The Fanatics CEO, who increased his stake in the company in 2020, is currently the third-largest shareholder behind Josh Harris and David Blitzer. The deal is expected to close in the coming weeks.
HBSE will likely be valued around $3 billion in the transaction, according to someone familiar with the talks, which is in line with the valuation in a separate HBSE stake sale involving Arctos Sports Partners earlier this month.
It’s unclear who is buying Rubin’s piece. Representatives for Rubin and HBSE declined to comment on the identity of the investor, or investors.
It's the latest in a whirlwind of recent business moves for Rubin, who has grown Fanatics into the world's largest seller of licensed sports apparel and is now pushing the company in new directions. In the past 18 months, Fanatics has launched a new NFT platform, a sports trading-card company and an entertainment trading-card brand. Meanwhile, the company is in the process of creating a sportsbook.
That's come alongside a few other acquisitions and a series of high-profile hires. Fanatics recently raised money at a $27 billion valuation, roughly triple its valuation from a raise just two years ago.
The business growth, particularly the trading-card and gambling ventures, also carry new potential conflicts of interest. A Fanatics sportsbook, for example, likely wouldn’t be able to take wagers on 76ers or Devils games if Rubin was still an HBSE investor.
Both Harris and Blitzer released statements thanking Rubin for his contributions to HBSE. "Given Michael's tremendous success growing Fanatics into a global platform across every major sport, his decision doesn't come as a surprise," Harris said.
HBSE also holds the Prudential Center (where the Devils play), a few minor league teams, esports assets and an innovation lab. Harris and Blitzer also separately pursue their own personal sports opportunities—Harris was recently a finalist to purchase the Denver Broncos; Blitzer is about to close on a significant minority stake in the Cleveland Guardians.
Arctos, a sports-focused private equity firm, recently invested in HBSE at a $3 billion valuation. The Arctos deal is entirely separate from the Rubin sale, according to people familiar with the transaction. Sportico values the 76ers at $2.67 billion and the Devils at $750 million.
Rubin purchased Fanatics in 2011 and over the past decade built it into the dominant force in licensed sports merchandise. The company appeared headed for an IPO before the pandemic, but instead it has aggressively pursued a goal of becoming a one-stop shop for sports fans and their commercial interests. His portfolio also includes Rue La La and Gilt, and he is a public advocate for criminal justice reform.