After the close today, Penn Entertainment (one of my largest positions) announced a new 10 year agreement with ESPN to build ESPN Bet, a new branded sportsbook which will be the only odds shown on ESPN and advertised (which is probably why $DKNG was down 10% after hrs).

The full story from yahoo finance can be found here:

I'll try to dive into it further in the next couple days, but WOW! What a roller coaster of emotions for me as a shareholder. I initially bought Penn BECAUSE of their connection to barstool, and the fact that I liked Portnoy and their omni channel strategy. That connection is gone now entirely.

The fact that they paid $500 million for barstool just to give it back to Dave for free makes me feel like they're poor capital allocator, as that money just got lit on fire (unless portnoy sells again, then they get 50% of the proceeds). But then again, espn, who fired barstool after one episode of their collab together, probably insisted that Penn divest their interests in a company that doesn't align with their values, and let's be honest - the viewership, distribution channels, legacy of espn (they're the worldwide leader in sports for a reason) was well worth the $1.5B in cash that Penn paid for the branding rights and advertising - hell, they paid more than that for theScore, which was a good brand, but nowhere near the level of ESPN to the general sports fan.

So as a shareholder, I'm conflicted. They poorly allocated capital, but ESPN likely forced their hand and said "its us or them" and they had no choice, and knowing they had no choice, portnoy could dictate his terms. This opportunity will allow them the name recognition to get on par with Draftkings and FanDuel, and potentially become the third large player in this fragmented industry.

It aligns with their omnichannel strategy, it's a great (and probably better fit) partner to have in the US, much like theScore in Canada, and the initial reaction tells me that both Penn and portnoy knew on some level that he/barstool was holding them back on wall street. He had been involved in a couple of scandals and hit pieces, and now that they're free of that wild card risk, perhaps the stock can finally catch up to the multiples of its peers and rerate.

I'm not sure what I'm going to do just yet, but just writing out some of these thoughts has calmed my mind about panic selling now that my original thesis is gone, because it's probably a better long term move - but how long will it take to flow through the financials?