The near collapse this week of FTX, one of the largest cryptocurrency exchanges, has sent shockwaves throughout the crypto startup and investment community. But the fallout could 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 One 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 Wednesday by Binance after the firm conducted a financial review of FTX.
The uncertainty around the future of FTX raises new questions over what happens to its many sports deals.
In 2021, FTX inked a reported $135 million, 19-year deal with the NBA’s Miami Heat to rename the American Airlines Arena as FTX Arena. Major League Baseball struck 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 premature for us to comment,” the FTX Arena and Miami Heat said in a joint statement provided to CNN Business when asked how the acquisition could impact their deal.
Even college sports has ties to FTX, with the University of California, Berkeley, signing a $17.5 million, 10-year naming rights partnership in 2021 for the school’s football stadium. “We believe we have found a great partner in FTX,” Cal Director of Athletics Jim Knowlton said at the time. “We are looking forward to building our relationship now and in the years ahead.”
In a statement after this story published, Cal Athletics said: “FTX is a great partner for Cal Athletics. We are monitoring the evolving business situation with FTX and will determine any next steps if they become warranted.”
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 an equity stake and has served as an ambassador for FTX.
Sports partnership experts say the 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, except for the two buildings,” Peter Laatz, global managing director at sports partnerships consultancy IEG, told CNN Business.
“It happened during the dot-com era where a bunch of buildings, baseball stadiums mostly, were getting named after all these wonky dot-com companies, and they all went completely belly up,” said Laatz. “Naming rights deals are just so hard to get up and running, to get in the minds of consumers that Staples and American Airlines Arenas are now called something different and to pull the roots up on something like that is just more difficult. It makes the property’s job harder. It’s more expensive.”
FTX and Binance did not respond to CNN’s request for comment.
FTX is not the only crypto company involved in the sports world. Cryptocurrency brands spent more than $130 million on NBA sponsorships alone last season, up from less than $2 million the season before. Just five crypto companies, including Crypto.com, Coinbase and FTX, were responsible for 92% of the sector spending, according to IEG.
In 2021, trading platform Coinbase inked a multiyear agreement with the NBA to serve as the league’s exclusive cryptocurrency partner, reportedly worth $192 million over four years. Crypto.com, another cryptocurrency exchange, purchased the naming rights for the Los Angeles Lakers’ stadium in November 2021, a deal reportedly worth $700 million. It also entered a multiyear deal to become the Philadelphia 76ers’ official jersey patch partner.
Then the market shifted. 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 that this was an arms race for brand awareness and users, and there were 40 crypto exchanges spending money in sponsorship a year ago — and now there’s like none. There’s maybe three or four,” said Laatz.
Binance, notably, sat out the sports sponsorship frenzy. In a hiring announcement earlier this year, Binance CEO Zhao “CZ” Changpeng said: “It was not easy saying no to Super Bowl ads, stadium naming rights, large sponsor deals a few months ago, but we did.”