In December, The Athletic will be highlighting the coaches, athletes and other figures who made the biggest impact in the U.S. sports we cover, as well as in the fields of sports business, media and culture. Next up in the series is our honoree in sports business: Michael Rubin, the CEO of Fanatics, which is on its way to being the “Amazon of sports buying” with its wide array of sports apparel, collectibles and other ventures. The full schedule is here.
Love or loathe Fanatics Inc, it has evolved over the past year-plus into a major player in the sports industry beyond its core business of licensed college and pro sports apparel and merchandise.
That’s why owner and CEO Michael Rubin is The Athletic’s Sports Business Person of the Year for 2022, topping a field of contenders that includes Big Ten commissioner Kevin Warren, Amazon executives Jay Marine and Marie Donoghue, and others.
Over the past year, Rubin has navigated Fanatics into the sports collectibles space, expanded the core apparel business with new deals and acquisitions, and set the stage to get into sports gambling.
What in particular lifts Rubin is the two-pronged masterstroke he pulled off to quickly take control of the trading-card business amid the ongoing sports collectibles boom.
In 2021, Fanatics surprised the industry by inking future long-term licensing deals with Major League Baseball and its players union, along with the NBA and its union and the NFL union (and recently, the NFL itself) for trading cards.
That functionally undercut longtime industry kingpin Topps, which suddenly found itself facing the loss of its key licenses while attempting a SPAC deal to boost its value. Fanatics’ card maneuvers also dinged rival Panini, which has controlled NBA cards for years.
It was this past January when Fanatics completed what by then seemed inevitable — buying Topps, for a discounted $500 million, to take control of the domestic trading-card market that’s grown into a multi-billion-dollar retail and resale business of both physical and digital cards.
“This is going to be their industry. The success of modern cards and newly released cards are going to be on their shoulders,” said Ken Goldin, the founder of Goldin Auctions that is one of the card industry’s major auction sites. “They made an aggressive bet.”
The company this summer announced plans for licensed college trading cards beginning next year.
While Fanatics has its critics in other business segments, its stewardship of Topps so far remains under the radar. Goldin is optimistic.
“I expect them to do a tremendous job and deliver a superior product to collectors but doing so at price point they feel they’re getting a value,” he said. “I would say the industry consensus is hopeful and wait-and-see. I don’t think there’s a lot of pessimism.”
There’s a risk that Fanatics could botch a big chunk of the card business, but Goldin thinks that threat is low.
“You’re the name everyone is going to know. The risk is lack of creativity,” he said.
Rubin got into the digital collectibles space last year with a controlling investment in Candy Digital, an NFT platform that has deals with MLB and WWE. However, the subsequent collapse of collectible NFTs and implosion of the cryptocurrency space this year fueled layoffs across the tech section, including an undisclosed number recently at Candy Digital.
Outside of cards and collectibles, Rubin and Fanatics made a number of business decisions over 2022 to deepen ties with current partners, as well.
In March, Fanatics also struck a long-term deal with WWE to handle its e-commerce business and create new licensed merchandise, trading cards and NFTs.
Over the summer, the company said it would begin producing most of Nike Inc.’s fan apparel for major colleges starting in 2024, while Nike itself continues to make the on-field gear for the players.
In the collegiate name-image-likeness space, Fanatics launched a football jersey program with more than 4,000 players.
These deals helped further cement Rubin and Fanatics atop the licensed sports clothing and merchandise sector.
“He’s definitely a massive player in the space. The business of apparel has gone so direct-to-consumer and he owns that. They’re the Amazon of sports buying,” said Larry Mann, an executive vice president at Chicago-based sports marketing and media agency rEvolution and a former ESPN vice president of sales.
Fanatics also recently completed another round of fundraising intended to finance future expansion and acquisitions. This time, it was $700 million that boosts Fanatics’ valuation as a business to $31 billion, up from $27 billion after a $1.5 billion investment round earlier this year.
Three years ago, Fanatics was valued at $4.5 billion. The company projects $8 billion in 2023 revenue.
