WWD Digital Daily

Fanatics, Hillhouse Deal Seen Serving Fashion Fans in China

● Licensed sports product from European soccer leagues and American sports teams will now be sold in that Asian country.

- BY JEAN E. PALMIERI

A Yankee cap is considered cool around the world and thanks to a new partnershi­p between Fanatics and Hillhouse Capital, Chinese consumers will soon be able to buy the official licensed blue and white hat in their home country.

Fanatics has created a 50-50 joint venture with Hillhouse, a leading Asian private equity fund, to bring its products to the Chinese market. The Shanghai-based company will seek to manufactur­e, source and distribute the product locally and is also exploring an expansion into physical retail, said Zohar Ravid, Fanatics’ head of internatio­nal.

The partnershi­p, called Fanatics China, is expected to be more than a $1 billion opportunit­y “if executed successful­ly,” he said. The total licensed sports market in China is estimated to be worth some $3 billion to $5 billion annually.

“Through this new transforma­tive joint venture with Hillhouse Capital, we’ll have the ability to locally design, manufactur­e and distribute unique, real-time product that is tailored to the passionate sports fans and fashion-driven consumers throughout China, and readily available across all retail channels. Our team in Shanghai will dig into the local trends that resonate most in that market, with an emphasis on fashion-forward designs for teams and leagues.”

The deal will allow Fanatics’ 300-plus global partners, which include major sports leagues and teams such as Major League Baseball, the National Football League, Manchester United, Paris-Saint Germain and Bayern Munich, to expand in the lucrative Chinese market.

Around 10 percent of Fanatics’ $3 billion-plus in annual sales come from internatio­nal sales and Ravid said China will add a “very meaningful contributi­on” to that number.

Ravid said the company had been exploring China for quite some time and doubled down after closing a $350 million Series E funding round in August that valued the company at $6.2 billion.

“We’re not the only people interested in the largest market in the world for sports and fashion outside the U.S. and Europe,” he said. “Ever since we raised the money from Softbank, China has been our core focus.”

He said Fanatics first spent time learning the market and exploring its potential before deciding on a partner. “We weren’t arrogant enough to think we could do it alone,” Ravid said. “We needed a partner with ears and feet on the ground,” and one which could recognize the fashion trends in the country that Fanatics could capitalize on.

Hillhouse, which was founded in

2005 by Lei Zhang with $20 million in seed money from the Yale University endowment, has invested in digital companies such as Tencent and JD.com, as well as those in fashion, sports and retail including Belle Group and Topsports. Topsports is one of the largest sports retail business in the country and operates more than 20,000 Nike and Adidas retail stores across China.

“We see China as a massive opportunit­y,” Ravid said. “And Hillhouse has expertise taking Western brands and creating large businesses. But most of the sports industry has been supported by the big athletic brands and they’re not focused on licensed product. No one has tried to unlock this business in China.”

Ravid said specifical­ly, European football, or soccer, “is a big and growing interest area in China.” In addition, there is a “true fan base” for leagues such as Manchester United, the National Basketball Associatio­n and others which is pining for official product. In addition, there are others who find licensed product fashionabl­e such as the Paris SaintGerma­in Jordan collection featuring the Eiffel Tower, Raiders-logo jerseys or Yankee caps, “which are cool anywhere around the world.”

Beyond China, Ravid said Fanatics, which sells in 190 countries and has operations in 11, including Japan and

India, has “big ambitions” for further internatio­nal expansion in the future. “We believe many brands have global appeal,” he said. He singled out Australia as an example. Last August, Fanatics signed a 10-year deal with Rebel, the country’s leading sports retailer, to supply all nonAustral­ian licensed sports merchandis­e for the Rebel web site. The deal will kick off sometime this summer, he said.

Beyond that, Ravid said Fanatics is “looking to expand quite aggressive­ly in Japan,” and is also exploring South America and other regions. “The world is a big place and fans are everywhere. So we should be too.”

 ??  ?? Fan apparel from Fanatics.
Fan apparel from Fanatics.

Newspapers in English

Newspapers from United States