Fanatics Inc.’s expanding sports business empire took a step backward.
CNBC reported Jan. 4 that the sports merchandise company sold off its 60% stake in NFT company Candy Digital, which was formed in 2021.
The financial news network posted an internal email on its website from Fanatics CEO Michael Rubin explaining the move.
“NFTs will most likely emerge as an integrated product/feature and not as a standalone business,” the email said.
“Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business.”
NFTs, or nonfungible tokens, are digital assets that are marketed to sports fans as unique collectible items.
CNBC said the collapse of the cryptocurrency market has lessened the appeal of NFTs.
Candy Digital was valued at $1.5 billion in October 2021 when it announced new investments in the company.
Rubin said in his email Fanatics sold its interest in the company to an investor group led by Galaxy Digital, the other founding partner in Candy Digital. The price was not disclosed.
“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,” Rubin said.
Fanatics is valued at an estimated $31 billion after raising more capital in December from a group of investment firms.
The company was founded with a single retail store in the Orange Park Mall in 1995. After opening a second store in The Avenues mall in 1997, it began selling sports merchandise online at a time when e-commerce was beginning.
The founders, brothers Mitchell and Alan Trager, sold the business in 2011 to a Philadelphia company run by Rubin.
The company maintains its commerce headquarters in Jacksonville.
Rubin has expanded Fanatics beyond its initial sports merchandising business, including an online sports gambling operation expected to launch this year.
Fanatics is also expected to go public at some point but Rubin has not said when it might register an initial public offering.