• Loading stock data...
Thursday, November 14, 2024

FTX Failure Leaves Big-Money Venue Sponsorship Voids

  • Miami-Dade County terminated its relationship with FTX, which had been the sponsor of the Heat’s arena.
  • FTX also entered into a 10-year deal as the naming rights sponsor for UC Berkeley’s football stadium.
FTX
FTX Arena

The failures of Enron and Adelphia left teams scrambling two decades ago, not unlike the situation for the Miami Heat — along with county officials — and UC Berkeley in the wake of FTX’s bankruptcy filing on Friday. 

One expert who has negotiated naming rights deals laid out why it may not be as easy to replace FTX, at least for the amount the failed crypto exchange agreed to pay. 

“This is a really challenging time to go out into the marketplace and try to find somebody who’s willing to make the level of investment as FTX, especially for that length of time,” sports marketing consultant Eric Fernandez told Front Office Sports.

FTX negotiated two major venue naming rights deals in 2021.

Miami-Dade, which owns the Heat’s home arena, and FTX agreed to a 19-year, $135 million deal for FTX to replace American Airlines as the venue’s sponsor. Miami-Dade County and the Heat said in a joint statement Friday night that they terminated their relationship, and Mayor Daniella Levine Cava told WPLG-TV on Sunday that the county had taken in $20 million before FTX’s bankruptcy. 

FTX-Arena

FTX, Once a High-Profile Sports Sponsor, Files for Bankruptcy

Binance recently backed out of a deal to acquire FTX.
November 11, 2022

FTX entered into a 10-year deal worth a reported $17.5 million for UC Berkeley’s football field. In a statement to FOS on Friday, UC Berkeley’s athletic department said they were “monitoring the evolving business situation with FTX and will determine any next steps.”

“You do due diligence on these companies because it’s kind of like a marriage,”  Fernandez said. “You are looking at this from a reputation and a chemistry standpoint.

“To have both these deals within 18 months fall apart, there are going to be questions coming from within, and they are going to be gun shy about what kind of brand or partner to go after next.”

John J. Ray III, who helped Enron creditors recoup billions, was tapped as FTX’s CEO to replace disgraced founder Sam Bankman-Fried. 

Crypto companies’ once-deep pockets were an attractive option for teams and athletes for a world that took a hit early in the COVID pandemic, Fernandez said.

Beyond FTX, Crypto.com also inked a 20-year, $700 million deal to take over Staples as the naming rights sponsor of the downtown Los Angeles arena where the Lakers, Clippers, and the NHL’s Kings play. 

“Is the whole financial technology sector going to be impacted?” Fernandez asked rhetorically. “There are a ton of deals being done now with fintechs for naming rights and jersey patches. There’s a level of diligence that’s going to be done on these kinds of companies to pressure test them to make sure that they’re financially sound.”

Crypto’s massive nosedive in value this year sets it apart from the bankruptcies that left franchises scrambling in years past.

Illegal accounting practices led to Enron’s demise in 2001. That forced the Houston Astros to find ways through bankruptcy court to get out of that deal. There was plenty of interest to replace Enron before Minute Maid agreed to a 30-year, $100 million deal in 2002. 

Adelphia founder and executives became embroiled in a financial scandal that led to the cable company’s bankruptcy, and, in turn, the Tennessee Titans’ need for a new sponsor of their football stadium. The Nashville stadium went purely as “The Coliseum” for four years before Louisiana-Pacific became the naming rights sponsor in 2006. Nissan acquired those rights in 2015. 

Commercial internet company PSI Net didn’t have a scandal but went bankrupt in 2001, a couple years into being the naming rights sponsor for the Baltimore Ravens’ stadium. After the stadium went without a sponsor for the 2002 season, its current sponsor — M&T Bank — took over. In 2014, M&T Bank agreed to a 10-year extension that pays around $6 million annually.

Linkedin
Whatsapp
Copy Link
Link Copied
Link Copied

What to Read

NBA In-Season Tournament Returns: New Name, Fresh Look, Bigger Payout

The league’s in-season tournament is back with a new name and a slightly raised top prize.
Vanderbilt Commodores quarterback Diego Pavia (2) throws the ball as Auburn Tigers take on Vanderbilt Commodores at Jordan-Hare Stadium in Auburn, Ala., on Saturday, Nov. 2, 2024. Vanderbilt Commodores defeated Auburn Tigers 17-7.

