Penn Entertainment Completes Barstool Sale, Forms Alliance with ESPN

Penn Entertainment recently announced that it has repurchased 100% of Barstool's share capital from Portnoy, with the transaction involving certain non-compete agreements. A nominal cash consideration of $1 was also part of the deal. This move followed Penn's confirmation of the divestment of Barstool, its sports betting brand since 2020, in August, leading to a significant impact on its Q3 financial results.

The divesture of Barstool resulted in a substantial loss of $923.2 million for the quarter. Despite nearly consistent year-on-year revenue, the company faced a significant quarterly loss. The sale, however, aligns with Penn's long-term plans, as it entered into a lucrative $1.50 billion deal with Disney-owned ESPN.

With the acquisition, Penn's existing Barstool sportsbooks will be relaunched under the new ESPN Bet brand on 14th November. This move marks the end of ESPN's partnerships with DraftKings and Caesars, as Penn becomes ESPN's exclusive sportsbook partner.

The company's Q3 revenue amounted to $1.62 billion, with a marginal drop of 0.4%. While gaming revenue decreased by 5.0% to $1.25 billion, food, beverage, and hotel revenue experienced a significant increase of 19.5% to $367.3 million. Penn's various business segments, including Northwest, South, Midwest, and West, contributed to its overall revenue.

Operating costs soared by 61.7%, reaching $2.41 billion, primarily due to the Barstool divesture. Other significant expenses included gaming costs and general administrative expenses. Despite tax benefits and adjustments, Penn faced a significant pre-tax loss of $886.8 million, leading to a net loss of $724.8 million for the quarter.

In the nine months ending September, Penn recorded revenue close to $5.00 billion, indicating a 3.2% increase from the same period in 2022. Despite financial setbacks, the company remains optimistic, with CEO Jay Snowden emphasizing the stability of their property-level performance and the anticipated groundbreaking of four growth projects in the coming months, which are expected to contribute to their long-term shareholder value.