The New Money: Cryptocurrency in Sports
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Executive Brief: Cryptocurrency companies are moving fast and aggressively to partner with sports teams, athletes, and companies to increase exposure and goodwill with sports’ millions of fans. With the large swaths of investment in crypto companies over the last few years, they’re armed with ridiculous amounts of money to execute branding deals across the space. From Tom Brady to F1, the partnerships and deals are coming hot and heavy. Today’s newsletter discusses some of the major deals to date, how they’re happening, and where I think the partnerships are going. Enjoy!
Sports as a Conduit to Progress
As of today, Bitcoin has a market capitalization (cap) of $1.13Tn and Ethereum has a market cap of $499Bn according to Yahoo Finance, not to mention all of the other alternate coins in the market that seem to be popping up by the day, some of which are generating millions in investment and billions in market cap. Whether you like it or not, cryptocurrency (crypto) is a major player in today’s economy and is only getting bigger in the future. Old businesses are dying, novel digital businesses are thriving and eating up unimaginable swaths of wealth and investment.
While it has taken society some time to realize crypto was real, sports have a way of marrying innovation and introducing it to society. I would argue this is also true of disaster, just think about North America’s reaction to COVID-19 in March 2020. In my opinion, many of us did not take COVID-19 seriously until Rudy Gobert touched that microphone and the NBA shut down. Sports have a way of influencing society and how it moves. So, to no surprise, crypto has released an onslaught of sports partnerships and sponsorships.
The Crypto Sponsorship Arms Race
Crypto trading and investment platforms are in an arms race to see which companies can solicit the most users for their services. Many of these companies are relatively young in their development stage, but because of the amount of money flowing into crypto, the trading and investment companies are becoming behemoths in terms of funding.
In June 2021, Coinbase made history and became the first major crypto company to list its shares on the U.S. stock exchange by going public. It ended day one valued at $85.7Bn, more than 10x its last valuation when it was a private company. Coinbase is a straightforward online exchange allowing retail buyers and sellers to meet in the middle and find a price for trading cryptocurrencies. For more details on the company, click here.
Michael Nagle, Bloomberg, Getty Images
Enter crypto merging with sports.
In April 2021, days before the 2021 NFL Draft, FTX entered the National Football League (NFL) space by signing the presumptive No. 1 pick Trevor Lawrence to a multi-year deal with its subsidiary company Blockfolio, which is its crypto portfolio tracking app. Two months later, FTX double-down on the NFL when it partnered with Tom Brady and his wife Gisele Bundchen on a deal, both of which received equity in the company for their partnership.
FTX. You in?
In June 2021, Miami-Date County made history by officially entering an agreement with FTX.us (FTX) for the naming rights of the Miami Heat’s arena. The deal with FTX is worth $135 million over 19 years and represented the first time a cryptocurrency exchange had acquired the naming rights to a major pro sports venue. The Heat’s new arena will be named FTX Arena, the first name change since it was named AmericanAirlines Arena in 1999 after opening its doors.
That same month, FTX paid $210 million for the naming rights to esports organization TSM, the Los Angeles-headquartered organization. The gaming organization has now changed its name to TSM FTX on behalf of its new sponsorship deal. The deal is for 10 years at $21 million per year, which is more lucrative than the Heat’s deal. TSM is ranked as the most valuable esports organization in the U.S. with a valuation of $410 million itself according to Forbes.
The synergies between crypto companies sponsoring esports organizations are fascinating. Crypto is taking one huge industry (finance) and reimagining it in the digital age. Esports are the same thing to real-life sports. The partnership makes sense and is extremely fluid. That said, not all is sunshine and rainbows. Shortly after the deal was announced, Riot Games, the company that organizes League of Legends and Valorant, stated that TSM will not be allowed to go by its new name or display FTX on its uniforms during competition because crypto exchanges are part of a category of sponsors that carry “activation restrictions”. For more on this, click here.
