Sports teams welcomed the multi-million dollar partnerships in 2021 from cryptocurrency companies like FTX, an exchange to trade digital assets.
The abrupt downfall and the pending acquisition of FTX, a popular cryptocurrency exchange, by Binance on Nov. 8, leaves the future of those partnerships up in the air.
Investors have often been wary of companies purchasing naming rights to stadiums because of the large investment. Many of those those deals involving naming rights appear to be cursed and the companies who spent hundreds of millions of dollars wind up filing for bankruptcy protection later on.
Miami Heat Home Changed to FTX Arena
In 2021, FTX agreed to a 19-year deal to pay $135 million to change the name of the home of the NBA’s Miami Heat to FTX Arena. It had been named the American Airlines Arena since 1999 after it opened.
Crypto.com agreed in 2021 to a 20-year deal to commit $700 million to rename the former Staples Center, home of the L.A. Lakers, another NBA team.
Both deals were concluded before the crypto winter, the bear market in virtual currencies that wiped out billions of dollars in valuation.
Major League Baseball Partnership
FTX, which was founded in 2019 by Sam Bankman-Fried, invested and partnered with various sports teams, including Major League Baseball (MLB), only two years later, spending millions of dollars.
In June 2021, MLB, which includes the 30 baseball teams in the U.S., chose FTX as its official cryptocurrency exchange brand in a five-year deal.
Ohtani Received Stake in FTX
Bankman-Fried’s sponsorship of major sports teams and athletes includes Los Angeles Angels Shohei Ohtani, a double threat superstar as a pitcher and a hitter. He was chosen as FTX’s global ambassador last November. He received a stake in the company in return, the founder told CNN.
Ohtani’s compensation was paid by an undisclosed ammout of equity in FTX and in cryptocurrency.
“He’s obviously one of the most electric players in all of sports right now,” Bankman-Fried, whose net worth was valued at $26.5 billion by Forbes in November 2021, told CNN. Bankman-Fried’s net worth was $15.6 billion as of Nov. 7, according to Bloomberg Billionaires Index. However it has been badly hit by the events of the past 24 hours.
FTX also got involved in the world of auto racing by serving as the first cryptocurrency exchange partner of the Mercedes-AMG Petronas Formula One Team. The partnership included motorsport fans being able to trade crypto through the FTX app, buy sell and create NFTs using the FTX NFT marketplace and pay for daily purchases with crypto through FTX Pay.
The partnership allowed FTX to feature its logo both the Formula One cars and the drivers’ racing suits and attire.
Part of the FTX branding was unveiled during the last Russian Grand Prix. Formula One has cancelled future races in Russia because of its invasion of Ukraine.
Basketball star Stephen Curry also signed a partnership with FTX in September 2021, which was his first investment in the crypto industry.
Curry, who plans for the Golden State Warriors, tweeted about the deal, stating “Just getting started in the crypto game…y’all got any advice??’
Curry’s foundation, Eat.Learn.Play., also partnered with the exchange on charitable initiatives.
Football superstar Tom Brady and model Gisele Bündchen also have an equity stake in FTX and served as for FTX.
The equity stake was not disclosed, but FTX said they would receive an unspecified amount and type of crypto.
In August 2021, the Cal Golden Bears signed a 10-year, $17.5 million naming rights deal with FTX.
Bankman-Fried’s Other Investments
Bankman-Fried bought a 7.6% stake in May in Robinhood, a brokerage meant to attract millennial investors who sought to invest in cryptocurrencies.
Robinhood (HOOD) – Get Free Report shares tumbled on Nov. 8, falling by as much as 15.54% in mid-day trading to $10.22 a share as Binance, the crypto behemoth, said it would acquire FTX, which was once its rival due to a “liquidity crunch.”
The pending deal whose terms were not disclosed surprised investors since Binance founder Changpeng Zhao and Bankman-Fried fought for several months on social media, including a major clash this week.
“To protect users, we signed a non-binding LOI, intending to fully acquire FTX and help cover the liquidity crunch,” Zhao said in a tweet. “We will be conducting a full DD in the coming days.”
Bankman-Fried recently concluded a deal with Anthony Scaramucci, who was ever-so-briefly White House director of communications under former president Donald Trump. FTX Ventures will acquire 30% of Skybridge Capital, the alternative investment company founded by Scaramucci, aka “The Mooch.”
Venture capital firms made large investments into FTX in 2021 with Sequoia providing $420 million in a round that that boosted the exchange’s valuation to $25 billion in October 2021. A consortium with Paradigm invested $400 million in January 2022, bringing the valuation to a massive $32 billion.
The first investor that funded FTX was Binance, the largest global crypto exchange, but the relationship between the two companies crumbled as FTX gained popularity and fans.