Is Dave Portnoy desperate for cash as he takes back control of Barstool Sports? Take a look at the listing for his spread in the Hamptons.
That’s the skeptical view from some on Wall Street, who note that at the end of July, Portnoy – just two weeks before he agreed to buy Barstool back from gambling giant Penn National for just $1 – slashed the price of the chic mansion on Old Montauk Highway to $10.5 million.
That’s a painful markdown from the $13 million Portnoy was asking when he initially listed the 5-bedroom, 5,700-square-foot spread with ocean views last September.
On top of that, just last week he grabbed $30 million by selling 1.25 million Penn National shares he had acquired just six months ago as part of Penn’s 2020 Barstool purchase – another sign he could be looking to raise cash in a hurry. He has 226,800 shares remaining, according to securities filings.
Since news of the $1 deal broke last week, some outlets have cast it as a victory for Portnoy. In February, Penn National had paid $388 million for the 64% of Barstool it didn’t already own. Penn had shelled out $163 million for an initial 36% stake three years earlier.
Portnoy netted around $100 million on the two deals put together, Portnoy said on Logan Paul’s podcast in March.
During the last six months, however, Barstool has lost $16 million, securities filings show. Insiders said the sports site looks ripe for cost cuts including layoffs – sentiment that Portnoy hasn’t done much to quell.
“I got the dumbest group of morons who ever lived … No wonder Penn gave it back to me for pennies on the dollar,” Portnoy wrote last week in an article headlined “How F***ing Brain Dead Are All My Employees.”
Neither Portnoy nor Barstool responded to repeated requests for further comment.
If making Barstool profitable looks like an uphill climb, the payoff for Portnoy also looks iffy. As part of the deal, Portnoy will get Barstool’s media assets that include a website and a stable of podcasts. In return, however, he signed a “certain non-compete and other restrictive covenants,” filings show.
“Penn got ‘schmuck insurance’ against Portnoy competing with them moving forward,” one banker told On The Money. “They gave him the Barstool name back and he can’t say anything disparaging about them.”
Maybe worse, Portnoy also committed to give 50% the proceeds from any future Barstool sale to Penn. Exact terms haven’t been disclosed, but bankers say Penn could argue it deserves 50% of anything Portnoy sells in sports media going forward.
“Portnoy sold half his name for the rest of his life,” one industry source told On The Money. “They could argue any other business he sells, they deserve to get half of it in perpetuity.”
The worst of it may be that Portnoy won’t get to participate in a nearly $100 billion sports betting industry. Penn shares jumped 25% on news that Penn was getting rid of Barstool and upgrading its dance partner to ESPN.
Meanwhile, Penn held onto Sportsbook – the one valuable asset from the Barstool acquisition – and turned it into a multi-billion dollar streaming deal with ESPN. Penn will pay $1.5 billion in licensing over the next decade and in turn ESPN will promote Penn’s betting platform.
That’s after Penn was passed over for a sports betting license in New York nearly two years ago. Last year, the company was given a temporary sports betting license in Massachusetts pending the outcome of an investigation into Portnoy’s “degenerate” gambling.
In a video posted to X last week, Portnoy’s analysis was admirably candid.
“We got denied [gambling] licenses because of me, you name it,” Portnoy said. “So the regulated industry [is] probably not the best place for Barstool Sports and the type of content we make.”
In the meantime, Portnoy may be banking on other ways to raise money. In addition to the Montauk mansion, a source said Portnoy also owns the lot next door. He’s holding it for now, according to the source.
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