Michael Rubin, the founder and chief executive officer of Fanatics, describes himself as a scrappy entrepreneur, someone who doesn’t read and a degenerate gambler.
He also says pretty much whatever he wants to say about his business, which CEOs of private companies can get away with. “Just to be clear about that, if we were a public company, I would still say whatever I want,” said Rubin, who opened up about himself and his business philosophy at NRF’s “Big Show” convention Sunday at Manhattan’s Jacob K. Javits Center.
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“As a kid at like 12 years old, I went to Atlantic City and won $3,000. When I called my mom and said I just won three grand, she said, ‘Get your ass back home. You’re grounded,'” Rubin said. “I’ve always liked the gambling business. I’ve always been on the wrong side of the gaming business as a customer,” suggesting that he’s lost money at casinos.
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Rubin, whose both self-deprecating yet highly confident building big businesses, was raised in Lafayette Hill, Pa., where, when he was eight years old, he was selling seeds and shoveling snow. As a teenager, he opened a ski shop called Mike’s Ski & Sport with his bar mitzvah money. He founded GSI Commerce, which provided a variety of e-commerce services, in 1995. He sold it to eBay for $2.4 billion in 2011 but kept the Fanatics division. “I feel that we failed upward with [GSI], because we got the strategy right, but I think our execution wasn’t near good enough. And I never loved the core business. As we kept getting bigger, I think we became less competitive in each of the businesses.”
Since then, he’s built Fanatics into a multibillion-dollar global digital sports platform that includes licensed sports merchandise, trading cards and collectibles, sports betting and gaming, special events, the Lids specialty chain, live commerce and other businesses. He’s a billionaire and very influential in sports-related businesses.
Interviewed on stage by CNBC co-anchor Sarah Eisen, Rubin said, “I think fanatics, in five years from now, could be a $30 billion, $50 billion business in revenues, and could be the most valuable company in sports.”
Asked if taking his business public was on the agenda, he replied: “We’re in a great position. We have a really good balance sheet, no liquidity needs, zero-zero pressure. Going public is not in the cards right now.”
“We’re going to be $13 billion business in revenues this year. We have about 22,000 people,” he said. “But we really do like to run it like this scrappy start-up. I believe if you lose that mentality, you’ll be dead.…We’re just getting started.”
Breaking the three-part Fanatics business down, Rubin said licensed merchandise is currently a $7 billion business, collectibles and trading cards is about a $4 billion business. “And we’ve got the betting and gaming business we started a couple years ago, but that’s about a $2 billion business this year.”
In each segment: “We have really strong competitors. There are always people trying to disrupt everything that we do.…If we don’t screw this up, we hope to be one of the most important companies in sports.…I want to do it together with Dick’s, so that we push each other up, together, which I think we do very well today. It’s like two family businesses that cooperate very well together.”
Dick’s Sporting Goods is a critical retail vehicle for Fanatics’ licensed merchandise, as are the NBA, NHL, MLB and NFL stores, department stores, college book stores and discounters. Fanatics also sells its licensed merchandise on its website and owns some brands as well. The company will operate shops for the FIFA World Cup this year being held in the U.S.
Before starting a new business, he said: “The way I think about business is, ‘Can you do something better for your customer? Can we make it much better for the fans?’ So we won’t get into any kind of business if we don’t think we can make it materially better for the customer, and if we can’t make at least a billion dollars of profit off it. Those are the two things I think about.
“We’re going to launch a credit card that I think can be a game changer for sports fans,” he said, adding the introduction would come later this spring. “We think it can make millions a year, while getting people that much more engaged in our ecosystem. It will be in our fourth profitable business.”
Last year, Fanatics got into the predictions market. “I don’t think it’s the future of sports betting.…The sports betting product is far superior to what I think the predictions product could ever be,” Rubin said.
“In California, Texas, Florida and Georgia, where you have virtually no sports betting, we can do prediction markets where we pay no taxes. I’m going to pay $600 million in gaming taxes this year. So in states that are not going to legalize sports betting, instead, they’re saying we’re going to give you a free pass to do other models. We’re going to do every one of those models.”
To help keep growth up, the company got into the loyalty space last year by launching ‘FanCash,” which customers earn by spending across the Fanatics ecosystem. FanCash can be redeemed for merchandise, tickets, trading cards and other products offered on the Fanatics site and on the Fanatics Sportsbook & Casino platform. “We’re going to issue a billion dollars in FanCash this year. People love this currency,” Rubin said. Perks, like access to special memorabilia, VIP events and private shopping opportunities are also offered.
Rubin also talked up the annual Fanatics Fest, which will have its third engagement July 16 to 19 at the Javits Center. According to Rubin, it draws 200,000 people over its four days, and is an opportunity for sports fans to engage with sports stars and entertainment celebrities, many of whom are investors in the business. The event includes special merchandise drops and live podcasts.
“I like being active with people that are important to me,” Rubin said. “That’s how I get better. That’s how I learn. That’s how we learn from each other. So I think when you look at a Jay-Z or Travis Scott or Tom Brady or Ed Stack, I care deeply about these relationships. You guys would think I’m being self-deprecating, I’m being honest. I’m barely literate. I don’t read, I don’t watch TV. So I learned from personal interactions. That’s the most valuable thing I can do. So I probably spend half my time externally, and then half my time grinding away at my three businesses.
“I’m doing this till I die,” he said. I’m having the time in my life. I’m learning so much every day, and I’m obsessed with it. So, you know, I think we have endless opportunity.”