Crypto winter freezes sports sponsorships for digital asset firms
The crypto market downturn has made it difficult for crypto firms to pull the trigger on any new sponsorship deals with the sports teams they spent hundreds of millions on at the beginning of the year.
The longer the crypto market stays in bearish territory, the more marketing deals with American sports teams are being taken off the table as crypto firms tighten their belts.
Crypto exchange FTX has been rethinking its marketing plan to plaster its name and logo across Los Angeles Angels jerseys, according to a June 20 report from the NY Post. The dramatic market downturn is likely to blame for the retractions.
Another patch deal between an undisclosed crypto firm and the Washington Wizards was axed just as the crypto market began its violent tumble in recent weeks.
The crypto firm in question could have been FTX.US as the exchange’s NFT platform and the Washington DC-based Wizards have an ongoing partnership. The NY Post said that the deal with the Wizards was desirable for crypto firms looking to curry favor with the DC political base.
Sports management professor at Columbia University Joe Favorito told the NY Post that he doesn’t believe any new sports partnerships will be announced while the market is down.
“What money hasn’t been spent already you’re going to see curtailed — just like we saw during the dot-com bubble.”
During the highs of the last crypto boom, crypto firms shelled out staggering amounts of cash for sponsorship deals. Crypto.com paid $700 million to name the LA Lakers’ home Crypto.com Arena for 20 years. FTX paid $135 to name the Miami Heat’s home arena FTX Arena in March 2021. Additionally, Tezos is paying $27 million annually to put its logo on Manchester United uniforms.
There have been dozens of other sponsorship deals between crypto firms and sports teams worth hundreds of millions of dollars.
While the sponsorships for basic brand visibility are being re-thought, the deals between real-world products and nonfungible token (NFT) firms appear to be firmly in place as they deliver more practical benefits to the parties involved.
Global beer manufacturer Budweiser partnered with the popular NFT horse racing platform Zed Run last week. Budweiser issued tokenized Clydesdales, which users could mint, while Zed Run will launch a Budweiser-themed race track and a tournament with a maximum prize of $95,000 in December.
NFL superstar Tom Brady’s Autograph NFT marketplace has a partnership with the likes of ESPN to create content for the sports TV network. Autograph launched a parallel NFT collection that was launched at the same time as the “Man in the Arena: Tom Brady” docuseries first aired on ESPN on April 6.