{"id":36502,"date":"2022-11-28T13:16:20","date_gmt":"2022-11-28T13:16:20","guid":{"rendered":"http:\/\/egrowonline.com\/?p=36502"},"modified":"2022-11-28T13:16:20","modified_gmt":"2022-11-28T13:16:20","slug":"ftx-collapse-sends-ripple-through-78-billion-sports-sponsorship-market","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=36502","title":{"rendered":"FTX collapse sends ripple through $78 billion sports sponsorship market"},"content":{"rendered":"


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Imploded crypto company FTX\u2019s hundreds of millions in sport sponsorships are being called into question and could cause other teams to review their crypto partners.<\/p>\n

FTX \u2014 which had Tom Brady as its ambassador and became the world\u2019s second-largest crypto exchange \u2014 signed a 19-year deal with the Miami Heat to take over naming rights of the former American Airlines Arena before filing for bankruptcy protection this month.<\/p>\n

Now the team has terminated the $135 million FTX Arena deal and is left without a sponsor, according to a joint statement from Miami-Dade County and the Heat.<\/p>\n

This may serve as a cautionary tale in the $78 billion global sport sponsorship market.<\/p>\n

\u201cCrypto is done\u201d being a sports partner, said Jonathan Jensen, a former sports marketing executive at Omnicom and Publicis Groupe.<\/p>\n

Other sports teams are creating distance from FTX, said Emily Sparvero, a sports management professor at the University of Texas in Austin. And after the crash in crypto prices last November, some crypto companies have already started to scale back on their sport sponsorship commitments, she said.<\/p>\n

\u201cI expect sport properties to honor existing partnerships with crypto companies, but they will be a lot more cautious going forward,\u201d Sparvero said.<\/p>\n

The issue is particularly relevant in Texas, a state known for its avid support of both sports and crypto. The Lone Star State tied with New Jersey as the fourth-best state for crypto enthusiasts<\/a>, according to a study from SmartAsset<\/a>.<\/p>\n

A number of Texas teams have paired up with crypto companies in recent years.<\/p>\n

The Dallas Mavericks announced a five-year partnership with Voyager Digital<\/a> in 2021 that has also soured. Dallas Mavericks fans were upset<\/a> when Voyager filed for bankruptcy earlier this year and said they had trusted that Mavericks owner Mark Cuban wouldn\u2019t endorse a financially unsound company.<\/p>\n

In April, the Dallas Cowboys announced that the crypto platform Blockchain.com would be its exclusive digital asset partner, making it the first NFL team to enter the crypto space. Also this spring, The Texas Rangers linked up with Jupiter, Fla.-based Trade The Chain, which paid for the deal entirely in crypto. And in August, BitWallet became the official digital currency of the Houston Texans.<\/p>\n

Crypto companies poured money into the sport sponsorship market while crypto prices were high, with FTX worth $32 billion at one point. But with the crypto crash last year that sent Bitcoin\u2019s price down over 70% in the last 12 months, crypto players are having to pull back some from sports deals.<\/p>\n

\u201cAs the crypto market is crashing, the brands in that space won\u2019t have the money to invest in sport sponsorships, so it could be a problem that takes care of itself from a sport perspective,\u201d Sparvero said.<\/p>\n

Seeking legitimacy<\/h3>\n

When Texas executives were asked recently what the most overhyped tech trend is, nearly half of them said crypto<\/a>, according to digital consulting firm West Monroe.<\/p>\n

Players in the still newish industry saw an opportunity in sports marketing to help legitimize their businesses and quickly build recognizable brands, said Jensen, now a professor of sports administration at the University of North Carolina at Chapel Hill.<\/p>\n

\u201cA large-scale sponsorship, like a naming rights sponsorship or a jersey sponsorship, can basically short-circuit the brand-building process that normally takes a long time,\u201d he said. \u201cIt can basically take that from zero to 60 in one announcement.\u201d<\/p>\n

The instant brand awareness with the public and potential investors is why emerging industries often partner with sports teams, which, in turn, is also why it may seem like lots of sport sponsorship deals fall through, said Jensen.<\/p>\n

Similar trends with emerging industries have happened before.<\/p>\n

During the 2007 to 2009 recession, sub-prime mortgage lender AmeriQuest lost its naming rights to the Texas Rangers stadium, now called Globe Life Field.<\/p>\n

