Posted on: Apr 12, 2022 8:10 am.
Last updated on: April 12, 2022, 8:10 am.
Following a recent round of funding that values the company at $27 billion, Fanatics is making for one of its most anticipated initial public offerings (IPOs), but it seems likely the sporting goods giant will remain private until late 2022.
Fanatics founder Michael Rubin here in a 2019 CNBC interview. The company likely won’t have an IPO this year. (Image: CNBC)
That is the view of unidentified sources cited by CNBC. News of a reduced likelihood of a Fanatics IPO in 2022 comes just weeks after it closed a $1.5 billion funding round that values the company at $27 billion. The $27 billion valuation is more than four times the $6.2 billion that Fanatics valued just two years ago.
An anonymous executive quoted by CNBC expressed skepticism that the Florida-based company is really worth $27 billion, noting that it’s a potential red flag that Fanatics remains private. Regardless of size or valuation, private companies are not required to keep regulators informed of their finances – something publicly traded companies are required to do.
Fanatics founder Michael Rubin recently said the plan is to grow the company to $100 billion over the next decade. Sources with inside knowledge of the operation believe the target is $10 billion in earnings before interest, taxes, depreciation and amortization (EBITDA) by the end of those 10 years.
Probably pass on WynnBET
Fanatics has well-documented sports betting ambitions. Last year, the company filed several patent applications for a branded casino, mobile betting app, and sportsbook with the United States Patent and Trademark Office (USPTO). Earlier, the Florida-based company announced the hiring of former FanDuel CEO Matt King.
Last year the company tried to get a New York gaming license but was unsuccessful. Fanatics has also been linked to several takeover rumors, including PointsBet, Rush Street Interactive (NYSE:RSI) and Swedish gaming giant Betsson, but the sportswear giant hasn’t pulled the trigger on any of those deals.
Sources tell CNBC Fanatics is unlikely to join Wynn Interactive. Rumors surfaced in January that Wynn Resorts (NASDAQ:WYNN) was buying its online gaming and sports betting business, which includes WynnBET, for $500 million, but the casino operator has not confirmed this and speculation is high subsided in recent months.
PointsBet, RSI and WynnBET are each licensed in New York. Still, it’s widely believed that it’s a matter of “when” not “if” that Fanatics will enter the sports betting arena. Rubin said at a recent conference his company can enjoy significant cost advantages in customer acquisition, making it a formidable contender for established competitors in the industry.
Famous investors list
As for the IPO, the timing remains to be seen, and it’s not clear if investors are pushing Rubin to accelerate the process.
However, it’s clear that there’s no shortage of big names on Fanatics’ list of investors. Company supporters 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, it likely means that the biggest IPO in the sportsbook space of 2022 will be a spinoff of Flutter Entertainment’s (NYSE:FLUTTER) FanDuel. This transaction is governed by a lawsuit between the gaming company and Fox Corp. (NASDAQ:FOXA) hampered.
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