Crypto Stadium naming rights under scrutiny during crypto winter
It’s been about a year since it was announced that Crypto.com would take over the naming rights to the downtown Los Angeles sports and events arena formerly known as the Staples Center.
There was mixed fan reaction to the reported 20-year, $700 million deal, with advocates praising the move as forward-thinking for AEG, the company that owns the home of the Lakers and Kings.
Opponents mocked everything from the new name of the arena to Crypto.com itself.
What was not debatable is that cryptocurrency arrived in a big way in 2020 and 2021, and with the name of one of the most popular buildings in LA, exchange Crypto.com was a player to be reckoned with.
Of course, all of this happened before the crypto winter that has knocked digital tokens out of the all-time highs they reached during the height of the pandemic.
Meanwhile, sponsorship revenue for the leagues is reaching new heights, thanks in part to the influx of crypto dollars. Earlier this year, Sportico reported that NBA sponsorship revenue will reach $1.64 billion by 2022.
Now the question is whether these 8 and 9 figure sports advertising deals will come back to haunt the crypto industry.
Crypto winter use
While the biggest crypto exchanges and coins have enough assets to withstand the recent downturn, other crypto companies have not been as solid.
When Terraform Labs, the developer of the Terra blockchain network, crashed earlier this year, there were questions about whether its $38 million deal with MLB’s Washington Nationals would be affected.
Like the Lakers, the Nationals are using the funds, all of which they reportedly received in advance, to make upgrades to the fan experience at the ballpark.
The Nats deal included naming rights to the Nats’ exclusive luxury fan club and signage around the park, including for the seats behind home plate.
But the intended positive effect of attaching Terra’s name to a premium product backfired when the Luna coin bottomed out and the founder walked away with $80 million.
Neither Terraform Labs nor the Washington Nationals responded to a request for comment on whether the branding will stick, but since Terra has already paid the money, it’s probably safe to say you’ll see the same signage when the park reopens next April.
Earlier this year, the New York Post reported that crypto exchange FTX, which spent $135 million on the naming rights to the NBA’s home arena of the Miami Heat, rejected talks to be a jersey patch sponsor for the Los Angeles Angels.
Change in tactics?
The topic of conversation during Coinbase’s earnings call was the company’s spending during the crypto winter.
“We’re focusing on tightly managing spending to make sure we can survive any kind of downturn cycle, and we intentionally raised capital in 2021 to make sure we had a really strong balance sheet in this downturn, which has been great.” Brian Armstrong said.
While Armstrong didn’t mention any of the money the company already spent to be the NBA’s official crypto partner, or the $14 million they spent on a 60-second Super Bowl ad earlier this year.
Back in February when the ad aired, bitcoin was still trading at twice the $19,000 level it is currently trading at.
Coinbase took about $500 million in non-cash impairment charges when the value of its crypto assets fell below book value on the company’s balance sheet,
But a case can still be made for Coinbase’s foray into sports advertising and partnerships.
The company’s “brand” should be the most trusted crypto exchange option in the industry, Armstrong said during the company’s earnings call.
Nothing says trust like being the official crypto partner of an entity as big as the NBA.
But in the end, the price of that partnership may not be worth the money if the crypt’s recovery never comes.
