The collapse of the FTX cryptocurrency exchange sent shockwaves through the sports world.
Since the company’s bankruptcy announcement last week, many sports organizations that had partnered with the fallen company have been quick to reassess their commitments. The Miami Heat NBA team has temporarily suspended its commercial relationship with FTX, although it signed a $135 million deal through March 2021 to provide “naming” rights. The Florida franchise’s expanding room will change its name again, as it is renamed the FTX Arena. Photos shared on social media showed that the FTX logo had already been removed from the enclosure.
Mercedes, which has also concluded a “naming” agreement with the Formula 1 team platform, has confirmed that the FTX logo will no longer appear on its racing cars as part of that. The debacle took a legal turn: On Wednesday, an investor filed a lawsuit against the company and several famous athletes, including its former chief Sam Bankman-Fried, basketball player Stephen Curry and his Golden State Warriors team, and former NBA glory Shackle. O’Neal, tennis star Naomi Osaka and quarterback Tom Brady.
The plaintiff alleges that these athletes, who have associated their image with the platform, contributed to a “fraudulent project.” […] Designed to take advantage of uninformed investors”. Comedian Larry David appeared in an ad for FTX that aired during the last Super Bowl, costing American consumers more than $11 billion.
Big implications?
FTX made a notable foray into the world of e-sports last year by forging a 10-year, $210 million partnership with TSM Group, known for its team of League of Legends players. “After monitoring the situation and discussing it internally, our partnership with FTX is being terminated effective immediately,” the company announced Wednesday. “This means FTX branding will no longer appear on any social media profiles of organizations, teams or players and will be removed from our shirts,” they said.
Other cryptocurrency exchanges have invested in the world of sports in recent years, benefiting from the boom in the price of Bitcoin and other virtual currencies since 2020. This is the case with Crypto.com, which exists in mixed martial arts (MMA). Or Whalefin, sponsor of British football club Chelsea FC. For John Fortunato, a professor at Fordham University’s business school in New York, FTX’s dramatic collapse will, in the short term, be a relief to teams and athletes who want to associate themselves with a steep field whose reputation has been seriously tarnished.
“There may be some reluctance to enter this product category,” says the academic. Increased regulation and stricter legislation by American and European authorities may dampen some enthusiasm. However, the crisis in the virtual currency market should have a fairly limited financial impact on teams and athletes betting on the sector, Mr Fortunato believes. “Sports leagues are quite resilient when it comes to finding revenue streams,” says the communications and media management professor. “They are always looking for opportunities and will find other sponsors,” he adds.