How the crypto crash could hit sports
Some of the top professional sports leagues could see cryptocurrency sponsorship dollars dry up in the wake of sector-wide troubles.
Why it matters: Crypto companies flooded the zone with sponsorship and naming rights dollars, becoming among the fastest-growing sponsors in sports. That now threatens to change.
By the numbers: Crypto companies collectively spent around $208.5 million in sponsorship rights fees across the top five professional sports leagues — NBA, NFL, MLB, NHL, MLS — over the past year.
- The NBA in particular rode the crypto wave. Crypto sponsorship went from $1.75 million in 2020-21 to $130 million in 2021-22. That means the NBA accounted for nearly two-thirds (62%) of all spending from crypto companies.
- Multiple NBA teams had crypto sponsors on their uniforms this season, while MLB's umpires have been rocking an FTX patch.
- Crypto.com's $700 million, 20-year agreement to take over the naming of the Staples Center is the biggest naming rights deal ever. FTX began its own naming rights deal with Miami-Dade County for the Miami Heat's home arena this past season.
State of play: The panic in the crypto world would make Chicken Little jealous, and things have been particularly dire since crypto lending firm Celsius froze withdrawals earlier this month.
- Celsius is considering filing for bankruptcy, while another crypto trading firm, Three Arrows Capital, entered liquidation this week.
- Bitcoin was trading at $19,149 Thursday morning, its lowest amount since late 2020, and nearly $2 trillion in crypto market value has been wiped out since last November.
- FTX founder Sam Bankman-Fried told Forbes he expects more crypto exchanges to go belly up. "There are some third-tier exchanges that are already secretly insolvent."
What they're saying: At least some of those with skin in this game aren't getting cold feet about the space amid crypto's struggles.
- "This is a 20-year agreement, we take the long view of the category. Crypto.com is a fantastic and engaged partner who is as active today as the day we announced. The economic downturn is hitting every industry and is not unique to cryptocurrency," Todd Goldstein, chief revenue officer for Anschutz Entertainment Group, which owns the Crypto.com Arena, told Axios in an emailed statement.
- Navigate, a data-driven consulting firm in sports and entertainment, believes that while a spending slowdown is likely coming, it will not last forever.
- "We believe it is reasonable to expect crypto firms to pull back on their spending. We also believe this contraction will be shorter than expected and the long-term outlook on blockchain unchanged," the firm said told Axios in an emailed statement.
What's next: It's not enough to just slap your name on a jersey, Navigate argues: "Activations need to manifest in meaningful ways that focus on the game changing possibilities of blockchain technology on the human experience instead of what makes up most of our news feeds today."