Bankroll bet big on Philly sports fans. How did it fail?

The bigger they are, the harder they fall. Bankroll fell hard, and it fell fast.

It was the most lavish sports bar ever in Philadelphia, with room for about 400 people at the former Boyd Theater near Rittenhouse Square. Although not an online-gaming parlor, Bankroll was advertised as a high-end gathering place for sports fans who could read the betting lines and interact through a proprietary app. Advertising revenue from gaming companies would be a key source of income. Bankroll also was touted as a Stephen Starr restaurant — though the partnership imploded just weeks before the opening in early March.

Bankroll itself was a huge gamble, as founder Paul Martino acknowledges.

Bankrolled at about $20 million, it opened in time for March Madness. By mid-June, with the sports calendar — and the bar seats — much emptier, management announced that service would be scaled back for the summer and furloughed almost all of Bankroll’s 50 employees. The culinary director learned about his layoff from a reporter’s phone call.

Bankroll closed permanently in July after fulfilling private events with a skeleton crew. In August, the contents — every fork, plate, sofa, mixer, grill, refrigerator, bottle of vodka, table, chair, LED flat-screen monitor (there were 61 of them), and a locked safe with no key and combination — were auctioned off online and carted out the front door.

Left behind are legal filings, disgruntled contractors, boxes of plates embossed with Bankroll’s QR code that no one wanted at the auction — and questions.

Chiefly: Why did Bankroll fail?

The answer depends on whom you ask.

Martino, the tech investor from Bucks County who conceived the project five years ago and served as Bankroll’s chairman, said it was a combination of poor dealmaking on his part, fluctuating market conditions in the online-gaming business, and “people out to get us” — specifically, the residents of the William Penn House across the street, who fought Bankroll’s zoning approval and liquor license, delaying the opening by 16 months.

To David Robkin, who at the time was a partner in Starr Restaurants and had joined Bankroll’s board in the early days to represent Stephen Starr’s interest: “They never executed on the business plan that was presented, and the business plan shifted as management shifted. There was a revolving door of different people.”

To Padma Rao, the chief executive since early 2022: “I’ll just put it on myself that the naivete of us being a live entertainment space vs. being restaurant-forward, I think, ended up hurting us. Everything from the way the space was used, how we spent the money — all of those things didn’t map to what the vision was.”

In short, it ended up trying to be both a restaurant and live-entertainment venue, and failed at both.

Martino said Bankroll’s limited liability corporation is being dissolved under the direction of Bankroll’s bank, Western Technology Investment, a Silicon Valley financier. Martino did not disclose the amount of the debt. It is also not clear how much the auction, conducted online by Quaker City Auctioneers, yielded.

Meanwhile, lawsuits have begun for unfulfilled contracts. The general contractor, Clemens Construction Co., filed a mechanic’s lien against the LLC, seeking $2.5 million. A plumbing company, E.J. Raith of West Chester, wants to recover nearly $132,000. Michael Mattson, an attorney representing Raith, said he had another client that also was owed a substantial sum over its Bankroll work and was considering filing. “These are small businesses and it’s a big hit for them,” Mattson told The Inquirer. Because the defendant is a limited liability company, Bankroll’s officers are not personally liable.

The full story of Bankroll begins with Martino, 49, who got his start in the tech field as a 14-year-old in Lansdale selling pre-internet phone-based software games at $15 each.

After getting his bachelor’s degree in mathematics and computer science from Lehigh University, Martino enrolled in a Ph.D. program at Princeton University but dropped out to start a company working with Netscape, the computer-services company. (Princeton later awarded him a master’s degree “as a parting gift,” he said.)

Martino has founded (and sold) companies including Ahpah Software, a computer security firm; Tribe, an early social network; and Aggregate Knowledge, a program that optimizes online advertising.

In late 2010, he launched Bullpen Capital, pioneering the concept of investing in new companies after they’ve spent their initial startup cash.

Martino and his wife, Aarati, an engineer with Google, relocated from Silicon Valley to Doylestown and send their children, now ages 12 and 14, to Central Bucks schools. He made headlines for putting his money behind conservative school board candidates and creating a super PAC seeking to “stop the liberal left.”

Martino was an early investor in FanDuel, the online gaming company. In 2016, he and friends attended the grand opening of the MGM National Harbor, a casino-hotel in Maryland. “We were all just daydreaming,” he said: “‘Philadelphia should have a marquee thing downtown to embrace sports betting.’”

Two years later — around the time that the Supreme Court struck down the federal law prohibiting sports gambling — Martino was invited to participate in the Philadelphia Global Identity Project, which was looking for ideas about how to brand the city.

“They said, ‘If you brought in a space alien [to town], other than ‘meds and eds,’ what would Philadelphia be known for?’” Martino said. “I said, ‘Philly is the most passionate sports town in America and we have no marquee place to show that off.’ And you know, I thought I’d get laughed out of the mayor’s office, and they’re like, ‘no, that’s a pretty good idea.’”

Martino set out to get financial partners for his dream. He did not want to open a sports book — a gambling operation — just an upscale venue that could snap up ad dollars from the sports books.

“The market [for gaming stocks] was hot,” he said. FanDuel’s sale in December 2020 yielded a windfall for Martino and other investors who had joined him. “Almost all of the investors in [Bankroll] were somehow involved in it, so this is all house money from almost all of us,” Martino said.

Martino turned his sights to leasing the Boyd, the century-old Art Deco movie house less than two blocks from Rittenhouse Square, which had sat empty after closing in 2002. Civic groups and preservationists rallied to save it, though plan after plan went nowhere. Pearl Properties, a developer, bought the Boyd in 2014 and was building a high-rise, encompassing the land back to Sansom Street. Besides the Boyd, Martino also wanted the low-slung building next door occupied by Gap Outlet.