Vandy QB Pavia Sues NCAA for 2 More Years of Eligibility

Diego Pavia beat Alabama. Can he beat the NCAA’s eligibility rules?

Lululemon-Fanatics Collab With NHL Sees ‘Explosive’ First-Day Sales

The premium collection made up 80% of all NHL merch sales.
Feb 1, 2024; Toronto, Ontario, CANADA; Team King defender Savannah Harmon (15) scores against Team Kloss goaltender Nicole Hensley (29) during the PWHL 3-on-3 Showcase during NHL All-Star Thursday at Scotiabank Arena.

PWHL Will Add Two Teams in Expansion Move

Possible new sites include Detroit, Pittsburgh, and Quebec City.
podcast thumbnail mobile
Front Office Sports Today

Is Jerry Jones Holding the Cowboys Back?

0:00

Featured Today

Former President Donald Trump waves to the crowd as he exits the putting green with his aide Walt Nauta, left, during the final round of the LIV Golf Bedminster golf tournament at Trump National Bedminster on Sunday, Aug. 13, 2023.
opinion

Trump Win Puts Sports Back in the White House

With Trump back in the White House, sports get more political again.
Members of the NY Giants run onto the field to start the game between the New York Giants and the Washington Commanders at MetLife Stadium in East Rutherford on Sunday, Nov. 3, 2024.
November 8, 2024

The NFL Is Becoming the League With No Borders

Where will the NFL go next? International expansion will only get bigger.
November 5, 2024

NFL Center Connor McGovern Is the Heir to a Potato Empire

The NFL vet’s family provides potatoes for McDonald’s, Wendy’s, and others.
Vanderbilt Commodores fans head to the south end zone as the goal post is taken down by exuberant fans after beating No. 1 Alabama 40-35 at Vanderbilt Stadium in Nashville, Tenn., Saturday, Oct. 5, 2024.
opinion
November 2, 2024

Something New in College Football This Year: Parity

Upsets, surprises. CFB is more fun on the field than the NFL.

Why Liberty Media Spun Off Assets, Shook Up Leadership

Longtime CEO Greg Maffei is stepping down at the end of the year.
Jul 7, 2021; Tampa, Florida, USA; Tampa Bay Lightning owner Jeff Vinik hoists the Stanley Cup after the Lightning defeated the Montreal Canadiens 1-0 in game five to win the 2021 Stanley Cup Final at Amalie Arena.
October 25, 2024

Lightning Sell at $1.8B Valuation, Nearly Double Prior NHL Record

The Lightning unveiled a multistep and multiyear sale process.
Oct 27, 2024; Seattle, Washington, USA; Buffalo Bills quarterback Josh Allen (17) passes against the Seattle Seahawks during the second quarter at Lumen Field.
October 30, 2024

Buffalo Bills in Talks to Sell Stake to PE Firm Arctos: Report

Arctos already has a slice of Paris Saint-Germain and the PGA Tour, among other assets.
Sponsored

How UBS Crafts Impactful Partnerships Across Sports, Arts, and Culture

As UBS continues to expand its impressive array of sports and entertainment partnerships, the company solidifies its position as a leader in wealth management.
May 24, 2024; Minneapolis, Minnesota, USA; Dallas Mavericks owner Mark Cuban celebrates after defeating the Minnesota Timberwolves in game two of the western conference finals for the 2024 NBA playoffs at Target Center.
October 9, 2024

Why Mark Cuban Sold the Dallas Mavericks When He Did

Cuban sold his majority stake to the Adelson family in December 2023.
Young fans look over Michigan State sports equipment on display during the Spring Showcase on Saturday, April 20, 2024, at Spartan Stadium in East Lansing.
October 2, 2024

Private Equity Firms Buy Rival Hockey Brands CCM and Bauer

Both brands have been around for decades and changed ownership in the same week.
September 18, 2024

Rogers Tightens Grip on Canadian Sports With $3.46B MLSE Stake

The Blue Jays owner makes a big move to corner most of the Toronto pro sports market.
Fans watch TV screens during a game viewing party for fans at the FanDuel Sportsbook at Meadowlands Racing & Entertainment in East Rutherford, New Jersey.
September 18, 2024

FanDuel Parent Buys Italian Gambling Company in Bid for Growth

Flutter is making big moves in Italy and Brazil.