Crypto Crash Leaves NWSL Players Empty-Handed as League Mulls Cash Out
The NWSL has told its players they could be out of money after cryptocurrency platform Voyager Digital, one of the league’s biggest partners, filed for bankruptcy earlier this month.
The league’s Voyager partnership, announced in December, was remarkable in both size and construction. About half of the value of the deal was to be paid to the league in cash, while the other half was earmarked for individual athletes to invest in cryptocurrencies via the Voyager platform.
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Those accounts were never funded, according to multiple people familiar with the partnership, and now that Voyager is entering voluntary Chapter 11, it’s unclear how much — if any — players will actually see. In a letter distributed Thursday to the athletes, the NWSL said there were “no definite answers at this time as to whether, or when, the player accounts will be funded.”
The letter, which was seen by Sporticoalso says that if the accounts are not funded, the league intends to work with the NWSLPA to share some of the cash it received from Voyager.
“The Player Fund was always intended to be distributed to Voyager accounts in cryptocurrency, with the goal of educating players regarding investing in the crypto space,” the letter said. “As such, there was always risk regarding the volatility of the cryptocurrency market.”
A representative for the NWSL declined to comment. Representatives for the NWSL Players’ Association and Voyager did not immediately respond to requests for comment.
The NWSL deal will attract attention across the sports world, where crypto companies have spent heavily in pursuit of new customers and market share. Throughout most of 2021, as currencies like Bitcoin and Ether rapidly rose in value, crypto trading platforms and lenders ran expensive Super Bowl commercials, snapped up naming rights to arenas, secured jersey ads and rushed to sign team-wide and league-wide deals. In recent months, however, much of the market has collapsed, resulting in massive losses for investors and bigger problems for some of the industry’s biggest companies.
The NWSL received its first year’s cash payment, according to one of the people, and Voyager’s field signs and website advertising remain active across the league. The crypto company is also a partner in the league’s 10thth anniversary celebration, and remains part of this campaign on the NWSL website.
The league may hope that fulfilling its side of the deal helps the claim for money owed by Voyager, but it is likely that the NWSL (and thus the players) will be an unsecured creditor, according to Gregory Moffett, director of Preti Flaherty Beliveau & Pachios, Chartered LLP, and co-chairman of the firm’s creditor rights and bankruptcy practice.
“If it turns out that the claims that the debtor has to make or the things that the debtor has to do are not consistent with their plan to go bankrupt or to or to sell the company or whatever it is that they plan to do, then [the NWSL contract] could potentially be at risk of rejection,” Moffett said in an interview.
Two months before Voyager announced its financial problems, the collapse of a prominent stablecoin rocked the industry. Recently, a prominent crypto hedge fund named Three Arrows Capital filed for Chapter 15 bankruptcy (assets are frozen and founders are unknown), and shortly after that both Voyager and fellow lender Celsius Network filed for Chapter 11.
The NWSL’s Voyager deal is different from other league crypto deals because of the funded player accounts. As the Women’s Soccer League grows its commercial footprint, it has found a number of new partners willing and eager to directly support the NWSL’s athletes, many of whom also play on the US Women’s National Team and are prominent figures. In July, for example, the league announced a partnership with CarMax that included an extra $5,000 for each player on the team with the best regular season record.
In a statement posted on its website last month, Voyager explained what the bankruptcy could mean for customers. The company said the cash balance was both insured and untouched in a special type of bank account, and should eventually be available for withdrawal. However, the crypto in users’ accounts likely won’t be returned in full — Voyager said those options will depend on the restructuring and the final outcome of more than $650 million in claims against Three Arrows, with which it had a business relationship. The statement did not directly address marketing commitments such as the NSWL Agreement.
The NWSL partnership is likely what’s called a “performance contract,” Moffett said, meaning there are ongoing obligations on both sides — payment from Voyager; marketing exposure from the league. In the Chapter 11 process, these contracts are often at particular risk of rejection, he said.
Moffett added that it will likely be a long time before the league has its solution. There is usually a multi-month exclusive window for the debtor to lay out a reorganization plan, but any subsequent extension can push that to a year or more.
The NWSL letter also says Voyager asked the league if it could share an update directly with the players. The league says Voyager will send that update separately. It is unclear if that has already happened.
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