Barstool Penn Bugs 220

For what’s likely the first time, a U.S. company has pointed to a podcast as part of the justification for why it’s committing to spend nearly a quarter billion dollars. Jay Snowden, President and CEO of the gaming company Penn National, said it’s podcasts like “Pardon My Take” that are behind its decision to buy into Barstool Sports.

“If you look at their fans, they’re concentrated in the biggest cities and that’s where a lot of our properties are,” Snowden explained. On a conference call with analysts Wednesday, he pointed out that “Pardon My Take” host Dan Katz is based in Chicago where Penn National operates three casinos. “Our collective focus is on introducing and driving a significant number of Barstool audience into Penn retail casinos and online products,” Snowden said.

It’s a deal that had its genesis last summer when the operator of 41 properties in 19 states was meeting with a wide variety of media companies. In a sale that values Barstool Sports at $450 million, Penn National will pay $163 million for an initial stake of 36%. Then in three years it will pay another $62 million and see its interest rise to 50%. The deal was to have been announced Monday, but executives decided to delay their news by 48 hours after the death of NBA great Kobe Bryant filled the headlines.

The alliance with Penn National will mean Barstool Sports will no longer accept advertising dollars from its rivals, like Fan Duel or Points Bet. But Snowden said he doesn’t expect that to have much of an impact on Barstool’s overall revenue. It was in the black in 2019 as it reported nearly $100 million in revenue. Figures released Wednesday show 32% of that came from audio advertising – putting Barstool’s audio revenue at roughly $30 million.

“We didn’t really have to sell or make a deal,” said Dave Portnoy, founder of Barstool Sports. “We were doing very well, but this is the perfect opportunity for us.”

Portnoy also announced the deal to fans – which the company calls “Stoolies” – in his characteristic bombastic style in a Twitter video that not only explained why he thought it was the right time to sell, but also plugged Penn National’s stock – and also included a disclaimer.

Barstool Sports CEO Erika Nardini will remain at the helm. Both she and Portnoy will retain their ownership stakes, and both have signed new long-term contracts. As for the focus of the content Barstool produces, she said that’s not changing.

“We will look to continue to make entertainment content, lifestyle content, sports content, comedy content, and then we will integrate Penn National whenever and wherever possible to drive conversion to on-property sports betting,” said Nardini, who will retain control over the content the company produces.

Barstool Sports has become one of the biggest sports podcasters during the past few years. According to Podtrac it had 8.2 million unique monthly podcast listeners in the U.S. in December. That put it ahead of ESPN, which had 6.9 million unique listeners for its roster of sports podcasts, which is nearly twice as large.

Figures released by the company show Barstool Sports reaches 9.2 million unique listeners each month on its collection of 38 podcasts. That’s more than twice the four million it reaches on its satellite radio programming. "What we understand how to do is to create content that breaks through,” said Nardini, who described Barstool as a “sports lifestyle and comedy” brand.

The focus for Penn National is largely driven by its effort to reach a younger audience beyond the 50-somethings that typically walk into a casino.

“Sports betting is a great nexus for us to start to attract and convert younger sports bettors,” Snowden said. Barstool reaches 48% of men and 44% of women in the Gen X and Millennial, demographics according to the company.

Nardini said being aligned with a casino operator will also be beneficial for Barstool shows and personalities. “Ultimately, it gives us a place to bring our audiences,” she said. “We tour about 30 weeks a year. We have our personalities, our brands, our people on the ground across the country and now we will do it in places when Penn has a physical presence.”