Fanatics' $1 Billion Credit Card Bet: Can Sports Loyalty Match Airline Economics?

Hey {{name}},

Welcome to the first Sports Stack of 2026! As mentioned, the frequency of these posts is reducing, but the analysis will be more detailed, and we’re off to a great start with this week’s edition - 3000 words that I hope you’ll enjoy!

This week’s topic caught my eye as a credit card points nerd, and I thought it deserved a deep dive, given my belief that there is genuine merit in what Fanatics is building (a new sports-oriented credit card).

Without giving away much of the analysis, the key point that struck me and which I believe is true is what Michael Rubin (CEO of Fanatics) said about their upcoming credit card: “It will make millions a year, while getting people that much more engaged in our ecosystem.”

I’m not focused on the ‘make millions a year’ but rather on the point about getting people engaged in their ecosystem, which I think is the huge upside to a successful credit card loyalty scheme. The ecosystem, businesses, and content built around successful credit card loyalty schemes, such as AMEX and Capital One, clearly illustrate Rubin’s prediction. People who have credit cards love getting into the details, finding deals with their points, and will purchase products more often if they can earn additional points and show loyalty to certain providers just to keep those points rolling in.

A quick but important note before we dive in: Credit cards carry real financial risk. Millions of people struggle with credit card debt, and I'm not here to downplay that reality. This analysis focuses on the strategic business opportunity Fanatics is pursuing and on how loyalty mechanics work when credit is used responsibly. Nothing in this article constitutes financial advice. I'm analysing a product launch, not recommending that you sign up for anything.

Fanatics recently mentioned that they were chasing another billion-dollar vertical by launching their own credit card later this year. 

“I believe it will be our fourth $1 billion business. People say it’s too hard, but we’ll see. We’ll figure out something we can do,” (Source: Forbes)

First, let’s break down why Michael Rubin might believe that credit cards are the next billion-dollar vertical for Fanatics. 

US: 

Europe: 

For the rest of the article, I’ll focus on the US, as it’s a key market for Fanatics. 

US Sports Market Sizing

I’m sure Rubin and Fanatics have obsessed over these market numbers for years while designing their credit card strategy, and it’s clear the market is growing. Americans carry, on average, 3 cards in their wallets and spend more on credit cards than on debit cards. However, becoming the card that holds the top-of-wallet position will be the key challenge in wallets that could already hold 3 cards. 

Do any Sport Examples exist?

There are already some examples on the market for specific leagues or clubs that Fanatics could build upon, with one key example being NFLExtraPoints. 

NFLExtraPoints, issued by Comenity Capital Bank (previously Alliance Data), is a fan-focused rewards credit card designed for NFL enthusiasts, allowing users to earn points on purchases, receive discounts on merchandise and tickets, and access exclusive league experiences. Users can choose from all 32 team-branded designs. Crucially for Fanatics, it’s NFL-only, with no multi-league coverage, no betting integration, and no trading/collectables, leaving some room for them to navigate. 

New cardmembers can earn 70,000 Membership Rewards® points after spending £6,000 in the first 3 months—up from the standard 55,000 point offer (terms apply, eligible new cardmembers only).

Click here 👇

Delta’s partnership with American Express, for example, is one of the most important pillars of its profitability: in 2025, the co‑branded card relationship generated about $8.2 billion in remuneration, up 11% year over year, within a business that produced $5.8 billion of operating income on $63.4 billion of revenue and increasingly relies on high‑margin loyalty and premium revenue streams to sustain and grow those profits. Delta describes this revenue as “high‑margin, diversified revenue streams” and cites it as a central driver of profitability, noting that it now accounts for roughly 60% of total revenue. 

There is also loyalty liability management (breakage). When you earn miles but never redeem them, that's pure profit for business. Airlines typically assume breakage rates of 24-26%, meaning a quarter of issued miles expire or go unused (2012 Data). American Airlines saw a $43 million revenue reduction in 2011 simply from lowering its breakage assumption from 27% to 26%. 

Whilst these partnerships will be challenging for Fanatics to build, you can see the reward that is dangled at the end of this hard work and the impact it can have on a business.

So, when Fanatics launches its credit card in Spring, as per Rubin’s guidance, what could we expect from them? Are there any existing services or products that could hint at the final product? What could they learn from the existing loyalty credit card schemes that are on the market and successful? 

There isn’t much to go on about what we could expect from Fanatics, other than some guidance from Rubin in a recent interview. The credit card will be aimed at sports fans and integrated across its betting, merchandise and ticketing offerings (Source: SBJ)

Are there any existing loyalty schemes Fanatics could leverage? 

There is already an existing loyalty scheme from Fanatics called FanCash, which allows customers who are signed up to Fanatics One to earn loyalty currency that can be redeemed across Fanatics experiences. Every dollar of FanCash is a dollar to spend on authentic apparel, Bonus Bets, collectibles and more. 

Currently, customers can earn FanCash only when logged in to their FanaticsOne account and purchasing on Fanatics sites, thereby reducing the target market and earning opportunities. Fancash redemption is also limited to Fanatics.com, the Fanatics App, and Fanatics partner sites.

As of August 2025, Fanatics reported that 10m customers were participating in the FanCash programme. This represents about 7% of their 140m global customer base. 

How could Fanatics build on FanCash to unlock an even bigger market? 

