If I could give my younger self any piece of advice, it would be to not watch sports. Like ripped jeans and faux mohawk haircuts, men should no longer watch sports after a certain age. The cutoff should be 19 years old, but after 30, you are really pushing it. Admittedly, you should not consider me the go-to voice for bullish confirmation bias toward Penn National Gaming (NASDAQ:PENN) and specifically, PENN stock.
My growing disdain for sports watching — I saw one quarter’s worth of football last year — made me miss a crucial element regarding PENN stock that a sports fan probably would have caught on to from day one. And that is Penn National’s partnership with Barstool Sports.
By acquiring a 36% interest in the sports media entertainment platform, Penn receives lucrative exposure to the burgeoning online sports gambling market.
It’s not that I missed the announcement — clearly, the partnership has been pivotal to the resilience of PENN stock. Rather, I didn’t know anything about Barstools because I never heard of the company nor did I know who Dave Portnoy, the founder of Barstool was. And my ignorance caused me to unintentionally overlook Portnoy and his company’s history of controversial or scandalous behaviors.
Perhaps in any other period in society, investors will merely view the troubles associated with Barstool as ultimately meaningless noise. This is just bros being bros. But the problem is that we’re in an extremely fractured environment politically. As well, advocates for social justice are not tolerating complicit behavior.
On Penn National’s website, just above the Barstools announcement is a message regarding Penn’s diversity initiatives. If I’m being honest, it’s an awfully jarring juxtaposition.
Will the Present Social Climate Hurt PENN Stock?
I’m not here to advocate for Portnoy’s cancellation. What I’d like to discuss, though, is whether he has generated enough controversy that could somehow hurt the trajectory of PENN stock.
The Barstools founder once proclaimed that he’s “uncancellable” and he may be right. In analyzing some of his troubling resurfaced statements, Portnoy expertly dances on the razor-thin line between racism and comedy. He was able say the N-word seemingly without consequence (though he did apologize for it).
Interestingly, LegalSportsReport.com contributor Adam Candee pressed Penn National on the disconnect between the company’s support of racial justice and Barstool’s history of offensive content. Candee argues that Penn CEO Jay Snowden gave a weak explanation for the partnership, citing Portnoy’s controversies as sometimes missing the mark.
From what I understand, Adam Candee is an influential voice in sports. So, you might be tempted to dump PENN stock. But don’t do it. The reason why Penn National is insulated from Barstool’s scandals is the same reason why Donald Trump will (probably) win reelection: many white men silently tolerate if not outright sympathize with Portnoy’s beliefs.
It’s simple really. Who’s buying the jerseys, going to the games and betting on the action? White men. Look at the caravans that head over to college towns across America. It’s a caravan of white men. If enough white male sports fans prioritized improving race relations, Barstool Sports wouldn’t be the success that it is.
Trying to suggest otherwise runs counter to reality.
Safe From Cancel Culture
While Democrats turned to loosening immigration standards to bolster their voting base, Republicans became introspective. Over the decades, the GOP recruited less-educated southern whites. This strategy has had such an enormous impact that last year, The Economist declared that “Poorly educated voters hold the keys to the White House.”
You want to know why Portnoy and Trump can get away with their offensive comments? Because they push enough to appeal to less-educated whites but not so much that they risk illegalities. Further, there are so many whites of modest academic achievement that it will take a monumental event to break up this political hegemony.
Therefore, in my opinion, PENN stock is safe from cancel culture. However, if you’re thinking about buying shares, I’d wait. Recently, the momentum has been crazy. Plus, you have competition with DraftKings (NASDAQ:DKNG), which has at least a credible short-term upside pathway without the social baggage.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.