The news of Staples Center becoming Crypto.com Arena hit the sports world like a tidal wave on the night of Nov. 16 last fall. It’s not often that you see naming rights deals spark such an outpouring of emotion and nationwide conversation — but this isn’t your typical venue.
The famous arena on Figueroa Street in downtown Los Angeles occupies the rarified air reserved for places like Madison Square Garden, Wrigley Field, and Old Trafford. Naturally, changing its name after two decades would come at a hefty price.
Crypto.com paid $700 million for the rights in a 20-year deal, per multiple reports. That figure is actually “under reported” according to Russell Silvers, Chief Operating Officer of AEG Global Partnerships, a division of the arena’s owner and operator, sports and entertainment conglomerate AEG — which owns or hosts more than 50 sports franchises globally.
The largest naming rights deal in sports history doesn’t happen overnight, and we’ll get into exactly how it all went down, but first, a little history on the arena that the NBA’s Lakers and Clippers, the NHL’s Kings, and the WNBA’s Sparks call home:
- Construction broke ground in 1997.
- Staples paid $100 million for naming rights in a 10-year deal.
- The $375 million Staples Center opened in October 1999.
- The Lakers won three consecutive titles in the venue’s first three years.
- Staples acquired the naming rights in perpetuity in 2009.
- By the end of 2020, the Sparks had won three championships, the Kings had won two Stanley Cups, and the Lakers had won six titles as residents of Staples Center.
The trick was getting out of the lifetime deal with Staples.
“To get zero [dollars] from your naming rights partner for one of the most iconic venues in the world for the rest of your business is not good business,” said Nick Baker, also Chief Operating Officer of AEG Global Partnerships, during a call with Silvers and me earlier in March. “We had to go back to our ownership group, our owner, and our board and say, ‘Here’s our idea.’”
The idea was to approach New York-based Sycamore Partners, the owner of Staples, and buy back the naming rights — an effort AEG saw through in 2019.
“The value that we purchased [the naming rights] back for wasn’t insignificant, but there was certainly a significant ROI generated on what we sold it for,” said Baker.
Around the time AEG hit the market in search of a new partner at the end of summer 2019, Baker’s son was diagnosed with a rare liver cancer. Baker’s attention shifted from naming rights to family, then not long after, the pandemic shut down live sports in March 2020.
Not only did the pandemic require AEG to renegotiate 4,000 contracts within its global portfolio, but it prevented the company from letting prospective naming rights buyers experience the electrifying atmosphere of the 20,000-seat arena in-person.
That said, the search picked back up eventually — and AEG had a firm criteria.
They wanted discussions kept secret and piled up NDAs to ensure that. They didn’t want to explore partnerships in categories where they had incumbent deals like theirs with Toyota, American Express, and Anheuser-Busch.
Beyond that, they had eyes on the types of brands that you would consider, well, “cool.”
“We wanted it to be a company that was the best and most innovative partner within their industry,” with that industry ideally landing in the realm of tech, said Silvers.
That’s where Crypto.com comes in.
Fortune Favors The Brave
Singapore-based cryptocurrency exchange Crypto.com has descended upon the sports industry in a manner so aggressive that you literally can’t ignore them.
Let’s recap the deals the company, which boasts 10 million users, has inked since 2021 alone:
- Exclusive cryptocurrency trading platform of FIFA World Cup Qatar 2022
- 10-year, $175 million sponsorship with UFC
- 5-year, $100 million deal with Formula 1
- Multi-year partnership with LeBron James and his nonprofit foundation
- First innovation and technology partner of Serie A football
- Individual deals with the Philadelphia 76ers, Paris Saint-Germain, Montreal Canadiens, and Aston Martin’s F1 team
Those deals, along with the Crypto.com Arena one, are a crucial element of the company’s mission to “accelerate the world’s transition to cryptocurrency.”
“Part of that is by communicating to the world that the industry and the technology is mature, and that we actually have a real business, and that we are here to stay,” said Crypto.com Chief Marketing Officer Steven Kalifowitz on a separate call after I spoke with Silvers and Baker.
But the Crypto.com Arena deal almost didn’t happen.
“We really got into it with [Crypto.com] in the summer of 2021,” said Baker. A third-party industry figure, whose identity AEG and Crypto.com declined to reveal, attempted to connect both parties — but there was one issue. “Something that hasn’t been reported publicly is that we were very far down the line with another company — well into contract negotiations.”
When that deal fell apart for “several reasons,” and other offers were turned down, Baker and Silvers, with the help of dozens of AEG employees at all levels, went ahead and engaged Kalifowitz and his colleague Gilad Rodkin, SVP of Marketing Strategy at Crypto.com.
The rest is history. What’s uncertain is the future.
The Next Episode
For all of the promise cryptocurrency holds, it’s also a space rife with controversy — extremely volatile markets, fraud, and scandal.
Some in the sports industry have already suffered the consequences of this reality.
FC Barcelona and Manchester City each canceled sponsorships with crypto-related businesses, in the same week that Crypto.com Arena was announced, due to the nefarious activities of their partners.
I asked the team at AEG how they felt about signing a two-decade deal with a company in a market that we, quite frankly, don’t know will even be relevant — or exist — in the 2040s.
“When you’re doing a deal for 15 to 20 years, it doesn’t matter what the category is, there’s a level of risk in a long-term relationship on both sides,” said Baker. “We did an immense amount of due diligence on cryptocurrency and felt very comfortable with not only the category, but more importantly, the people and company which we’re doing this deal with.”
And if the crypto market suddenly crashes and doesn’t recover?
“We have a big enough infrastructure built that [the collapse of] no one deal would have catastrophic penalties to our organization,” he continued.
For his part, Kalifowitz believes crypto gets an unfair rap, pointing out how blue chip stocks like Facebook, Netflix, and Disney have been down anywhere from 20% to 40% over the past six months, while Bitcoin is up nearly 3% during the same period, despite a precipitous drop from its late 2021 highs.
He also welcomes the federal government’s impending regulations on cryptocurrency because “once the rules are clear, then it becomes easier for everybody to participate in the market.” He compares the current wave of skepticism to reports that the internet was a fad in the 1990s.
“A 20-year deal on an iconic stadium suggests that we intend to be here long-term,” Kalifowitz elaborated. “People setting up Ponzi schemes don’t hang out at any one place too long, right?”
The $700 Million Question
To say naming rights deals are having a moment would be an understatement.
Just across town in Los Angeles, you have SoFi Stadium — home of the Rams and Chargers — and the forthcoming Intuit Dome, which will house the Clippers come 2024.
- SoFi paid $625 million for rights for 20 years.
- Intuit shelled out $500 million for 23 years.
- Across the pond, Spotify acquired naming rights to FC Barcelona’s legendary Camp Nou stadium in a $310 million deal announced less than two weeks ago.
But where does the money actually go in these massive deals we keep hearing about?
“It essentially creates the economics that fund the rest of our business,” said Baker. “Several hundred million dollars of renovations are planned for the next three years at Crypto.com Arena to continue to make it a mecca of live entertainment.”
Roughly a decade ago, I saw Jay-Z, Kanye West, and Drake tours at Staples Center. When I attended Lakers and Kings games at Crypto.com Arena this month — my first time at the venue since those concerts — I was surprised to see how well its condition has held up.
“We’ve never allowed the building to look anything but state of the art,” Silvers said. “At the end of every season, there’s a huddle up as to what the building needs every year to get better.”
It’s certainly easier to address those needs with a fresh $700 million in the bank.