Penn Entertainment's Turmoil and Investor Pushback Explained
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SportsTranscript
00:00Let's get started with Penn Entertainment, a company that has certainly changed hands to say the least over the last year or so.
00:11Let's get the latest update from you. How are they doing?
00:14You know, Penn has not been doing terrific, Craig.
00:18We've talked at length about their international or their interactive losses.
00:24And they finally had a shareholder come out and write a letter that really took them to task for it.
00:31It was the Dunrell Group is the name of the investor, and Will Wyatt, he's a managing partner, and he penned the letter.
00:37And after the letter came out, Penn's stock price jumped 20 percent on Friday, Craig.
00:44It traded at almost four times its average trading volume.
00:48So basically, the market got behind this and said, yeah, that's what we're trying to say.
00:53And what Wyatt said was basically Penn has failed at sports betting.
00:59In so many words, that's what it came down to.
01:02And he highlighted the purchase of Barstool and how even though, you know, about a year into it, it was clear that this wasn't going the way that they thought it would.
01:13They still went through and bought the rest of Barstool.
01:16And then months later, turned it around and sold it back to Portnoy for a buck that cost them like $800 million around there.
01:23Non-cash impairments, of course, but it's still on your balance sheet.
01:27It's still not what you want to do.
01:29It's still not great business to have your acquisitions turn up like that.
01:34Then he mentioned the score.
01:36And if you remember the score, they are a sports media outlet bigger than SportsCenter and ESPN in Canada.
01:44But they spent $2.1 billion on the score, Craig.
01:48And the score didn't have the numbers to support that kind of purchase price at the time.
01:54And now we're on the ESPN bet.
01:57And ESPN bet has already lost like a lot more than Penn guided to.
02:04And so you have this situation where Penn, before they got into this interactive business,
02:13they have a portfolio of more than 40 retail casinos.
02:18And they know what they're doing in the retail casino place.
02:23They have a good loyalty program.
02:26They know how to run those local casinos.
02:31And that is being completely overshadowed by the substantial losses they are now facing from interactive.
02:39And Wyatt basically said, you know, when is this going to end?
02:45He even questioned if the acquisition of the score, which Penn had said was for their technology, if that was necessary.
02:54And he said, quote, had a digitally native and more experienced leadership been at the helm,
03:00shareholders have to wonder if this could have been done in a more cost-effective manner from the onset.
03:06And then he jumps into taking some shots at how much CEO J Snowden has made,
03:11which is almost $100 million over the past four years.
03:15And he's basically saying, for what?
03:19Why? Why is he getting this kind of compensation?
03:22So it's interesting right now.
03:25Basically, it came down to them saying, Wyatt suggested potentially selling that portfolio of retail casinos.
03:34I don't know how many buyers there are out there right now for 40 land-based casinos, Craig.
03:41That's not something that you just decide to do.
03:45So Penn is going to remain an interesting story through the football season.
03:50Right. We know that they're waiting for the parlays to improve.
03:53We know that they're working on a whole bunch of stuff right now.
03:56So we need to see some kind of turnaround quickly from Penn on these interactive losses if they want the stock price to not be sincerely and severely impacted by that.
04:11But the market absolutely loved what Will Wyatt had to say.