Welcome to the new cash cow.
In Summer 2018, sports teams, properties and media sales folks were all licking their chops for the influx of cash from a new source.
When the U.S. Supreme Court struck down PASPA in May 2018, sports gambling was all the rage. A true sales lead no-brainer.
Now who had “crypto” and “blockchain” alongside “sportsbook” in their Google Alerts? If you have your hand up, put it down.
Everyone saw the sports wagering explosion coming, but fintech companies, particularly cryptocurrency exchanges, have inundated sports landscape even more quickly.
In 2021, fintech spending is proof point No. 1 that live sports remain a top option for brands looking to establish awareness and reach an engaged audience.
At the head of the class is FTX, which has been incredibly busy on the partnerships front.
Among FTX’s furious 2021, the company announced its $135 million deal in April for naming rights to the Miami Heat‘s arena, the first crypto naming rights deal in the U.S.; inked an umpire uniform patch deal with MLB in June that also included a major MLB postseason presence; paid $210 million over 10 years to partner with esports team TSM, to change its name to TSM FTX, also in June; signed a $17.5 million, 10-year naming rights deal for UC Berkeley‘s football stadium in August; a multi-season sponsorship of the Mercedes F1 Team in September; and a global partnership for all International Cricket Council events up to the 2023 Cricket World Cup in October.
In addition, FTX boasts athlete ambassadors such as Tom Brady (who starred in a $20 million FTX ad campaign with his wife Gisele Bündchen in October), Steph Curry and Shohei Ohtani.
Just today, the company and Curry’s Golden State Warriors announced FTX will now be the Official Cryptocurrency Platform and NFT Marketplace of the Warriors, with the franchise to drop NFTs on FTX.us, beginning in early 2022. The partnership marks the Warriors’ first international rights partnership, meaning FTX will have logo and likeness rights internationally. To commemorate the partnership, the Dubs and FTX will gift 3 Bitcoin—one per non-profit— to three Bay Area organizations that address educational equity.
“While the market for sports is always evolving, and becoming more focused on digital natives who are younger and tech savvy, you can’t deny the overall drawing power the American sports landscape has and how being in with teams and leagues in the right way gets you credibility — and mainstream consumer exposure that you can’t find any other way,” said Jene Elzie, Chief Growth Officer at Athletes First Partners and longtime sports executive at the NBA, The Tennis Channel and other places. “It certainly is a race right now where the well positioned team, league, arena is going to be the recipient of an influx of new money and marketing dollars that doesn’t seem to have an end, to the contrary it seems to just be getting going.”
FTX, already worth an estimated $25 billion, is not alone by any means, with a multitude of other fintech companies such StormX, Crypto.com, WeBull, Coinbase, NYDIG and Voyager leading a crowded field trying to separate themselves from the pack of cryptocurrency exchanges, blockchain and NFT drops.
Elsewhere, StormX, a startup that pays out crypto cash-back awards on online purchases, snagged crypto’s first NBA uniform patch deal with the Portland Trailblazers in July.
Earlier this Summer, Crypto.com, the next largest player in sports sponsorship after FTX, grabbed an eight-figure ($175 million), 10-year merch-heavy agreement with UFC and a reported $100 million deal with F1. In September, the Philadelphia 76ers inked them to be the team’s new jersey patch partner.
Crypto.com continued their buying spree three weeks ago, paying a record naming rights fee — as high as $700 million for 20-years, which exceeds the huge deals from more established financial tech-based brands such as SoFi‘s $600 million football stadium deal and Intuit‘s $500 million partnership with the Clippers on their under-construction arena — for the (about to be officially changed-over) Staples Center in Los Angeles that includes official sponsor status with the Lakers and Kings.
In October, Coinbase struck a deal with the NBA, WNBA and USA Basketball to go with existing sports marketing deals with esports team Team Liquid and Adidas. Then in November, the Houston Rockets unveiled bitcoin company NYDIG, as the club’s exclusive Official Bitcoin Services Partner and Bitcoin Platform, with the sponsorship paid in bitcoin and the proceeds held on NYDIG’s platform.
