How Fanatics Plans To Become A $100 Billion Company

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Friends,

Fanatics has quickly become one of the most influential companies in sports.

The online manufacturer and retailer was announced as the NHL’s new on-ice uniform provider last week, replacing Adidas on a ten-year deal and marking the first time Fanatics branding will be directly on official player uniforms.

• The agreement begins with the 2024-25 NHL season

• Fanatics will manufacture the new NHL uniforms in the same Canadian factory that has been making NHL uniforms for 30+ years

• Financial details haven’t been disclosed, but Adidas was reportedly paying the NHL around $70 million per year for the rights (on a deal that was signed in 2015)

But this really shouldn’t be too much of a surprise. Fanatics has become a monopoly of sorts. They have partnerships with 900+ sports properties, including the NFL, NBA, MLB, NHL, MLS, and Formula 1. The company has seen its valuation increase from $277 million in 2011 to $31 billion today (+11,091%), and they have made virtually every professional sports league on the planet a ton of money over the last decade.

Fanatics Valuation Growth

• 2011: $277 million 

• 2017: $4.5 billion 

• 2020: $6.2 billion 

• 2021: $18 billion

• 2022: $27 billion  

• 2023: $31 billion

And Fanatics CEO Michael Rubin isn’t slowing down. He recently launched two other businesses (Fanatics Collectibles and Fanatics Betting & Gaming) and has publicly said he wants Fanatics to be worth $100 billion within the next ten years.

(Photo: Fanatics CEO Michael Rubin)

The Fanatics story starts in 1995. Brothers Alan and Mitch Trager opened a retail storefront in Jacksonville, Florida, where sports fans could buy merchandise. They then expanded the business over the following decade and eventually began operating e-commerce stores for professional and college sports teams nationwide.

This is where Michael Rubin comes in. Rubin was the founder of a company called GSI Commerce, which created and ran online shopping sites for brick-and-mortar retailers like Toys “R” Us, Timberland, Kmart, Ace Hardware, and Sports Authority.

But Rubin wanted to expand into the sports business, so his company GSI Commerce paid $277 million to acquire Fanatics in 2011.

And this is where things get interesting. Rubin sold GSI Commerce to eBay later that year for $2.4 billion, but eBay was only interested in GSI’s retail customer list, and Rubin was able to buy back Fanatics and a few other brands for pennies on the dollar.

This narrowed Rubin’s focus almost exclusively on sports, and it kicked off a decade-long period of immense growth for the company.

Fanatics immediately raised $150 million at a $1.5 billion valuation from Andreessen Horowitz and others. They then signed a deal to run the NBA’s flagship retail store on Fifth Avenue in New York City and now run the e-commerce business for basically every major professional sports league (+ hundreds of colleges) in the United States.

But none of this would have been possible without Rubin’s win-win partnership mentality. Fanatics has compiled one of the most impressive cap tables you’ll ever see, and Rubin is constantly looking to align incentives through equity upside.

For example, the NFL, MLB, NBA, NHL, MLS, and various player unions all own equity in Fanatics, and the combined stake is reportedly worth $5 billion.

Notable Fanatics Investors

• NFL 

• MLB

• NBA

• NHL

• MLS

• NFL Players Association

• MLB Players Association

• NBA Players Association 

• Fidelity

• BlackRock 

• Roc Nation 

• SoftBank 

• Silver Lake 

• Endeavor Group

• Qatar Investment Authority

• Jay-Z

This equity-for-partnership exchange mechanism has helped Fanatics add $30 billion in enterprise value over the last ten years — and now Rubin is doing it again.

Take their newly launched trading card business. Rubin started the company in 2021 by securing exclusive partnerships with the NFL, MLB, and NBA. He secured those deals by offering the leagues and player unions equity in the parent company, and he effectively created a $10 billion business overnight.

Fanatics Trading Card Ownership Structure

• Michael Rubin owns slightly over 80%

• NFL, MLB, NBA, and their unions own about 14%

• Silver Lake, Endeavor Group, and Insight Partners own approximately 3.5%

And here’s a refresher on the timeline, including their takeover of Topps:

1. Fanatics launched a trading card business in Q3 of 2021.

2. They brokered exclusive deals with the NFL, MLB, NBA, and its player associations by offering them equity in the new business.

3. Topps watched its valuation crumble after losing the exclusive MLB license and was forced to cancel its plan to go public at a $1.3 billion valuation.

4. Fanatics used its new exclusive licenses as leverage to go out and raise $350 million at a $10.4 billion valuation without ever producing an actual card.

5. Fanatics then used that fresh pile of cash to buy Topps for $500 million, representing a massive discount to their previous $1.3 billion valuation.

So while many people like to complain about the quality of Fanatics merchandise, it’s increasingly apparent that they aren’t going anywhere. CEO Michael Rubin has intelligently aligned his company’s interest with the interest of his partners, and Fanatics is well on its way to hitting its goal of a $100 billion valuation by 2033.

I hope everyone has a great day. We’ll talk on Wednesday.

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Extra Credit: Anthony Volpe Makes The Yankees Opening Day Roster

I’m a sucker for MLB call-up videos, and this one is no different. Anthony Volpe grew up a Yankees fan and used to chase down Derek Jeter for autographs. But now he’ll be on the field as the youngest player in a Yankees Opening Day lineup in 25+ years.

Joe Pompliano @JoePompliano

MLB call-up videos are the best. Anthony Volpe is a 21-year-old shortstop from New Jersey that grew up a Yankees fan. And now he’ll be the youngest player in a Yankees Opening Day lineup since Derek Jeter more than 25 years ago. Let’s goooooo!!

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Huddle Up is a 3x weekly newsletter that breaks down the business and money behind sports. If you are not already a subscriber, sign up and join 96,000+ others who receive it directly in their inbox each week.

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