Fanatics CEO Michael Rubin has a game plan to make Fanatics Sportsbook a one-stop shop for sports betting, licensed team merchandise, collectibles and tickets. On The Volume with Colin Cowherd in a wide ranging interview, Rubin also discussed purchasing and then selling his stake in the Philadelphia 76ers, sports collectibles and the one piece of memorabilia he wants more than anything.
Michael Rubin on buying, then selling stake in Sixers
Rubin was raised in suburban Philadelphia in Lafayette Hill and his favorite team was the Sixers. His entrepreneurial spirit started to bloom at eight-years-old selling vegetable seeds and shoveling snow. At 11, he started a ski-tuning shop in his parents’ basement.
After dropping out of Villanova, Rubin founded Global Sports Incorporated, an apparel and logistics company. In the late nineties, it evolved to GSI Commerce. In 2011, Rubin had sold GSI Commerce to eBay for $2.4 billion. Later, he bought back the consumer business of GSI at a lower price and repurchased Fanatics.
While on The Volume, Rubin recalled his next door neighbor, Ed Snider, the owner of the Philadelphia Flyers and 76ers, stopping over when Rubin sold Fanatics in 2011 with a congratulatory bottle of champagne and a proposal.
“You should buy the Sixers from me,” Snider said.
Rubin mentioned the Sixers were losing a lot of money and he was focused on Fanatics. He also thought the asking price would be upwards of $400 million.
“I like you too much, I don’t want you to buy the team,” Rubin recalled Snider saying.
Another opportunity to invest in the 76ers presents itself
Then, Josh Harris and David Blitzer bought the Sixers for $280 million and were looking for a local partner.
“Josh and David were incredible partners and it was a great opportunity to work with them,” said Rubin.
On being a minority owner with the Sixers, Rubin commented:
“I believe the NBA is well-positioned strategically. Look at (Joel) Embiid and (James) Harden. I have a great relationship with those players. Those players have done a lot to help the Sixers’ position. Harden took $14 million less because he wants to win a championship. I deal with powerful people every day and my job is to figure it out and have a great relationship with them whether they play on the court, are partners, owners, or fans. If you treat people the right way you are going to get a good outcome.”
Why Michael Rubin sold stake in Sixers
Rubin held a 10% equity stake in Harris Blitzer Sports & Entertainment, the company that owns the 76ers and the New Jersey Devils. Rubin announced on June 22 he is divesting his 11-year stake in both franchises due to the upcoming conflicts of interest with Fanatics expanding into sports betting and collectibles.
“It got too complicated. We plan to take bets on the Sixers by the end of this year. It was great when it wasn’t a conflict. When I saw that it was holding back Fanatics it was immediately an easy decision. Fanatics is a massive opportunity. This is a company I think can be the most valuable company in sports. Potentially the most valuable company in technology. I am locked-in and laser-focused.”
Fanatics has filed to trademark BetFanatics, which will be their brand for online casino, sports betting and fantasy sports applications. The company has also built up a strong leadership team which includes:
- CEO Matt King, former FanDuel CEO
- Chief Commercial Officer Ari Borod, former COO of The Action Network and former VP of fantasy sports at FanDuel
- Chief Product Officer Scot McClintic, former CPO and GM of Barstool Sportsbook & Casino
On The Volume, Rubin went more in-depth on what the Fanatics sports betting app will look like and how they plan to leverage their database of 100 million customers. He believes it will be the ultimate digital sports experience with everything fans want all in one space.
“There really isn’t another company today that is working to build an end-to-end digital sports platform. A place where one day you can bet on the games as you are watching them live, buy the jersey, get a collectible, an NFT or a ticket. We really want to give the sports fan everything they want in one place. That’s a massive opportunity.”
Fanatics sports betting launch
Pennsylvania launched online sports betting in the summer of 2019 and now has 14 online sportsbooks with FanDuel holding about a 40% market share. Currently 30 states and DC now offer some form of sports betting.
However, even before Rubin spoke to Cowherd, Fanatics has expressed it is looking at the long game.
At a sports media summit in March, Fanatics Chief Commercial Officer Ari Borod said:
“We aren’t going into this industry to win for 2 years. We are looking at this 5-10 years from now. We are bullish on this industry long-term.”
Sports betting is still not legal in the two largest U.S. states by population (California and Texas).
“It’s very early. It’s the second or third inning of sports betting,” said Rubin when Cowherd asked him about what stage the sports betting industry is currently in.
“I think ten years from now, sports betting is completely mainstream in most places in North America. The experience will also be demonstrably better. We aren’t worried about how things start. It’s about how things finish. We are going to make sure we create the best product and experience for sports fans.”
Fanatics collectibles and NFTs
In addition to sports betting, Fanatics has been building its collectibles division.
- June 2021: Rubin, crypto investor Michael Novogratz, entrepreneur Gary Vaynerchuk teamed to create Candy Digital. The company specializes in virtual collectibles and other NFTs. Major League Baseball is its first partner, giving it exclusive rights to digital collectibles released by the league or its 30 teams.
- August 2021: Fanatics pinned down rights for Major League Baseball, the NFL Players Association, and the NBA to produce trading cards.
- Early January 2022: Fanatics acquired Topps trading cards physical and digital arm in a deal valued for about $500 million. This isn’t just a play for a “pack of cards.”
Rubin told Cowherd that in the collectibles industry, Fanatics plans to:
- Eliminate redemptions
- Market the industry
- Build more innovative products
“So many collectors hate redemptions. We need to do better. The industry today spends less than 1% of revenue in marketing. There is so much opportunity to innovate, market and take better care of collectors. It’s a massive opportunity.”
No sleep for Rubin
Fanatics hit a valuation of $27 billion in March. Rubin repeatedly mentioned during the podcast the goal is for Fanatics to be a $100 billion company.
“We are just getting started. I think next year we could be approaching $10 billion in revenue. There is so much more to improve the sports fan experience. In gambling, I think we are going to create a great experience for fans.
The constant pursuit to make experiences better for sports fans keeps him up at night.
“I am the worst sleeper in the world,” Rubin told Cowherd.
He sleeps about three hours each night. He’s too distracted by texts, emails, and the news. And he just doesn’t like losing.
Which brings it back to the Sixers. Cowherd asked if there is a piece of memorabilia Rubin wants. What do you get the man who seemingly has everything?
“A 2023 Sixers championship ring. I want the shit that’s hard to get because that’s what makes it interesting.”
Fanatics sportsbook in Pennsylvania
Rubin said Fanatics Sportsbook would take bets on the Sixers by the end of 2022. Will Rubin be able to place a bet on the Sixers while he is in Pennsylvania? What is Fanatics Sportsbook’s possible path to launch in PA?
Fanatics applied for iGaming and sports betting licenses to the Pennsylvania Gaming Control Board on April 26 as FGB Enterprises. The status is still pending, where it will likely remain for a while.
Fanatics will need to partner with a land-based certificate holder to launch its sportsbook in Pennsylvania. Its options are limited.
Here’s what they could possibly do. It is all speculation and anything that does become official would then be subject to approval by the Pennsylvania Gaming Control Board.
- TwinSpires, which operates in PA through its partnership with Presque Isle Downs, plans to shut down its online sportsbook and casino in PA in December or January. Fanatics could possibly purchase TwinSpires.
- Possible land-based partners in PA: Parx Shippensburg plans to open by the end of 2022. Lady Luck Nemacolin does not yet have a sports betting partner. There’s also Bally’s, which is planning on opening a mini-casino near State College. However, the project is delayed and it doesn’t even have a license yet.