$18 billion retailer Fanatics prepares for IPO — here is what’s subsequent for the corporate

Fanatics Founder / 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 shocked the sports world last month after securing trading card rights to Major League Baseball, the National Football League and the National Basketball Association.

Especially Fanatics’ deal with MLB ended the league’s decades-long partnership with Topps and possibly caused the end of Topps’ plans to use a SPAC Mudrick Capital Acquisition Corp. II. It also sent Topps owners and former Disney CEO Michael Eisner back to the drawing board for reflection the next train – if there is one.

Panini, which had the NFL trading card license since 2016 and the NBA license since 2009, is also losing the rights to Fanatics.

The series of deals shows how Fanatics, under CEO Michael Rubin, plans to expand beyond sportswear into collectibles, sports betting and even broadcasting games. It has already attracted well-known investors like Jay-Z to come with his $ 18 billion private valuation before an expected IPO.

Here you can find out how Fanatics landed the partnerships and what this means for the future of the company.

Fanatics add another piece to the puzzle

Rubin’s move ends some historic sports partnerships that the NBA has already proven not to be set in stone. In May 2020, the NBA has dropped basketball maker Spalding, a partner for more than 30 years and associated with Wilson to make its basketballs.

Sports leagues like Fanatics’ moat around its products, and the company is already affiliated with most leagues and teams to make soft goods and hard goods, including sports jerseys. The pandemic forced all leagues to review deals to maximize profits after suffering significant losses. Fanatics also had to rethink their business as live sporting events were suspended at the start of the pandemic.

According to people familiar with Fanatics’ plans, the company considered expanding last summer to add more pillars to its operations. Fanatics already dominates vertical and e-commerce in sports, mostly with all of its MLB rights. But it also saw an opportunity in the trading card market.

Fanatics declined to comment on this story.

Topps trading cards are arranged for a photo in Richmond, Virginia.

Jay Paul | Bloomberg | Getty Images

The business with sports trading cards should reach $ 98.7 billion by 2027, according to Verified Market Research. In 2021 the industry was particularly active, with a 1914 baseball card from Babe Ruth to set a record. Even Luka Doncic’s rookie card set an auction record.

Entering the trading cards business is also in line with Fanatics’ plans to build its name in the NFT collectibles space via Candy Digital. To secure the new deals, Fanatics provided the leagues and player unions with equity capital that is guaranteed to generate at least 1 billion US dollars in sales over the duration of the partnerships. Leagues have no equity in their current trading card company dealings.

Fanatics’ plan for the physical trading card space is to expand it by opening up the market to take greater advantage of it through direct offers to consumers, according to those familiar with the matter. For example, when collectors buy a trading card, they can insure, value, store, and even offer the asset for sale or barter on a marketplace – all through Fanatics. The company would likely charge transaction fees, and leagues will also get valuable data they crave.

Speculation on Wall Street suggests Fanatics will also try to buy one of the trading card companies. Panini is valued at $ 1.3 billion, according to PitchBook, and there are other companies, Upper Deck and Leaf Trading Cards based in Texas.

The competition’s takeover would be similar to a takeover Fanatics completed when it bought it in 2017 VF Corp ‘s licensed sports group for approximately $ 225 million. That deal included the Majestic Athletic brand and came right after Fanatics took over the MLB apparel rights from Majestic.

Robert Kraft, Jay-Z and Mike Rubin attend Michael Rubin’s Fanatics Super Bowl Party at the Loews Miami Beach Hotel on February 01, 2020 in Miami Beach, Florida.

Kevin Mazur | Getty Images

Still business on the table

Fanatics also wants to be valued in the $ 40 billion American online gambling room through sports betting, sources said.

The company did Headlines according to plans, the entry into the New York sports betting market arose. Fanatics feels it can bring its 80 million user base tied to its sports merchandising company to a sports betting offering. If it works, Fanatics can lure Sportwetter to its platform and combine offers from its merchandise catalog as a reward for customer loyalty.

But fanatics have to buy an established sportsbook to enter the room.

Industry talks connected Fanatics and online casino operator Rush Street Interactive, which operates sports betting through its SugarHouse property. But sources told CNBC that Fanatics was not interested in the takeover. Rush Street is traded under the ticker on the New York Stock Exchange RSI symbol and has a market capitalization of $ 2.6 billion. Rush Street declined to comment.

It’s unclear who Fanatics is targeting, but it will have to show its hand on that front at some point as sports betting laws require.

Rubin’s company has made no secret of being a global powerhouse with various offers in the digital world. Fanatics wants to participate in sports media rights, games of chance, revised ticket models, memorabilia, NFTs and now also trading cards.

And while business goes on, an IPO awaits.

In sports betting circles, it is not a question of whether but when fanatics go public. Fanatics scored his $ 18 billion Evaluation after taking up additional funds. It also starts a China operation after a Investment from entertainer Jay-Z. MLB and NFL were already partners, and SoftBank gave Fanatics cash from its $ 93 billion Vision fund.

Barrett Daniels, a partner at global accounting firm Deloitte, said that companies similar to positioning Fanatics and securing big deals typically seek public offers sooner rather than later.

Daniels, who serves as Deloitte’s national IPO co-leader and heads the SPAC Western region, said companies with status like Fanatics have decided to go public to “reward and share in this success to be able to. This is a big driver and an important piece of the puzzle. And there are some companies that feel they are the dominant player in their field, they need to be public. “

Though an IPO might be involved, Daniels added that staying private is no longer as taboo as it used to be.

“You used to go public when you hit about a billion dollars, but these days there doesn’t seem to be a limit,” Daniels said. “Companies keep getting bigger in the private market and staying private. And there is still a lot of money in the private markets.”