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    Home » FTX Failure Rethinks Global Sports Sponsorship
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    FTX Failure Rethinks Global Sports Sponsorship

    sportspicksnation_wy10nwBy sportspicksnation_wy10nwJanuary 4, 2023No Comments4 Mins Read
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    The FTX demise has reverberated beyond the cryptocurrency and financial worlds. The global sports industry contemplates the future of lucrative sponsorship deals with digital asset companies.

    The now infamous Sam Bankman-Fried, founder of the once valued $32 billion cryptocurrency exchange, is reaching new audiences through brand-enhancing partnerships with top sports teams in basketball, motorsports and baseball. won.

    Before filing for bankruptcy in November, FTX had its logo plastered on the uniforms of major league baseball umpires and the Mercedes Formula 1 cars driven by Lewis Hamilton and George Russell. His 19-year deal, worth $135 million, signed last year, renamed the home of the Miami Heat basketball team to his FTX Arena and made NFL quarterback Tom Brady an ambassador for the cryptocurrency brand. rice field.

    The deal was emblematic of the boom in sports and cryptocurrency tie-ups emerging from the coronavirus lockdown. As clubs and leagues seek to recoup some of the billions of dollars lost as a result of canceled events, the crypto industry has found itself rich in cash. This includes his Crypto.com, which has signed a sponsorship deal for his Fifa World Cup this year, and his Tezos, his blockchain provider, to the Premier League’s Manchester United club. Training slapped their own brand on his kit.

    Steve Martin, global chief executive of M&C Saatchi Sports & Entertainment, said many European sports groups “received the money immediately.” Especially since gambling advertising is prohibited, or may be prohibited, in some jurisdictions, so we tried to replace our betting partners.

    “When cryptocurrencies started coming out, it felt new and revolutionary. You have to question how much due diligence was done,” Martin said.

    Martin Dubravka of Manchester United
    Blockchain provider Tezos has slapped its brand on the training kit of Premier League club Manchester United. ©Phil Noble/Action Images/Reuters

    Clubs and leagues have started to look to such partnerships for future earnings. In February, data provider Nielsen predicted the value of sports sponsorship deals with cryptocurrency, blockchain and digital asset players to reach $5 billion by 2026. According to sports marketing agency His Two Circle, 2019 was spent on sports sponsorships around the world. Nielsen warned, “It is imperative that organizations properly vette their sponsors and ensure that revenue does not interfere with due diligence.”

    There are two threats. As FTX-style explosions become more common, sports businesses are at greater risk of reputational damage. Moreover, as token prices drop and trust in the industry dwindles, crypto companies themselves are unable to jump on sponsorship deals.

    Haider Rafik, marketing chief of crypto group OKX, which backs Premier League champions Manchester City and Formula 1 motor racing team McLaren, said the fall of FTX has set the trajectory of crypto sports sponsorship back by five years. said. He expects OKX to remain active in the space, but predicts a slowdown in new sports sponsorships.

    “I don’t think you’ll see much,” said Rafic.

    In addition to the loss of trust associated with FTX, a December report by sports media company IMG and its digital agency Seven League found that the crash in cryptocurrency prices has led to an appetite for digital sports collections (tokens known as NFTs). is said to be weakening. It is sold to digital asset companies and sports organizations and sold to fans. The report found that the “conversion” from sports fans to NFT enthusiasts was “much slower than expected.”

    They will be banking millions in the next few years. If these deals are collapsing, they should replace them.

    Sports clubs may change how they use their tokens. “When it comes to sports, 2023 will likely focus innovation on improving relationships with fans and customers, rather than just focusing on making money using these new technologies,” he said. says the IMG-Seven League report.

    A December survey by the European Sponsorship Association found that many in the sports industry said they felt cautious about cryptocurrency partnerships, or that they were “already adversely affected by short-lived partnerships.” increase.

    Ratings agency Fitch also said it would be difficult for sports clubs and leagues to sign potential sponsors from all walks of life next year in a “deteriorating macroeconomic environment” as cost pressures forced companies to cut marketing budgets. Said it could be.

    M&C Saatchi’s Martin said the FTX demise will put more pressure on sports clubs and leagues to scrutinize potential sponsors.

    “People are going to be in a situation where they are going to be very cautious about the impact of FTX right now,” he said. “Over the next few years, they’re going to be throwing millions of dollars at it. If these deals are falling apart, they’ll have to replace them.”



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