{"id":284804,"date":"2023-08-10T12:54:17","date_gmt":"2023-08-10T17:54:17","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=284804"},"modified":"2023-08-10T13:05:37","modified_gmt":"2023-08-10T18:05:37","slug":"penn-entertainment-criticized-by-analysts-following-espn-deal","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/penn-entertainment-criticized-by-analysts-following-espn-deal\/","title":{"rendered":"Penn Reportedly ESPN\u2019s Third Choice, Analysts Not Enthusiastic on Partnership"},"content":{"rendered":"

On Tuesday, Penn Entertainment (NASDAQ: PENN) shook the sports wagering space, unveiling a 10-year, $1.5 billion partnership with Walt Disney\u2019s (NYSE: DIS) ESPN<\/em> to use ESPN Bet branding on its online and brick-and-mortar sportsbooks.<\/p>\n

\"Penn
Penn Entertainment CEO Jay Snowden in a 2020 CNBC<\/em> interview. The company swung big in a deal with ESPN<\/em>, but analysts aren’t impressed. (Image: Reading Eagle)<\/figcaption><\/figure>\n

Penn also announced it sold Barstool Sports<\/em> back to founder David Portnoy for a mere $1 just months after completing a $550 million acquisition of the sports media property. The deal with the regional casino operator also brings to an end ESPN\u2019s<\/em> long-running hunt for a more significant entry into the sports wagering industry, though at a notably lower price point than the $3 billion it reportedly<\/a> sought two years ago as it searched for a marketing deal.<\/p>\n

Over the past two days, speculation surfaced that Penn wasn\u2019t ESPN\u2019s<\/em> first choice for such a deal. Reportedly, the casino operator wasn\u2019t even the network\u2019s second choice. That might be part of the reason why some analysts covering the gaming company aren\u2019t enthusiastic about the arrangement with \u201cthe worldwide leader in sports.\u201d<\/p>\n

\n

Supposedly, ESPN<\/em> would have preferred to strike a deal with FanDuel<\/a>, the largest online sportsbook operator in the US, or DraftKings (NASDAQ: DKNG), a company with which ESPN <\/em>has had a long-running working relationship. The rumor mill indicates neither company wanted to fork over the $200 million annually in cash and stock the sports media entity desired.<\/p>\n<\/div>\n

While the partnership with ESPN<\/em> can be scrapped after year three if certain metrics aren\u2019t met, Penn is willing to devote $150 million a year to the endeavor while providing ESPN<\/em> with rights to eventually own almost a quarter of its equity.<\/p>\n

Analysts Not Impressed with Penn \u2018Hail Mary\u2019<\/h2>\n

Initial reaction to news of the accord sent shares of Penn rallying while weighing on DraftKings<\/a>, but the casino operator endured multiple downgrades and price target cuts on Thursday.<\/p>\n

In a note to clients titled \u201cWhen You Are Losing The Game, Sometimes You Need A Hail Mary,\u201d Craig-Hallum analyst Ryan Sigdahl chided Penn for extracting no value for shareholders in the sale of Barstool Sports <\/em>though the media entity was worth an estimated $660 million as of February.<\/p>\n

It is hard to defend this sale process as maximizing the asset’s value for shareholders,\u201d wrote the analyst who downgraded Penn to \u201chold\u201d from \u201cbuy\u201d while slashing his price target on the stock to $30 from $56.<\/p><\/blockquote>\n

Sigdahl added that while ESPN Bet could have \u201csignificant upside,\u201d previous examples of media intersecting with sports betting have delivered more failures than successes. Those include Penn\/Barstool, FoxBet, MaximBet, Bally\u2019s and Sinclair\u2019s regional sports networks, Sports Illustrated<\/em> and 888, and Pointsbet and NBC<\/em>.<\/p>\n

Penn\/ESPN Deal Could Be Winner, But\u2026<\/h2>\n

On the company\u2019s second-quarter earnings conference call Wednesday, Penn CEO Jay Snowden told analysts that the goal is to grab a 20% share of the US sports betting market by 2027 by leveraging the ESPN Bet brand<\/a>.<\/p>\n

It\u2019s an admirable objective when considering FanDuel and DraftKings control 75% of the market while Penn has struggled to gain a double-digit share in any of the states in which it offers sports betting. As such, analysts remain cautious on the Penn\/ESPN <\/em>\u00a0accord.<\/p>\n

PENN\u2019s upside from ESPN Bet could be material, though we see sizable execution risks that may not resolve soon \u2014 while land-based trends just look stable. With even mgmt admitting they\u2019re a show-me story, we advise waiting before adding to positions,\u201d wrote Truist analyst Barry Jonas in a report.<\/p><\/blockquote>\n

Jonas lowered his rating on the gaming stock to \u201chold\u201d from \u201cbuy\u201d while paring his price target to $30 from $33.<\/p>\n","protected":false},"excerpt":{"rendered":"

On Tuesday, Penn Entertainment (NASDAQ: PENN) shook the sports wagering space, unveiling a 10-year, $1.5 billion partnership with Walt Disney\u2019s (NYSE: DIS) ESPN to use ESPN Bet branding on its online and brick-and-mortar sportsbooks. Penn also announced it sold Barstool Sports back to founder David Portnoy for a mere $1 just months after completing a […]<\/p>\n","protected":false},"author":46,"featured_media":163420,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,33810,1074],"tags":[81903,81898,80968],"acf":[],"yoast_head":"\nPenn Entertainment Criticized By Analysts Following ESPN Deal<\/title>\n<meta name=\"description\" content=\"Analysts not impressed by Penn\/ESPN deal nor the lack of value received by selling Barstool Sports.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/penn-entertainment-criticized-by-analysts-following-espn-deal\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Penn Entertainment Criticized By Analysts Following ESPN Deal\" \/>\n<meta property=\"og:description\" content=\"Analysts not impressed by Penn\/ESPN deal nor the lack of value received by selling Barstool Sports.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/penn-entertainment-criticized-by-analysts-following-espn-deal\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2023-08-10T17:54:17+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-08-10T18:05:37+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/02\/jay2.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1626\" \/>\n\t<meta property=\"og:image:height\" content=\"1220\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/penn-entertainment-criticized-by-analysts-following-espn-deal\/\",\"url\":\"https:\/\/www.casino.org\/news\/penn-entertainment-criticized-by-analysts-following-espn-deal\/\",\"name\":\"Penn Entertainment Criticized By Analysts Following ESPN Deal\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/penn-entertainment-criticized-by-analysts-following-espn-deal\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/penn-entertainment-criticized-by-analysts-following-espn-deal\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/02\/jay2.jpg\",\"datePublished\":\"2023-08-10T17:54:17+00:00\",\"dateModified\":\"2023-08-10T18:05:37+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Analysts not impressed by Penn\/ESPN deal nor the lack of value received by selling Barstool Sports.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/penn-entertainment-criticized-by-analysts-following-espn-deal\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/penn-entertainment-criticized-by-analysts-following-espn-deal\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/penn-entertainment-criticized-by-analysts-following-espn-deal\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/02\/jay2.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2021\/02\/jay2.jpg\",\"width\":1626,\"height\":1220,\"caption\":\"Penn Entertainment CEO Jay Snowden in a 2020 CNBC interview. 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