Posted on: March 16, 2023, 02:32h.
Final up to date on: March 17, 2023, 01:19h.
Barstool Sports activities founder David Portnoy isn’t any stranger to controversy. Some may say he even embraces and enjoys it. Thankfully for traders, at the very least one analyst believes that’s not problematic for Penn Leisure (NASDAQ: PENN).
Final month, the regional on line casino operator accomplished its acquisition of Barstool, paying $388 million for 64% of the sports activities and leisure media outlet it didn’t beforehand personal. That transaction occurred virtually precisely three years after it paid $163 million in money and inventory to buy a 36% curiosity in Portnoy’s firm.
Portnoy’s affiliation with Penn and the involvement of different well-known Barstool personalities has lately been a thorny problem for regulators in some states, together with Massachusetts and New York, the place Penn sought sports activities betting permits. At problem was the employment standing of Portnoy and others who dispense sports activities wagering recommendation and are believed to put their bets by way of Penn-owned Barstool Sportsbook.
Administration famous that Dave’s and [Dan “Big Cat” Katz’s] employment contracts are finished by way of a loan-out firm, which removes their necessities to carry a gaming license,” wrote J.P. Morgan analyst Joseph Greff.
Greff issued these remarks following a gathering with Penn CFO Felicia Hendrix on the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Administration Entry Discussion board, held in Las Vegas earlier this week.
Portnoy Has Penchant for Ruffling Feathers
Portnoy has a documented historical past of irking folks of practically all political persuasions and walks of life.
For instance, he interviewed then-President Donald Trump on the White Home in July 2020. Mix that with frequent appearances on Fox Information, and there was hypothesis his politics leaned proper.
In 5 months final yr, Portnoy praised Elon Musk’s buy of Twitter, bashed the Supreme Courtroom’s determination to overturn Roe v. Wade, and publicly toyed with the concept of leaving New York to determine residency in Florida, which is much extra tax-friendly.
None of that features allegations of his sexual proclivities, which landed him in scorching water within the court docket of public opinion following a collection of articles revealed by Insider detailing raunchy parts of a few of his encounters. He later sued Insider, and, it’s essential to notice, he didn’t face prison costs.
Of their chat, Greff and Hendrix didn’t unpack the aforementioned controversies. However the Penn chief monetary officer instructed the analyst that Portnoy and Katz are primarily consultants, they usually, together with Barstool CEO Erica Nardini, have employment contracts with Penn. The trio stays traders in each Barstool and the on line casino operator. Portnoy’s contract expires in 2025, whereas the Katz and Nardini pacts expire the next yr.
Penn Benefiting from Barstool Affiliation
Whereas there’s already hypothesis relating to Barstool’s future beneath the Penn umbrella, the extra essential near-term problem for the operator is proving to traders that there are advantages to proudly owning Portnoy’s firm. It seems that’s taking place on the promoting and commerce fronts.
“The previous is benefiting from exhibits, social, personalities, and the latter is benefiting from its loyal following,” famous Greff.
The analyst forecasts that Barstool Sportsbook will ramp up advertising spending forward of the 2023 soccer season to realize extra market share, however received’t get carried away with these expenditures.
“This elevated advertising spend is not going to be within the type of TV promoting, however extra so by way of digital and social channels,” concluded Greff.