Fanatics Valuation Jumps to $31B Following $700M Capital Raise

Posted on: December 6, 2022, 03:30h. 

Last updated on: January 3, 2023, 05:37h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Florida-based collectibles, sports apparel, and sports wagering company Fanatics’ valuation has risen to $31 billion. That’s after the company raised $700 million from a group of investors.

Fanatics
Fanatics founder and Chairman Michael Rubin. The company raised $700 million at a valuation of $31 billion. (Image: CNBC)

That’s a significant increase from a $27 billion valuation revealed in March, and one that’s all the more impressive when accounting for lethargy in private capital markets caused by macroeconomic headwinds, such as rising interest rates.

The Wall Street Journal reports that roughly two-thirds of the $700 million Fanatics raised came from new investors, including private equity firm Clearlake Capital Group and LionTree LLC. Previous investors in the company, including Fidelity, Silver Lake, and SoftBank Group, also participated in the funding round.

“Proceeds from the investment, which comes in the form of common stock, will be set aside for strategic M&A, “ the Journal reported, citing unidentified sources familiar with the matter. “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.”

Could Fanatics Pull Trigger On Betting Deal?

As noted above, some of the $700 million raised by Fanatics could be directed to mergers and acquisitions. It remains to be seen if that involves sports wagering.

Fanatics is aiming to begin accepting sports wagers early next year, with hopes of being live in at least 15 states by the start of the 2023 NFL season.  In other words, the company’s sports betting ambitions are widely known. As a result, it’s widely mentioned as a possible suitor for smaller wagering companies.

Previous speculation centered around Fanatics being a possible buyer of Swedish gaming giant Betsson, Churchill Downs’ (NASDAQ: CHDN) TwinSpires Racing unit, PointsBet, Rush Street Interactive (NYSE: RSI), Tipico, or WynnBET. None of those rumored deals came to fruition.

Fanatics isn’t acquisition-averse. In January, the company announced the purchase of trading cards company Topps Sports & Entertainment in a transaction reportedly worth $500 million.

Fanatics IPO Still Possible

Entering 2022, market participants were eagerly anticipating a Fanatics initial public offering (IPO). Those hopes were dashed amid slack market conditions, including dampened enthusiasm for emerging growth equities, of which Fanatics would be one.

While the IPO didn’t happen this year, it’s not dead. Sources told the Journal Fanatics is still eyeing becoming a publicly traded company, and is merely waiting for some of its younger business lines to mature and for market conditions to improve.

Fanatics founder Michael Rubin recently said the plan is to grow the company to $100 billion over the next decade. Sources with internal knowledge of the operation believe the goal is $10 billion of earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of those 10 years.