Penn Entertainment has agreed a sports betting partnership with ESPN – dropping Barstool Media in the process – but it appears to be business as usual for its flagship brand in Canada, theScore.
Yesterday’s announcement sent shockwaves round the sports betting industry as Penn revealed plans to rebrand its current sportsbook to ESPN Bet this fall in the 16 legalized betting states where the company is licensed.
In return for exclusive rights to the ESPN trademark for 10 years, Penn will pay $1.5bn (CAD$2.01bn) in cash payments and grant approximately $500m (CAD$671.46m) of stock warrants to purchase nearly 32 million in Penn common shares in addition to another 6.4 million shares that are triggered with certain performance achievements.
The domino effect of this is that Penn has severed ties with Barstool Sports, just six months after finalizing a $524m deal to acquire 100% of the firm.
An announcement stated: “Penn sold 100% of the Barstool Sports, Inc. common stock to David Portnoy in exchange for certain non-compete and other restrictive covenants. Penn also has the right to receive 50% of the gross proceeds received by David Portnoy in any subsequent sale or other monetization event of Barstool.”
Amidst a time of uncertainty, though, there is comfort to be found in the success of theScore in Canada, which is now a double digit market share leader in Ontario according to Penn.
The brand’s achievements in the Canadian province were laid bare earlier this year in Penn’s 2022 Q4 report, which revealed Ontario had become its top market in North America for sports betting and casino.
Jay Snowden, Penn Entertainment CEO, was effusive in his praise for theScore’s tech stack, further hailing “the quality of our products and the stickiness of theScore media ecosystem”.
He echoed those sentiments upon publication of Penn’s 2023 Q1 report.
“In Ontario, we are seeing the benefits of our proprietary technology stack, which has led to our sustained market share in one of the most competitive markets in North America,” said Snowden in May.
Commenting on his company’s latest agreement with ESPN, Snowden also reserved some words of encouragement for theScore.
He said: “Our agreement with ESPN will provide us access to the largest ecosystem in sports, with 105 million+ monthly unique digital visitors, an audience of more than 370 million across social platforms, 25 million ESPN+ subscribers, and the nation’s number one fantasy database.
“Penn’s ability to leverage the leading sports media brands in both the US and Canada with ESPN and theScore, combined with our newly launched sports betting app, will allow us to significantly expand our digital footprint and catapult ESPN Bet into a strong podium position in this space.
“We believe we can achieve substantial adjusted EBITDA in our Interactive Segment over the coming years – and this will translate to very strong free cash flow generation for the company and value creation for our shareholders.”