A Billion-Dollar Company That Knows What It Won't Do
Most companies spend their time chasing new markets. Fanatics, the huge sports merchandise and betting company, is spending its time ruling them out.
Fanatics has come a long way since its founding in 2011 as a simple sports apparel retailer. Through strategic acquisitions and partnerships, it has built a dominant position in licensed merchandise, later expanding into collectibles and sports betting, which now contribute significantly to its $14 billion revenue forecast.
Founder and CEO Michael Rubin appeared at the CNBC Game Plan Summit on July 16 and shut down two big questions right away. The company is already huge but Rubin says some businesses just are not worth the headache.
"We don't want to be big; we want to be beloved," he said.
That remark stands out given the company's valuation of $31 billion following a $700 million funding round concluded in December 2022. Fanatics now serves more than 150 million customers across its sports-focused businesses. Its Fanatics Fest expects over 200,000 attendees over four days. But size alone is not the goal anymore.
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The company's shift in focus follows a turbulent 2024 when Fanatics faced widespread criticism over its NHL and MLB jersey production. That backlash forced Rubin to reevaluate the company's priorities, leading to the current emphasis on fan experience over sheer expansion. The jersey quality issues in 2024 prompted Rubin to reassess the company's trajectory, leading to a renewed focus on customer satisfaction rather than unchecked growth. Fanatics' expansion into collectibles and sports betting had already diversified its revenue streams, but the public relations crisis underscored the risks of prioritizing scale over quality.
Why Ticketing and Broadcasting Are Off the Table
Fanatics faced serious public backlash in 2024 over its jersey production for both the NHL and the MLB. That criticism pushed Rubin to rethink the company's purpose. He now defines it as "relentlessly enhancing the fan experience." If a business does not fit that mission, he walks away.
Ticketing is a perfect example. Rubin said it is "a hard business … it's a complicated business; lots of competitors." The teams and artists that provide the content "keep all the money, which is the way it should be." So Fanatics will never get into that business.
Broadcasting is another area Rubin wants to avoid. "There are so many big companies," Rubin said. His plan is to "get the popcorn out and watch" from the sidelines.
The Bigger Bet: New Businesses Still to Come
Rubin is not saying Fanatics is done growing. He told CNBC he believes the company could become "the most valuable company in sports" and expects to launch new businesses over the next decade.
"We think there are several opportunities to create new businesses that we're not in, leveraging the relationships we have with customers, with sports properties, with the athletes," he said.
Through the years, the company has built extensive operations in trading cards, gambling, and prediction platforms. Rubin said he expects a similar story to play out again: "I'd say a decade from now, I bet you we have a few businesses that are equally as important to the three that we have today."
The bottom line: Rubin sees no reason to rush. "There's no rush to be a public company," he said on CNBC last year, even though many expect Fanatics to eventually go public.
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