Unparalleled Reach Meets Operational Experience: the ESPN and Penn Entertainment Partnership Is One to Bet On
ESPN and PENN Entertainment have unveiled a groundbreaking deal to launch “ESPN BET,” a branded sportsbook set to debut this fall in 16 states. This ambitious venture sees PENN committing significant financial investment in ESPN over a decade, with the latter gaining share options. Amidst this, PENN’s stock surged by 14% post-announcement. In a surprising twist, PENN also sold Barstool Sports back to its founder, Dave Portnoy, after initially buying it to boost its online sportsbook. Portnoy candidly expressed Barstool’s challenges in the regulated gambling world, hinting at a mismatch between the brand’s edgy content and the industry’s stringent norms.
How will this ESPN and PENN Entertainment partnership shape or reshape the sportsbook landscape? And what made this union such a wise bet for both companies? Suite Talk’s Patrick Rishe couldn’t wait to break down all the particulars.
“Hey everybody, welcome to Suite Talk, and the big news in the sports industry is announcement of the ESPN and Penn Entertainment partnership. ESPN launches a sportsbook, ESPN BET, in partnership with Penn Entertainment. And the numbers behind this are really quite staggering when we’re talking about ESPN will receive $1.5 billion over the next ten years from Penn, also grants of $500 billion in shares over the course of the next ten years. This is certainly a tremendous deal for both parties and here’s why.
Obviously, Penn benefits from ESPN’s unparalleled reach. ESPN benefits from Penn’s operational experience in the sportsbook space. So, a wonderful partnership between the two entities. Penn is among the few gaming companies profitable in last year’s fourth quarter. The fourth quarter is a tough time of year for many of these gaming companies to be profitable because they’re spending so much money on marketing and promotions to get people to bet during the football season, which is where the most action and handle is.
So, I think ESPN saw the organizational efficiencies that Penn brought to the table. And again, as we all know, ESPN truly does have unparalleled reach in the sports consumer space. This also helps ESPN shore up, obviously, with fewer people watching traditional cable networks and with the streaming business at ESPN losing some money. This infusion of cash, again, helps replace some of those resources that had been going in a different direction. So, a great partnership for both sides.
Will this mean that ESPN Bet will outperform DraftKings and FanDuel in the future? That will be fascinating because both DraftKings and FanDuel ultimately have had first-mover advantage for quite some time. But will the audience space and the reach that ESPN affords Penn, could that help them overcome the head start that FanDuel and DraftKings have? I don’t know if they’ll catch them in terms of market share, but they’ll certainly be able to have more share than they had when partnering in the past with Barstool. For Suite TALK, the business behind sports, I’m Patrick Rishe.”
Article by James Kent