The Story of How Barstool Sports Got Sold
Can you make an introduction to El Presidente?
That was the request made around six months ago by Mike Kerns to the agent for Jared Lorenzen, a former NFL quarterback and contributor to Barstool Sports, the controversial website led by Dave Portnoy (known to the site’s fans as El Presidente). Lorenzen obliged, and Kerns ― head of digital for media and technology firm The Chernin Group ― soon was on a flight from San Francisco to Boston, to have dinner with someone who he kept coming across via Twitter.
“Both myself and [Chernin Group president] Jesse Jacobs are sports fans, and thought the Barstool guys had a good sense of humor,” Kerns says. “I reached out to better understand his vision for the future, and to see if he’s the type of person we’d want to work with.”
For Portnoy, this was hardly the first time he had been approached by someone with deep pockets. And he had said “no” each and every time, concerned that outside investors would meddle with the site’s editorial content. Lorenzen, however, was a “warm introduction.”
“We weren’t looking for an investment, and I had said that I’d never do a deal unless it was so much money that I could just go live on an island,” Portnoy explains. “But Mike and Chernin Group are the first ones that I felt totally understood the brand and liked us with all of the warts.”
The two sides today announced a deal whereby Chernin Group acquired a majority stake in Barstool Sports for an undisclosed amount, with Portnoy retaining 100% editorial independence. Barstool also will consolidate its geographically-disparate staff in Manhattan, which actually was Boston-based Portnoy’s idea.
“I believe that, in order to take the next step, we should all be working together in the same place,” Portnoy says. “And I had a couple of guys in New York who were more entrenched, with family and stuff, so I’m moving… I love Boston, but it’s a smaller city for the personalities and video and the other stuff we want to incorporate.”
For Portnoy, the deal is a chance to significantly upgrade Barstool. Owing largely to its lack of outside investment, the company doesn’t currently employ anyone who has ever written a line of code, let alone formal product managers. Chernin will provide both capital and know-how. The firm’s founder, Peter Chernin, is a former News Corp. (NWS) president whose current board seats include Twitter (TWTR) and Pandora (P). Kerns used to be a senior Yahoo exec responsible for the company’s homepage and sports vertical. Jacobs is a former Goldman Sachs (GS) banker. And Chernin Group itself is sponsored by Providence Equity Partners, an investment firm primarily focused on the media and entertainment spaces.
For Chernin Group, this is an opportunity to keep building out its digital footprint by partnering with unique content providers. “This is one of the rare digital media companies with engagements analogous only to messaging apps and fantasy sports,” Kerns says. “The fact that they have that sort of engagement with their audience without any log-in is amazing.”
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That said, this wasn’t always a slam dunk. That engagement is known to sometimes go to some pretty dark places, including misogynistic harassment of those who raise the ire of Barstool readers. In fact, Chernin Group even briefly discussed holding off on today’s announcement after Sports Illustrated’s “Cauldron” blog published a piece about one such incident (Barstool’s website has already added the critique’s headline ― which suggests the company “weaponizes social media” ― next to its logo). Portnoy, for his part, said he’d never “let someone… ruin this moment for us, but it does stink that they’ve gotten intertwined.”
Kerns acknowledges that Barstool has been offensive to many in the past, and that Portnoy’s continuing editorial control means it is almost certain to offend in the future:
“We certainly understand that there’s an element of controversial topics and off-color content and programming… and we talked a lot about it. So there is certainly an element that isn’t going to be for everyone… But our general point of view is that a lot of the most unappealing and insensitive comments brought up in the Sports Illustrated piece were from commenters on both the site and on Twitter. You can go to any link at most any website that has a story about Donald Trump or Ted Cruz and find offensive stuff in the first hundred comments. Let alone on Twitter, Reddit or Tumblr.”
Even if Kerns ― who will sit on the Barstool board along with Jacobs ― knows what he’s getting right now, there is a big question as to whether or not his new investment can achieve its ultimate vision: To become a top comedy brand.
The Chernin Group’s bet here is that Barstool is much more about sensibility than sports, as evidenced by the company’s announcement video:
“In the past, you’d send your resume to SNL or work for an alternative newspaper,” says Portnoy, who adds that he’s unlikely to spend his evenings recruiting at the Comedy Cellar. “We’ve found that standup doesn’t really equate to the type of comedy we’re looking for. When I think about some of our best guys, one was doing real estate, another was doing accounting. I’m not convinced there’s a ‘right’ background, but I do know that there’s a lot of talent out there. We want that next generation here with us.”
Neither Kerns nor Portnoy would disclose financial terms, although Portnoy reportedly said during a Periscope session with fans that the deal valued Barstool at between $10 million and $15 million.