Fanatics raises $700m in funding round ahead of 2023 US sportsbook drive
US investors circle as sports merchandisers value tops $31bn with funds to be used to grow operational divisions
Aspiring sports betting operator Fanatics has raised more than $700m in new funding from US investors and banks ahead of its expected US sportsbook launch in 2023.
Details of the capital raise first surfaced on the Wall Street Journal website and were later confirmed by Reuters.
Santa Monica-based private-equity firm Clearlake Capital Group LP led this funding round and investment firm LionTree LLC are among new investors in the company, with two-thirds of new funds received coming from new investors.
Previous Fanatics investors SoftBank Group, Silver Lake, and Fidelity Management & Research were among those returning for a second bite of the investment cherry in this round.
It is understood that the investment proceeds, made in the form of common stock in the business, will be used for M&A as well as growing the business’ three main divisions: commerce, collectibles, and the newest division, betting and gaming.
The investment has reportedly pushed the overall valuation of Fanatics to $31bn, with the business now worth more than half the companies which make up the Standard & Poors top 500 list of companies.
Headquartered in Jacksonville, Florida, Fanatics operates a multi-million-dollar multi-channel global sports merchandising business across 11 countries as well as an NFT marketplace business, Candy Digital.
In January, Fanatics acquired US-based trading card firm Topps for $500m and has recently bought clothing retailer Mitchell & Ness, with the $250m deal partially funded by rapper Jay-Z.
Fanatics’ partners include all major US professional sports leagues (NFL, MLB, NBA, NHL, NASCAR, MLS, and PGA) and hundreds of collegiate and professional teams.
At an international level, the merchandiser has agreements with Manchester United, Chelsea, Paris Saint-Germain, Bayern Munich, Atletico Madrid, The FA, UEFA, NFL, NBA, and Formula One.
The influx of new capital comes amid Fanatics’ preparations to develop its debut US sportsbook brand, BetFanatics, with a launch planned for January.
In October, Fanatics CEO Michael Rubin confirmed the 2023 launch, with Fanatics targeting more than 15 US states in its debut breakout year as it looks to carve out market share from the more established players such as DraftKings, BetMGM and US market leader FanDuel.
“We’re going to start launching in multiple states in January,” Rubin said at a conference in October.
“We’ll be in every major state other than New York, where you can’t make money by next football season and we do like to make money by the way,” he said.
Fanatics’ journey as a potential sportsbook operator in the US has not been an easy one, beginning with the New York State Gaming Commission’s rejection of its sportsbook license application in October 2021, an application which would have seen the firm partner with Roc-Nation founder Jay-Z.
Since then, the company’s ambitions have been the subject of near constant speculation, with rumors ranging from the business pursuing M&A with established operators including PointsBet, Rush Street Interactive, and Malta-headquartered operator Tipico. All rumors have ultimately proven to be fruitless.
Another option, and seemingly the one chosen by the firm, is to develop its own sportsbook in-house, with unconfirmed reports claiming a purchase of sportsbook technology and code from supplier Amelco.
Rubin, for his part, has remained committed to expanding Fanatics into sports betting, shedding his 10% stake in Harris Blitzer Sports Entertainment (HBSE) as part of measures necessitated by the sportsbook launch in June 2022.
In comments made in August, the Fanatics CEO highlighted the potential synergies of bringing sports merchandising and betting together.
“To be able to take that 100 million fans and not only service them with all their merchandise needs and all of their collectible needs but also with their sports betting needs is a big opportunity for us,” Rubin said.
“I think we can service the fan better and do things better for them, and at the same time have a better business model,” he added.