CNN Business
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The near-collapse this week of FTX, one of the largest cryptocurrency exchanges, has sent shock waves throughout the crypto startup and investment community. But the fallout can also spread to the sports industry.
Like other crypto companies, FTX has invested heavily in sports sponsorships, including partnerships and naming rights in professional basketball, baseball and Formula 1 racing. Now the company is in turmoil. On Tuesday, it said it would be acquired by rival Binance after experiencing a sudden liquidity crisis, but the deal was called off on Wednesday by Binance after the firm conducted a financial review of FTX.
The uncertainty surrounding the future of FTX raises new questions about what happens to the many sports agreements.
In 2021, FTX entered into a reported $135 million, 19-year deal with the NBA’s Miami Heat to rename American Airlines Arena to FTX Arena. Major League Baseball entered into a five-year deal in 2021 to name FTX as its official cryptocurrency exchange, a partnership that includes putting FTX patches on umpires’ uniforms. FTX is also the official cryptocurrency exchange partner of the Mercedes-AMG Petronas Formula One Team.
“It is far too early for us to comment,” FTX Arena and the Miami Heat said in a joint statement provided to CNN Business when asked how the acquisition might affect their deal.
Even college sports have ties to FTX, with the University of California, Berkeley, signing a 10-year, $17.5 million naming rights partnership in 2021 for the school’s football stadium. “We think we’ve found a great partner in FTX,” Cal Director of Athletics Jim Knowlton said at the time. “We look forward to building our relationship now and for years to come.” Cal Athletics did not immediately respond to CNN’s request for comment.
FTX also works directly with some of the biggest athletes across sports. Los Angeles Angels superstar Shohei Ohtani became the exchange’s global ambassador in return for a stake in the company; NBA star Steph Curry and his foundation, Eat.Learn.Play., signed a partnership with FTX in 2021; and football legend Tom Brady has a stake and has served as an ambassador for FTX.
Sports partnership experts say stadium naming rights are the biggest headache. “There’s not a huge level of permanence to a lot of the things that have been done, other than the two buildings,” Peter Laatz, global managing director of sports partnership consultancy IEG, told CNN Business.
“It happened during the dot-com era where a bunch of buildings, mostly baseball stadiums, were named after all these crazy dot-com companies, and they all blew up,” Laatz said. “Naming rights deals are just so hard to get going, to get consumers in the head that Staples and American Airlines Arenas are now called something else, and pulling up roots on something like that is just harder. It makes real estate’s job harder. It is more expensive.”
FTX and Binance did not respond to CNN’s request for comment.
FTX is not the only crypto company involved in the world of sports. Cryptocurrency brands spent more than $130 million on NBA sponsorships alone last season, up from less than $2 million the previous season. Just five crypto companies, including Crypto.com, Coinbase and FTX, were responsible for 92% of sector spending, according to IEG.
In 2021, trading platform Coinbase entered into a multi-year deal with the NBA to serve as the league’s exclusive cryptocurrency partner, reportedly worth $192 million over four years. Crypto.com, another cryptocurrency exchange, bought the naming rights to the Los Angeles Lakers stadium in November 2021, a deal reportedly worth $700 million. It also entered into a multi-year agreement to become the Philadelphia 76ers’ official jersey patch partner.
Then the market changed. Coinbase, Crypto.com and other services announced layoffs as rising inflation, fears of a looming recession and broader market turbulence led to a sharp decline in the value of cryptocurrencies.
“We’ve always said this was an arms race for brand awareness and users, and there were 40 crypto exchanges spending money on sponsorships a year ago — and now there’s none. There’s maybe three or four,” Laatz said.
Binance, in particular, set off the sports sponsorship frenzy. In a hiring announcement earlier this year, Binance CEO Zhao “CZ” Changpeng said, “It wasn’t easy to say no to Super Bowl ads, stadium naming rights, big sponsorship deals a few months ago, but we did it.”
