The Big Idea

Fanatics: Merchandise Giant to Sports Betting Contender

In the competitive landscape of U.S. sports betting, Fanatics has emerged as a formidable challenger, leveraging its established merchandise empire to fuel its ambitious expansion into the gambling sector. Much like Apple TV+ is subsidized by Apple's hardware sales, Fanatics is using its profitable merchandise business to bankroll its sports betting venture, creating a unique competitive advantage in the process.

The Fanatics Empire

Fanatics reported impressive growth in 2024, with total revenue reaching $8.1 billion, a 15% increase from the previous year. The company's core Commerce division, which includes apparel and merchandise, remains the backbone of the business, generating $6.2 billion—or 77% of total revenue. Fanatics Collectibles contributed $1.6 billion, while the newer sportsbook division pulled in $300 million, according to Sportico.

This diversified revenue stream allows Fanatics to operate differently than pure-play betting companies. As CFO Glenn Schiffman noted, "Profits from our commerce business, retail, and collectibles businesses are funding that investment in gaming."

With a strong financial foundation, Fanatics has been able to invest aggressively in customer acquisition, technology, and marketing, positioning itself as a serious competitor.

Rapid Market Share Growth

Since launching in late 2023, Fanatics Sportsbook has made remarkable progress in capturing market share. According to JMP Securities, Fanatics has now captured a 6.7% market share as of January 2025, putting it within striking distance of BetMGM's 7.5% and well ahead of Caesars Sportsbook's 5.3%.

This growth is particularly impressive considering Fanatics only held around 0.5% market share when it entered the market, growing to approximately 5% by the end of 2024, according to Eilers and Krejcik Gaming. While still far behind industry leaders FanDuel (36.9%) and DraftKings (36.3%), Fanatics' trajectory suggests it's poised to become a serious competitor in the space.

Fanatics' ability to scale quickly is a testament to its brand recognition and existing customer base. The company has millions of customers who already purchase sports-related merchandise, providing a built-in audience for its sportsbook.

The Data Advantage

Perhaps Fanatics' most significant competitive edge lies in its unique access to customer data. The company's established relationships with millions of merchandise buyers provide invaluable insights that can be leveraged to enhance its betting operations.

When sports fans purchase team merchandise through Fanatics, the company gains an understanding of team allegiances, spending patterns, and engagement levels. This data can be used to create highly targeted betting promotions and personalized experiences that resonate with users on an individual level.

Fanatics has already begun implementing this strategy. During peak merchandise sales periods like Cyber Week and early December, the company saw sportsbook signups increase by over 200% compared to weekly averages. When MLB teams unveiled new spring training caps, Fanatics offered $100 bet credits to merchandise buyers in states with legal sports betting.

This level of data-driven engagement gives Fanatics a major edge over competitors, who often rely on expensive advertising campaigns to acquire customers. By integrating betting offers within its existing ecosystem, Fanatics can efficiently convert merchandise buyers into sportsbook users.

The Road Ahead

While Fanatics has made impressive strides, challenges remain. The U.S. sports betting market is dominated by FanDuel and DraftKings, which together control more than 70% of U.S. bets. Breaking this duopoly will require continued investment and innovation.

However, Fanatics' approach of using its merchandise business to subsidize betting operations while leveraging cross-platform data appears to be working. As CEO Matt King noted, "We're trying to approach this market differently than every competitor has to date."

If Fanatics can continue to convert merchandise buyers into betting customers while using its data advantage to create more effective betting algorithms and personalized experiences, it may achieve profitability faster than competitors who lack these synergies, potentially reshaping the sports betting landscape in the process.

Pulse Check

Last week, we asked Beyond the Sideline readers, “The chairman of the NCAA men’s basketball selection committee is UNC athletic director Bubba Cunningham, who has contract incentives for teams making the NCAA tournament. Did that influence UNC’s surprise invitation to the First Four?”. Here’s what they thought.

Marketing

A Winning Approach To Losing

How do you go to market after the worst season in history? The White Sox front office may be a case study in making the best of the worst.

The White Sox set an MLB record for losses in 2024. It was a season without a bright spot. If you're in charge of interacting with fans, what can you do besides throw up your hands in resignation? While there was little to admire on the field, the White Sox showed some impressive resilience off the field. Their marketing department executed three notable strategies to make the best of a historically lousy hand.

1. Be Real

The White Sox marketing team didn’t try to spin things. In an interview with Sports Business Journal, CMO Brooks Boyer said that the only approach was one of honesty and transparency. This commitment extended beyond words and into actions. While the season was still underway in mid-August, the team announced that season-ticket prices would be reduced by an average of 10% for the 2025 season. “We are going to be asking our fans to ride this one out with us.” said Boyer with unblinking candor, “and get in on what is the ground level — it might even be the basement, hopefully, it’s the basement.”

2. Be Smart

The Sox also devised an innovative ticketing plan to get fans back in their seats. They launched a new “Ballpark Pass” that grants buyers a ticket for all 27 home games in March, April, and May for only $125. That’s less than $5 a game. But it’s not just a pure giveaway. The pass is only limited to the early months of the season, so if the team rebounds to respectable form they haven’t given away the season. It also sends buyers their individual tickets only 24 hours before the game, allowing the Sox to change the location of the seats depending on demand and where they want to fill in the stadium to maximize their telecast impression for the audience at home. 

3. Be Creative

The White Sox rollout of their promotional calendar in late January generated viral enthusiasm on social media. While fans might not be excited to get to the stadium earlier for a game, the giveaways have stepped up in a big way for those willing to arrive before first-pitch. A 1920s replica hoodie, a 1940s varsity sweater, and a working AM/FM radio in the shape of old Comiskey Park have generated a palpable, positive buzz around the celebration of the Sox 125th Anniversary. 

All of these strategies won’t change an entire fanbase's mindset but they do help keep the fun and excitement of a season alive in the unfortunate event that the on-field product wavers.  The White Sox may not be able to control the outcome on the field, but their promotional performance is among the best in the league.

By The Numbers

Numbers That Jumped Off the Page

0- The number of losses by this year’s top 4 seeds in the NCAA Men’s Basketball Tournament. This is just the 6th time they’ve gone 16-0 in the first round since the tournament expanded to 64 teams, with the last coming in 2017. Remember bracket makers, you can’t the madness for granted!

23%- The Shohei Ohtani signing has helped boost the Los Angeles Dodgers' value by a staggering 23% to $7.73 billion, according to Forbes. The Japanese superstar's impact extends far beyond the diamond, driving merchandise sales, media deals, and international interest. Not too shabby of an ROI for the billion-dollar player at the start of just year 2!

$40 Million- MLB's Tokyo Series between the Dodgers and Cubs generated an unprecedented $40 million in merchandise sales according to Fanatics, higher than any other major sporting event. Shohei Ohtani's star power helped drive massive interest, with Japanese fans going crazy for all things Dodgers. MLB is now looking at ways for all teams to cash in on the Japanese market.

$2 Billion- The Athletics, soon to be the Las Vegas Athletics, are being valued at $2 billion in a sale of new shares. This valuation comes as the team prepares for its relocation to Las Vegas and the construction of a new stadium, showing how franchise values continue to climb despite on-field challenges. It’s a good reminder that Moneyball doesn’t just describe roster building.

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