NFL, Fanatics relationship takes on new dynamic as league buys stake in company
The NFL is now a partial owner of the sports apparel and merchandise giant Fanatics.
On the heels of Fanatics nabbing part of the NBA uniform license and all of the MLB uniform license with its acquisition of Majestic, the sale of a minority stake has brought a brand new dynamic to the NFL-Fanatics relationship.
Other than now being a part of the company which will produce MLB and NBA jerseys, the acquisition of a small piece of Fanatics makes sense for the NFL despite the hefty price that the league had to pay to get into the ownership room.
The NFL has purchased a 3% stake in retail giant @fanatics for $95 million, reports @sbjsbd's Terry Lefton.
— Darren Rovell (@darrenrovell) May 8, 2017
Values company at $3.17B.
Before the NFL became a part-owner of Fanatics, its only capability of profiting off the myriad of merchandise sold daily on the site and in stores was royalties off NFL-licensed merchandise, in addition to whatever licensing fees Fanatics pays to the NFL. With this purchase, the NFL will now enjoy all the benefits of being a stakeholder in the company and thus be able to enjoy a percentage of all sales.
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As much as the deal benefits the NFL, it’s also a win for Fanatics.
Having the NFL as an investor not only keeps the most lucrative professional sports brand in the western hemisphere close, but adds a lot of credibility in future negotiations for other uniform and licensing contracts. When the NFL’s own uniform licensing deal with Nike expires after the 2019-20 season, Fanatics may be part of the next contract in partnership with Nike or Under Armour, as is the case with NBA and MLB uniforms.
It’s also worth watching from this point out if other leagues will follow the NFL’s lead and put up the cash necessary to buy similar minority stakes in Fanatics. Fanatics already handles some manufacturing and distribution for Under Armour, so it’s not too far-fetched to speculate that perhaps Under Armour and/or Nike would become investors as well.
In a few years’ time, Fanatics could have strong relationships with at least three of the four biggest professional sports leagues in North America. The NFL becoming an investor is a significant step toward that possibility.