Has the naming rights curse finally hit crypto?

While it would be unfair to say that any corporate naming rights partnership is preceded by an unfortunate event – there are, after all, more than 75 professional league stadiums in America – a mythology has been established around such deals and the hubris required to see them through. .

Although talk of a naming rights curse is exaggerating things a bit, it has to be said that some of the most high-profile naming deals in recent years have centered around particularly disastrous episodes. Consider the MCI Center in DC, Enron Field in Houston and the Wachovia Center in Philadelphia.

If nothing else, these deals can apparently provide a practical litmus test before major market declines.

History rhymes

On April 7, 2000, just a year before reporters and investors began to question the financial statements, Enron purchased 30 years of naming rights for the newly constructed Astros stadium in Houston. The price for the rights was $100 million, paid out at just over $3 million a year.

By late 2002, Enron was forced by a court order to sell those naming rights back to the Astros for $2.1 million. The Astros were quickly able to find a new buyer, to whom the rights still belong, Minute Maid—although Minute Maid was merged into the Coca-Cola Company by 2003.

In what probably felt like déjà vu, just last year Crypto Dot Com, a Singapore-based cryptocurrency exchange, made the decision to buy two decades of naming rights to the former name STAPLES Center in Los Angeles.

This decision came at an incredible cost to the startup: over $700 million, or almost double what it cost to build the STAPLES center in the first place. The sum was also almost four times what it cost Staples to buy the original naming rights.

On top of more than 700 million dollars spent on naming rights for the arenaalso inked the exchange an “eight-figure deal” to put a patch on the uniforms of the Philadelphia 76ers for six years.

So, what has more than three quarters of a billion dollars spent on basketball marketing alone got the change? Not much, from what any outside observer can tell. Crypto Dot Com’s native cryptocurrency, Cronos, is down nearly 90% year over year. Meanwhile, it has been widely reported that the company is facing steep layoffs in the face of an industry-wide downturn.

Read more: Crypto.com is in big trouble – but the warnings were there

FTX warms up

The other big swinger in sports marketing in the last couple of years has been FTX, a Bahamas-based crypto exchange with American Sam Bankman-Fried at the helm. FTX acquired naming rights to the former American Airlines Arena in Miami in early 2021, a 19-year deal sealed for 135 million dollars. The Miami Heat are now officially playing in the FTX Arena.

But this wasn’t the only sports marketing the exchange participated in. It also sponsored an esports team for over $200 million and has seen its logo plastered on every umpire in Major League Baseball. The price of that agreement has not been disclosed.

This suggests that FTX used one half a billion dollars or more on sports marketing alone — and chances are they weren’t the most beneficial dollars spent. This year, FTX gave up on an attempted deal with the Los Angeles Angels of Anaheim as the crypto winter took its toll.

Meanwhile, for the first time since FTX was founded, people seem to be asking whether the exchange and its sister trading firm – Alameda Research – are insolvent.

Best in the end

The most extreme example of choosing to spend money on sports marketing as opposed to a functional business must go to the team previously in charge of the algorithmic stablecoin pair TERRA/LUNA.

A deal was struck this year with the Washington Nationals for about $40 million, giving naming rights to an exclusive luxury venue for exclusive customers, along with seats behind home plate emblazoned with ‘TERRA’ for at least one MLB season – possibly many more.

Just months later The stablecoin pair collapsed into oblivion. Meanwhile, anyone watching a Nationals game has been reminded of the bad deal for the entire season — with empty seats staring back at viewers during every game.

Read more: Crypto exchange to name NBA stadium in $135M deal, replacing American Airlines

Immersed in the naming rights curse

As the broader economy begins to embrace a recession, cryptocurrency is sustaining lows not seen in years. Is the stadium naming rights curse real? Are there more major cryptocurrency bankruptcies in the not-so-distant future? Only time will tell — Crypto Dot Com and FTX hope to buck the trend.

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