causes Penn initially bought a stake in Barstool Sports activities was to attempt to attain a youthful viewers and create cross-selling alternatives. The corporate has since created a number of Barstool Sports activities branded merchandise, similar to its retail deal with Barstool Sportsbooks, which has helped to drive the segments’ revenues to $179.3 million for the quarter, up from $162 million final 12 months.
By outright proudly owning Barstool Sports activities, Penn Leisure can leverage the model to draw extra and youthful prospects to interact in its extensive product base extra cost-effectively. This can give it an edge over rivals with greater buyer acquisition prices.
Penn Leisure acquired a 36% stake in Barstool Sports activities for $161.2 million in 2020. Penn later grew its stake within the media firm to 50% for an extra $62 million, and can now personal the corporate outright for a complete of $450 million.
Traders weren’t impressed with this information, inflicting the corporate’s share value to drop by 1.02% in the present day. This is because of controversy surrounding the founder and CEO of the sports activities media firm, David Portnoy. In February of this 12 months, Insider printed articles detailing sexual misconduct allegations towards Portnoy, who has denied any wrongdoing.
Ought to Mr. Portnoy have an government place in Penn Leisure, then it’s possible that the controversy surrounding him will stain the corporate’s fame and doubtlessly its share value. Mr. Portnoy is seen because the face of Barstool Sports activities and one of many causes for Penn Leisure’s funding within the firm. He has additionally been the driving pressure behind the publicity of Barstool Sportsbook.
Though the acquisition will generate extra income for Penn Leisure by full management of the corporate’s earnings, cross-selling, and creating new branded merchandise, the cloud round Portnoy might steal the highlight and make it a pricey mistake. This leaves questions of what to do with the media firm’s founder and CEO. Ought to he keep or ought to he go? Solely time will inform what the corporate decides.
