Formula 1 crypto sponsors drop by 40%
As the 2023 Formula 1 season kicks off, it’s clear that the bearish crypto market, which is also marred by a series of scandals and regulatory issues, has hit the industry hard. Last year, blockchain-related companies, token issuers and digital asset exchanges flooded sponsorships over F1 teams and events. Now, the number of crypto sponsors in the sporting organization has dropped by 40%, with some teams ending partnerships with the crypto sector altogether.
According to a Bloomberg report, every F1 team is backed by at least one company related to crypto or Web3 last year. This can be seen plastered all over the color of the cars, the uniforms and helmets of the drivers and the race track. However, their numbers have suddenly dropped this year to 60%.
Big names that have been cut
The shift has been driven by various factors. One of them includes the FTX debacle which reportedly led the Mercedes-AMG Petronas team to file a claim in bankruptcy proceedings. Sources have also said that the three-pointed star brand is working hard to distance itself from the disgraced crypto exchange, but this may be difficult to find at the moment because the logos of the defunct company can still be seen on the uniforms, cars, and merchandise of the team whenever the focus goes to those in the Drive to Survive Netflix series.
Another sponsorship outcome also occurred between Ferrari and Velas in January. It should be noted that the Velas-Ferrari affair was supposed to have a long-term deal, but the Swiss blockchain firm ended the deal prematurely. This reportedly resulted in a loss of $30 million in revenue for the Italian team.
Both parties have remained mum on the circumstances surrounding the incident, but there were claims it had something to do with the F1 group’s refusal to allow the company to produce Ferrari-themed NFTs. Other news outfits dismissed it as a mere excuse for Velas to pull out of the deal due to the large crypto market.
Big names that remain
Despite the industry’s recent struggles, some crypto companies are still sponsoring Formula 1. Binance, Opensea, Crypto.com and Socios are among those sticking with the sport. Meanwhile, Red Bull’s partnership with exchange Bybit and Tezos’ arrangement with British rival McLaren remain in place.
With the crypto industry facing significant headwinds, it is unlikely that F1 will rely heavily on crypto sponsorship to the same degree as it did in the past. Nevertheless, some teams are still exploring opportunities in the crypto sector. McLaren has revealed it is exploring several new web3 initiatives and other teams are likely to follow suit as they seek new ways to generate revenue in a challenging sports sponsorship environment.
Conclusion
Overall, while the crypto industry and Formula 1 have had a close relationship in recent years, the fallout from the crypto winter is now affecting the world of motorsports. As teams look for new sponsors and explore alternative revenue streams, it remains to be seen whether crypto companies will continue to play a significant role in the sport’s future.
