$ 18 billion fanatics prepare for IPO: here’s the next step for the company

$ 18 billion fanatics prepare for IPO: here's the next step for the company

Fanatics Founder and Executive Chairman Michael Rubin attends the Fanatics Super Bowl Party at the College Football Hall of Fame on February 2, 2019 in Atlanta, Georgia.

Mike Coppola | Getty Images

Sports merchandising company Fanatics surprised the sports world last month after acquiring the trading card rights for Major League Baseball, National Football League and National Basketball Association.

Most notably, the Radicals deal with MLB ended a decades-long partnership with Topps and likely caused Topps’ plans to go public through a SPAC with Mudrick Capital Acquisition Corp. II. He sent Topps owner and former Disney CEO Michael Eisner back to the drawing board to consider the next step, if any. Panini, licensed as an NFL Trading Card since 2016 and NBA since 2009, will also lose Fanatics rights.

The series of deals shows how Fanatics, under the leadership of CEO Michael Rubin, plans to expand beyond sportswear and collectibles, sports betting and even sports game broadcasting. It has already lured big investors like Jay-Z for a private valuation of $ 18 billion ahead of a planned IPO.

Here’s how the fanatics broke up and what that means for the company going forward.

Fanatics add another part to the puzzle

Rubin’s decision ends a historic sports partnership that the NBA has already proven not to be set in stone. Last May, the NBA left basketball maker Spalding, a partner for more than 30 years, and partnered with Wilson to build his basketball. MLB has taken another step forward by forming an alliance with collectible card fanatics.

Sports leagues like Fanatics revolve around its products, and the company has already formed alliances with most leagues and teams to make soft and material merchandise, including sports jerseys. The pandemic has forced all leagues to reconsider trade deals to maximize profits after suffering substantial losses. Fanatics have also had to rethink their business as live sporting events were put on hold at the start of the pandemic.

The company considered expanding its operations last summer to add more pillars, according to people familiar with the hard-line plans. Fanatics already dominates vertical sports and e-commerce, mainly with all of its MLB rights. But he also saw an opportunity in the collectible card market.

The fanatics declined to comment on the story.

Topps Collectible Cards are held for a photo in Richmond, Virginia.

Jai Paul | Bloomberg | Getty Images

According to Verified Market Research, the sports trading card industry is expected to reach $ 98.7 billion by 2027. In 2021, the field has been particularly active, with Babe Ruth’s classic baseball card setting a record. Even Luka Doncic’s rookie card set an auction record.

The foray into collectible cards also aligns with fanatics’ plans to make a name for themselves in the NFT collectibles business through Candy Digital. To secure the new deals, the fanatics have provided capital to leagues and player associations, which are guaranteed to generate at least $ 1 billion in revenue over the life of the partnership. The league lacks fairness in its current deals with collectible card companies.

Fanatics’ plan for the physical business card space is to expand it by opening up markets to make the most of it through direct-to-consumer offers, according to people familiar with the matter. For example, if collectors buy a collectible card, they’ll be able to insure ownership, classify it, store it, and even put it on the market for sale or exchange – all throughout fandom. . The company will collect transaction fees and the leagues will also get the valuable data they want.

Wall Street speculation suggests that Fanatics will also attempt to buy one of the collectible card companies. Panini is valued at $ 1.3 billion according to Pitchbook and owns Texas-based Upper Deck and Leaf Trading Cards.

The acquisition of the competition will look like an acquisition made by Fanatics in 2017, when it bought the sports conglomerate under license from VF Corp. for about $ 225 million. The deal included sports brand Majestic, and it came just after Fanatics took the clothing rights from MLB to Majestic.

Robert Kraft, Jay-Z and Mike Rubin attend the Michael Rubin Fanatics Super Bowl Party at the Loews Miami Beach Hotel on February 1, 2020 in Miami Beach, Florida.

Kevin Mazur | Getty Images

business still on the table

Sources said the fanatics also wanted a presence in the estimated US $ 40 billion online gambling space through sports betting.

The company made headlines after its intention to enter the New York sports betting market. Fanatics believe he can use his 80 million users associated with his sports merchandising business in a sports betting offering. If this works, Fanatics will be able to attract sports bookmakers to its platform and add offers from its merchandise catalog as a reward for consumer loyalty.

But fanatics will have to buy an established bookmaker to enter the space.

Industry shit added fanatics and online casino operator Rush Street Interactive, which has a bookie through its Sugarhouse property. But sources said hard-line CNBC supporters were not interested in the takeover. Rush Street is listed on the New York Stock Exchange under the symbol RSI and has a market capitalization of $ 2.6 billion. Rush Street declined to comment.

It’s unclear who the fanatics are targeting, but he will eventually have to show his hand on that front as required by sports betting laws.

Rubin’s company has made no secret that it wants to be a global powerhouse with a variety of offerings in the digital world. Fanatics want sports media rights, gambling, ticketing model improvements, memorable assets, NFTs, and now collectible cards.

And as trading continues, an IPO awaits.

In sports betting circles, the question is not what is, but when will the fandoms go public. The fanatics raised a valuation of $ 18 billion after raising additional funds. He’s also launching a China operation with a sinking investment artist Jay-Z. MLB and NFL were already partners, and SoftBank funded Fanatics from its $ 93 billion Vision Fund.

Barrett Daniels, partner at global accounting firm Deloitte, said companies with fanatic status and big business generally look for a public offering as soon as possible.

Daniels, who is Deloitte’s national IPO co-leader and heads his SPAC Western region, said companies emulating the radical stance “reward everyone involved and share that success.” To be able to help make the decision to go public. It’s a huge engine and an important piece of the puzzle. And there are companies that feel like major players in their field; they must be made public. necessary.”

Although an IPO is in the works, Daniels said staying private isn’t as taboo as it used to be.

“It used to be that you always went public when you had around $ 1 billion, but nowadays there doesn’t seem to be a limit,” Daniels said. “Private market companies are getting bigger and bigger and remain private. And there is still a ton of money in the private markets.

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