Penn National’s Divorce from Barstool Leads to $1.5 Billion Deal with ESPN
The divorce between Penn National and Barstool surprised many on Tuesday, but it’s Penn National’s next move that is causing a stir. According to Axios.com, Penn National has struck a deal with ESPN, agreeing to pay the network a staggering $1.5 billion over the course of 10 years. As part of the arrangement, the various Barstool Sportsbooks will be rebranded as ESPN BET.
Additionally, ESPN will receive $500 million in stock warrants, purchasing 31.8 million shares of Penn National, further solidifying their partnership. This influx of cash for ESPN comes at a crucial time, as the network recently went through significant layoffs of both on-air and behind-the-scenes employees.
The scale of this deal raises questions about its timeline and whether it was in the works prior to the layoffs. Regardless, the news of annual payments of $150 million for a long-awaited gambling partnership has been met with surprise and intrigue.
Axios.com also reports that the Penn National deal does not prevent ESPN from selling advertisements to competitors such as FanDuel and DraftKings. This freedom allows ESPN to generate even more revenue from gambling companies looking to promote their products alongside broadcasting events on which people gamble.
The success or failure of this association will determine whether Penn National can gain the desired market share it seeks. If successful, ESPN BET could become one of the top gambling platforms globally. Even if it falls short, ESPN still stands to earn an additional $1.5 billion over the next decade.
While the cash infusion won’t solve ESPN’s broader revenue challenges stemming from the impact of cord-cutting, it certainly provides a boost in their efforts to bring in more money than they spend.
This collaboration between Penn National and ESPN also raises important questions about the intersection of gambling and sports. ESPN now walks a fine line between its partnerships with sports organizations and its role in facilitating widespread public betting.
In an industry that lacks significant federal regulation, moves like this may accelerate efforts to ensure the integrity of games and the wagers placed on them. The impact of this deal extends beyond financial implications, fueling discussions about responsible gambling practices and the influence of betting on sports.