ESPN’s deal with Penn Entertainment (PENN) -) to rebrand Barstool Sportsbook into ESPN Bet has been the talk of the sports business world for the last few days.
Disney (DIS) -) is facing a lot of headwinds in this economic environment, and the company has begun thinking creatively about how it can utilize its sports network — including looking for strategic partnerships to help boost its distribution and content.
David Samson, former Miami Marlins general manager, explained that Penn Entertainment, which only had about 3% market share with the Barstool Sportsbook app, was likely looking for something better in the sports betting world.
It may have been struggling to get more traction and licenses given Portnoy’s public image — something the Barstool Sportsbook founder admitted during his announcement of the deal — and sought ESPN’s brand name as its best way to battle the big dogs like FanDuel and DraftKings (DKNG) -).
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And Samson said the deal for ESPN President Jimmy Pitaro is a “dream,” considering Penn is paying them $150 million per year for 10 years together and adding the opportunity to buy hundreds of millions worth in Penn shares as well.
“The president of ESPN gets to bring cash on the books and he gets to say to his customers, ‘You watch ESPN, we talk about the games, now you can bet on the games while we are talking about the games,'” Samson said.
And what Disney CEO Bob Iger said during the company’s Q3 earnings call on Wednesday also supported Samson’s point.
“We've been in discussion with a number of entities for a fairly long period of time.... Penn stepped up in an aggressive way and made an offer to us better than any of the competitors by far,” Iger said.
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But outside of ESPN and Penn, Samson called the deal a “huge win” for Barstool Sports owner Dave Portnoy, who reclaimed full control of his company after originally selling it to Penn.
“The ultimate pirate ship guy went corporate and realized he was miserable and found a way out,” Samson said. “All he had to give up was future sales.”
Samson was referencing the point in the deal that Penn would receive 50% should Portnoy decide to sell Barstool Sports again in the future. Portnoy has already said that there’s no way he will sell the company.
But Samson said the details are unclear as to whether the 50% sale rule with Penn will continue even after Portnoy’s death, and that will matter for the controversial owner’s future estate planning.
