Fanatics Raises $1.5B, Valuing Company at $27B

Investors are fanatical about Fanatics, as they recently pumped $1.5 billion into the sports merchandise maker, valuing the aspiring gaming company at $27 billion.

The latest funding round for Michael Rubin’s privately held company included existing investors as well as BlackRock, Fidelity, and MSD Partners — an investment vehicle controlled by Dell founder Michael Dell. At the implied valuation of $27 billion, that indicates Fanatics is worth 50 percent more today than it was less than a year ago.

As the company’s valuation increases, so do speculation regarding an initial public offering (IPO). Fanatics previously expressed interest in an IPO, calling such a move likely. But a timeline for that transaction hasn’t been revealed.

Should the company announce a 2022 IPO, it would almost certainly be one of this year’s largest — regardless of industry — and likely represent a significant monetization opportunity for major investors, including private-equity firm Silver Lake and SoftBank.

Fanatics Gaming Ambitions

It’s widely known that Fanatics is looking to diversify from its core business of sports apparel and merchandise and that some of that effort includes a possible entry into the gaming world.

Fanatics has also been tied to an assortment of gaming industry takeover rumors, including speculation it held merger talks last year with Rush Street Interactive (NYSE:RSI) and Swedish gaming giant Betsson.

The company was also thought to be a potential suitor for TwinSpires — controlled by Churchill Downs. It’s also rumored that Fanatics held discussions with Australia’s PointsBet (OTC:PBTHF) before deciding against a takeover of that operator. PointsBet remains a hotbed of takeover chatter.

Fanatics Has Other Businesses

Beyond apparel and merchandise and its gaming aspirations, Fanatics has other businesses, including its Candy Digital unit — a non-fungible token (NFT) with rights to produce digital art related to some professional sports leagues.

Additionally, Rubin’s company announced in January that it’s paying $500 million to acquire trading card giant Topps Sports & Entertainment.

That purchase is complementary for Fanatics because last August the company procured rights for card deals with Major League Baseball (MLB) and the NBA. Fanatics Trading Cards landed $350 million in funding from three investors last September, valuing that business at $10.4 billion, reports The Wall Street Journal.