Penn Entertainment and Pat McAfee have one thing in common: enormous annual contracts with ESPN. Penn pays ESPN $200 million per year to brand and advertise its sportsbook; ESPN pays McAfee $15 million annually to license his show, but that didn’t stop the former NFL punter from having a laugh at ESPN Bet’s expense Thursday.
An ESPN Bet ad popped on the screen while McAfee was talking, catching him off guard. He jokingly referenced “things going great here” and pointed to the ESPN Bet logo. One of his fellow studio mates fired back, “Not!” to which a laughing McAfee replied, “Not at all.”
“ESPN Bet’s got a lot of room to grow,” McAfee said, starting to clap. “Hey, good luck, hey, let’s go, ESPN Bet! You get knocked down, you come back!”
His tone then got more serious. “We’re pulling for it. ‘Cause we are on ESPN and obviously we’re a part of ESPN, so we would like ESPN stuff to succeed,” McAfee said. “They’re gonna be fine. They’re gonna figure it out.”
It was a tough morning for ESPN Bet as Penn Entertainment, the actual owner of the sportsbook, released its first-quarter earnings report. It was the first to include a full quarter of ESPN Bet operations. While Penn’s overall revenue was in line with expectations, ESPN Bet’s earnings came up about $30 million short of what analysts projected.
Penn’s stock fell as far as 15% after the reports came out.
“ESPN BET continued to attract new users this quarter while maintaining a disciplined approach to promotions and marketing expenses; however, our financial results were impacted by lower-than-expected hold and spend per user,” said Penn CEO and president Jay Snowden in a statement. “While we are pleased with the early ESPN BET adoption and engagement results, our focus heading into this football season will be on enhancing our product offerings, including a refreshed home screen and expanded parlay offerings.”
Penn Entertainment made the move from Barstool Sports to ESPN branding last summer, paying the media brand $2 billion over 10 years, which includes marketing on ESPN platforms like McAfee’s show. The sportsbook is chasing lofty dreams of owning 10% to 20% of market share, but as McAfee said, has room for improvement.
