Cryptocurrency companies are being forced to pay hefty premiums in sports sponsorship deals as professional teams weigh the risk of burning out – like some of them did during the dot-com bubble.
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Singapore-based crypto trading site, Crypto.com reportedly paid $700 million for naming rights to Staples Center in Los Angeles for 20 years – more than five times what Staples paid for the same rights in 1999.
And in March, Bahamas-based crypto exchange FTX paid $135 million to rename the Miami Heat home. That’s more than triple what American Airlines paid for naming rights in 1999.
Experts say Arena’s owners have been able to demand more funding from venture capital-infused crypto firms because they are relatively unknown names in an unproven industry.
“If you want to make a deal with Mercedes-Benz, it’s safe,” Columbia University sports management professor Joe Favarito told The Post. “If you go after a non-traditional naming rights deal, you’re probably asking them for a lot of money.”
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That’s because the arena owners remember stadiums named after long-standing tech firms such as Baltimore’s PSINet Stadium and Boston’s CMGI Arena—both renamed after them after the dot-com bubble burst in 2001. was to be nominated.
“During the bubble, there were companies that would buy into buildings and go bankrupt and that was extremely disappointing and troubling,” Favarito said. Its appeal to future sponsors.
As a result, crypto firms with unproven track records have to scale up their offers so much that team owners “can’t take anything else”, according to Chris Lenchesky, an ex-Comcast executive who has worked on naming deals in the field. He likens the dynamic to the “tobacco premium” that cigarette manufacturers had to pay for sports deals in the 20th century.
Beyond naming rights to the arena, crypto companies are also spending big on other game deals.
Tampa Bay Buccaneers quarterback Tom Brady and his supermodel wife Gisele Bundchen starred in a $20 million advertising campaign for FTX in October, while American crypto exchange Coinbase paid an undisclosed amount to become the NBA’s first “crypto sponsor” the same month. did.
Crypto.com also paid $175 million in July to put its name on the Ultimate Fighting Championship poster and merch for 10 years. StormX, a startup that pays out crypto cash-back rewards on online purchases, in July signed a multi-year deal to adorn Portland Trail Blazers jerseys with logo patches.
“These companies are crazy about getting their name out there and keeping their stake in the land,” said Woody Thompson, executive vice president of sports and entertainment marketing firm Octagon.
Thompson said the premium value venture capital-flush crypto companies are willing to pay for ad space could drive up advertising costs across the board, which could cost more money to traditional advertisers like car, retail and beverage companies. .
“That’s what happened with the dot-com boom,” he said.
According to Favarito, as lawmakers and regulators debate how to oversee the rapidly growing crypto industry, teams and arenas in Washington, DC are seeing particularly high interest from crypto companies and other new fintech firms. .
“In Washington, the people who are going to the Games are lobbyists and senators and you want to be front and center with them in their place,” he said. “Nobody really talked about the casual lobbying that happens in a hockey game or a football game.”
Crypto.com, FTX and StormX did not respond to requests for comment. Nor will the Portland Trail Blazers, UFC, FTX Arena or AEG Worldwide, which owns the Staples Center.
Coinbase spokesman Andrew Schmidt declined to provide details of the company’s NBA deal.