Fulfilling Fanatic
This was back in the first week of February, the halcyon, long-ago days when Corona was best known for complementing burritos; lockdown was a term reserved for prison movies; and masks were reserved for Halloween. So it wasn’t at all strange that celebrity after celebrity traipsed into a double-wide suite at Hard Rock Stadium in Miami, and then packed in tighter than subway commuters.
Sure, the Chiefs and 49ers were playing in Super Bowl LIV. But on the suite level, directly above the 50-yard line, the occasion felt like a cocktail party with a football game tacked on. Shaq, Cardi B, Ari Emanuel, Ben Simmons, Kevin Hart, Robert Kraft and Emily Ratajkowski were among the dozens of stars rotating in.
The host, the figure with the celebrity tropism to assemble this guest list? He is no athlete. He is no entertainer. He not only can, but does, walk the streets of Greenwich Village unnoticed. But Michael Rubin already ranks among the most influential and well-connected figures in sports. A billionaire before he got out of his 30s, Rubin is a minority owner of teams in the NBA, NHL and Premier League, and is a good bet to buy the next NBA or NFL team that comes up for purchase. The company he founded, Fanatics, is the Amazon of sports apparel—maker of all that licensed NFL, NBA and MLB gear in your (and your kid’s) closet—and part of his larger technology business, Kynetic, which also includes online shopping destination Rue Gilt Groupe and membership program ShopRunner.
Beyond that, Rubin stands as the encapsulation of the next generation of sports plutocrat. He is Mark Cuban 20 years ago, Jerry Buss in the 1970s. While he is 48, at first blush, anyway, he presents as someone half his age, dressed in Nikes and a hoodie, studding sentences with the word “dude.” But his track record as an entrepreneur is such that he has the ear of the four major league leaders and seldom goes a day without a fellow (and, inevitably, older) owner calling him for advice. “I’ve known him for almost 25 years,” says NBA commissioner Adam Silver, “and have watched him build a remarkable business with vision, persistence and a unique ability to establish strong relationships.
After the extravagance of the Super Bowl party, Rubin returned to various day jobs, sometimes working 20 hours a day, trekking by helicopter from his sprawling home in the Philadelphia suburb of Conshohocken to his home office in Manhattan. He attended Sixers games. He held board meetings for Reform Alliance, the social justice nonprofit he co-founded. And he continued in his role overseeing Fanatics, which earned more than $2.5 billion in revenue in 2019. “Life,” Rubin recalls, “was good.”
And then, abruptly, it wasn’t. Barely a month after the Super Bowl, COVID-19 hit. The same memorable day the NBA paused the season in March, the Fanatics board gathered for a meeting that had already been on the books for months. Rubin told his executive team to prepare for a steep decline in sales. In the past, when there were labor stoppages in the pro leagues, sports apparel sales fell off as much as 70%. This forthcoming pandemic, Rubin reckoned, would be like every sport going on strike at once. “Honestly,” says Rubin, “we kind of thought the world was coming to an end.”
Soon, though, Rubin realized that canceled sporting events were the least of the pandemic’s ravages. And his entrepreneurial instincts took over. His first move: He ordered the various Fanatics production plants nationwide to begin manufacturing personal protective equipment (PPE). Suddenly, the same pinstriped nylon intended to be sewn into Yankees gear was being used to manufacture masks; the material originally earmarked for Indians jerseys was made into gowns and sent to the Cleveland Clinic. By late spring, Fanatics had donated more than a million masks to first responders in 13 states and more than 10 million to various prisons.
Then, inspiration really struck. Rubin wondered: What if I took out the same sports contact list that enabled me to host the biggest, baddest Super Bowl party . . . and instead of inviting them to eat canapes and drink Moët in my suite, ask them to join and do some good for people getting crushed by this miserable pandemic?
As Rubin envisioned it, “Everyone would donate a one-of-a-kind, once-in-a-lifetime experience or item for an online auction and share them on their social media channels in videos.” He would also spread the word through the 45 million sports fans who make up Fanatics’ customer list. And 100% of the proceeds would benefit COVID-19 relief.
Courtesy of Fanatics
Rubin’s first call was to Silver. Warm to the idea, Silver offered a roster spot for the All-Star celebrity game and a readout of the donor’s name at the next NBA draft. Rubin then called his friend, rapper Meek Mill, who suggested Rubin broaden the appeal to include entertainers as well. Before the call ended, Mill offered to donate a Rolls Royce. Next, Rubin asked his buddy Hart if he would contribute.
“Sure, what are you thinking?” asked Hart.
“I don’t know,” Rubin responded. “Maybe a physical training session?”
“What the hell would I want to do that for?” Hart sniffed. “I’ll give them a role and make them a star in my next movie.”
And so it went. Tom Brady, another Rubin pal, donated four tickets to a Bucs game, plus dinner. Bo Jackson organized a fishing trip in Alabama. Kelly Slater was good for a day of surfing.
