Penn National bets big on Barstool’s anti-PC positioning

Penn National Barstool Sports
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Penn National’s new media partner, Barstool Sports, may have found a niche in resisting the increasingly “progressive discourse” in US sports – but is taking sides in the culture wars an astute move for America’s third largest gaming group?

 

Penn National’s stock soared with the news it had taken a 36 percent slice in niche sports media outfit, Barstools Sports.

The deal values Barstool at $450m (up from just $25m when it was acquired by Chernin four years ago) and promises to provide Penn National with a much younger, more male, and more sports-centric audience than it is used to in its brick-and-mortar casinos.

As Penn National CEO Jay Snowden put it: “The question has been asked over and over again around how do you attract younger generations — Gen X, millennials. We have the opportunity with Barstool to do that now.”

The merits of the move have been questioned by some analysts, however, largely over the provocative and divisive tone of Barstool’s editorial and overall business model – and whether that can really fit with a modern multi-state gaming brand. 

Speaking at a Dow Jones event in February, the firm’s CEO, Erika Nardini, boasted: “We’re a company that thrives on drama.” This has certainly been its story to date.

Dave Portnoy, who founded Barstool in 2003 as an outlet “by the common man, for the common man,” brought the brand to prominence in 2016 after being arrested at the NFL headquarters – for protesting the suspension of a quarterback accused of rigging a game by deflating the match balls.

Since then Barstool has built a reputation playing to anti-woke sentiment in a culturally divided America – frequently weighing in on gender issues and freedom of speech issues. Portnoy once told an ESPN reporter to “sex it up and be slutty,” losing a contract with the channel in the process. He recently settled a lawsuit with the National Labour Office after saying he would fire any employee who talked about unionisation.

“We will not bow down to the winds of PC culture whichever way they may blow,” Portnoy says. “If that makes us perceived as counter culture then so be it. I’d say we represent the silent majority.”

Whatever ones flavour, there is commercial logic to a sports media site speaking without censor. Barstool boasts a staggering 66 million unique visitors a month – mostly male, and mostly young – the prime sports betting demographic.

“In many ways, Barstool has resisted some of the more progressive discourse around sports. And I think there’s a niche for that,” said Marie Hardin, dean of Penn State’s Donald Bellisario College of Communications. “There’s a market there and they’re able to capture that.”

America’s third largest gaming group cannot afford to be so precise. Sports fans, and bettors, may be overwhelmingly “masculine” – but at the legislative and licensing level, gambling is quintessentially a liberal endeavour.

“Barstool is so popular because it is thoroughly irreverent and ‘jock’ driven – in a way that deliberately skirts what more liberal types might consider good taste,” said Paul Leyland, analyst at Regulus Partners. “As an independent or PE backed brand, this is fair enough; the US is a free country including the freedom offend and to be offended (and sue).” 

However, by taking a meaningful stake in Barstool, Penn National will struggle to distance themselves from the inevitable (indeed, intended) controversies. “If they water it down or try to insist on guidelines to protect their own more serious, regulated brand image (with regulators and politicians as well as broader customer groups such as women) then they risk killing the goose that appears to be laying golden betting eggs,” Leyland added. 

“If they don’t, they potentially put that brand at risk: with politicians, regulators and material cohorts of customers. That looks pretty double edged to us.”

 

HIGH WATER MARK

 

Portony’s refusal to “bow down to the winds of PC culture, whichever way they may blow” could come back to bite Barstool. A closer look at the blog’s analytics shows a marked decline in page views per session (from 16 a year ago to four in January) – a vital metric for Penn’s ability to cross-sell readers. Moreover combined mobile and desktop viewership has fallen from a high of 11 million per month a year ago, to 8 million today.

“While data like this should be taken with a grain of salt (because web traffic is often fickle), it goes to show that Barstool Sports may not deliver on investor’s current expectations,” said  research analyst, Harrison Schwartz

If Barstool is riding a cultural wave, that wave is destined to crash and roll back. At which point there may be little to salvage from the wreck. 

“As the industry matures, it is likely that competition will grow,” Schwartz added. “Additionally, websites are not known for having strong moats and Barstool’s moat may already be breaking.”


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