It is much easier to offer cashback and points via your own channels and on your own products, as Fanatics does with FanCash. However, launching a credit card that offers points and promotions on products and services outside your ecosystem is much more difficult. 

The reason comes down to economics. Credit card rewards are funded by interchange fees, which are the 2-3% merchants pay when you swipe your card. According to Federal Reserve research, rewards expenses for the six largest U.S. credit card issuers average 1.57% of purchase volume, compared with 1.82% for interchange income, implying that roughly 85–86% of interchange revenue is returned to cardholders as rewards. (Source: New York Fed)

Within Fanatics' ecosystem, where they control both sides of the transaction, offering 5% back on their own products works because they're returning a slice of their estimated 40%+ merchandise margins. But for external purchases such as groceries or petrol, Fanatics would receive only about 2% in interchange fees, which would make it difficult for them to promise 5% in rewards. 

To win top-of-wallet positioning, Fanatics needs the card to work everywhere with competitive rewards. But the moment customers start using it for general spending, the profitability model becomes difficult unless they dramatically reduce external rewards or charge substantial annual fees.

Setting cashback aside for the moment, I’d like to focus on some of the other benefits that Fanatics could launch to help them capture the sports market and potentially move existing loyal credit card customers to the new Fanatics card. 

The Sports Tickets ‘Seats-Redemption Model’ explained. 

We all know those friends who never pay for flights and instead use points to find great deals around the world. There is even a whole world of companies like seats.aero and seatspy, and content creators like Head for Points, who have built successful businesses around credit card points and flight redemptions. Imagine a world where we had the same model for sports tickets.

The seats-redemption model creates a new demand source for undervalued inventory:

The airline analogy: This is exactly how "saver award" seats work. Airlines release award inventory for flights they expect to fly at partial capacity. The marginal cost of filling the seat is near zero (one extra passenger, ≈ $20 in fuel/service), so even "paying" in miles is profitable.

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The seats-redemption model faces a fundamental challenge that doesn't exist in the airline industry: Fanatics doesn't own the ‘planes’. 

While airlines control exactly which seats become available for award redemptions years in advance through sophisticated capacity planning, Fanatics operates one step removed from primary ticket distribution. Their March 2025 partnership with Ticketmaster, a commercial agreement, not an equity stake, launched the Fanatics Ticket Marketplace as a resale platform, but it doesn't grant them inventory control. This creates three critical friction points:

Fanatics' potential path forward could involve integrating with a company like Jump and using their dynamic pricing engine to identify undervalued inventory in real-time, establishing team-specific co-branding partnerships with big clubs like Lakers, Cowboys, Yankees, etc., to guarantee allocation for premium cardholders, or offering fixed-value credit tiers (e.g., 25,000 points = $250 ticket credit) to simplify the user experience. 

But make no mistake: execution here determines whether the seats-redemption model becomes a genuine competitive moat or merely another underwhelming loyalty programme feature that fans quickly ignore.

Rubin's claim that the credit card could become Fanatics' "fourth $1 billion business" sounds audacious, but the maths checks out if executed correctly. 

How the revenue model works: Fanatics partners with a card issuer (likely Chase or American Express), which handles the actual credit. When cardholders swipe anywhere, the issuer earns interchange fees and pays Fanatics a percentage of total card spend. In airline co-brands, this runs around 4% of volume. For a first-time sports co-brand with unproven engagement, expect closer to 1.5-2%.

The base-case math: 

If they had 5 million cardholders spending $12,000 annually, that would be $60 billion in card volume. Here’s how Fanatics could reach $1bn in gross contribution:

Total = $1.36 billion in gross contribution before costs. 

The variables that determine success: 

Cardholder acquisition - can Fanatics convert 3-5% of its 140m customer base? 

Spend per cardholder - The $12,000 assumption is 71% higher than the $7,000 per card annually. This only works if Fanatics captures top-of-wallet positioning, meaning fans use it for groceries, petrol, and daily spending, not just game tickets and merchandise. 

Partner payment rate - Airlines negotiate 3-5% because they bring enormous scale and proven engagement. Fanatics is an unproven co-brand partner. Expecting 1-2% is reasonable but not guaranteed. If they land at 1%, the model drops to $600m in partner payments, and the path to $1bn narrows. 

What I’ve purposely left out - The costs. Credit card programs require customer acquisition spend, fraud management, customer service infrastructure, and reward fulfilment operations. These are difficult to estimate for my analysis, but are hard costs that will need to be considered.

The path to $1 billion exists, but it requires near-perfect execution across cardholder acquisition, spend velocity, and partner economics. Most importantly, it assumes Fanatics can solve the top-of-wallet problem, making this a primary spending card rather than a sports-only novelty.

A Quick Note on How All of This Actually Works

Fanatics isn't becoming a bank. Like Amazon with Chase or the NFL with Comenity, Fanatics will partner with a card issuer that handles the actual credit underwriting, billing, regulatory compliance, and customer service. Fanatics provides the brand, the customer base, and the rewards ecosystem; the issuer provides the financial infrastructure. The two parties then negotiate a revenue-sharing agreement covering interchange fees, annual fees, and marketing spend. Who that issuing partner will be hasn't been announced, but given Fanatics' scale (140 million customers, $8 billion revenue), expect a major player, likely Chase or American Express, both of whom have proven co-brand expertise at this level.