Barstool Sports got funding at a $450 million valuation, and all I could think of was UFC.
To the Worldwide Reader, the story of Barstool Sports warms the heart. They started small. They read the market. They hustled. They created a product people love. They have been richly rewarded.
(To the haters it’s a different story, of course. To them Barstool cynically plays to the animal instincts of White Male Rage, and the Penn National funding is proof only of the fact that oppressors will always protect fellow oppressors, until the revolution happens.)
I have no insider knowledge of Barstool’s business. I saw the slide deck. It said revenue is booming. Sixty-six million uniques visit the site each month. They have a blog, an app, live & on-demand video, merch sales and podcasts.
Barstool has thirty-three podcasts, to be exact, and several of them do quite well. One of them does beyond well. It does Conor McGregor-compared-to-every-other-fighter well. It is ‘Pardon My Take’.
PMT, as it’s known to fans, is nothing short of a sports media phenomenon. Every week the list of most-downloaded sports podcasts comes out. Every week ESPN shows and Bill Simmons dot the top ten. Every week PMT, which didn’t even exist four years ago, tops them all.
Barstool projects $100 million in gross revenue this year. They are in a growth period, so profits are not of the utmost importance. They want more clicks, views and downloads.
Is it all worth a $450 million valuation? (That valuation is because Penn National, a casino owner, bought 36% of the company for $162 million.) Again, I don’t know the details of their business.
What I do know is that the deal reminds of Endeavor’s purchase of UFC, three and a half years ago. UFC was a solid, diversified company, but what made someone acquiesce to the Fertitta’s eye-popping $4 billion asking price was growth fueled by Conor McGregor and Ronda Rousey. Every astute observer knew that if either or both of those two left the company, business would decline. They were stars at a level far beyond anyone else on the UFC roster, just as Big Cat and PFT Commenter — hosts of PMT — are the 800 pound gorillas of Barstool.
Barstool founder Dave Portnoy made it a point to reassure everyone that “Dave and Eric” (given names of Big Cat and PFT Commenter, respectively) are going to be at Barstool for a long time. The media game is also much different than the fight game; we all know athletes’ careers are brief, while media careers often last decades.
Even with the magic of PMT and the potential of sportsbook partnerships, the Reader reads Penn National’s investment as a rash move. Surely they were fearful that the established sportsbooks and daily fantasy sites would siphon off the gaming dollars of young, fun-seeking men. Penn surely viewed Barstool as a portal into that world. Time will tell if Stoolies’ loyalty extends to point spreads and parlays.