On the heels of a recent funding round that values the company at $27 billion, Fanatics makes for one of the most widely anticipated initial public offerings (IPOs), but it appears likely the sports merchandise giant will remain private through the end of 2022.
That’s the view of unidentified sources cited by CNBC. News of a diminished likelihood of a 2022 IPO by Fanatics emerges just weeks after a $1.5 billion funding round wrapped up, valuing the company at $27 billion. The $27 billion valuation is more than quadruple the $6.2 billion Fanatics was estimated to be worth just two years ago.
An anonymous executive cited by CNBC expressed skepticism that the Florida-based company is truly worth $27 billion, noting it’s a potential red flag that Fanatics remains a private company. Regardless of size or valuation, private companies aren’t required to update regulators on their financials — something publicly traded companies must do.
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.
Likely Taking Pass on WynnBET
Fanatics has well-documented sports wagering ambitions. Last year, the firm filed several patent applications with the US Patent and Trademark Office (USPTO) for a branded casino, mobile betting app, and sportsbook. Before that, the Florida-based company announced the hiring of former FanDuel CEO Matt King.
Last year, the company attempted to procure a New York gaming license, but wasn’t successful in that endeavor. Fanatics has also been tied to multiple acquisition rumors, including PointsBet, Rush Street Interactive (NYSE:RSI) and Swedish gaming giant Betsson, but the sports apparel giant hasn’t pulled the trigger on any of those deals.
Sources tell CNBC it’s unlikely Fanatics makes a run at Wynn Interactive. Rumors surfaced in January that Wynn Resorts (NASDAQ:WYNN) is shopping its online gaming and sports wagering business, which includes WynnBET, for $500 million, but the casino operator hasn’t confirmed that and speculation to that effect died down in recent months.
PointsBet, RSI and WynnBET are each licensed in New York. Still, it’s widely believed it’s a matter of “when”, not “if” Fanatics enters the sports wagering arena. Rubin recently said at a conference his company could enjoy significant customer acquisition cost advantages, making it a formidable rival to entrenched competitors in the industry.
Famed Investor Roster
As for the IPO, timing remains to be seen and it’s not clear if investors are pushing Rubin to expedite that process.
It is, however, clear that Fanatics’ investor roster doesn’t lack for big names. The company’s backers include Peyton Manning, rapper Jay-Z, Brooklyn Nets owner Joseph Tsai, BlackRock, Fidelity, the NFL, the NFL Players Association (NFLPA), Major League Baseball (MLB) and its players’ union, and the NHL.
Should Fanatics remain private through the end of this year, that likely means the biggest IPO in the sports wagering space in 2022 will be a spin-off of FanDuel by Flutter Entertainment (OTC:PDYPY). That transaction is hindered by a legal spat between the gaming company and Fox Corp. (NASDAQ:FOXA).
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