Fanatics has denied a report suggesting that Chairman and CEO Michael Rubin might be considering selling up to $1 billion worth of his stake in the privately held company.
The report, published in the Airmail Newsletter by William Cohan and based on unnamed sources in private stock transactions, claimed Rubin was exploring the sale of $250 million of his equity as part of a potential $1 billion sale. Fanatics, however, has stated that no such transaction is planned.
This reported sale would have been a significant discount, given that Fanatics was valued at $31 billion after raising $700 million in capital in December 2022.
Fanatics IPO Likely Delayed
The speculation about Rubin reducing his stake in Fanatics comes amid growing doubts that the sports apparel giant will launch an initial public offering (IPO) in 2024.
Fitch Ratings, in a report released last December, noted that Fanatics’ EBITDA for 2024 and 2025 should improve due to a rebound in e-commerce sales and decreasing losses in the sports wagering unit. Nevertheless, Fitch downgraded Fanatics’ rating from “BB-” to “B+” — both considered junk grades — partly because of weakening free cash flow (FCF).
Fanatics IPO Still on the Horizon
Even if Rubin were to sell some of his Fanatics equity, it wouldn’t necessarily be a cause for concern. Founders often sell shares to raise cash and diversify their portfolios. Such a sale wouldn’t hinder IPO efforts, especially with Fanatics holding a $1.7 billion cash reserve.
For now, Fanatics seems content to stay private, focusing on expanding its various divisions, including enhancing its sports betting unit and the Topps trading card division.
Fanatics has significant backing from the four major US sports leagues — Major League Baseball (MLB), the NBA, NFL, and the NHL, as well as Major League Soccer (MLS). Other investors include Silver Lake, SoftBank, BlackRock, Fidelity, and MSD Partners, an investment firm controlled by Dell founder Michael Dell.
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