Rubin relied heavily on his NBA connections. Carmelo Anthony volunteered to host “A Very Melo NYC Weekend.” Kevin Love offered to design the winner’s home gym. Dwyane Wade presented an invite to join him on a tour of Napa Valley. Mark Cuban offered a one-day Mavericks contract during preseason. Rubin himself threw in a $100,000 Fanatics gift card. Rubin called this the All In Challenge. By the time it was over, it had raised more than $60 million to combat food insecurity during the pandemic.
This was a distillation of Rubin, an alloy of hustle, schmooze, execution, marketing, ready-fire-aim impetuousness . . . powered by sports. Though Rubin describes himself as the “world’s worst athlete,” his story isn’t dissimilar from those of the NBA players whose company he keeps. He was a prodigy in his field—in his case, entrepreneurship, running a ski equipment business as a teenager that did six figures in revenue—endowed with talent, drive and passion. Feeling restricted by college (Villanova, in his case), he left school early, effectively, to turn pro.
The same way the scoreboard stat sheets reveal, coldly and unambiguously, which athletes deliver and which don’t, Rubin has financial goals he either meets or misses. “You hear it all the time, this [overlap] between sports and business,” he says. “But there’s really something to it. I think that’s one reason I relate to these guys so much as people.”
Inasmuch as Rubin had a big break, it came in the late ’90s. He was all of 26 and running an apparel and logistics business, GSI Commerce, that was posting $130 million in annual sales. An analyst called, asking him how he was going to integrate the internet into his business model. “I laughed,” Rubin recalls. “I told him the internet was for people who are determined to lose money. I think I hung up on him.” The analyst called back and Rubin, again, dismissed the internet as a fad. But as he thought about it, he realized the opportunity. In short order, Rubin hired the pesky analyst, Michael Conn, as the CFO of the company.
The business pivoted to e-commerce, and in 2011, Rubin sold GSI to eBay for $2.4 billion. The real sleight of hand: While parting with the backorder and fulfillment businesses, he held onto the one that produced actual goods, Fanatics. The goal was to make licensing deals with every major league, expand internationally into sports like soccer; and then make, distribute and sell every possible piece of sports merchandising.
In the days after the GSI sale, Rubin was at home when his neighbor Ed Snider stopped by. The majority owner of the 76ers, Snider asked Rubin whether he might be interested in buying the franchise. Rubin declined, skeptical that a pro sports team, with its year-to-year operating losses, was where he wanted to park his money.
Again, though, Rubin reconsidered his gut instinct. Months later, he joined the bid of Josh Harris and David Blitzer, who paid $287 million for the Sixers. Now, less than a decade later, the franchise is valued at roughly $2 billion. “I only did it because David Stern told me to do it,” says Rubin. “Good owners aren’t buying franchises because they think it’s a good economic deal. They’re buying franchises because they’re a huge fan of the sport and they want to be a steward of that team. If they just do it because of a good economic deal, they’re going to be bad owners.”
Since he bought into the Sixers, Rubin has steadily intensified his footprint in sports. He’s stuck with the Harris-Blitzer group as they’ve bought the New Jersey Devils and the Premier League’s Crystal Palace club. Rubin does turns on Bill Simmons’s podcast, just as he does on CNBC. He vacations in the Caribbean with Kraft; his friendship with Joel Embiid is such that the 76ers center called and texted Rubin repeatedly on election night in November, asking, not unreasonably, for help making sense of the chaos. (“This is the craziest thing I’ve ever seen, bro!” the big man marveled.)
In 2018, Rubin activated his contact list yet again, this time assembling a bid to buy the Carolina Panthers. The franchise had come on the market after sexual assault allegations surfaced against the longtime owner, Jerry Richardson. Rubin was the principal, but his group included Stephen Curry, Diddy and LeBron James. Richardson chose to sell to David Tepper, a Pittsburgh hedge fund titan who paid $2.275 billion. But it did not go unnoticed that Rubin could put together a competitive bid on such short notice.
Ask around the NBA and the consensus is that becoming a full owner—which would mean divesting his share of the Sixers—is likely a “when” and not an “if.” Says Silver: “Michael has all of the characteristics that we would look for in a team owner. He’s smart, innovative and passionate, wants to give back to his community and loves the game.”
All the more so given the performance of Fanatics. Contrary to Rubin’s grim projections, 2020 was not doom for his company. Anything but. Rubin says that Fanatics’ year-over-year sales could be up as much as 30%. E-commerce has, of course, been one of the few sectors to thrive during the lockdown. There was no correlation between the cancellation of sports and the appeal of sports merchandise. Fanatics recently held a final round of funding before a likely IPO, hoping to bring in $250 million. Oversubscribed, it netted $350 million.
Apparel analysts have some explanations. Businesses set up to transact online have been big winners during the pandemic. Specific to Fanatics, with everyone home, unencumbered by work clothes, the demand for the casual comfort of, say, Pacers hoodies or Lakers caps, only grew.
But Rubin has another explanation: the binding qualities of sports. It’s a simple, faintly idealistic concept. But it made him a billionaire. It helped get countless people through an awful year. And it enabled Rubin to pull off one of the great fundraising feats of 2020. “Sports have an obligation to step up and make a difference,” he says. “And in this case, it definitely did.”
