Online sportswear retailer Fanatics is on investors’ radar for an IPO, moving into the spotlight with an exciting growth story.
Fanatics could take advantage of the reopening window for listings in 2024, with an IPO being a stated medium-term objective. Valued above $30 billion in a 2022 fundraising, such a transaction would be among the most significant potential IPOs in waiting.
Exclusive licensing deals with all the major US sports franchises, like the NFL, MLB, and NBA, underpins much of the hype around Fanatics. Also, getting investors excited is a dynamic acquisition strategy and vision to mobilize billions of global sports fans behind the brand. Forays into sports betting, trading cards, and digital collectibles have created a powerful stream of revenues, all connected by sports fandom.
As the name suggests, Fanatics has built its business around its customers’ fanatical obsession with their favorite sports teams. Signs of momentum continue to emerge as Fanatics signs more deals with Lebron James and the WWE in these new markets.
Building a Sports Merchandise Powerhouse
Fanatics’ roots go back to CEO Michael Rubin’s first e-commerce rights deal with NASCAR in 2002 and his company GSI Commerce. After acquiring rights for all the major US sports leagues, Florida-based sports retailer Fanatics was the next target in 2011. eBay then acquired GSI for $2.4 billion, with Rubin keeping the Fanatics name for his new venture.
Rubin created a sports merchandise powerhouse by bringing on board a series of new partners and licensing deals across professional and college leagues. In addition to developing its own manufacturing capability, Fanatics employs real-time data to monitor and react to changing customer demand. Today, according to the company, Fanatics serves over 100 million sports fans across its global platform.
Characterizing its rapid growth in vertical markets, the company coined the phrase ‘v-commerce’ for its business model. Since 2021, the focus has been on expanding into new markets. Collectibles, such as trading cards, sporting memorabilia, and sports betting, have been added to the platform. Unique live events, such as shopping experiences and game streaming, based on its stable of sporting properties, have also created a buzz.
According to Crunchbase, Fanatics has raised $4.9 billion over 11 rounds, with Insight Partners leading 2012’s $150 million Series A. Alibaba and Temasek invested $170 million In 2013’s Series B, and Silver Lake led the $300 million Series C in 2015. A $1 billion Series D round in 2017, led by Softbank Vision Fund, took Fanatics’ valuation to $4.5 billion. Other notable investors include Franklin Templeton, Fidelity, Blackstone, Michael Dell’s MSD Capital, and Jay Z. The December 2022 Series E round, led by Clearlake Capital Group with LionTree, raised $700 million, valuing the company at $31 billion.
Former investment banker Glenn Schiffman serves as CFO alongside Chairman and CEO Rubin. Board directors include Vice Chairman Michael Conn, Mindy Grossman – former CEO at WW International, and TwentyFirstCentury Brand’s Jonathan Mildenhall. The other board members are Insight Partners’ Deven Parekh, Silver Lake’s Greg Mondre, Softbank’s Lydia Jett, and Starch Advisors’ Gerald Storch.
Connecting Fans With Betting and Collectibles
Drawing on the passion of sports fans, Fanatics’ true differentiator is its global digital platform, leveraging exclusive sales relationships. With a tech-driven, on-demand manufacturing infrastructure and an agile global supply chain, Fanatics has become a sales “juggernaut.”
Connected-merchandising, powered by AI, has elevated the retail experience for sports fans. Exclusive products can even be ordered and delivered to fan seats during games. With over 60 stores worldwide – including at major venues – and through its online platform, Fanatics sells in more than 175 countries. Fans can select from over 1.5 million product SKUs and over 1000 brands on the platform.
After launching its Trading Cards and Collectibles division in 2021, Fanatics moved to acquire the iconic Topps Trading Cards brand in 2022 for $500 million. Fanatics had already secured trading card rights with major US sports leagues, while Topps’ portfolio included global brands like Formula 1 and UEFA. Bringing Topps into its platform, Fanatics said it could launch its own trading cards ahead of the scheduled 2026 date.
More licensing deals continued to flow. Front Office Sports reported that Fanatics beat Panini in a critical deal with the WWE, just as it had done with the NFL Players Association. Panini had previously filed an antitrust suit, alleging Fanatics’ entry into trading cards broke federal rules.
For its sports betting move, Fanatics acquired PointsBet’s US assets for $225 billion in 2023, beating a bid from DraftKings. Fanatics then combined sports betting with its online casino on the platform. As the seventh largest US operator, PointsBet’s sports betting licenses include vital states such as New York, New Jersey, and Pennsylvania. By the end of 2023, Fanatics said it would operate from 16 states, increasing in 2024.
Launching its new Events business in 2023, Fanatics signed a partnership with sports and fashion giant IMG Events. Through Fanatics Events, fans will come together for unique ticketed live experiences. Initially, the focus is on enhancing the opportunities in collectibles. Going forward, the vision includes bringing together top athletes, music, and entertainment acts with major pop culture brands. Lance Fensterman, formerly president of ReedPop, was brought in as CEO.
Fanatics also had a brief venture with NFTs, taking a 60% stake in Candy Digital when the sports NFT market boomed in 2021. As the NFT market imploded the following year, Fanatics sold its holding to investors led by Galaxy Digital’s Mike Novogratz.
Strategic Hire Could Accelerate IPO Timeline
Fanatics was valued at $31 billion at the end of 2022. Since then, it has launched its Sports Betting and Live Events businesses. Financial accounts are private, but the company was reported to be projecting approximately $8 billion in 2023 revenue excluding trading cards. CEO Rubin has also publicly stated a vision for profits to equate to 2023 revenue within ten years.
With its exclusive sporting licenses and a broad range of business activities, there are few genuine comparable companies to Fanatics. Sportswear giant Nike shares are down 20% over the past year. Shares in sports betting company DraftKings have advanced 146% in the past 12 months, taking its market cap to $19 billion.
Several firms, including General Atlantic and Reddit, have made pre-IPO filings with the SEC as the IPO outlook has improved. No IPO timeline has been explicitly laid out for Fanatics, although CFO Glenn Schiffman has previously said the company will eventually go public. A general improvement in sentiment for IPOs has encouraged speculation that Fanatics may complete a listing in 2004.
Furthermore, Deborah Crawford became the first Head of Investor Relations last year, having held similar roles at Meta and Netflix. Commentators said the formal creation of an Investor Relations division means a Fanatics IPO is one step closer. Schiffman confirmed in an interview that the company wanted Crawford in place well ahead of its planned IPO.
Fanatics has seen such a rapid rise in valuation and has potentially transformative acquisitions to integrate fully into its platform. As further details emerge and a prospective IPO takes shape, investors will be paying close attention.
CapitalMarkets.com is managed by individuals who have worked in the capital markets for over 25 years. Contributing writers include professionals and financial journalists with unique experiences across the capital markets.