Fanatics has long been rumored as a potential IPO candidate as the e-commerce and sports business platform has continued to increase its valuation and its reach. While an IPO is not on the immediate horizon, the company is taking a step in the direction of preparing for one, hiring Meta's investor relations head to further build out its engagement with current and future shareholders.
Deborah Crawford, who has served as Meta's vice president of investor relations for more than eight years, is being appointed as Fanatics' head of investor relations, a new position at the company. Prior to Meta, Crawford was head of investor relations for Netflix, where she helped initiate the streaming company's first formal investor relations function, according to Fanatics.
Fanatics executive vice president and CFO Glenn Schiffman said the company wanted to bring on a head of investor relations "well in advance of any contemplated public offering," giving Crawford time to understand the company's business and "help us share the story, shape the narrative, and be involved from the first minute of the first day of drafting the roadshow presentation and drafting the S-1."
Schiffman declined to comment on the potential timing of a Fanatics IPO but confirmed the company has a goal of going public.
"We're not going public near term. We've thought about it medium term. Eventually, we will go public," Schiffman said.
"We've been on record that it's medium term, that's 12 to 24 months, but it'll depend on the state of the business, it'll depend on the state of the markets, it'll depend on our goals," he said. "I wouldn't read into the definition of medium-term, short-term, long-term; I think we're gearing up, we're investing in our business, we're investing in our talent, we're investing in our team to be able to choose the right time."
Meta could not be immediately reached for comment. Crawford led Meta's call with analysts after its quarterly earnings on Wednesday afternoon.
Last fall, Fanatics CEO and founder Michael Rubin met with more than 90 internet, retail and gaming analysts from various Wall Street firms, discussing Fanatics' growth plans.
While that sparked rumors that Fanatics was close to going public, Schiffman said it was instead a reflection of the way Fanatics is approaching this potential stage of the company's growth, something it is bolstering with Crawford's hire. "We're spending time with the buy side and sell side more than a pre-IPO company, so she's part of that process," he said.
"I've always been kind of surprised or shocked at how companies on the eve of their roadshow, the eve of their IPO, the eve of filing, bring on a head of IR or make a similar change to their management team," Schiffman said. "I've always thought that was pretty silly, frankly."
Fanatics has seen its valuation and investor roster drastically expand in recent years, which has also helped to fuel IPO chatter. In December, Fanatics raised $700 million at a valuation of $31 billion, bringing on Clearlake Capital and LionTree as new investors, as well as further investments from Silver Lake, Fidelity, and Softbank.
In March 2022, Fanatics raised $1.5 billion at a valuation of $27 billion, a round led by Fidelity, Blackrock, and Michael Dell's MSD Partners. Other investors in the company include Thrive Capital, Franklin Templeton, Neuberger Berman, Alibaba Group, and the Qatar Investment Authority, as well as Major League Baseball, the NFL Players Association, and the National Hockey League.
That valuation growth has come alongside a further expansion of Fanatics' business. In addition to growing its licensing and rights deals to include WWE's on-site retail sales and the NHL's official uniform, Fanatics has also pushed deeper into trading cards and collectibles, as well as live-streamed shopping.
Fanatics has also moved into the crowded sports betting space, and has reportedly considered acquisitions to compete with Flutter-owned FanDuel, DraftKings, Caesars and BetMGM, which is co-owned by MGM Resorts and Entain.
Last year, Rubin sold his 10% stake in Harris Blitzer Sports Entertainment, the owner of the Philadelphia 76ers and New Jersey Devils, which allowed Fanatics to enter the gambling space. NBA rules prohibit team owners from operating a gambling platform.
However, Fanatics has slightly moved away from the once-hot market of NFTs, divesting its 60% stake in NFT company Candy Digital in January. Candy Digital, which Fanatics co-founded with Galaxy Digital CEO and crypto backer Mike Novogratz, had previously been valued at $1.5 billion after raising a $100 Series A in October 2021.
Revenue for Fanatics, including its Lids segment, will be approximately $8 billion in 2023, according to company estimates previously reported by CNBC. That number excludes any trading card rights expected to come in the next few years.
Fanatics does not have a "present intention" to do another capital raise, Schiffman said, as the company has a significant cash balance, and its businesses are either fully funded or free-cash-flow positive. However, he did add that "if an opportunity is there, we could consider it."
Another consideration for Fanatics could be the state of the IPO market, which has been effectively frozen. In 2022, just $7.7 billion was raised in the IPO market, compared to an average of $55 billion in each of the previous 10 years.
So far in 2023, the total amount raised by IPOs is $2.4 billion.
That market could thaw a bit depending on the success of Johnson & Johnson's spinoff of consumer-health company Kenvue. In a regulatory filing this week, Johnson & Johnson said it will price shares of the company at $20 to $23 in an IPO later this year, which would value Kenvue at around $40 billion.
Fanatics, a three-time CNBC Disruptor 50 company, is just one of the many venture-backed giants that have been rumored for a potential IPO this year, including Delivery giant Instacart, payments processor Stripe, Fortnite developer Epic Games, and digital banking provider Chime.
Schiffman said the company isn't spending much time looking at the public markets, and instead is focusing on "growing our business and focused on executing our plan."
