Prior to the last two weeks, cryptocurrencies, NFTs, exchanges, and a host of companies related to the crypto industry have heavily invested in sports.
Whether it was athletes becoming the face of a particular crypto brand, teams entering into naming rights agreements for their arenas, or leagues entering into partnerships, the relationship between sports and crypto has become more and more ubiquitous.
During this period, many athletes and teams entered crypto because of its promise of being the “future of money”. Crypto as a whole is viewed as one of the most accessible and investable asset classes, and athletes have capitalized on that trend from a marketing standpoint. Tom Brady, Steph Curry, and Trevor Lawrence all have become faces of crypto exchange FTX, but these deals are not exclusive to athletes or FTX.
- Crypto.com signed a 20-year deal reportedly worth $700 million to take over the naming rights of Los Angeles’ iconic Staples Center in November. The exchange also agreed to a 10-year, $175 million deal with UFC and a five-year, $100 million partnership with Formula 1 last year.
- Last October, Coinbase inked a multiyear deal to become the exclusive crypto exchange of the NBA, WNBA, and NBA G League.
- The Dallas Cowboys became the first NFL team with a crypto partnership last month via a deal with Blockchain.com.
- FTX agreed to a 19-year, $135 million pact in March 2021 for naming rights to the Miami Heat’s arena.
The deals have recently come into question, however, as the broader crypto markets saw an enormous selloff over the past two weeks. At peak selloff, it is estimated that nearly $400 billion of market capitalization was wiped away.
The crash was catalyzed, in large part, by the collapse of – what is known in the industry as – a stablecoin project called Terra (“UST”). The stablecoin saw its market capitalization decrease by 97% in the span of days, leading to investors panicking and pulling out their money, causing a vicious, self-enforcing bank run.
While most crypto partnerships are between large exchanges and their sports counterparts, stablecoins have found their way into the industry as well. In February, the Washington Nationals signed a five-year, $40 million sponsorship deal with Terra. Since the deal, the market capitalization of Terra has decreased to less than $1 billion — an almost 97% reduction in value since the initial deal was struck.
Want to learn more? Check out the full Scouting Report here.
ICYMI: Last week, we published another Scouting Report on the importance of short form video for content creators and marketers in sports. You can access that report and our other research at Pro HQ
