Article: Fanatics and the Parameters of MLB’s Antitrust Exemption

[Maddie Landis]

Major League Baseball has enjoyed a legal monopoly for over a century. Now, its chosen licensing partner is gobbling up competitors like there's no tomorrow while lowering quality and raising prices.

The lack of quality options in the licensed sports market is increasingly frustrating for fans, especially as apparel prices continue to rise and quality declines. One company is at the heart of this discontent. If you’ve spent any time on social media in the past year, you’ve probably seen complaints about the quality of Fanatics products. Has this hurt the company's revenue? No. Sportico recently reported that Fanatics' revenue jumped to $8.1 billion in 2024, a 15% increase from the previous year, and broke down the company's revenue: 

Fanatics dipped its toes in the collectibles market, acquiring Topps in 2022, as well as online sports betting, with the creation of Fanatics Sportsbook in 2023. Most of its revenue comes from Fanatics Commerce, which designs, manufactures, and distributes its merchandise and other companies' products. Despite the grievances, people are still buying Fanatics products, but not necessarily because they want to. There aren’t many other options to purchase from, and that's by design.

Over the past eight years, Fanatics secured long-term licensing deals with all four major US sports leagues, in addition to Major League Soccer, Formula 1, an ever-growing list of NCAA teams, and the Australian Football League. More recently, it has been buying up competitors. In December 2020, Fanatics bought WinCraft, another licensed sports goods company. The company acquired Mitchell & Ness, a prominent vintage sportswear apparel company, in early 2022, and last year, they became the majority holder of Lids, a major hat retailer. Fanatics isn’t limited to consumer sportswear apparel; it also has an exclusive partnership with Nike to distribute player uniforms for the National Hockey League and Major League Baseball.

Following the official rollout of the new MLB uniforms in 2024, Fanatics faced a wave of scrutiny from players (and fans) due to the subpar quality. Red Sox reliever Zack Kelly stated, “The numbers look like iron-ons….A big-league uniform should be special. It was hard for me to get here and for other guys, too. I think there will be some changes. I hope so.” MLB is reportedly transitioning back to the older uniform templates this year with larger player names and numbers, the older fabric, and customizable pants. NHL fans have had similar complaints.

Cornell's Legal Information Institute provides a definition of a monopoly: “When a single company or entity creates an unreasonable restraint of competition in a market….In essence, the term monopoly may be used any time that a market for a good is controlled by a limited number of actors.” Getting more specific, case law has established precedents to identify a firm’s monopoly power. United States of America, v. Dentsply International held that “Absent other pertinent factors, a share significantly larger than 55% has been required to establish prima facie market power.”

Market research firm Mordor Intelligence estimates the size of the licensed sports market a $37.51 billion. In December 2022, Fanatics' valuation reached $31 billion. With an expansive portfolio that includes Fanatics Collectibles, Fanatics Betting & Gaming, Fanatics Collect, and Fanatics Events, it’s difficult to pinpoint the exact contribution of Fanatics Commerce to their valuation. Given that Fanatics Commerce generates 77% of the company’s revenue ($6.1 billion in 2024), it’s evident that the division holds a dominant market share.

During the nineteenth century, powerful robber barons like Andrew Carnegie, John D. Rockefeller, and Cornelius Vanderbilt to create monopolies in their respective industries through ruthless anti-competitive tactics and currying favor from pro-business with politicians. Carnegie Steel Company controlled the steel industry’s supply chain. Rockefeller’s Standard Oil oversaw 90% of the United States’ oil pipelines and refineries. Vanderbilt dominated the shipping and railroad industry. Facing public concerns over the power of large corporations, Congress passed the Sherman Antitrust Act in 1890 and Clayton Antitrust Act of 1914  to protect consumers from unfair monopolistic practices.

Despite those practices, Major League Baseball enjoys a legal monopoly. The league's antitrust exemption has been upheld by the Supreme Court three times in the past century. Federal Baseball Club v. National League (1922) unanimously ruled that “Organized Baseball is not interstate commerce and does not constitute an attempt to monopolize within the Sherman Act.” Toolson v. New York Yankees, Inc. (1952) upheld Federal in a 7-2 vote, basing their decision on stare decisis. Once again, the Supreme Court reaffirmed Federal’s ruling in Flood v. Kuhn (1972).

MLB is currently facing an antitrust lawsuit. Plaintiff Casey Distributing, a licensed sports hard goods seller, alleged that MLB and Fanatics breached the Sherman Act: “MLB, Fanatics, and certain horizontally competing licensees and retailers have entered into various agreements that serve to severely limit Fanatics’ and Defendants’ competition on TPOMs.” The case currently remains open. Its most recent update was in August of 2023 when MLB requested additional time to submit briefs in support of its motion to dismiss the lawsuit.

Fanatics isn’t slowing down. In October 2024, Fanatics Sportsbook signed a nonexclusive deal with the MLBPA to use MLB player names, images, and likenesses in advertising. The deal emerged a couple of weeks after the MLBPA sued FanDuel, DraftKings, bet365, and Underdog Fantasy for unauthorized use of names, images, and likenesses. Fanatics Collectibles, whose portfolio includes Topps, Bowman, and the English Premier League, will open its first flagship European store in London this spring. 

Antitrust law is very complicated and very political. Casey’s outcome is yet to be determined. Since MLB and the MLBPA hold financial stakes in Fanatics, it’s improbable that they would want the company to face antitrust penalties. The Department of Justice is currently engaged in a lawsuit with Ticketmaster. Once this case is settled, the DOJ could potentially shift its focus to Fanatics.

Consumers deserve a broader range of choices when purchasing licensed sports apparel. Fortunately, platforms like eBay and Depop offer quality vintage options free of the ubiquitous Fanatics logo. Additionally, 47 Brand remains independent — at least for now. However, as Fanatics aggressively expands its presence, avoiding it has become nearly impossible.

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[mvp 78]

This is the best article written so far for the new site. 

Fanatics is really the dirt worst. Everything the touch, they ruin. Baseball cards were just starting to have a little resurgence thanks to COVID, but this should really bring the market down. I've already seen a lot of complaints about customer service, missing hit cards and other issues that weren't happening just two years ago. I wasn't a jersey guy so it didn't impact me before, but sometimes you have to look around and see how everything is just getting worse with these massive companies pushing out inferior products. The NFL isn't allowing the Patriots to have a Blue Sky account. Every few seconds you are bombarded with online betting crap when you watch sports. It's only a matter of time until the same thing happens and AI slop is pushed down your throat.