- Casino operator Penn National Gaming agreed to buy a minority stake in Barstool Sports for $163 million, a deal that now values the popular sports and pop culture blog at $450 million.
- Since sports gambling was legalized in 2018, media and gambling companies have been rushing to enter the market.
- By combining their forces, media companies get access to revenue streams outside of advertising, while gambling companies get access to new consumers and a broader reach.
- While some believe this model will spread, others note that Barstool has a unique following and ability to monetize its audience that sets it apart from others.
Penn National Buys Barstool Stake
Casino operator Penn National Gaming announced Wednesday that it bought a $163 Million stake in sports pop culture blog Barstool Sports, valuing the media company at $450 million.
In a press release, Penn National said that they had acquired a 36% stake in Barstool, adding that in three years the casino operator will “increase its ownership to approximately 50% with an incremental investment of approximately $62 million.”
Penn National will now be the “exclusive gaming partner” of Barstool for “up to 40 years,” according to the press release.
Penn National will also have “the sole right to utilize the Barstool Sports brand for all of the Company’s online and retail sports betting and iCasino products.”
Barstool founder Dave Portnoy separately announced the deal in a video on Twitter, where he talked about how he started Barstool as a “gambling rag” 17 years ago, and how the company has a deep history connected to gambling.
“We just needed a company with a shared vision,” he said. “That vision is Penn National Gaming. They have one of the biggest infrastructures in the country for gambling. They have sports tracks, they have casinos, they’re all over the country.”
“They have the infrastructure, we have this rabid audience, this fan base craving it,” Portnoy added.
“Together, we’re going to create an omnipresent approach to gambling, on-premise, off-premise: Barstool casinos, bars, pizza places, you name it, we’re going to build it. All fueled by the Barstool media engine.”
Win-Win for Media and Gambling Companies
The deal is a significant step for Barstool and Penn National, but it is also representative of a broader change in the gambling industry.
In 2018, the Supreme Court ruled that sports gambling was legal in the U.S., giving individual states the power to decide if they wanted to legalize.
According to the Wall Street Journal, 20 states and DC have legalized sports gambling. While some of those states only allow it to take place in casinos, others do permit online betting.
Since the decision, there has been a rush by both the gambling industry and media companies to capitalize on that new market, specifically when it comes to online gambling.
Those efforts have proven to be incredibly lucrative. According to the American Gaming Association, gamblers have placed $15.8 billion in sports bets and generated $1.1 billion in revenue for sportsbooks since the Supreme Court ruling.
Online betting has been the most profitable in states where it is allowed like New Jersey, where nearly 84% of the $4.58 billion the state brought in from sports wagers last year came from online bets, according to the Journal.
The thing that is so unique about this market is that media and gambling companies do not have to be competitors. When companies like Penn National and Barstool combine their resources, both benefit.
Working jointly is good for companies like Barstool because digital-media companies primarily depend on advertising revenue. But combing forces with a gambling industry giant allows them to diversify their revenue streams.
It is also beneficial for big gambling operations like Penn National because media companies give them access to their large, young audience.
For example, Barstool sports has 66 million monthly unique visitors. By pairing with a popular company like Barstool, Penn National— which is very lucrative but not very well known— can grow its profile nationally while simultaneously cutting down on costs.
This saves gambling companies money because attracting new customers through normal means like advertising Facebook and Google can be expensive.
According to filings from the sports betting company DraftKings, the company paid an average of $406 for each new customer acquired in New Jersey in the first half of 2019.
Future of Sports Gambling
While some predict that this model will be used for other media and gambling company pair-ups in the future, others are not so sure.
In an article for Forbes, writer Daniel Marcus argued that from the get-go, Barstool, “has been willing to leverage its’ rabid and loyal fan base into other revenue opportunities outside of the traditional advertising model.”
Marcus notes that Portnoy has always mobilized Barstool’s fans in a unique way, like through selling merchandise and convincing fans to actually buy that merchandise in a way other companies have not.
He also said that while other media companies have leaned into premium subscription models, Barstool has always supported growth without doing so.
“For those assuming this deal will trigger some sort of domino effect that will benefit the other sports media entities that are currently in play, I wouldn’t count on it, as few of them have proven they are able to effectively monetize their audiences beyond advertising,” he wrote.
While Portnoy has been effective at reaching his fans, he has also been a controversial figure. In August, he came under fire after he threatened to fire Barstool employees who talked to union activists in a series of tweets.