What about Fanatics’ core business — e-commerce and brick-and-mortar sales of licensed sports clothing and items — as it expands into other segments amid inflation and other pocketbook issues for consumers?
Consumers continue to buy jerseys and sports apparel despite economic uncertainty, said Matt Powell, a vice president and senior sports industry analyst at market research and advisory firm NPD Group Inc.
“The e-commerce side of the business should continue to be the best part,” he said. “Assuming the (consumer spending) trend continues, I think the future looks good for licensed sports products.”
And Fanatics is particularly well positioned because of how the business is set up, Powell added. That includes being a licensee, manufacturer and retailer both online and in stores.
“That’s the magic of the model for them — touching every aspect of the process,” Powell said.
Fanatics reportedly has a customer database of more than 80 million consumers.
Rubin with Joel Embiid of the 76ers and rapper Meek Mill during a playoff game in 2018. A Philadelphia-area native and part-owner from 2011 until this year, Rubin has been a fixture at 76ers games. (Drew Hallowell / Getty Images)
To bolster the business, Fanatics in February paid a reported $250 million for prestige sports apparel brand Mitchell & Ness in a deal that included celebrity investors such as Jay-Z, Maverick Carter, Meek Mill and Lil Baby.
Fanatics previously bought a stake in ballcap retailer Lids, which, like Mitchell & Ness, operates as its own standalone brand.
Up next, Rubin is about to wade into the sports gambling space with BetFanatics, which is expected to launch in early 2023 and possibly be in up to 20 states by the fall.
To clear the legal and regulatory decks to get into gambling and other sports deals, Rubin in October sold his 10 percent equity stake in Harris Blitzer Sports & Entertainment, corporate parent of the Philadelphia 76ers and New Jersey Devils.
Gambling is a busy new frontier since it became widely legal in recent years, with more states beginning to permit it, but it’s also a crowded space. How Fanatics crafts its licensed betting business and sets itself apart from other betting companies will shake out over the next couple of years.
After wagering, it’s unclear what Fanatics may do next. Media? Ticketing?
Unlike Alexander the Great supposedly weeping at the notion of there being no worlds left to conquer, Rubin and Fanatics believe there is more business to do and want to be all things to all sports consumers.
“I like his comments when he says wants to be everything for the consumer,” Mann said. “All the passion points of a sports consumer, he wants to touch. I find that to be really unique.”
Fanatics, of course, faces risks the same as any other company — overextension, recession, shifting consumer habits, dud products, etc.
The company is said to be cash-flow positive, so its new rounds of investment are for mergers and acquisitions rather than financing operations.
“We’re not privy to his financials to know if he’s overextended himself. I don’t think so,” Mann said. “I don’t see a huge risk unless he over-extends himself.”
Rubin, 50, got his start in business as a teenager selling used ski equipment out of his parents’ Philadelphia home, and by the later 1990s got into e-commerce as a seller and provider of turnkey online retail sales for bigger companies.
Rubin, who wasn’t made available to comment, formed Fanatics in 2011 after selling another company to eBay for $2.4 billion and then buying back portions of it, including Fanatics. The holding company for the business is based in New York while its day-to-day operations are handled in Jacksonville, Fla.
Forbes estimated he’s worth $11.3 billion. Outside of Fanatics, he’s co-chair of the REFORM Alliance that seeks to reform the criminal justice system and end prejudicial laws.
Rubin, who briefly attended Villanova University before building his businesses, made myriad powerful connections in and outside of sports during his career, which serve to bolster Fanatics’ growth.
One is Dallas Mavericks owner and longtime entrepreneur Mark Cuban, who has become an admirer of what Rubin has done with Fanatics.
“Michael has done an amazing job building Fanatics. He is on a mission to remake and take everything related to sports branding and he is well on his way to doing so,” Cuban said via email. “He has the drive, EQ, brains and focus to do it. He is an amazing entrepreneur.”
GO DEEPER
The Athletic’s Sportspersons of the Year: The athletes and coaches who defined 2022
(Illustration: Sean Reilly / The Athletic; David Dow / NBAE via Getty Images)
