FTX's sudden collapse will have big effects on sports
Tom Brady, Steph Curry, and Shohei Ohtani all made partnerships with cryptocurrency exchange FTX. But now those partnerships — and FTX — are gone.
FTX filed for bankruptcy on Friday, after spending the last few years aggressively recruiting athletes and celebrities, and sponsoring arenas. Curry took an equity stake in FTX in exchange for becoming a "global ambassador," which involved dressing up as a mime in an embarrassing commercial.
FTX signed a 19-year, $135 million deal to rename the Miami Heat's arena after their company. They signed a smaller deal — 10 years for $17.5 million — with the California Golden Bears, to name their home "FTX Field at Memorial Stadium." They made deals with Major League Baseball — where umpires wore an FTX patch — Tom Brady and his soon-to-be ex-wife Gisele Bundchen, Shaquille O'Neal, Ohtani, Naomi Osaka, Jaguars QB Trevor Lawrence, the Mercedes-AMG Petronas Formula 1 team, the Golden State Warriors, David "Big Papi" Ortiz and the NBA's oldest player, Udonis Haslem.
If all these athletes, like Curry and Brady, got cryptocurrency or FTX equity in their deals, they're out a lot of money. So is any fan who followed the endorsement of these athletes and invested with FTX themselves. The Miami Heat are surely going to have a new arena name soon, Cal needs a new field sponsor, and the Warriors need a replacement crypto partner. Or maybe, a better idea would be no crypto partner at all.
The quick demise of FTX also affects other deals in this space. A year ago, Crypto.com announced a 20-year, $700 million deal with the Lakers to rename the Staples Center. Since June, Crypto.com has laid off at least 40 percent of their workforce. The Lakers can't be confident in the next 20 weeks with Crypto.com, let alone 20 years. They're also the jersey patch sponsor for the 76ers — at least for now. There have also been massive layoffs at Coinbase, who is the "exclusive cryptocurrency platform partner of the NBA."
Peter Laatz, global managing director at sports partnerships consultancy IEG, told CNN Business, "It happened during the dot-com era where a bunch of buildings, baseball stadiums mostly, were getting named after all these wonky dot-com companies, and they all went completely belly up. Naming rights deals are just so hard to get up and running, to get in the minds of consumers that Staples and American Airlines Arenas are now called something different and to pull the roots up on something like that is just more difficult."
Replacing the sponsorship deals is going to be time-consuming and expensive for the teams, schools and leagues. Perhaps we should have heeded Larry David's skepticism from FTX's Super Bowl ad.
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