The current downtrend of the crypto market has negatively affected financial institutions, particularly those dealing with digital currencies.
Currently, some firms are beginning to feel the heat from a different angle. This involves sponsorship deals between these digital currency companies and sports teams. This is particular to the crypto firms that have already spent hundreds of millions on the matter.
The Crypto Winter Takes Hold
As of 2021, the news reported that many digital currency firms invested billions of dollars in sponsoring sports. These companies had believed that the same would occur in 2022, only to wake up to the dawning of the downturn in the crypto market.
As the crypto winter takes hold, there have been records of losses for certain digital currency firms. This led them to make some hard decisions, such as trimming costs and staff headcounts. Moreover, companies that ventured into heavy sports deals are seeking ways to sustain their operations. As such, there is a need to cut down costs.
According to the reports, the digital currency exchange, FTX, drew back on the issue of offering a jersey patch for the Los Angeles Angel of MLB. This occurred some weeks back, seeing the tanking of the digital currency market. However, from the news, FTX had shelled out $135 million in March 2020 to rename the Miami Heat’s home.
Sources cited another example of a nixed deal resulting from the crypto market crash. This involved the patch deal between a crypto firm and the NBA’s Washington Wizards. Many crypto companies consider the Washington Wizards patch desirable.
This is because the regulators and politicians who supervise their games are more often in attendance. However, there was no response from the parties (Washington Wizards and FTX).
Past Sponsorships
Going further, Joe Favorito, a professor in charge of sports at the University of Columbia, made a statement about the situation. From his speech, there will be no announcement on sports partnerships or sponsorships until the bulls take over the market.
Furthermore, it was disclosed that vast amounts of money were poured into sponsorships deals during the last bullish market trend.
Some examples of crypto firms cited were Crypto.com, FTX, and Tezos. For example, sources noted that Crypto.com offered about $700 million to name the Los Angeles Lakers’ home for nearly 20 years.
Cryptocurrency market falls by 3% on daily chart | Source: Crypto Total Market Cap on TradingView.com
Moving on to Tezos, the company offered 27 million dollars annually to maintain the Manchester United uniforms logo. However, the current market trend does not change the firm deals between NFT companies and real-world products. This means that there are certain benefits still available to the related parties.
An example is Budweiser, a Golden beer manufacturer in partnership with Zed Run, a renowned horse racing platform. Another source example is Tom Brady’s Autograph NFT marketplace in partnership with ESPN. Again, the idea was to develop significant content for the sports television network.