He was later forced to remove the tweets in a settlement with the National Labor Relations Board.
See what others are saying: (The Wall Street Journal) (Forbes) (Business Insider)
Hundreds of Businesses and Celebrities Join Growing Fight Against Restrictive Voting Efforts
- In a letter published Wednesday, hundreds of major companies, law firms, corporate leaders, and celebrities banded together “to oppose any discriminatory legislation or measures that restrict or prevent any eligible voter from having an equal and fair opportunity to cast a ballot.”
- The list of signatories includes companies like Facebook, Twitter, and Amazon; celebrities such as Demi Lovato, Katy Perry, and Samuel L. Jackson; and billionaire investor Warren Buffet, among others.
- Though the letter does not address any specific voting legislation, it was organized by Kenneth Chenault and Kenneth Fraizer, who also organized a letter late last month in which more than 70 Black executives urged companies to take a stand against GOP-led restrictive voting proposals being floated in dozens of states.
Hundreds of Companies Oppose Restrictive Voting
The number of companies speaking out against a series of GOP-led voting proposals is growing, despite calls from notable Republicans for boycotts against companies doing so.
In a letter published Wednesday morning, hundreds of major companies, law firms, corporate leaders, and celebrities united behind what journalist David Gelles described as “the biggest show of solidarity to date.”
The letter itself doesn’t specifically call out Republican voting efforts. Instead, the statement reads, “We stand for democracy,” with the signatories also vowing “to oppose any discriminatory legislation or measures that restrict or prevent any eligible voter from having an equal and fair opportunity to cast a ballot.”
Still, the letter comes in the middle of an ongoing battle between corporate America and the GOP, which is backing dozens of state proposals that many have condemned as restrictive and discriminatory against poorer individuals and people of color.
The slew of companies that signed Wednesday’s letter includes Target, Netflix, Bank of America, Facebook, Twitter, Microsoft, Starbucks, Amazon, Mastercard, American Airlines, United Airlines, and others.
The letter also boasts star-power from celebrities like Demi Lovato, Katy Perry, Gwyneth Paltrow, George Clooney, and Samuel L. Jackson, among others. Notably, billionaire investor Warren Buffet also added his name to this list.
Companies Debate Taking Action Against States That Pass Restrictive Voting Measures
Wednesday’s letter was organized by Kenneth Chenault and Kenneth Frazier, who late last month also organized a similar letter from a group of more than 70 Black executives. That message, which urged companies to speak out against the GOP-led proposals, has largely been credited with helping to catalyze the fight between the GOP and corporate America.
This past weekend, the two also partially led a Zoom call that featured over 120 CEOs and business leaders.
During that call, participating executives considered a number of possible steps, including pulling donations to politicians who support restrictive voting measures, refusing to move business or jobs to states that pass such laws, and even relocating events; however, no hard plans were actually set into motion.
Still, some groups have already gone forward with various forms of protests against such laws. Last week, Major League Baseball announced it was moving its All-Star game out of Georgia, which recently passed a series of restrictive voting measures. On Monday, actor Will Smith and director Antoine Fuqua also announced that they no longer plan to film their runaway slave thriller “Emancipation” in the state.
Some Companies Didn’t Speak Out in Wednesday’s Letter
Both federal and state Republicans have been very vocal as businesses have continued to lob criticism at their proposed laws.
Last week, Senate Minority Leader Mitch McConnell warned businesses to “stay out of politics,” though he later walked back that statement.
Two weeks ago, the Georgia state House voted to strip Delta Airlines of its tax breaks after the company spoke out against the state’s new voting laws. In fact, that reprimand might explain why it and other Georgia-based companies like Coca-Cola were absent from Wednesday’s letter.
According to The New York Times, people involved in the process of organizing this letter said those companies feared more blowback and also did not feel the need to speak up again.
Connected to that, The Times reported that some companies originally tried to have the line of “oppos[ing] any discriminatory legislation” removed, but they later signed anyway after Chenault and Frazier insisted the line was crucial.
See what others are saying: (The New York Times) (The Washington Post) (The Hollywood Reporter)
Nike To Clean and Resell Used Sneakers at a Discounted Price
- At least 15 Nike retail locations in the U.S. are participating in a new program the company calls “Nike Refurbish,” which is aimed at reducing waste.
- As part of it, Nike will restore shoes with manufacturing flaws, as well as donated or returned shoes, and resell them at a discounted price.