Earlier today, Voyager was announced as the NWSL’s first-ever cryptocurrency brokerage partner, following on the heels of last week’s extension with NASCAR‘s Landon Cassill. This wasn’t their first splash, however. In late October, Voyager became not only the Dallas Mavericks‘ first crypto brokerage, but (as the Warriors did today with FTX) became the Mavs’ first international partner in an exclusive, five-year deal.
Now you see how quickly the category — and the opportunities — keep growing. All for a business that is anything but mainstream so far, and whose adoption, not to mention regulation, is still very fluid.
“The crypto platform market is flush with VC/SPAC cash, and they all have the same objectives: brand building and customer acquisition,” Tweeted veteran sports marketer, tech expert and Columbia University professor, Tom Richardson last week. “Just like daily fantasy 7 years ago and sports betting the last two years. It’s a good time to be selling sponsorships & licenses.”
Still — will all that cash, and all that awareness, translate into sustainability and long-term partnerships in such a volatile category? Let alone remain truly global?
Many of us who have been in the sponsorship selling game for some time remember the dot-com boom, where naming rights deals like the New England Patriots‘ with CGMI, the Tennessee Titans with Adelphia Communications and the Baltimore Ravens with PSINet, and massive media spends on Super Bowl ads from companies like FogDog and Pets.com all went bust.
Yet many others, think Go Daddy or YouTube, have ridden the exposure to success and even boom years.
The crypto platform market is flush with VC/SPAC cash, and they all have the same objectives: brand building & customer acquisition. Just like daily fantasy 7 years ago and sports betting the last 2 years. Good time to be selling sponsorships & licenses. #easymoney
— Tom Richardson (@ConvergenceTR) December 7, 2021
“Like in any new category there are going to be big winners and tough losers, the reality is that today you can do more homework with business intelligence tools and make much better decisions than you could have 15 years ago,” added veteran marketer Chris Lencheski, who has worked on naming rights deals in the past.
“One thing you have to remember, while these brands and this category are talking about secured cloud-based payment systems, we old school sellers need cold hard cash to make the deal work,” continued Lencheski. “If you are doing these deals, even for the long term, dollars in the bank are going to be key in such a competitive and volatile category. Learning from past deals that were big on buzz but short on company life should make everyone make sure that the dollars are there before signing away the building rights.”
As a rising fintech tide comes in, the prices for all categories can start to rise again as well. For all the properties who were engaged in givebacks the past 18 months due to the pandemic, this would be a welcome long-term opportunity. Albeit, it is an opportunity with some trepidation.
“These companies are in a mad dash to get their name out there and put their stake in the ground,” Woody Thompson, EVP at Octagon, told the New York Post two weeks ago. “The premium prices venture capital-flush crypto companies are willing to pay for ad space are likely to raise advertising costs across the board, forcing traditional advertisers like car, retail and beverage companies to shell out more money, it’s what happened with the dot-com boom.”
How soon until we see the ultimate convergence of sports businesses two spending leaders and a crypto-owned sportsbook? It feels inevitable at this point, though how soon remains a bit of a drama-filled guessing game.
Just yesterday, Legal Sports Report reported that FTX was close to acquiring a sportsbook, Las Vegas, Nev.-based PlayUp, for $450 million in August. That is until PlayUp’s now former U.S. CEO, Dr. Laila Mintas torpedoed the sale following her failed personal contract negotiations. This all came to light because PlayUp has filed for a restraining order against Mintas, alleging she threatened to “burn PlayUp to the ground” after her demand to be installed as global CEO was rebuffed.
Even with boom-bust cycles and category crossover uncertainty helping many cast a cautious eye, there is no doubt that the category, which can really be labeled more explosive than just steadily emerging, is the one that is keeping sellers active, engaged, and a bit wary as we head towards 2022.
Which cash-infused brands will be next into the spending race?
Only one thing is certain. With NBA patch deals, NHL helmet deals, several new stadia under construction, skyrocketing interest in college sports, and the open market of European soccer looking for cash and exposure, it is going to be interesting to continue to follow what happens next.