Fanatics has quickly become almost synonymous with professional sports merchandise, growing to one of the biggest brands in licensed apparel and collectibles.
But, the company is now at the center of an anti-trust lawsuit along with the NFL and all 32 teams in the league over the licensing deals.
In a 92-page class action lawsuit filed in Manhattan, the plaintiffs claim that Fanatics and the NFL profited from “anti-competitive conduct” by outperforming and ultimately eliminating lower-priced companies that also sell licensed merchandise, keeping their own prices as high as possible, according to Courthouse News Service.
Charles Franz, who filed the lawsuit, claims that after the NFL purchased a 3% stake in Fanatics in 2017, the NFL started to cut out other online retailers, even ones as large as Amazon, in what he called a “boycott.”
“Historically, each team competed with itself and other retailers (Fanatics being just one) in the online market for NFL licensed products,” the lawsuit says, “For their mutual benefit, defendants — the NFL and its affiliates, each of the 32 Teams that participate in the NFL, and Fanatics Inc. — conspired to dominate the retail market for online sales of NFL Licensed Products.”
As Franz laid out in the lawsuit, as Fanatics’ value rises, the NFL’s does as well.
“This boycott eliminated defendants’ competitors who would have charged lower prices for NFL licensed products sold online,” Franz said, according to Courthouse News Service. “In so doing, the boycott removed the downward pressure on prices and margins that, absent the conspiracy, would have otherwise flowed directly from enhanced competition.”
It’s his belief that while the NFL never made Fanatics the sole retailer for licensed goods, the league and Fanatics suppressed competition by “forbidding” other companies from using NFL-related keywords to market “or even describe” their products.
“In a competitive market, each team would compete to sell NFL licensed products to the greatest number of fans — not only to realize profit but as a self-serving marketing tool,” Franz reportedly said. “Fans wearing NFL licensed products are walking billboards.”
The lawsuit further claims that Fanatics CEO Michael Rubin used his industry ties and lavish, celebrity-filled events to ingratiate himself with influential people within the NFL, including franchise owners. The lawsuit claims that New England Patriots owner Robert Kraft encouraged the NFL to invest in Fanatics in part due to their relationship, and that between Rubin’s personal relationships and the revenue share that each team receives from the licensed goods “creates strong financial incentives to collude rather than compete.”
In response to the allegations, a Fanatics spokesperson told Courthouse News Service that this lawsuit is a “copy-and-paste job” of a similar lawsuit filed in 2022 in the same federal court, which had already been dismissed.
“This is a blatant effort by the same lawyers — after having shopped around for a new plaintiff — to try for a second bite at the apple,” the spokesperson said. “We intend to vigorously defend against this action and are confident in achieving the same result.”
Based on a similar lawsuit filed in the same court being dismissed so recently, it feels unlikely that this would gain too much traction. Also, while the NFL’s stake in Fanatics is quantifiable and traceable, it’s much harder to prove that Rubin’s personal relationships would sway the league and owners to undercut competition. It’s more intangible.
However, if the plaintiffs were successful, it would have an enormous impact not only on one of the biggest companies in the greater promotional products industry, but also on the licensed merchandise landscape.
