An internal email obtained by CNBC shows that Michael Rubin is selling his stake in Candy Digital.
According to an email, Fanatics will be selling its interest in Candy Digital to an investor group led byGalaxy Digital, which was one of the founding shareholders.
They didn't want to comment.
In the middle of the sports NFT boom, Candy Digital was founded in June of 2021. The first effort came out of a multiyear licensing agreement with MLB, which included an exclusive Lou Gehrig NFT, a non-fungible token. The company released digital collectibles with several teams.
Similar to the broader NFT market, sports NFTs saw a decline as the value of digital assets plummeted. The company behind NBA Top Shot and NFL All Day laid off 22% of its employees.
At the time, Candy Digital had raised a $100 million Series A round and was valued at over $1 billion. According to a previous CNBC report, investors in that round included SoftBank's Vision Fund 2, Insight Partners, and the Pro Football Hall of Fame quarterback.
Rubin wrote "Divesting our ownership stake at this time allowed us to ensure investors were able to recoup most of their investment via cash or additional shares in the company."
Rubin wrote in the email that it was a simple and easy decision for them to make.
Rubin said that NFTs are unlikely to be sustainable or profitable as a stand alone business. Digital products will have more value and utility when connected to physical collectibles to create the best experience for collector
The rights to produce MLB trading cards were acquired by Fanatics, severing a nearly 70 year partnership between the two companies.
The company raised $700 million in fresh capital in December to focus on potential merger and acquisition opportunities. It increased the company's valuation to $32 billion.
The company began selling team merchandise to sports fans, but has since looked to expand across the entire sports industry. Rubin met with more than 90 internet, retail and gaming analysts from various Wall Street firms, where he spoke of the company's growth plans.
The company was ranked in the top 20 on last year's list.
Rubin sent the email to the staff.
The team is called TeamFanatics.
I wish you a happy new year. I hope you had a chance to spend time with your family and friends during the holidays, and that your new year is going to be great.
I wanted to let you know that I have some news for you. We have sold our majority stake in Candy Digital. We sold our interest in the company to an investor group. This was a simple and easy decision to make when we looked at all the factors.
Over the past year it has become clear that NFTs are unlikely to be sustainable or profitable as a stand alone business. Digital products will have more value and utility when connected to physical collectibles to create the best experience for collector We have a larger set of NFT and digital collectibles rights within our business that come with our trading cards rights, which we are integrating with the world-class physical collectibles rights we currently have. The ability to connect physical and digital collectibles will be the most powerful way to create an emotional resonance.
This immediate action allows us to maintain the integrity of our relationships with our investors while also making sense for the strategic direction of the company. The investors in Candy bought into the vision because of the track record of the company. Our alignment on the mission to build the leading global digital sports platform is the reason for the proven track record. We needed to protect their investment as the market and financial environment changed. In an imploding NFT market that has seen precipitous drops in both transaction volumes and prices for standalone N, we were able to ensure investors were able to recover most of their investment via cash or additional shares in the company.
Similar to how quickly we mobilize when the right strategic acquisition presents itself, we move even quicker when we realize things aren't working We never achieved full integration of Candy within the Fanatics environment due to shareholders competing The culture of building, growing and winning is what makes this company special, and we were not willing to compromise on this front.
We look forward to growing our digital and trading cards business together with our partners and we are confident that this was the best long-term decision for us.
Wishing everyone a happy new year.
Rubin is named Michael.
The CEO of the company.
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