In addition to his success in the sports e-commerce industry, Fanatics CEO Michael Rubin plans to expand into the sports betting industry.
Fanatics, based in Florida, secured a $325 million investment on Monday, valued at an estimated $18 billion. Investments of $320 million and $350 million in March 2021 and August 2020 respectively valued the company at $6.2 billion and $12.8 billion, respectively. This round was led by Jay-Z and Roc Nation with SoftBank, Silver Lake, and Eldridge Capital also participating.
There have been a lot of changes in the past year, and not just in valuations. Aiming to scale up its verticalized e-commerce (“v-commerce”) business, Fanatics began with $350 million in funding and has since acquired licensing rights and expanded internationally.
It is believed by investors, that Fanatics will begin to generate revenue from sports gambling and other digital channels.
There’s a widespread belief that Fanatics will be able to convert its existing customers (currently around 80 million) with little or no associated acquisition cost — something that incumbent sportsbooks cannot claim.
Fanatics has also been very active in the hiring department. In the past few months, the company has brought in heavy hitters from a wide range of industries to help with its transition into sports betting and digital media.
In terms of the company’s evolution, this “reshuffle” of the top brass is a major step forward for the company. Having the largest sports e-commerce platform in the world is just a means to an end.
To cut out the middleman, the company uses the v-commerce business model. A fanatics-league agreement is just one part of the relationship between the two parties. When the NFL and MLB first invested $150 million in the company, their investment grew by $100 million. Rubin and Fanatics are currently considering ticketing, non-traditional betting, gaming, and sports betting. Out of all of its league and team partnerships, the company’s secret weapon lies in its 80 million-plus strong user base, which can be monetized.
As a sportsbook, Fanatics joined forces with Penn National (Barstool Sportsbook) to compete for a New York sports betting license last week. In contrast to other bidders, Fanatics hasn’t launched its sports betting product yet, but it could do so as early as next year.
It does, however, have a captive audience of 80 million sports fans, and that number is growing at a rate of roughly 10% per year. A highly targeted audience with a demonstrated affinity for your brand can help you convert people from buying sports merchandise to betting on games.
Being a fully integrated, digitally native brand has its perks. Currently, Fanatics controls the entire process of purchasing sports merchandise from beginning to end. From purchasing tickets to collecting NFTs and memorabilia to placing bets on the outcome of games, it can now control the whole fan experience.
After raising $320 million in fresh capital, appointing a new CEO, and considering an IPO, it looks like Fanatics is only left with the implementation.