Fanatics buys Majestic months after winning deal to replace it as MLB partner
Fanatics has reached a definitive agreement to acquire the Majestic sportswear manufacturing operation and the rest of VF Corporation's Licensed Sports Group business, a deal which will bring the company that has been making Major League Baseball-licensed on-field uniforms and other apparel under the ownership of one of the brands scheduled to replace it as a key MLB partner beginning in 2020.
Commissioner of Baseball Rob Manfred, Fanatics Owner and Executive Chairman Michael Rubin and Majestic President Mike Pardini came together to announce the deal Tuesday at the Pennsylvania factory where at least 500 Majestic employees currently work to make MLB uniforms. Manfred and Pardini both said that the uniforms will continue to be at made that facility after the acquisition closes, which is expected to happen in the second quarter of this year.
The announcement of the acquisition comes four months after Fanatics and Under Armour teamed up to win a 10-year contract from MLB to make player uniforms and manufacture and sell licensed fan apparel, a deal which positioned those companies to replace current MLB partners Majestic and Nike.
This was a surprising move, and there is nothing suggesting it was in the works at the time Fanatics and Under Armour won the MLB deal. Under a somewhat complex partnership between those two companies, Under Armour was set to handle production and branding of on-field uniforms, while Fanatics was going to handle manufacturing of fan apparel.
The parties involved in Tuesday's announcement seemed to go out of their way to specify that after this acquisition, on-field uniforms will continue to be made by Majestic under ownership of Fanatics. Some reports suggested Under Armour would take over the Majestic facility in Pennsylvania, but if that's the case, why isn't it the one buying the VF assets? We're wondering if there is more detail to come about this acquisition, or possibly a change in the terms of the partnership between Fanatics and Under Armour.
This turn of events, surprising as it is, resolves a couple of thorny issues for the companies involved, as well as MLB. For one, VF Corporation reportedly had been seeking a buyer for Majestic and related properties for a quite a while, so Fanatics saves VF and Majestic from further uncertainty. Second, MLB’s move to award uniform manufacturing work to a different firm was not a very popular move with VF's union employees or throughout the state of Pennsylvania. So, Fanatics, Under Armour and MLB all avoid any possibility of lingering controversy. In fact, the announcement that hundreds of people will keep their jobs making MLB apparel makes a pretty positive side story to the opening week of the 2017 MLB season.
Fanatics has been busily setting up big partnerships with major sports leagues in the last year or so. In addition to the MLB deal, it has earned new arrangements with NASCAR and the National Hockey League. Also, both Fanatics and Majestic have partnerships with the National Football League. The MLB deal is the newest of these, and different from the company's traditional role as an e-commerce sales and fulfillment lead. Perhaps by acquiring a company that it was set to replace, Fanatics may looking to ensure that its relationship with MLB is able to get out of the batter's box without a stumble.