Sports ecommerce platform Fanatics is divesting its 60% majority stake in NFT company Candy Digital, with Fanatics Founder Michael Rubin saying “it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business,” in a letter obtained by CNBC.
Rubin co-founded Candy Digital in June 2021 alongside crypto investor Mike Novogratz and digital media entrepreneur Gary Vaynerchuk, and the company swiftly secured a long-term deal to become the official NFT partner of Major League Baseball. Other sports deals followed — including one with the professional wrestling organization WWE — along with $100 million in Series A funding in October 2021 that valued the company at $1.5 billion. But then… Crypto Winter arrived.
“Divesting our ownership stake at this time allowed us to ensure investors were able to recoup most of their investment via cash or additional shares in Fanatics — a favorable outcome for investors, especially in an imploding NFT market that has seen precipitous drops in both transaction volumes and prices for standalone NFTs,” said Rubin in the letter, according to CNBC.
Fanatics sold its share of Candy Digital to fellow Co-founder Novogratz, although what Fanatics received for its stake in the company is not known.
In his letter Rubin added that “aside from physical collectibles (trading cards) driving 99% of the business, we believe digital products will have more value and utility when connected to physical collectibles to create the best experience for collectors.” Clearly Rubin is looking to focus Fanatics’ efforts on its physical trading card business, which got a big boost when the company acquired Topps in January 2022. By December 2022, Fanatics had reached a valuation of $31 billion after it raised an additional $700 million in capital, the bulk of which will be used for mergers and acquisitions across the company’s collectibles, betting and gaming businesses, according to CNBC.