The tech company CMGI had naming rights for the home of the New England Patriots until the dot-com bubble burst and it became Gillette Stadium. Similarly, the Baltimore Ravens\u2019 stadium, called M&T Bank Stadium now, was once PSINet Stadium until 2002 when the early internet service provider filed for bankruptcy.<\/p>\n

\u201cAn emerging tech firm would slap their name on a stadium because it gives them not only instant brand awareness but it also gives them instant credibility,\u201d Jensen said.<\/p>\n

Crypto executives need to grow up or go the way of FTX, Riot Blockchain leader says <\/a><\/article>\n

Befriending crypto<\/h3>\n

Crypto still has its doubters, and not without reason. Since the start of 2021, more than 46,000 people have reported losing over $1 billion in crypto to scams, with a median loss of $2,600, according to the Federal Trade Commission.<\/p>\n

But sports teams are not investors and don\u2019t evaluate potential sponsors too deeply, Jensen said. The sports teams may have their eyes on the money and put blinders on, he said.<\/p>\n

\u201cThe vetting process is, \u2018Who\u2019s going to pay the most?\u2019\u201d Jensen said. \u201cMost do not undergo a great deal of scrutiny.\u201d<\/p>\n

Teams that signed deals with crypto companies knew that, if the industry went south, they could change sponsors. It\u2019s not uncommon and isn\u2019t too expensive, Jensen said.<\/p>\n

\u201cWhat\u2019s expensive is not having a sponsor,\u201d he said.<\/p>\n

Sports teams also gained monetary value as crypto sponsorships emerged because it was a new category outside the more common ones like an official beer, said Sparvero. And coming out of the pandemic, sports teams were under pressure to maximize revenue, she said.<\/p>\n

Lasting impacts<\/h3>\n

The uncertainty in the economy means teams associated with FTX may have a harder time finding new partners, Sparvero said. At the same time, crypto is still a relatively minor part of the sport sponsorship market, she said. It\u2019s still dominated by traditional categories, like beer, soft drinks, cars, and banks and financial service companies, she said.<\/p>\n

\u201cThese types of brands make sense for sport properties,\u201d she said. \u201cPeople consume beer and Cokes while watching a game, or there\u2019s overlap between the fans of sports and the consumers of cars. There hasn\u2019t been the same type of fit between sports and crypto.\u201d<\/p>\n

While sports teams will likely move away from the crypto industry moving forward, there will always be new emerging industries to take its place, Jensen said. At this point, people have gotten used to arenas and stadiums changing names, he said, noting that the Houston Astros dropped Enron as a stadium naming rights sponsor after it was caught in an accounting scandal.<\/p>\n

\u201cThe real question is, will other <\/b>new emerging tech firms have a hard time getting teams, leagues, arenas and stadiums to partner with them?\u201d Jensen said. \u201cAnd I have to be honest, I think the answer is no. It\u2019s happened before, it\u2019ll happen again.\u201d<\/p>\n

Lawsuit accuses Dallas\u2019 Mark Cuban of duping investors with crypto \u2018Ponzi scheme\u2019<\/a><\/article>\n<\/div>\n


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Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Imploded crypto company FTX\u2019s hundreds of millions in sport sponsorships are being called into question and could cause other teams to review their crypto partners. FTX \u2014 which had Tom Brady as its ambassador and became the world\u2019s second-largest crypto exchange \u2014 signed a 19-year deal with the Miami Heat to take over naming rights […]<\/p>\n","protected":false},"author":1,"featured_media":36503,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[40],"tags":[1065,819,2258,219,265,3199,2381,915],"class_list":["post-36502","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-analysis","tag-billion","tag-collapse","tag-ftx","tag-market","tag-ripple","tag-sends","tag-sponsorship","tag-sports"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"http:\/\/egrowonline.com\/wp-content\/uploads\/2022\/11\/TBIPSI3GSBS6E2VWC5V2JXBBSU.jpg","_links":{"self":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/36502","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=36502"}],"version-history":[{"count":1,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/36502\/revisions"}],"predecessor-version":[{"id":36504,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/36502\/revisions\/36504"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/media\/36503"}],"wp:attachment":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=36502"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=36502"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=36502"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}