- Shoes at the end of their wear will be recycled into Nike Grind materials that are used to construct running tracks, gym floors, playgrounds, other Nike products, and more.
Nike announced a new program on Monday called “Nike Refurbish” that will help boost sustainability and reduce waste.
As part of the program, the brand will take donated and returned shoes that are like new or gently used, as well as shoes with cosmetic manufacturing flaws, then clean and restore them to resell at a discounted price. Returned shoes must have been brought back within Nike’s 60-day return period in order for them to be resold.
All the refurbished shoes will have labeling on the box with information about their condition grade. Plus, they are also covered under Nike’s 60-day return policy.
Nike’s Recycling Efforts
Nike didn’t say what it previously did with returned sneakers in its announcement, but the new plan is part of its wider attempts to recycle materials.
On its website, it markets the initiative as a way for customers to “help keep shoes out of landfills.” and join Nike’s efforts towards, “Zero carbon and zero waste to help protect the future of sport.”
Shoes that are truly at the end of their wear will be recycled into Nike Grind materials that are then used for tons of other projects, including running tracks, gym floors, playgrounds, outdoor courts, as well as other Nike apparel and footwear.
So far, 15 Nike retail locations across the U.S. are confirmed to be participating in this model, but there are plans in place to expand this list over the course of 2021.
See what others are saying: (FOX Business) (Footwear News) (Miami Herald)
Uber Sees Record Ride Demand But Doesn’t Have Enough Drivers Available
- Demand for Ubers outpaced driver availability in March, according to a Monday statement from Uber.
- On top of seeing its best-performing month since the beginning of pandemic closures, the company also received more bookings last month than any other month in its entire history.
- In an attempt to attract more drivers, Uber announced a $250 million, one-time stimulus payment last week to “boost” driver earnings.
- While Uber said it believes it will turn a profit for 2021, the company could be set back more than $500 million because of a U.K. Supreme Court ruling that gives the country’s drivers minimum wage, holiday pay, and pension.
Uber Posts Record-Setting Growth
Uber announced Monday that its ride requests for the month of March were the highest it has ever recorded in its 12-year history.
According to a filing with the SEC, last month, the company crossed “a $30 billion annualized Gross Bookings run-rate.” Alongside that, average daily Gross Bookings grew 9% from the previous month.
Notably, this also marked the company’s best month since March of last year, when pandemic closures began in the U.S.
On top of that, Uber said its delivery business crossed “a $52 billion annualized Gross Bookings run-rate in March, growing more than 150% year-over-year.”
In fact, that demand over the past month was so high that Uber didn’t have enough drivers to meet it.
“As vaccination rates increase in the United States, we are observing that consumer demand for Mobility is recovering faster than driver availability, and consumer demand for Delivery continues to exceed courier availability,” the company said.
$250 Million Driver Stimulus
Monday’s filing is in line with another announcement from Uber, which said last week that it is opening up a $250 million driver stimulus to “boost” earnings for drivers.
“In 2021, there are more riders requesting trips than there are drivers available to give them—making it a great time to be a driver,” the company said at the time. “We want drivers to take advantage of higher earnings now because this is likely a temporary situation.”
“As the recovery continues, we expect more drivers will be hitting the road, which means that over time earnings will come back to pre-Covid levels.”
Can Uber Become Profitable?
In February, Uber reported $6.8 billion in losses for 2020, and for years, many have questioned if its business model is even profitable at all; however, in this latest filing, Uber said it believes it’ll become profitable by the end of 2021.
That said, last month, the Supreme Court of the United Kingdom handed drivers a major win by ruling that they need to be reclassified as “workers,” guaranteeing them minimum wage, holiday pay, and pension.
While big news, the U.K. classifies “workers” and “employees” separately. As a result, U.K. drivers still aren’t granted full benefits.
The decision will also likely be a setback for Uber, as Bank of America has estimated that it could cost the company more than $500 million.
Uber’s Vaccine Access Fund
In other Uber news, the company — along with PayPal and Walgreens — has launched a “Vaccine Access Fund.”
Through that fund, customers can donate money that will be used to help people who normally lack transportation get to their vaccination appointment.
Notably, all three companies have said they’ll donate a joint $11 million.
That’s on top of the $5 million PayPal previously donated, as well as the 10 million free and discounted rides Uber promised to give in December.
Uber users are able to donate in-app, and PayPal has launched a donation page on its website.