Crypto and sports bet on winning combination to woo fans - Financespiders

Crypto and sports bet on winning combination to woo fans - Financespiders

When stamped its name on Los Angeles’ main sports arena, the crypto exchange’s boss Kris Marszalek said the $700mn deal marked “the moment that cryptocurrencies . . . crossed the chasm into the mainstream”.

Renaming the home of the LA Lakers National Basketball Association team in November opened the floodgates to a series of multimillion-dollar marketing deals and partnerships between digital asset companies flush with cash and sports franchises that can deliver millions of potential customers.

Rival exchanges Coinbase,, and FTX bought Super Bowl ads this year, which cost a reported $7mn for just 30 seconds of airtime. The home of the NBA team the Miami Heat is now the FTX Arena — part of a 19-year deal for the exchange led by Sam Bankman-Fried, and Coinbase became the “exclusive cryptocurrency platform partner” for the NBA and WNBA in October.

“It’s almost like buying real estate in California,” said Haider Rafique, chief marketing officer at OKX, a crypto exchange that recently signed a sponsorship deal with Premier League club Manchester City FC. He said the rush to strike “hyperpriced” sponsorships came as crypto companies had plenty of cash to burn, “or at least everyone did last year at the top of the market”. 

Six months after’s LA coup, the exuberance in virtual asset markets has waned. The deal came near the top of last year’s run-up in crypto prices. An investor who bought bitcoin, the largest cryptocurrency, on the same day as the deal would have lost nearly half their money.

Still, the love affair between sport and crypto appears to be a perfect match, as franchises can deliver a wider audience within the demographic that digital asset players want to reach. “It’s a way to really hit their target audiences.

The traditional sports watcher syncs up very well with the crypto holder or more mainstream early adopter,” said Shailesh Lakhani, managing director at Sequoia Capital in India.

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Best Day Trading Strategies for Beginners, which in March agreed a World Cup sponsorship deal with Fifa, said the exchange’s user base has grown from 10mn in February 2021 to more than 50mn.

Lou Kovacs, president of marketing in North America for advertising and talent agency Octagon, estimates that marketing spend by crypto firms on sports sponsorships grew from $25mn-$50mn in 2020 to more than $600mn last year — excluding television commercials.

The rash of marketing has prompted concern among regulators and consumer groups that inexperienced investors may be encouraged to funnel their cash into digital tokens they do not understand.

“It takes a lot of intellectual calories to understand these [crypto] businesses,” said Quentin Thom, co-head at crypto due diligence firm Perform Due Diligence Services.

Thom likened the wave of crypto marketing to previous promotions from now-controversial industries. “It’s the cigarette boom all over again. You’ve got millions of fans who will be using crypto, and [a sports franchise] could end up having the reputational risk of being associated with bad actors, but also there’s a financial risk for all of your fans,” he said.

Spanish football star Andrés Iniesta was chided by the country’s markets regulator last year after he participated in a paid influencer campaign for the crypto exchange Binance along with three other footballers.

US boxer Floyd Mayweather, NBA Hall of Famer Paul Pierce, and social media influencer Kim Kardashian were in January named in a lawsuit claiming they helped inflate the price of token EthereumMax as part of a scheme that enriched its backers at the expense of ordinary investors. The token’s backers dispute the claims.

As part of the wider pivot to crypto-related content, sports franchises have also embraced fan tokens.

In December, the Advertising Standards Authority in the UK said the Premier League’s Arsenal FC breached marketing rules with “irresponsible” adverts for its token, which allows holders to participate in official club decisions. The club said it took its responsibilities around advertising to fans “very seriously”. Source: Financial Times.


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