NBA Owns 5% of Fanatics China in Previously Undisclosed Deal
The National Basketball Association is a partner in Fanatics China, the joint venture launched last year between e-commerce giant Fanatics and private equity firm Hillhouse Capital, according to multiple people familiar with the matter.
The league has a roughly 5% stake in the venture, which it acquired around the time it was formed last year, said the people, who were granted anonymity because the matter is private.
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Representatives for the NBA and Fanatics declined to comment.
Fanatics China handles brick-and-mortar stores and e-commerce across China. The goal is to merge the league relationships and e-commerce expertise of Fanatics with the market experience of Hillhouse, which was founded by Chinese billionaire Zhang Lei and invests primarily in Asia. Hillhouse’s portfolio includes some of China’s most prominent retail companies, including Tencent and JD.com.
The joint venture also promised expanded opportunities in China for Fanatics’ 300-plus partners, including the NFL and NBA. It’s unclear exactly how the NBA’s equity relationship changes that opportunity. (Sportico is unaware of any other leagues investing in Fanatics China).
While every major U.S. league sees China as a growth opportunity, none has had more success there than the NBA, which first started airing games on CCTV in the late 1980s. The NBA was the first U.S. league to establish a footprint in China, opening a Hong Kong office in 1992, and launched NBA China in 2008. It has played more than two dozen preseason games in China, and hundreds of millions of people in the country consume NBA content each year on television, digital and social media.
That’s also come with controversy. A 2019 tweet from then-Houston Rockets GM Daryl Morey supporting pro-democracy protestors in Hong Kong dramatically cooled the relationship between the NBA and its most valuable foreign market. Commissioner Adam Silver later said the league expected to lose “hundreds of millions” from the fallout, and while the NBA has worked to repair the relationship over the past few years, its business ties to China remains a popular talking point among many conservative politicians in the U.S.
Fanatics also views China as a growth area. Already the world’s largest seller of licensed sports merchandise, Michael Rubin’s company is now focused on expanding internationally and launching new business verticals. They include a trading card company and a sports betting business. The company recently raised money at a $27 billion valuation, up from $6.2 billion less than two years ago.
That growth has benefited many of its biggest partners. Part of the Fanatics business model is allowing leagues and teams to share in the company’s success. Equity holders in the main e-commerce business include the NFL, MLS, NHL and MLB, plus a handful of players unions. That strategy is unfolding with the group’s trading card business as well. The NBA is not an investor in the Fanatics e-commerce business, but it does hold equity in the trading-card venture.
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