Sports merchandise company Fanatics has raised a $325 million fundraising effort to expand into new sectors within its parent company. It is now valued at $18 billion, sources told CNBC.
The Florida-based e-commerce company plans to focus on revenue streams outside of merchandising. The division will be led by Fanatics chairman Michael Rubin, who will serve as chief executive officer. Fanatics claims it will generate $3.4 billion in revenue this year, according to The Wall Street Journal.
Fanatics is looking for new opportunities like sports gambling and this move explains why it has hired new executives. Last month, Fanatics hired former IAC chief financial officer Glenn Schiffman to play a pivotal role in expanding into new sectors such as gaming and new ticketing models. The company oversees a blockchain linked to its non-replaceable token company, Candy Digital.
Former Los Angeles Dodgers Chairman Tucker Kain joined the company as Chief Strategy and Growth Officer. Matt King, the former CEO of FanDuel, is expected to help lead a sports betting and betting division.
It is still unclear what role Fanatics could play within the sports gambling sector. The company was investigating the acquisition of PointsBet, a sports gambling provider, but those discussions ended.
Investors in the fundraising include hip-hop mogul Jay-Z and his entertainment company Roc Nation. SoftBank and Major League Baseball also have shares in Fanatics.
The investment continues an active 2021 for Jay-Z. Last February, Moët Hennessy, the wine and spirits division of luxury conglomerate LVMH, bought a 50% stake in its champagne brand, Armand de Brignac. And last March, Jack Dorsey’s Square platform bought Jay-Z’s Tidal music service for $297 million in cash and stock.
Rubin is transforming Fanatics into a more globally focused digital sports company that can serve various sectors within sports (merchandise, gambling, ticketing and the NFT marketplace). Fanatics plans to leverage the more than 80 million users associated with the merchandise division.
Fanatics strengthened its business through acquisitions in 2020. The company also started operations in China to help boost its valuation from $6.2 billion in August 2020 to $12.8 billion last March.
Fanatics bought sports manufacturer WinCraft in December to increase its presence with non-apparel merchandise. WinCraft sells sports themed merchandise for the home, office, and car, such as clocks and banners. The move accelerated its vertical trading activities and strengthened its manufacturing and distribution activities.
The National Football League and MLB will benefit from any higher valuations, as both leagues jointly invested $150 million in Fanatics in 2017. Last year, the $350 million fundraiser resulted in a $100 million share increase in their holdings in Fanatics.
And as Fanatics grows its stake in the sport, it fuels speculation that an IPO is on the way. However, the company continues to downplay potential access to the public sector.
Asked about his plans on CNBC’s “Squawk Box” last March, Rubin replied, “I think going public is an option for us that we talk a lot about, but it’s not something we’re focusing on today. We’re focused on building a But I think we are well funded and have a lot of growth capital to grow further.”
Correction: This article has been updated to reflect that Fanatics plans to expand into new sectors within the parent umbrella. It is not a new company.
Disclosure: CNBC parent company Comcast and NBC Sports are investors in FanDuel.