Fanatics is selling its 60 percent stake in sports-focused NFT company Candy Digital to a group led by Galaxy Digital, according to a report from CNBC, citing an internal email from the network. Terms were not disclosed.

Fanatics’ CEO Michael Rubin wrote in the email, “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 Fanatics—a favorable outcome for investors,especially in an imploding NFT market that has seen precipitous drops in both transaction volumes and prices for standalone NFTs.”

Rubin cited several factors for Fanatics’ divesture, describing it as a “rather straightforward and easy decision for us to make for several reasons.”

He wrote in the email, “Over the past year, it has become clear that NFTs are unlikely to be sustainable or profitable as a standalone business,” Aside from physical collectibles (trading cards) driving 99 percent of the business, we believe digital products will have more value and utility when connected to physical collectibles to create the best experience for collectors.”

Galaxy Digital set up Candy Digital with entrepreneur Gary Vaynerchuk in June 2021 with the official Major League Baseball (MLB) license during a booming period for the sports NFT market. In October 2021, Candy Digital raised $100 million in a Series A funding round at a $1.5 billion valuation.

In January 2022, Fanatics acquired Topps for roughly $500 million after acquiring the rights to produce MLB trading cards to support the initiative; however, the NFT market declined in 2022 following broader crypto market drops. 

Candy Digital reportedly laid off at least one-third of its 100-person staff in November.

Photo courtesy Fanatics