Fanatics sees parts of its business fall 100% with sports on hold due to coronavirus
Fanatics, the privately-held sports apparel company valued at $4.5 billion, is the official retailer of licensed merchandise for all the major U.S. sports leagues, including the NFL, NBA, NHL, MLB, MLS, and PGA Tour.
But there are no sports right now, as all the major leagues have put their seasons on hold due to coronavirus. “That's a pretty bad ingredient for near-term business,” says Fanatics executive chairman Michael Rubin, who is also a co-owner of the Philadelphia 76ers.
Fanatics operates around 50 merchandise stands at different stadiums, and has a wholesale business that supplies product to brick-and mortar retail stores. That segment makes up a third of Fanatics’ business, and that segment is down 100%, since stadiums are closed and stores are closed.
Online sales, which typically represent two thirds of Fanatics’ business (it’s mostly an e-commerce company, which is why it’s seen as a tech unicorn), are down 30% to 40%, whereas online sales had been trending up 20% pre-coronavirus.
“So, glass half-full, there are still customers buying licensed sports products from their favorite teams, at maybe a 40% lower rate than they would have been buying,” Rubin said on Yahoo Finance on Monday. The “glass half-empty” view, Rubin says, is that a third of the business is down 100% and two-thirds is down 30% to 40% from the previous rate.
Still, Fanatics made news last week for quickly converting its factory in Easton, Pa., where it manufactures official MLB jerseys, into a hub for making coronavirus masks and gowns for hospital workers. The masks and gowns are made out of jersey material, and Fanatics worked closely with MLB Commissioner Rob Manfred to make the change, which included halting production of MLB jerseys.
Fanatics isn’t the only sports apparel brand using its manufacturing capabilities to help hospital workers: Nike, Under Armour, New Balance, and Bauer are all doing the same.
And Fanatics is hardly the only sports industry company feeling the sales hit from coronavirus. Leagues will see the pinch of lost revenue, as will team owners, league sponsors, TV advertisers, broadcasters, merchandisers, and media outlets that cover sports.
Buffalo-based hat brand New Era is furloughing 70% of its employees. Maven, the parent company of Sports Illustrated and financial blog The Street, laid off 9% of it workforce on Monday, which included several Sports Illustrated journalists. DAZN, the European sports streaming platform that has UFC and boxing rights in the U.S. and many more live sports rights outside the U.S., told employees this week it will have to furlough people imminently, according to Sports Business Journal.
The entire industry has ground to a halt as coronavirus freezes live sports, and it’s unclear where every company will be financially when the dust settles after quarantining.
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Daniel Roberts is an editor-at-large at Yahoo Finance. Follow him on Twitter at @readDanwrite.
Read more on how coronavirus is hitting the sports world:
Nike, Under Armour, Fanatics and other sports retailers are making coronavirus masks
Nike, Lululemon say they learned lessons from coronavirus closures in China they can apply to U.S.
Coronavirus hits sports leagues: March Madness canceled; NBA, NHL, MLS seasons on hold
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