FTX didn’t stop there. Instead, they secured a five-year international partnership deal with Major League Baseball, which marked the first such deal between a professional sports league and crypto exchange. As a part of the agreement, FTX became the first company to sponsor a patch on umpires’ uniforms, starting with the 2021 MLB All-Star Game. Side note, sponsoring umpire uniforms is brilliant branding – umpires always find themselves behind the scenes on the TV screen during a baseball game. You can’t miss them.
G Flume/Getty Images
FTX, the aggressive first-mover in the market, has also inked the following deals:
Blockfolio by FTX became a presenting partner of Turner Sports’ celebrity golf event The Match.
FTX became the title sponsor of the FTX Crypto Cup, which is part of the wider Meltwater Champions Chess Tour 2021.
FTX secured a seven-year deal with the game publisher Riot Games to become the official cryptocurrency exchange of the League Championship Series.
FTX signed a deal with NBA MVP and champion Steph Curry to become its new Global Ambassador. Curry receives equity in the company for the deal. FTX will also make contributions and build partnerships with Curry’s charity.
The Cal Golden Bears signed a 10-year, $17.5 million naming rights deal with FTX.
FTX signed a deal with likely MLB MVP Shohei Ohtani which compensates him in equity and cryptocurrencies, while FTX will make annual donations to his charities.
FTX isn’t the only crypto company diving headfirst into sports. Crypto.com, another cryptocurrency platform, has been moving fast and loud too. In recent months, Crypto.com secured a long-term deal with the Ultimate Fighting Championship and became a global partner of the Formula 1 (F1) motor vehicle racing series. Crypto.com has also sponsored deals with the International Ice Hockey Federation (IIHF), the Montreal Canadiens, Italian soccer team Coppa Italia, and Aston Martin’s F1 team.
Most recently, Crypto.com made its biggest splash when it inked a $700 million, 20-year deal to hang its name on the leading sports and entertainment venue in Los Angeles, currently called the Staples Center. The new name is planned to debut on Christmas Day 2021, when the arena’s prime tenant, the Los Angeles Lakers play the Brooklyn Nets in a nationally televised game.
Source: Anschutz Entertainment Group
Neither FTX nor Crypto.com is alone in making major investments in the sports space, several others are moving quickly to secure deals and partnerships. However, the two seem to be leading the race thus far.
It makes sense that crypto companies are so bullish in the sports space. For one, crypto companies are focused on innovating and aim to execute swiftly and effectively. So, when the rest of the market moves into sports, everyone else moved swiftly to do the same. Crypto is also a new thing for most people still, which brings a certain learning curve and a certain amount of time for people to get comfortable and familiar. For many in the world, sports are familiar and frequent in their lives, so these types of partnerships expedite the familiarity process for potential users. By working with sports teams and personalities, crypto companies are helping manifest peoples’ trust factors, which they hope will lead to brand awareness, appreciation, and goodwill towards the brand.
The big thing crypto companies are focused on in their marketing push is partnering with companies or people that have passionate followings. Where there is a large emotional connection with followings or followers, crypto companies will look to market with those partners as nothing builds trust and goodwill for someone like the person or team they’re most invested in trusting a crypto company enough to partner with it.
You can expect partnerships to start popping up with actors, musicians, celebrities, public speakers, and other well-known personalities, teams, or companies in the very near future.
Thank you for reading. Have a great day, and we’ll talk on Monday.
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Games of the Weekend
NFL
Sunday, November 21, the 1st place Dallas Cowboys vs. the 1st place Kansas City Chiefs at 4:25 pm ET available on DAZN and TSN.
NBA
Friday, November 19, the 2nd place Phoenix Suns vs. the 4th place Dallas Mavericks at 10:00 pm ET available on NBA League Pass or ESPN.
NHL
Saturday, November 20th, the 1st place Minnesota Wild vs. the 1st place Florida Panthers at 6:00 pm ET.