Fanatics rides pandemic sales boom to $12.8 billion valuation

The five-month long professional sports drought last year clearly did not stop Americans from buying their favorite team’s jersey or hat, judging by Fanatics sales results.

Fanatics, which owns the rights to fan gear for the sports teams in the major U.S. sports leagues, as well as some Nike products, saw online sales rise 20% last year, and is now on a path to hit the $3 billion sales milestone this year, as sales continue to surge while the country re-opens and in-person attendance resumes gradually.

In addition the deals with the leagues, the company’s secret sauce has been its own integrated manufacturing and retail operations that have allowed it to respond swiftly to demand, such as producing jerseys for a championship team soon after it wins the final game, or when a superstar changes teams as LeBron James did in 2018.

On the strength of its big sales gains, Fanatics got a big show of support from current investors, principally Silver Lake along with Fidelity, Neuberger Berman, Franklin Templeton, Blackstone, Thrive Capital and Major League Baseball to the tune of $320 million in a new funding round. That gives Fanatics a valuation of $12.8 billion, roughly twice what it was only six months ago.

Another big reason for their bullishness: Fanatics, whose founder and executive chairman Michael Rubin is also a part-owner of the N.B.A.’s Philadelphia 76ers, is about to make a big play for China. Last month, Fanatics announced 50-50 joint venture with Hillhouse Capital, an Asian private equity firm, to enter the sports licensed product market in China.

Meanwhile, in its bread-and-butter U.S. market, Fanatics has made more moves to strengthen its grip. Since its last funding, Fanatics bought a college hats brand and a hardwoods company so it can build up its business beyond apparel to things like souvenirs and novelty items, as well as headwear.

As for an IPO at a time the market for new stock flotations is sizzling, the company says no news on a timeline even as a spokesman says an IPO “is clearly an option.”

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