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Fanatics Scores Investment From Jay-Z, Drives $18 Billion Valuation

Fanatics Scores Investment From Jay-Z, Drives $18 Billion Valuation The rapper was part of an investment round pouring more money into the sports licensing giant as its business broadens.




WWD https://wwd.com/business-news/financial/fanatics-jay-z-roc-nation-18-valuation-michael-rubin-1234896714/ Fan apparel from Fanatics. The Fanatics team is growing — and putting even bigger numbers up on the board. The sports licensing and commerce company raised an additional $325 million, with new money from Jay-Z and Roc Nation, Major League Baseball, SoftBank, Silver Lake, Eldridge, TWG Sports Media & Entertainment and Insight Partners, according to people familiar with the deal.

That values the company at an eye-popping $18 billion and nearly triples its enterprise value over the past year. (Fanatics last raised money in March at a $12.8 billion valuation.) Alongside the new investment, Fanatics is evolving its business, looking to make more of its technology, relationships and consumer database to expand its businesses beyond what it calls vCommerce to build with NFTs, gaming, sports betting and media. The larger integrated Fanatics will be led by Michael Rubin, who will transition from executive chairman to chief executive officer. Doug Mack, who is currently CEO of the company’s vertical commerce business, will stay in that role and add the title of vice chairman of the broader company. The current Fanatics team will continue to report to Mack. When Mack took the reins of Fanatics in 2014, the company was, as he recently told WWD, “effectively the Zappos of licensed sports merchandise.” But under his leadership, it evolved into a multibillion-dollar global consumer player with more than 7,500 employees and merchandise that can’t be found anywhere else.

Fanatics has carved out a very techie sports-fashion niche, combining its connections to teams and leagues with data savvy and a quick turn supply chain that positioned it to be able to react — and start selling — moments after a big win on the field or some player development. The company flew under the radar for years gathering its strength, but was prepared to make the most of the changing landscape when the pandemic pushed consumers toward e-commerce. It is now stepping out more and more, raising round after round of investment capital as it continues to build in its current market and go after big new segments.

All of the investment love could be a prelude to something else. The company has been buzzed about as a possible IPO candidate — and if it did go public, it would likely be one of the largest consumer offerings ever and a leader in the current rush to Wall Street. A company spokesperson told WWD: “While at this time an IPO remains the most likely outcome for us, there is no update on any timeline.”

Last month, Mack told WWD: “We don’t need an IPO to raise capital because we’re well capitalized and we’re cash-flow positive. The primary things to gain via an IPO would be to raise our visibility even further with the tens, or hundreds, of millions of consumers. And we’ve been fairly acquisitive as a company and that’s a little bit harder as a private company. The case against that is that as part of our culture, we’re extremely transparent internally, continually sharing the scorecard of how we’re performing, what we’re doing well and what we need to work on. And once a company becomes public, you lose the ability to share as much information internally.” While fashion- and apparel-related stocks struggled for years as investors worried Amazon was going to take over the market, the dynamic changed during the pandemic. Investors are sensing new opportunity in the consumer space as it grows more digital and a new generation of companies, such as Warby Parker and Rent the Runway, prepare to make their market debuts. Fanatics fits in with the consumer rush in that it’s a digital player that has used technology to build closer ties to the consumer. But it also stands out with its direct relationships to teams — and now, with it’s much broader take on its business. To help steer that business, Glenn Schiffman, who most recently was chief financial officer of IAC, will become CFO of the broader Fanatics company. And Tucker Kain, who was most recently president of the L.A. Dodgers, will become chief strategy and growth officer. Entrepreneur Matt King, former CEO of FanDuel, will work with Rubin on building new large-scale digital companies and has been reported to be exploring sports betting and media opportunities.

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