Key Takeaways:
- The crash of cryptocurrency exchange FTX has impacted the sports industry
- Sam Bankman-Fried’s company had the naming rights for the Miami Heat arena
- It's collapse has now placed crypto-sports partnership under the scanner
YEREVAN (CoinChapter.com) — Various industries have felt the tremors from the collapse of Sam Bankman-Fried’s crypto exchange FTX. While many investors lost their life savings, other players in the space are still in limbo, unclear how this will impact them. The sports industry, especially sports arenas and stadiums carrying names of cryptocurrency companies, might be some of the hardest hit.
Ever since cryptocurrency companies turned heads by attracting billions in investments, they have entered every industry possible. Sports bring large audiences. Hence, it was only natural that crypto firms rushed to sign new partnership deals with big names in the industry.
From sports teams to athletes, everyone joined the bandwagon. While some issued sports-related fan tokens and NFTs, others dived directly into naming rights.
The FTX crypto exchange was among the first to see merit in putting its name on big arenas. Now its sports partnerships raise serious questions.
On November 11, FTX filed for Chapter 11 bankruptcy following Bankman-Fried’s resignation from the post of CEO.
FTX is bankrupt. What about naming rights for sports arenas?
In 2021, Sam Bankman-Fried’s FTX signed a $135 million, 19-year deal with the American professional basketball team Miami Heat. Under the deal, the American Airlines Arena, the home turf of the NBA club, was renamed FTX Arena.
The deal was considered a masterstroke, as it would help make FTX a household name. Faced with tough competition from other exchanges, such as Binance, it added to the reputation of Bankman-Fried as a crypto mogul.
The crypto exchange also signed a 10-year agreement with the California Golden Bears football program, which represents the University of California, Berkeley in college football.
Under the deal, FTX received naming rights to the field at California Memorial Stadium, which became known as FTX Field at California Memorial Stadium.
Besides buying the naming rights to the Miami Heats court and the Cal Athletics stadium, the exchange also inked deals with other sports giants.
In June 2021, FTX announced a long-term partnership with Major League Baseball (MLB). Thanks to the deal (which didn’t turn out to be long-term, after all), Baseball fans could see the FTX logo during matches, including on empires.
Bankman-Fried’s exchange also roped in Formula 1 racing team Mercedes-AMG Petronas. Earlier this year, the two announced they would release an NFT collection to coincide with the start of Formula 1 racing for the 2022 season.
However, the Mercedes Formula One team suspended the partnership agreement on November 11, following FTX’s debacle.
American Football quarterback Tom Brady, NBA superstar Steph Curry, and MLB phenomenon Shohei Ohtani are also on its star sports list.
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Sports teams should do due diligence before crypto partnerships
The once brilliant idea of roping in big crypto companies has backfired on sports teams and individuals. The recent collapse in the cryptocurrency market has thrown many of these companies into a financial crisis.
Around the same time that FTX inked the partnership with the Miami Heat, another cryptocurrency exchange, Crypto.com, purchased the naming rights for the legendary Los Angeles Lakers’ arena. The deal, according to reports, was worth $700 million.
Then came the crisis. The crypto crash, fueled by the tanking of LUNA, dried up trading volumes on the exchange. As a result, it laid off over 2,000 employees or around 40% of its workforce.
Coinbase has also inked a multiyear agreement with the NBA to serve as the league’s exclusive cryptocurrency partner. The deal, according to reports, was worth $192 million over four years.
The crash has now raised serious questions on the merit of sports teams partnering with crypto companies. With so many of them going belly up, one never knows when these partnerships will backfire.
Meanwhile, the Miami Heat arena is almost certain to get a new name. However, will it be another crypto player? Time will tell.
