Penn Entertainment incurred a significant net loss of $724.8 million in the third quarter due to the decision to sell the Barstool brand back to its founder, Dave Portnoy, for just $1. The deal included a consideration of $1 and certain non-compete and other restrictive covenants. This divestiture resulted in a loss of $923.2 million for the quarter, impacting the company’s bottom line despite nearly level year-on-year revenue of $1.62 billion.
The sale of Barstool is part of Penn Entertainment’s long-term plans, with the company entering into an agreement with ESPN worth approximately $1.50 billion. This strategic alliance makes Penn ESPN’s exclusive sportsbook partner, effectively ending ESPN’s partnerships with other brands such as DraftKings and Caesars. The existing Barstool sportsbooks will be relaunched under the new ESPN Bet brand on November 14.
In addition to the Barstool divestiture, Penn incurred higher operating costs, which increased by 61.7% year-on-year to $2.41 billion. This led to a pre-tax loss of $886.8 million, far wider than the $58.8 million loss from the previous year.
Despite the significant losses, Penn remained in the black in terms of adjusted EBITDAR, with a figure of $445.1 million, down 5.7% from the previous year. The company’s revenue for the nine months ending September 30 was $4.97 billion, a 3.2% increase from the previous year.
Penn’s CEO, Jay Snowden, commented on the performance, stating that the company’s property level performance was stable in the third quarter. He also announced plans to break ground on four growth projects in November and December, which are expected to create long-term shareholder value and contribute to strong free cash flow generation upon opening in late 2025 and early 2026.
Despite the challenging quarter, Penn Entertainment remains optimistic about its long-term strategic plans, including the partnership with ESPN and the upcoming growth projects.