Penn Entertainment Sheds Barstool, Unveils $1.5B ESPN Deal
In tidings that rocked the US sports wagering landscape, Penn Entertainment (NASDAQ: PENN) announced it will disinvest Barstool Sports and contract a $1.5 one million million deal with Walt Disney’s (NYSE: DIS) ESPN to habituate the ESPN Bet trademark.
Under the terms of the agreement, the regional casino operator testament compensate the sports media giant $1.5 1000000000 over 10 years to utilisation ESPN Bet branding for that full stop with an choice for another 10 years at the final stage of the initial term. Penn is also granting ESPN $500 meg inwards warrants that earmark the electronic network to purchase close to 31.8 shares inwards the gambling casino company, vesting ratably over 10 years. In return, Penn gets “marketing services, brandmark and other rights provided past ESPN.”
Penn estimates the relationship with “the worldwide leader in sports” could supply $500 1000000 to $1 billion in long-term, familiarized earnings before interestingness taxes, depreciation and amortisation (EBITDA) to its interactive gaming unit.
Upon ESPN Bet group meeting certain U.S. online sports betting (OSB) marketplace apportion public presentation thresholds, ESPN could get bonus warrants to purchase upward to an additional just about 6.4 billion PENN common shares,” according to a statement.
That implies ESPN could eventually possess 38.2 one thousand thousand shares of Penn, or nearly a canton of the gaming company’s shares striking based on current figures. Based on Penn’s market capitalisation of $3.84 1000000000 at the confining of US markets today and the $1.5 billion the gambling casino manipulator is paying to ESPN, the Walt Disney building block could come come out substantially before of the $3 billion it sought-after(a) two years agone in rumored licensing discussions with sportsbook operators.
ESPN also has the alternative to constitute a non-voting commentator to the William Penn table of directors, or at the end of the third twelvemonth of the pact, “designate a Board fellow member dependent to satisfying gaming regulatory approval(s) and a minimum ownership threshold.”
Penn Swiftly Rids Itself of Barstool Sports
Nearly a yr to the day on which it acquired 100% of Saint David Portnoy’s Barstool Sports, William Penn Entertainment proclaimed its parting shipway with the nouveau-riche media entity that served as the brand for the gaming company’s online and retail sportsbooks.
The company, antecedently known as Penn National Gaming, said inward Jan 2020 that it was shelling come out $163 one thousand thousand inwards cash and equity to have a 36% stake inwards the sports and soda civilisation blog. Under the terms of that agreement, the casino manipulator gained rights to increment its Barstool post to 50% for another $62 zillion defrayment and eventually own the media dimension outright for a number of $450 million. All told, Penn paid north of $500 meg for Barstool..
The Pennsylvania-based gaming accompany said it’s merchandising 100% of the equity in Barstool Sports to Portnoy. Financial terms of that transaction weren’t revealed, but William Penn noted it has rights to 50% of the proceeds received past Portnoy should he opt to sell Barstool or monetize it another way.
Rumors about a possible sales agreement of Barstool by Penn surfaced before this year, so it’s non surprising a business deal to essence materialized. The stunner is the timeframe inward which it occurred.
In the months ahead, Penn testament molt the Barstool branding on its sportsbooks for ESPN Bet spell the operator’s iGaming political program will hold the Hollywood Casino name. The operator’s Canadian River sports betting concern will keep on the Score Bet name.
Other Interesting Odds and Ends
News of the Penn/ESPN relationship arrives most a month before the three-year day of remembrance of the electronic network inking what at the clip were viewed as landmark accords with Caesars Entertainment (NASDAQ:CZR) and DraftKings (NASDAQ:DKNG).
For now, it’s unclear how the Penn/ESPN pact testament impact those gaming companies, but specific to Caesars, conjecture latterly surfaced that the cassino whale would be happy to part the ESPN business deal as an boulevard to save cash. Regarding DraftKings, executives from that operator experience spoken in bullish terms around their relationship with ESPN and Walt Disney owns most 6% of DraftKings’ non-voting equity, which the entertainment empire got via its 2019 $71.3 1000000000000 takeover of 21st Century Fox.
It’s non yet been confirmed but at the cost dot William Penn is paying and ESPN’s equity optionality inward the firm, it’s likely that at some point, the deals with Caesars and DraftKings fall by the wayside.
“PENN’s ability to purchase the leading sports media brands in both the U.S. and Canada with ESPN and theScore, combined with our newly launched sports betting app, will set aside us to significantly expand our digital step and arbalist ESPN Bet into a strong podium view inwards this space,” said William Penn CEO Jay Snowden inwards the statement. “We believe we tin accomplish real familiarised Earnings Before Interest Taxes Depreciation and Amortization inwards our Interactive Segment over the coming years — and this testament transform to real strong unloosen cash in flow generation for the Company and value creation for our shareholders.”