ESPN agreed to a $2 billion deal to allow its brand to be used in Penn Entertainment’s online sportsbook, a strategic turn for both companies as they try to tap into the sports-betting sector’s growth.
Penn Entertainment, whose shares surged more than 20% after hours on news of the pact, said its Barstool Sportsbook app would be rebranded as ESPN Bet this fall as part of the 10-year agreement. In addition to $1.5 billion in cash over the term of the agreement, ESPN will receive warrants worth about $500 million to purchase shares in Penn.
The move marks a sharp pivot for Penn, which has struggled to secure market share in the competitive U.S. sports-gambling industry. The company also said it has sold its ownership of Barstool Sports to Barstool founder David Portnoy in exchange for 50% of the proceeds on any future sale of the media brand. Penn acquired Barstool through a pair of transactions valued at a combined $550 million.
Read the full story on The Wall Street Journal here.