ESPN Bet's Quick Exit and $2 Billion Failed Deal with PENN

Watch ESPN Bet's Quick Exit and $2 Billion Failed Deal with PENN - SportsGrid on Dailymotion

Transcript

00:00you know the biggest story for ESPN bet is the fact that they're just in and out before they

00:06even had a real chance I think to succeed here but I know it doesn't come as a surprise to you

00:11it doesn't come as a surprise to me we talked about this you know a year or two ago when they

00:15started like how is it possible that just by throwing four letters on an app that you think

00:20all of a sudden everyone is just going to run and start betting with you just a huge mistake and

00:26boy I would not want to be the person who was spearheading this operation getting you know

00:32ESPN paid by you know sports betting operators and accounts my gosh what an epic failure it is for

00:38them yeah there's no other way to describe it Craig you know after trying the same strategy

00:44essentially with barstool which I think is eight letters if my math is correct they then did it with

00:49ESPN which is just four letters and yeah there's no other way to describe it but an abject failure

00:54it was a 10-year agreement that they agreed to in 2023 which is going to be worth up to two billion

01:00dollars both sides exit the deal after just two years their goal was to reach 10 to 20 percent

01:07market share in the U.S. really try to compete with Fandle and DraftKings today they sit at less than

01:13three percent so as you mentioned Craig we this isn't a surprise but it's more just kind of like a sad

01:19thing to look at here with when you talk about all the money that was committed when you talk about

01:24the fact that they had to that they had bought barstool for half a billion dollars and then in

01:29order to move over to this deal with ESPN they then had to give barstool back for one dollar to

01:35Dave Portnoy and then commit another two billion to ESPN now because they're exiting the agreement

01:40early they're not paying that full two billion it's only going to be about 380 million dollars

01:44that they paid but again a huge kind of waste of money they were even less successful with this app than

01:50they were with the barstool app and ESPN and or Disney that owns ESPN is going to have some stock

01:56options as well that it can execute in February albeit at a lower stock price for Penn which has

02:02just taken a tremendous hit but kind of the story here is that they didn't really do much out

02:08differently than the last deal besides adding ESPN it was pretty clear that ESPN and Penn never really

02:15had a great working relationship where they could figure out how to really monetize that sales pitch

02:22that they gave to investors at the time was leveraging ESPN's huge user base and all its viewers

02:28and everything and integrate it with the fantasy app but they never figured out how to actually make

02:32that make money a lot of the same problems that they had with barstool rolled over where the tech

02:37really wasn't good and when you talk about tech you're talking about same game parlay product

02:41you're talking about in-app experience and they did it at a time when pretty much most users had

02:47already been on FanDuel and DraftKings and there was little incentive to go over to this new app

02:51other than to get a new bonus so yeah Penn walking away from the deal doing it to just kind of save

02:58face at this point they've spent billions on sports betting which has led to a proxy fight where

03:03someone there's an investor called HG Vora that wants the head of Penn basically out the door for what

03:10they call like the worst thing that's ever happened in the sports betting business uh Penn will rebrand

03:15to the score bet now but it's going to kind of have it have its tail between its legs and you know

03:20try to figure out how it can it can go forward and obviously not be throwing billions of dollars at

03:25another media company

03:28you

03:30you