Sports Industry Grapples With Crypto Decline

Minha Oh

Last month, FTX, one of the world’s largest cryptocurrency exchanges, filed for bankruptcy sending shockwaves throughout the crypto startup and investment communities. The 30-year-old entrepreneur Sam Bankman-Fried, once hailed as a modern-day J.P. Morgan, watched his digital empire and the billions of his own fortune evaporate. Some industry experts claim the failure of FTX has shaken the foundations of the trillion-dollar crypto industry and has become its turning point. FTX has invested heavily in sports sponsorships, like other crypto companies, but is now in turmoil. FTX’s uncertain future raises new questions about its many sports deals.

Last year, FTX signed a $135 million, 19-year deal with Miami-Dade County to rename the home of the Miami Heat as FTX Arena. Last month, the NBA team released a joint statement with the County saying they are “immediately taking action to terminate our business relationship with FTX.” The cryptocurrency exchange also has a partnership with Major League Baseball, including the addition of FTX logo patches on umpires’ uniforms. The Mercedes-AMG Petronas Formula One Team recently announced it suspended FTX’s sponsorship.

FTX has ties to college sports, too. UC Berkeley signed a 10-year naming rights deal for its football stadium in 2021 for $17.5 million. University officials said they suspended the agreement in November, according to news reports.

In addition, FTX collaborates with some of the top athletes across sports, including partnerships with Shohei Ohtani of the Los Angeles Angels and Golden State Warriors player Stephen Curry and his foundation. 

FTX is not the only crypto company that is involved with sports. In the last NBA season, crypto brands spent about $130 million on sponsorships, a significant increase from less than $2 million the year before. According to IEG, only five crypto companies were responsible for 92% of the sector spending.

In 2021, trading platform Coinbase signed an agreement with the NBA to become the league’s only cryptocurrency partner, worth $192 million over four years. In November, another crypto platform purchased the naming rights for the Los Angeles Lakers’ arena, which was worth approximately $700 million. However, cryptocurrency services announced layoffs as rising inflation and broader market turbulence led to the sharp drop of market value. 

Bankman-Fried has announced that his firm, Alameda Research, would stop trading and FTX would instead focus on emergency fundraising. As reported by The New York Times, he stated in a memo that FTX had communicated with crypto entrepreneur Justin Sun, who tweeted that he was working on “establishing a solution with FTX.” 

Bloomberg reports that U.S. authorities, including the US Department of Justice and the U.S. Securities and Exchange Commission, are investigating FTX.