A group of investors has raised $700 million from Fanatics Inc., pushing the sports-merchandising company's valuation to $31 billion, according to people familiar with the matter.
The people said that two-thirds of the new money came from parties that hadn't previously invested in the company, including private-equity firm Clearlake Capital Group LP, which led the round, and investment and merchant-banking firm LionTree LLC. Prior Fanatics investors, such as Silver Lake, Fidelity Management Research Co. and SoftBank Group Corp., were also among the participants.
The people said that the investment, which comes in the form of common stock, will be set aside for strategic M&A. They said that the goal is to help Fanatics grow across its divisions, including its soon-to-be launched sports-betting and gaming business, and won't be used to fund its day-to- day operations.
Fanatics latest valuation was a relatively modest step up from March, when it raised $1.5 billion at a $27 billion valuation. It stands out as one of the few instances in which a big company raised money at a higher valuation during the market turmoil of 2022.
The people said that the company expects to complete an initial public offering, but it plans to wait until the new-issue market reopens and some of its new business lines are more established.
Under Chief Executive Michael Rubin, Fanatics has tried to expand into areas beyond its core business of providing merchandise and memorabilia for professional sports teams. The people said that the business still accounts for the bulk of the company's revenue, close to $6 billion in 2022, out of an expected total of nearly $7 billion.
Another division, Fanatics Collectibles, includes the trading-card business that the company started last year, as well as a smaller one offering sports-related nonfungible token, or NFTs. As more of its exclusive trading-card deals with players unions and leagues such as the National Football League and the National Basketball Association kick in, the unit is expected to reach $1 billion in sales this year, a figure that is expected to increase as more of its exclusive trading-card deals with the players unions and leagues kick in over the next few years, the people said.
In January, Fanatics said it was buying Topps Co., the dominant player in baseball cards. The purchase price was $500 million, according to The Wall Street Journal.
Rubin said that the third division of Fanatics - Sports Betting - Business will start in the spring of 2023 and will be in more than 15 states by the beginning of the next football season. Its launch would be the culmination of a long effort by the company to enter the rapidly expanding market. Fanatics hired Matt King, the former CEO of the FanDuel Group, to run the unit last year. It had an early setback when New York Gaming regulators rejected its application for a license in November 2021.