The companies have formed a joint venture that has signed a long-term partnership with Barnes & Noble Education, operator of more than 770 bookstores on college campuses around the country. Lids will run the in-store sports merchandise business for those shops, which include official bookstores at Michigan, Harvard, Penn State and UNC; Fanatics, which owns a significant minority stake in Lids, will run the e-commerce part of that business.
As part of the deal, the joint venture is making a $15 million equity investment in Barnes & Noble Education, receiving 2.3 million common shares. Wider terms of the partnership were not provided.
The deal applies only to licensed sports apparel and hardgoods sold by these stores, typically the go-to spot on campus to buy university-branded T-shirts, jerseys and pennants. Barnes & Noble Education, which became an independent public company in 2015, will maintain its relationships with the colleges and be responsible for staffing the stores, textbook sales and their day-to-day operations.
“This partnership has tremendous potential to improve the customer experience, increase selection and accelerate [Barnes & Noble Education’s] growth across our high-margin general merchandise business, particularly in e-commerce, providing a significant opportunity to increase our financial contribution to campus partners,” company CEO Michael Huseby said in a statement.
The joint venture agreed to pay $6.50 per share of Barnes & Noble Education—equivalent to a 50% markup, and the stock was trading at $4.35 as of 10:25 a.m. ET. That markup shows a strong vote of confidence in the long-term growth for Barnes & Noble Education.
Lids operates more than 1,200 brick-and-mortar retail stores around North America, including branded stores for the New York Yankees and Los Angeles Dodgers. Fanatics, which has partnerships with all the major U.S. sports leagues and many of its teams, has e-commerce rights with more than 150 universities, and sells merchandise of more than 500 schools.
Fanatics is expanding into college sports in other ways as well. In addition to this deal, the company has inked wider school-specific licensing deals with universities like Oregon, Florida and Notre Dame.
Owned by billionaire Michael Rubin, the company recently raised $350 million at a $6.2 billion valuation. It has put some of that capital to work already—in the last few months it purchased headwear licensee Top of the World, and hardgoods maker WinCraft.
(This story has been updated with details of the Barnes & Noble Education share price in the sixth paragraph.)