Sporting properties impacted by collapse of cryptocurrency firm

November 16, 2022

Sporting leagues, teams and stars may shy away from long-term deals with crypto firms to minimise their risks after troubled crypto exchange FTX filed for bankruptcy protection in the USA last week.

FTX filed for bankruptcy on Friday in one of the highest-profile cryptocurrency collapses after traders withdrew US$6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed rescue deal.

As reported by Reuters, the announcement had an immediate impact in the world of sport, where the exchange has a significant presence, with the Mercedes Formula One team suspending its partnership agreement ahead of Sunday’s Brazilian Grand Prix.

The Miami Heat of the USA's National Basketball Association also dropped the FTX name from their arena, ending a 19-year deal worth $135 million agreed last year, while the status of FTX’s partnership with the International Cricket Council is currently unclear.

David Ridpath, Professor of Sports Administration at Ohio University in the USA, believes the situation at FTX could "100%" lead to sports firms looking outside crypto to avoid association with the space in future.

Professor Ridpath advised “crypto was/is the next big thing and it was natural for sports properties to pursue them but it also was a very volatile market so a huge risk that certainly panned out like many thought it would.

"I think crypto will be at the bottom of prospect lists for quite some time. Until that industry stabilises and has better oversight and controls - if it happens - then maybe it might be a viable partner."

The ever-evolving nature of sports sponsorship means other emerging categories could come to the fore, said Larry Mann, Partner at sports marketing and media agency rEvolution.

Mann told Reuters “while crypto might be cooling off as an emerging category, there are always other growth areas to watch - sports betting, CBD, Fintech, are a few examples to keep an eye on.

"If teams weren't cautious before regarding crypto ... they will be now.

"As it relates to increasing sponsorship revenue, teams/leagues are always looking for new opportunities, but what's happening with FTX is a wake-up call."

Singapore-based crypto exchange Crypto.com said on Monday it had moved about US$1 billion to FTX over the course of a year, but most of it was recovered and exposure at the time of FTX's collapse was less than US$10 million.

Cryptocom Chief Executive, Kris Marszalek advised that the firm - which also has a major presence in sport as an official sponsor of the upcoming FIFA World Cup in Qatar and a partnership with the AFL - would demonstrate that the platform is not in trouble.

Marszalek said in a YouTube livestream “we're a global partner of the FIFA World Cup. There will be probably five billion people watching the game.

"And the name Cryptocom is going to be all over this. It's going to serve to raise awareness and maybe help a tiny bit with issues of trust because of the visibility and being right next to the most trusted brands in the world."

The AFL’s links with Cryptocom
Signed earlier this year, the AFL’s five-year deal with Cryptocom earlier this year includes sponsorship deals with four AFL clubs along with Cryptocom becoming the “official cryptocurrency exchange and cryptocurrency trading platform” for the AFL and AFLW.

A spokesperson for the AFL told Guardian Australia there had been no change to the partnership.

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