Internal email: Fanatics is selling its 60% stake in sports NFT company Candy Digital to an investor group led by Mike Novogratz's Galaxy Digital
Ian Thomas / CNBC :
Context & Ripple Effects
Candy Digital was one of the marquee sports-NFT bets of the 2021 cycle: Fanatics-owned Candy raised a $100M Series A at a $1.5B valuation from Vision Fund 2 and others just over a year ago. Since then the crypto market has turned — by November 2022 Candy had cut as many as half of its roughly 100-person staff, and Fanatics has been redirecting its collectibles strategy toward physical assets like the Topps deal and toward new commerce formats such as the planned Fanatics Live unit.
The buyer matters as much as the seller: Galaxy Digital, Mike Novogratz's crypto-focused firm, just reported a $482M Q4 net loss it attributed to the crypto crash, with trading volumes down about 40% quarter-over-quarter — so this is a distressed-asset pickup by a crypto native rather than a growth investment.
First-order effects
- Fanatics exits majority control of the NFT venture it incubated, handing its 60% stake to a Galaxy Digital-led investor group while keeping its collectibles push anchored in the Topps trading-card business instead.
- Candy's Series A backers, including Vision Fund 2, now sit under new leadership whose incentives are set by a buyer that bought into a falling market.
Second-order effects
- League investors who put money into Fanatics' own $1.5B raise at a $27B valuation — with the NFL contributing the largest share — watch the NFT leg of Fanatics' strategy get unwound, reinforcing pressure to show returns from the remaining commerce bets.
- Galaxy is consolidating a weakened asset at what is implicitly a markdown from the $1.5B mark, a template other crypto firms with cash may follow for stranded 2021-vintage NFT ventures.
Third-order effects
- If this pattern holds, sports NFT companies built during the 2021 funding peak migrate from league-and-celebrity-backed startups to crypto-firm balance sheets, resetting how digital collectibles rights are priced and owned across major leagues.
- Fanatics' pivot — shedding the speculative NFT stake while doubling down on cards and livestreamed commerce — points to sports merchandising consolidating around proven revenue lines rather than token-based experiments.
The trend: Sports NFT ventures funded at 2021 peak valuations are being sold off or absorbed at steep discounts as both their corporate parents and crypto-market buyers reprice the category.