Major League Soccer invests in Fanatics, signs long-term merchandise deal
Major League Soccer and sports merchandise company Fanatics have signed a long-term deal that gives Fanatics extensive rights to manufacture MLS gear.
Fanatics has had a deal with MLS since 2015, but it was strictly an e-commerce deal: Fanatics was the licensed seller of the jerseys made by Adidas, which is the official on-field apparel outfitter of MLS.
Under the new agreement, Fanatics gets to manufacture MLS merchandise, not just sell it — all items except the official jerseys, and it can still sell those as well. MLS says the new Fanatics deal “complements” the existing deal with Adidas, which MLS extended this year through 2024. Fanatics’ new rights begin in 2019 in the U.S. and 2018 in Canada, where MLS has three teams.
Separately from the new agreement, Yahoo Finance has learned that MLS has invested in Fanatics. This comes after the NFL, NFLPA, and MLB all invested in Fanatics, but was not part of the same round.
MLS declined to comment on the financial details of its investment. Sports Business Journal reported in May that the NFL bought a 3% equity stake for $95 million, MLB bought a 1.5% stake for $50 million, and NFLPA invested $5 million for less than 1%.
Fanatics also closed a $1 billion investment from SoftBank over the summer, giving the e-commerce “unicorn” a $4.5 billion valuation.
What this means for Fanatics
Fanatics has quietly had a banner year, perhaps the biggest year of any company in the sports apparel space.
It partnered with Under Armour to win the MLB official apparel contract, so beginning in 2019, Under Armour will be the logo on all official MLB jerseys, and Fanatics will make those jerseys. It acquired Majestic, the current maker of MLB jerseys, from VF Corp. Last month, it launched a Fanatics College division.
Fanatics powers the official online stores of the NFL, NBA, MLB, NHL, MLS, Nascar, and PGA Tour. And it already has the extensive manufacturing rights with NFL, MLB, and NBA that it will now have with MLS.
“We’ve seen a lot of good things in the few years we’ve been working with MLS,” says Gary Gertzog, president of business affairs for Fanatics. “Their new clubs in the last few years have done incredibly well, whether it’s NYCFC, or Atlanta United, and we expect that trend to continue with LAFC next year. At the beginning of the season of a new team, we see a big bump in orders. Atlanta is a great example: they broke the attendance record in their first year, and the excitement from fans was instant.”
(For more on the instant success of the Atlanta team, see the above video of our full interview with MLS Commissioner Don Garber at the Yahoo Finance All Markets Summit.)