Martino signed Starr, who owns about three dozen restaurants on the East Coast. The Starr name was all over the project — attached to every news release and prospectus and floated before community meetings and the city zoning hearing board, which signed off on the project before a judge nullified the decision.

Martino also brought in Marc Rayfield, who had just left a quarter-century career with CBS Radio (now Audacy), where he oversaw WIP, Philadelphia’s top-rated sports-talk radio station, as well as KYW, the news station, before being promoted to run CBS’s New York properties.

With ties to Philadelphia business and sports, Martino figured that Rayfield would be a smart choice for Bankroll’s CEO.

Rayfield took the job and also became an investor in March 2020. Rayfield said in an interview that he was more interested in Bankroll’s technology potential than the nuts and bolts of the restaurant world. He believed that an idea like Bankroll would be scalable to other cities.

At the time, Rayfield was helping to launch a line of spirits for Philadelphia-based Darco Spirits. In late 2021, shortly after Bankroll signed the lease at the Boyd, Rayfield realized that his Darco work required more travel as pandemic restrictions were being lifted. “It became apparent to me that I could not do both of them effectively,” he said.

When Rayfield left Bankroll in February 2022, Martino replaced him as CEO with Rao, who had joined Bankroll the summer before as chief marketing officer.

Though Rayfield’s managerial ties had ended, his Bankroll investment — which he declined to specify — remained. “I am looking forward to getting a detailed understanding of what went wrong, which I’m sure Paul will share with us soon,” he said last weekend.

Rao’s promotion to Bankroll CEO seemed unusual, given that she had never run a food-and-beverage operation or any hospitality business.

“This is one thing that I’ll never understand — that Martino hired someone as the CEO who had zero food and beverage experience, had no knowledge of sports, forget about sports betting,” said Robkin, who left Bankroll in January 2023 when Starr parted ways with the project over friction. Starr declined to comment for this article.

For Martino, it was a strategic decision.

“It was always a hard problem — who was going to run a half-tech company, half-live entertainment venue?” Martino said. “You kind of had two choices: You either pick a tech person you could hope could be conversant in the restaurant [space], or you had to pick a kind of live-entertainment person who you would hope could be conversant in the technology.”

Rao, whom Martino knew as an adviser with Bullpen Capital, was the tech person. With background packed with companies straddling retail and tech, “I fundamentally believe in the reinvention of physical retail and physical entertainment,” Rao said in an interview for this article. “The way we interact with the physical world — and the combination of technology and the changes in logistics and consumer expectations of what should happen and what’s going to get you off the couch — I think have changed. So for me, getting to try something that would extend the way the world is going to change was exciting to me.”

While the kitchen existed primarily under Starr’s team’s control, questions about who called the shots at the rest of the venue — who was in charge of scheduling wait staff, for instance — was murkier, said Scott Swiderski, the culinary director, in an interview.

“There were management difficulties about who reported to who that were unresolvable,” Martino said.

Adding to Rao’s challenge, another issue had surfaced. “Almost immediately after the money goes into the bank: All the sports-betting stocks hit the [toilet],” Martino said. “DraftKings [a FanDuel competitor] goes down like 90% between spring of 2021 and Christmas of 2021.”

Bankroll’s prospective casino partners were then “a lot more tepid on the project than they were when we originally pitched them on it,” Martino said. Yet at the same time, “we’re getting ready to start building and zoning and all that stuff.”

As the casino stocks rebounded in 2022, Martino said, the casinos realized that “getting the guy to place the $5 bet was a waste of time. They needed to have a luxury experience for the whales. We knew that we were building the right thing, but we had to double down on the luxury aspects of the place, making the cost overruns even worse.”

Also cropping up were supply-chain problems, which vexed many construction projects during the pandemic. Facing the uncertainty from the casino partners, “every day that we delayed ordering, the project gets more expensive.”

“Our kitchen should have been $1.2 million when all was said and done. But because of a combination of COVID supply chain [issues] and design errors — design errors on us — the kitchen was $2.2 million,” Martino said. “All of a sudden, the wind is in our face almost immediately.”

“All of those problems made us lose the eye on the ball of deploying all the technology,” Martino said. “We built a really cool app. None of that even launched because it all got lost in all of this.”

Initially, Bankroll had targeted an opening in the fourth quarter of 2021. By the time of the media preview in April 2022, the timeline was shifted to early 2023 — missing the lucrative fourth quarter of the year entirely.

“I’ve done this math 100 times,” Martino said. “If we had launched 12 months late, I bet we’d still be in business because we would have caught November, December, January” — the basketball, hockey, and football crowds. But it had to open. In early 2023, Martino said he added $3 million to get Bankroll across the finish line.

As it became clear that the lender was unhappy shortly after opening, Martino tried to find a new operator. Pearl Properties, the landlord, was not interested in this idea, he said. (A Pearl representative declined to comment.)

The auction proceeded, and Pearl has hired Jacob Cooper and Brittany Goldberg of MSC to market the space, which can be subdivided.

Would Martino do something like this again? “I know so much now that there’s a part of me that wants to do it again, but I also saw all the ways that the judge gets in the way, the landlord gets in the way, the dissident group gets in the way, and I’m sure if I did it again, there’d be five other things that got in my way that I couldn’t predict and screw it up,” he said.

“But having now been through the whole thing, and look, we had good people around us, I don’t know that I’d do it in Philly ever again,” he said. “And that pains me as a lifelong Philadelphia guy. I think if I would do this again,” he said. “I wouldn’t pick my hometown because my hometown made it a little too hard.”