Fanatics Acquires Topps for $500 Million, Eyes Trading Card Dominance

Posted on: January 4, 2022, 08:52h.

Last updated on: January 4, 2022, 09:15h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Fanatics hasn’t produced its own trading cards as of yet. But the company continues making waves in the space, announcing today it’s acquiring Topps Sports & Entertainment.

Fanatics Topps — Fanatics Chairman Michael Rubin, seen here in 2018. His company is shaking the sport card world again, acquiring Topps for $500 million. (Image: *CNBC*)

The buyer is reportedly paying $500 million for the venerable baseball card, or more than triple the target’s 2021 earnings before interest, taxes, depreciation and amortization (EBITDA). Topps generated sales of $550 million last year. Fanatics founder and co-chairman confirmed the deal and that the Topps brand will remain in place.

Could not be more excited for the future of our trading card business with the acquisition of Topps, the preeminent and most trusted trading card brand worldwide!!,” Rubin said on Twitter earlier today.

The acquisition comes just a few months after Fanatics shook the trading world. In August, the company announced card deals with Major League Baseball (MLB) — for years fertile territory for Topps — and the NBA, as well as agreements with the players of the those leagues and the NFL Players Association (NFLPA). Fanatics winning those rights ultimately led to the collapse of a merger between Topps and a special purpose acquisition company (SPAC) that was to take the card producer public.

In the blank-check agreement, Topps was valued at $1.3 billion, confirming Fanatics is paying a significantly lower price tag.

What’s In It for Fanatics

Privately held Fanatics is largely known for its dominance in the sports merchandise and team apparel space. But investors see significant opportunity for the company in the booming trading card industry.

Fanatics reached a private market valuation of $18 billion last year, and while its sports card arm hasn’t released product as of yet, that unit was valued at $10.4 billion in a September funding round. With the Topps acquisition, Fanatics doesn’t have to wait for that company’s MLB deal to expire in 2025, and the buyer can immediately commence production of baseball cards. Thus, it is efficiently inserting itself into a business that could be worth $98.7 billion by 2027, according to Verified Market Research.

The Topps acquisition is complementary to Fanatics’ Candy Digital unit — a non-fungible token (NFT) business that has rights to produce MLB digital art.

As part of the deal, Fanatics also gets Topps’ rights to produce Bundesliga, F1, Major League Soccer (MLS), and UEFA cards.

Fanatics Could Continue Shopping

Topps may not be the end of Fanatics’ 2022 acquisitions. It’s widely known the company is eyeing the gaming industry. In October, it filed several patent applications with the US Patent and Trademark Office (USPTO). They call for a branded casino, mobile betting app, and sportsbook.

Last month, the company was mentioned as a potential suitor for Churchill Downs’ (NASDAQ:CHDN) TwinSpires Racing unit.

Prior to that, it was reported Fanatics held talks with Rush Street Interactive (NYSE:RSI) and Swedish gaming giant Betsson. All of that is to say Fanatics’ interest in sports wagering is widely known, and an acquisition to that effect by the company wouldn’t be surprising.