Are you a bad actor in the sports industry? Congratulations: No one has been talking about you lately because Fanatics has occupied the world’s attention.
Since its 2011 founding, Fanatics has become a behemoth of sports merchandise in a way that even Nike and Adidas have not. It is a critical apparel licensing partner for the four major North American professional sports leagues and countless major college athletic programs. It makes its own apparel and memorabilia and sells it alongside other companies’ products. It is heavily involved in the licensing processes of some of its highest-profile partners. It also makes game uniforms; Fanatics will take over the NHL’s jerseys next season, but it already has Major League Baseball’s. The get-ups, which Fanatics manufactures according to specs by Nike, have arguably been the story of spring training. The patching looks as if it came from counterfeits, not real MLB uniforms. The pants lack the necessary opacity. The spacing of lettering and numbering is needlessly awkward. Fanatics feels that it has done what it was supposed to do, and maybe it did. It’s hard to identify how many of the problems are because of Nike’s design vs. Fanatics’ execution.
The problem is that Fanatics has a checkered track record on its own. What feels like every 15 minutes, there’s a new viral social media moment featuring a disappointed Fanatics customer. The latest is a baseball fan who ordered a ball autographed by World Series hero Adolis García (of last season’s champion Texas Rangers) around Christmas but never received it: “Welp, @Fanatics just canceled my Christmas present today: a World Series baseball autographed by Adolis Garcia. Hope they enjoyed having my money for three months interest free for selling something they apparently never had,” the fan wrote. “So bummed. So, so bummed.” As other scorned customers chimed in with their own Fanatics misadventures, the company’s support account on X furiously tried to get these consumers to send private messages and sort out the situations with them.
Has any of this prevented Fanatics from running a lucrative business? You already know that it has not. The company achieved a $31 billion valuation by the end of 2022, and if it ever goes public—which it seems poised to do sooner or later—its offering will be a blockbuster. CNBC reported that the company’s internal revenue projection for 2023 was $8 billion. The perceived quality of Fanatics’ goods and the success of its business do not have any apparent relationship with each other.
Which is why it’s time for the federal government to get involved, ideally in a way that has some teeth. But let’s settle first for something much easier to achieve: a glitzy, entirely performative congressional hearing that lights a fire under the company’s collective ass. Fanatics has demonstrated that it’s at least uncomfortable with public shaming, so the time has come for lawmakers to give Fanatics the Ticketmaster treatment. Michael Rubin, the CEO, is a man whose business dealings demand that he be called into a committee room and grilled like an executive from Big Tobacco.
Fanatics looks an awful lot like a monopoly. The reason it’s hard to be definitive about it is that the mechanics of Fanatics’ dominance are novel. As one competitor that is suing the company described it, Fanatics has “created an entirely new monopoly spanning multiple leagues and multiple players associations.” There are lots of companies selling sports apparel, but Fanatics has become the industry’s Amazon, a force that smaller players can’t possibly fight and ultimately are best off cooperating with.
The company achieved that status by doing many things at once. Fanatics makes a lot of shirts on its own, but it also has a retail business selling the wares of other apparel companies. (The company makes half of what it sells, the New York Times reported last year.) At the same time, Fanatics is a licensee of the country’s biggest sports leagues, running their official shops and selling their stuff. But it’s also a key licensor of blue-chip properties to other companies that might want to sell sports merchandise with their iconic names and logos. Fanatics pays sports organizations for the privilege of selling apparel with their name on it, and it also has a strong say in who else enters into licensing agreements with those properties. Want to make a product with a Notre Dame or Paris Saint-Germain logo? You’ll have to go through Fanatics’ licensing arm. A cynic might think that this puts obvious pressure on the smaller apparel company to sell its products on Fanatics’ platforms at terms amenable to Fanatics. The alternative would be to risk offending a licensing gatekeeper who also operates the in-stadium stores for several major sports teams.
And that’s just the apparel business. Fanatics has also used licensing deals and acquisitions to dominate the sports trading card industry, and it’s establishing a foothold in game uniforms. In both industries, Fanatics has first won a major contract away from a competitor (Topps in MLB trading cards, Majestic in MLB uniforms), then bought said competitor.
None of this—all of the mergers and acquisitions, the involvement in whether potential competitors get to license products from Fanatics’ partners—seems to encourage competition. Maybe the Federal Trade Commission or Department of Justice should take a look under the hood and make sure everything is on the up-and-up.
But those sorts of inquiries take a while to pull together, and congressional funding for the DOJ’s antitrust efforts is on the block. You know what doesn’t take a long time or much money? A congressional hearing. Lawmakers can throw together one of those in a matter of days.
Will they pass any laws to rein in Fanatics during this election year? Absolutely not, but that isn’t the point. It also wasn’t the point when the leader of Ticketmaster’s parent company needed to go before the Senate to explain how badly he had messed up ticketing for Taylor Swift’s “Eras” tour. The point was for politicians to score a few easy points against an unpopular company that nobody cared to defend. Maybe they also wanted to raise awareness of an antitrust issue, something that now appeals to many Republicans as well as Democrats.
So, some Senate and House committees should get to work. Fanatics’ business may still be doing great, but its leadership does seem sensitive to harsh headlines about it. After Defector and SFGate writer Drew Magary wrote about a nightmarish experience with Fanatics, a stranger showed up at his house with some NFL jerseys and a handwritten note from Rubin, the CEO. Rubin has lamented that Fanatics is “getting the shit kicked out of us” over this season’s baseball uniforms. I think it would do Rubin some good to visit D.C., check out the Capitol complex, and answer a few questions under oath about Fanatics’ business. He might even enjoy it! Mark Zuckerberg sometimes seems as if he’s having a little fun at these things.
This strategy can only do so much, given that Fanatics appears to be on excellent business footing even as it deals with so many PR crises. The company fits into the trend of enshittification, which happens when a company builds up a huge consumer base, then sells out its users in service of its business clients. Fanatics has taken more than a decade to build itself into a major consumer brand, and in the past few years, it has spent what must be ungodly sums of money on all sorts of exclusive licensing deals with many of the most valuable sports brands in the world. That money is green for leagues and players’ unions. But Fanatics is not in the business of losing money on purpose forever. Maybe that’s how a company that can afford the NFL’s licensing fees winds up in hot water for selling Jalen Hurts jerseys and T-shirts that look like Chinese bootlegs. Paying big fees for a sports license but cutting corners on quality is not unique to Fanatics or even to apparel. It’s akin to Fox paying millions to broadcast football games, then using a remote broadcast crew.
Fanatics is far from the only offender of its kind. But that doesn’t mean that the government should just let this sort of management overrun the sports industry. Ideally, lawmakers would pass creative laws to discourage it, or antitrust regulators would scare businesspeople out of deploying it by punishing transgressors. Those things are hard, though. Batting around a CEO for an afternoon is easy. Maybe he’ll even say something that one of his company’s competitors can cite in a legal filing.
