Sports Giant Fanatics Sells Its Majority Stake in NFT Startup Candy Digital

Sports goods giant Fanatics has sold its majority stake in NFT firm Candy Digital, according to a company memo obtained by Decrypt.

Fanatics CEO Michael Rubin informed employees of the move today, writing that the company has sold its approximately 60% stake in Candy Digital to a group led by Galaxy Digital, the other founding shareholder of the sports and entertainment-centric NFT startup. The move follows a recent round of layoffs at the start.

“When we looked at all the factors on the table, this was a pretty straightforward and easy decision for us to make for several reasons,” Rubin wrote in the note.

Candy Digital launched in June 2021 with the official Major League Baseball license, and fast a value of 1.5 billion dollars when it raised $100 million in October of that year.

However, the NFT market dropped significantly in 2022 after broader falls in the crypto market, and the like many NFT startups, Candy Digital was significantly affected. In November, Candy laid off at least a third of its 100 employees, which was first reported by Sportico and confirmed to Decrypt by a source close to the company.

In his email to employees today, Rubin said NFTs “will most likely emerge as an integrated product/feature and not as a standalone business.” Since co-founding Candy Digital in 2021, Fanatics acquired trading card brand Topps, which has its own NFT business.

“Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business,” Rubin wrote, adding that Fanatics believes that “digital products will have more value and utility when connected physical collectibles to create the best experience for collectors.”

Rubin added that the move was made now to try to “maintain the integrity of our investor relations,” saying that “we never achieved full integration of Candy into the Fanatics environment or culture due to shareholders with competing goals and objectives. “

“The investors in Candy bought into the vision not because of NFTs or Candy per se, but because of our track record at Fanatics,” he wrote. “The sale of our stake at this time allowed us to ensure that 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 which has seen sharp falls in both transaction volumes and prices for standalone NFTs.”

Rubin was one of the founding board members along with Galaxy Digital’s Mike Novogratz and entrepreneur and investor Gary Vaynerchuk. Fanatics declined to comment for this story.