They’ve gobbled up the next licensing deals to produce baseball, football and basketball cards. Now, Fanatics may have its sights set on buying an existing trading card company.
Chairman Michael Rubin addressed his company’s recent blockbuster move for the first time on Thursday morning, confirming to a CNBC audience that Fanatics plans to implement a more direct to consumer approach.
“This is really about a completely different vision for the trading card industry. If you really think about the collector experience, it’s pretty brutal today,” Rubin said. “You’ve got to buy primary cards with so many people kind of in the middle of it. Then you sell a secondary card somewhere else. You get your cards graded by another party. You store them with somebody else if not your house. This is about our vision to create an incredible collector experience to bring all of the pieces together.”
While not tipping his hand as to future plans, Rubin said “it’s absolutely possible” Fanatics will acquire an existing card maker like Topps or Panini.
“All of these trading card companies, they’re good manufacturers. They’re good at what they do. They just didn’t have a vision for building a much more direct to consumer model and then bring all the pieces together to create a good collector experience. This hobby has so many people in the middle of it and perfectly set up to have an integrated direct-to-consumer experience.”
Calling the exploding market for trading cards as they’re currently made “a highly profitable business,” Rubin’s goal seems to be to grow profits by streamlining how cards get to collectors and somehow making Fanatics the go-to source for just about everything related to current cards including what happens after a collector gets them.
“The traditional trading card manufacturers make close to a billion dollars selling to distributors. When you think about taking this model much more direct to consumer and then adding in kind of an integrated collector experience, primary card sold, secondary market capabilities with grading and breaking and insurance and storage and financing, this is a very massive opportunity.”
Earlier this summer, Rubin was among the investors who purchased Certified Collectibles Group, the parent company of Certified Sports Guaranty (CSG), which began grading sports cards early this year.
Fanatics will reportedly have an MLB Players Association license in 2023, then take over the football and basketball contracts by 2026. As of now, the NHL trading card license remains with Upper Deck.
The Fanatics deals, which reportedly run 15-20 years, are expected to give the leagues and players associations part ownership in Fanatics Trading Cards, a company that will be run separately from the company’s main ecommerce brand.
“Each property made a decision independently that they wanted to give a much better experience to their collectors long term and to really grow the hobby,” Rubin said. “They thought the vision that we had made so much more sense and also leveraging the 80 million-plus fans that we have in our database that built the structural advantages that we have when we created this digital sports platform.”
Earlier this week, the Wall Street Journal reported that Fanatics had attracted $350 million in Series A funding from additional investors to its trading card business. While the effort to dominate the trading card space will mean a jaw-dropping investment, sports attorney Irwin Kishner told CNBC later Thursday that it “seems high now, but 10 years from this date, you’d wish you bought it. They’ve aligned themselves with various leagues, took the Topps business plan and made it their own. This company is going to be a disruptor.”
It was clear in the interview that Rubin and the team he’s building to run Fanatics Trading Cards is focused on a new generation of young people who have embraced alternative assets and treat cards more like stocks than simple collectors’ items.
“That’s the most important part. This is really a financial asset of the younger generation and I believe that with a great collector experience we can grow this business many times. I think there’s great growth ahead for the hobby.”