Fanatics’ valuation is up 15% since March

The news: Sports-merchandising giant Fanatics reportedly raised $700 million from investors, pushing the company’s valuation to $31 billion—a 14.8% increase from March when it raised $1.5 billion, per The Wall Street Journal.

  • That makes Fanatics one of the few large companies to raise money at a higher valuation than its previous funding round this year.
  • The company plans to set the proceeds from the investment aside for strategic M&A as it looks for growth opportunities across its company, including its sports betting and gaming business. It says the funds won’t be used for day-to-day operations.

Why Fanatics has investors’ trust: Fanatics has come to dominate the sports merchandise and memorabilia market, which the Journal reports will account for roughly $6 billion of its $7 billion in revenues this year.

  • The company also operates the Fanatics Collectibles division, which includes the trading card business it launched last year and nonfungible tokens (NFTs). The company expects to significantly grow the division’s $1 billion in revenues this year thanks to exclusive trading card deals with Major League Baseball, the National Basketball Association, and the National Football League.
  • The company plans to launch a third division, a sports betting business, that will operate in at least 15 states next spring.

The big takeaway: While the days of cheap capital fueling hypergrowth are in the past, investors are ready to fund companies that have a proven track record of market dominance.

  • Fanatics appears poised to make its mark in sports betting to further capture an even larger share of consumers’ sports-related spending.