The Barstool Sports Deal: A Game-Changer for Penn National
The past few months have been nothing short of transformative for the media giant Barstool Sports, despite the unprecedented halt in real sports events worldwide due to the COVID-19 pandemic. With a significant 36% stake owned by Penn National Gaming, Barstool Sports has seen a remarkable uptick in digital engagement, setting the stage for what could be a lucrative partnership in the realm of sports betting and online gaming.
Penn National Gaming initially purchased a 36% stake in Barstool Sports for approximately $136 million in January 2020, valuing Barstool at around $450 million, and later acquired full ownership by 2023 after paying a total of about $550 million over three years.
Surge in Digital Engagement
April was a standout month for Barstool Sports, witnessing a 20% surge in blog traffic and an impressive 50% increase in social media views across platforms like Twitter, Instagram, and TikTok. This digital boom comes at a time when the global sports calendar has been wiped clean, demonstrating the resilience and adaptability of Barstool’s content strategy. Not just confined to sports, the brand’s ability to churn out highly creative and engaging content has kept its 66 million-strong viewer base hooked and growing.
Strategic Moves and Future Prospects
Penn National Gaming’s strategic acquisition of a stake in Barstool Sports for $136 million earlier this year was a move aimed at bolstering its push into retail sportsbooks and mobile sports betting. With plans to launch the Barstool sports betting app by the third quarter, the synergy between Penn’s extensive casino operation and Barstool’s digital prowess is poised to create a formidable force in the online gaming and betting landscape.
The partnership plans to leverage Barstool’s youthful demographic to rejuvenate Penn’s 20 million-member customer loyalty program, which traditionally skews towards an older age group. By infusing Barstool’s millennial and Gen X audience into the mix, Penn National is strategically positioning itself to lower customer acquisition costs significantly.
Barstool’s Brand Power
Barstool Sports is not just another player in the digital media space. Its robust social media presence, including 2.3 million followers on its primary Twitter feed and 8 million on Instagram, far surpasses Penn National’s own digital footprint. This disparity highlights the value Barstool brings to the table in terms of brand visibility and market penetration. The anticipated Barstool-branded sportsbooks and mobile wagering app are expected to be pivotal in driving market share and customer engagement for Penn National.
Investment and Market Reaction
The development of the sports betting app and the rebranding of existing sportsbooks represent a significant investment for Penn National, with projected costs between $8 million to $10 million. Yet, the market has responded positively to these initiatives, as evidenced by a more than 15% surge in Penn’s shares following these announcements. This upbeat investor sentiment reflects the broader industry’s optimism about the growth potential of iGaming and sports wagering in the U.S., especially in the aftermath of the pandemic.
The Road Ahead
As the world gradually moves towards normalization, with sports events slowly resuming and casinos reopening, the partnership between Penn National and Barstool Sports stands at the cusp of a new era in sports betting and online gaming. With states looking to legalize sports betting as a means to recover lost tax revenues, the future looks promising for this dynamic duo. The blend of Penn’s industry expertise and Barstool’s digital savviness could indeed redefine the landscape of sports betting and entertainment.