Name change: the former FTX Arena in Miami
The collapse of the cryptocurrency exchange FTX has sent shockwaves through sport, which the platform used widely to build its brand.
FTX signed a series of sponsorship deals and recruited sports stars to appear in commercials, often aired during sports programmes.
Since the announcement of the company’s bankruptcy last week, many sports organisations have been quick to pull out of partnerships.
The Mercedes Formula 1 team removed the FTX logos from their Formula One cars ahead of the Brazil Grand Prix last Sunday.
The Miami Heat NBA basketball team dropped its deal with FTX, having signed a $135-million contract for arena naming rights in March 2021.
The FTX Arena, previously known as the Miami Arena and the American Airlines Arena, will change its name again. Photos on social media showed that the FTX logo had already been removed.
The debacle has also taken a legal turn.
On Wednesday, an investor filed a lawsuit in Miami against the company, its former boss Sam Bankman-Fried and several famous athletes.
These included basketball player Stephen Curry and his Golden State Warriors team, former NBA star Shaquille O’Neal, tennis player Naomi Osaka and NFL quarterback Tom Brady.
The investor, Edwin Garrison, of Oklahoma, accused the company of “misrepresentations and omissions”.
“Some of the biggest names in sports and entertainment have either invested in FTX or been brand ambassadors for the company” and hyped the exchange in ads and on social media, the document said.
Comedian Larry David, who appeared in an FTX commercial that aired during the last Super Bowl, was also named.
– Cryptocurrency doubts –
FTX had also made a notable foray into the world of e-sports by forging a $210-million, 10-year partnership with the TSM Group, known for its League of Legends team.
“After monitoring the evolving situation and discussing internally, we’re suspending our partnership with FTX effective immediately,” the company announced Wednesday.
“This means that FTX branding will no longer appear on any of our org, team and player social media profiles, and will also be removed from our player jerseys.”
Other cryptocurrency exchanges have invested in the sports world in recent years, benefiting from the soaring price of bitcoin and other virtual currencies from 2020.
Crypto.com is a sponsor of the World Cup, which kicks off in Qatar next week, has a strong presence in mixed martial arts and, among other deals, has sponsored events and teams in Formula One, the NBA and Australian Rules football.
In the English Premier League, OKX sponsors Manchester City and WhaleFin is a sponsor of Premier League club Chelsea.
Socios, which markets blockchain tokens to fans, has deals with six English clubs, a string of other big teams across Europe and bought almost 25 percent of Barcelona’s media studio in the summer.
Quite apart from the fear of signing big contracts that then evaporate, the crypto industry could face increased regulation by US and European authorities.
John Fortunato, a professor at Fordham University’s business school in New York, said FTX’s dramatic fall would make teams and athletes wary of taking money from other companies in the sector in the short term.
“For the time being, there might be some reluctance entering this product category,” he said.
“Sports leagues are pretty resilient when it comes to finding revenue streams,” he added.
“They are always looking for opportunities and will find other sponsors,” he added.
