And there’s an additional wrinkle for people who pay attention to changes in sports and pop culture: ESPN’s sports betting deal with Penn replaces one the company previously had with Barstool Sports, the raunchy and provocative publisher that used to thrive on portraying ESPN as lumbering and out of touch.
The deal tells us a lot about the state of sports, media, and gambling. Here are some answers to a few of the questions it raises.
What does the deal mean for Disney? A lot — symbolically, at least. During Bob Iger’s first stint running Disney from 2005 to 2020, he expressed a real distaste for sports betting on the grounds that gambling couldn’t coexist with Disney’s pristine family image. And even when that stance softened, Iger still kept his distance. For instance, a potential deal in 2015 to invest in DraftKings, which at the time was a “daily fantasy” sports betting company, was softened to become a more standard marketing deal.
But after Iger stepped down as Disney CEO in 2020, his replacement, Bob Chapek, signaled he was much more interested in sports betting, which became legalized on a state-by-state basis in 2018. And since Iger returned to the top job last fall, he has been signaling he’s become more comfortable with sports betting because his research tells him that’s what young consumers want to do. “I’d prefer to wait as long as possible,” he said earlier this year, but added that it would be “inevitable.”
Financially, the deal doesn’t mean quite as much: While Penn is paying Disney $2 billion over 10 years, spread out between cash and stock warrants, Disney is an $83 billion company. Which is why, unlike Penn, it doesn’t even need to tell investors about the deal in an SEC filing.
What does it tell us about the state of ESPN? Some folks who work at ESPN think it’s a big win: They get an infusion of cash, and they think not just telling their viewers about sports betting but directly participating in sports betting is a good thing. ESPN already had deals with sports betting companies, but you should now expect to see a lot more of it when you tune in. In a presentation to investors, Penn says it will benefit from a “comprehensive suite of ESPN sponsorship and media assets across top tier live programming” and “access to top ESPN talent and personalities.”