$ 18 billion Fans are preparing for the IPO – that’s what’s coming for the company

Fans founder / chief executive Michael Rubin attends the Super Bowl fan 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 business card rights for Major League Baseball, the National Football League and the National Basketball Association.

Most importantly, Fanatics ’deal with MLB ended a decades-long partnership with Topps and perhaps caused the end of Topps’ plans to go public through a SPAC with Mudrick Capital Acquisition Corp. II. He also sent Topps owner and former Disney CEO Michael Eisner back to the drawing board to contemplate the next movement – if there is one. Panini, who has had the NFL exchange card license since 2016 and the NBA since 2009, will also lose rights to Fanatics.

The series of treatises highlights how Fanatics, under CEO Michael Rubin, plans to expand beyond sportswear and collectibles, sports betting and even broadcasting sports games. It has already attracted big-name investors like Jay-Z to go with its $ 18 billion private valuation ahead of an early IPO.

Here’s how Fanatics has landed partnerships and what it means for the company to move forward.

Fans adding another piece to the puzzle

Topps exchange cards are available for photography in Richmond, Virginia.

Jay Paul | Bloomberg | Getty Images

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

The entry into the trading cards also aligns with Fanatics ’plans to build their name in the NFT collection sector through Candy Digital. To secure the new deals, Fanatics has provided assets to the leagues and player unions that are guaranteed to bring in at least $ 1 billion in revenue over the duration of the partnerships. Laws have no fairness in their current dealings with business card companies.

The plan of the fans for the physical business card space is to expand it by opening the market to exploit it more through direct offers to the consumer, according to people familiar with the matter. For example, if collectors purchase an exchange card, they will be able to secure the asset, grade, store and even put them in a market to sell or exchange – all for Fanatics. The company will likely collect transaction fees, and the laws will also obtain valuable data that they claim.

Speculation on Wall Street suggests that fans are also trying to buy one of the trading card companies. Panini is estimated at $ 1.3 billion according to PitchBook, and there are Upper Deck companies, and Texas-based Leaf Trading Cards.

The acquisition of the competition resembles a Fanatica acquisition completed in 2017 when it acquired VF Corp’s licensed sports group for approximately $ 225 million. That deal included the Majestic Athletic brand, and it came shortly after Fanatics took over Majestic’s MLB clothing rights.

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

Kevin Mazur | Getty Images

Always business on the table

Fans also want a presence in the esteem $ 40 billion The U.S. online gaming space through sports betting, sources said.

The company did titles following plans to enter the New York sports betting market. Fans have the impression that it can exploit its 80 million user base linked to its sports merchandising company in a sports betting offer. If it works, then Fanatics will be able to attract sports bettors to their platform and combine offers from their merchandise catalog as a reward for consumer loyalty.

But Fans will have to buy an established sport to enter the space.

Industry-related chatter Fanatics and online casino operator Rush Street Interactive, which has a sport through its SugarHouse property. But sources told CNBC Fanatics he is not interested in the purchase. Rush Street is listed on the New York Stock Exchange under the RSI ticker symbol and has a market cap of $ 2.6 billion. Rush Street declined to comment.

It’s not clear what Fanatics is aiming for, but they will finally have to show their hand on this front as the sports betting laws require.

Rubin’s company has made no secret that it wants to be a global powerhouse with various offerings in the digital world. Fans want to get involved on sports media rights, gaming, renewed ticket models, memorable goods, NFTs and now trading cards.

And while business continues, an IPO awaits.

In sports betting circles, it’s not a question of whether but when Fans become public. Fans have rated his valuation at $ 18 billion after raising additional funds. He also started an operation in China involving investment entertainer Jay-Z. MLB and NFL were already partners, and SoftBank gave Fanatics money from its $ 93 billion Vision Fund.

Barrett Daniels, a colleague at global accounting firm Deloitte, said companies similar to Fanatics ’positioning and securing big deals usually seek public offerings sooner rather than later.

Daniels, who is the national co-leader of Deloitte’s IPO and who runs its western SPAC region, said companies that emulate Fanatics status decided to go public to “be able to reward everyone who participates and they help to participate in this success. It’s an important factor and an important piece of the puzzle. And there are certain companies that feel like the dominant player in their space; they need to be public. “

Although an IPO might be at stake, Daniels added that staying private is not as taboo as before.

“In today’s times, you’re still public when you’ve reached about $ 1 billion or more, but today there doesn’t seem to be a limit,” Daniels said. “Companies are getting bigger and bigger in the private market and staying private. And there’s always a lot of money in the private markets.”

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