Additionally, the company revealed that it has sold all of its Barstool Sports subsidiaries to its founder David Portnoy in exchange for non-compete and other agreements. PENN will also be entitled to receive 50% of the gross proceeds from any future sale or monetization event of Barstool.
As part of the deal, Penn will hold the exclusive rights to use the ESPN Bet name in the United States for a duration of 10 years, according to a statement released by the company after the market close on Tuesday. Penn will pay ESPN $1.5 billion in cash.
In addition, ESPN will receive approximately $500 million worth of warrants to purchase around 31.8 million PENN common shares that will vest over 10 years. There is also the potential for ESPN to receive bonus warrants based on ESPN Bet’s market share performance in the U.S.
The news of this partnership between Penn Entertainment and ESPN has garnered significant attention, as it signals ESPN’s entry into the sports betting arena.
Competitor DraftKings (DKNG:US) shares fell 8.6% on the announcement.
Moreover, Penn announced second-quarter results, which were completely overshadowed by the company’s ESPN announcement.
Revenue reached $1.67 billion, meeting the average analyst estimate. Earnings per share stood at $0.48, compared to $0.15 in the previous year. Adjusted EBITDA decreased by 31% year-over-year to $330.4 million, slightly lower than the estimated $349.7 million.