Barstool Sports in Talks for DraftKings Deal Amidst Ownership Changes
Barstool Sports Eyes Lucrative Deal with DraftKings Amidst Ownership Shake-Up
In a notable shift within the sports media and betting landscape, Barstool Sports is currently in negotiations for a potentially lucrative sports betting partnership with industry giant DraftKings. This move comes as Barstool's founder, Dave Portnoy, has recently regained control of the company in a dramatic turn of events.The Return of Portnoy
Dave Portnoy, the outspoken and often controversial figure, has taken back the reins of Barstool Sports after Penn Entertainment divested its stake in the company for a nominal fee of $1. This transaction marked a significant loss for Penn, which had initially invested $163 million for a 36% stake and later acquired the remaining 64% for an additional $388 million. Despite their efforts, Penn's strategy to leverage Barstool's brand to boost their sportsbook did not yield the expected results, culminating in a substantial $850 million write-off.New Horizons for Penn Entertainment
Following the sale of Barstool, Penn Entertainment has embarked on a new venture, partnering with ESPN to launch ESPN Bet. This collaboration appears to be Penn's latest attempt to carve out a successful niche within the competitive sports betting market, especially after ending their association with Barstool.Barstool's Betting Industry Aspirations
Despite the change in ownership, Barstool Sports remains committed to making a strong comeback in the sports betting sector. The potential deal with DraftKings, estimated to be worth low eight figures annually, could mark a significant milestone for the company. However, due to a lock-up agreement, Barstool is unable to finalize any betting deals until after the Super Bowl.
This stipulation also aligns with Barstool's current prohibition from entering the betting industry until the conclusion of the present NFL season. Nonetheless, the company is eager to re-establish itself as a key player in the market. "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," stated an insider from Barstool.DraftKings Scaling Back Marketing Investments
DraftKings, a leading sports betting company, invested a staggering $1.19 billion in sales and marketing during the fiscal year 2022. Notably, this was the first time in over three years that the company reduced its marketing expenditures. This strategic decision coincided with the termination of DraftKings' marketing partnership with ESPN, which has since aligned with Penn for ESPN Bet.Barstool's Future Prospects
As Barstool continues to provide gambling advice and picks, it is clear that the brand intends to expand its footprint in the betting industry through strategic partnerships. With the anticipated end of the NFL season, Barstool is poised to make significant moves, leveraging its brand recognition and loyal fan base.
In the event of a future sale of Barstool, Penn Entertainment stands to benefit by receiving half of the gross proceeds, ensuring that they maintain a vested interest in Barstool's success despite their divestment.
The sports media and betting industries are witnessing a period of intense dynamism, with Barstool Sports at the forefront of these changes. As the company navigates its renewed independence and explores fresh opportunities with DraftKings, the sports betting community eagerly anticipates the outcomes of these developments. Barstool's aggressive pursuit of growth within this space may redefine its trajectory and influence the broader landscape of sports betting and media partnerships.