For fans of professional sports, the insistent overtures from the crypto industry have become almost impossible to miss: The names of exchanges and blockchain companies are emblazoned on team jerseys, plastered on stadiums, and beckoning from halftime TV commercials. They’re talked up by prominent players who enjoy lucrative endorsement deals.
This nascent band of businesses has moved aggressively since last year to match the advertising muscle of beer brands, carmakers, telecom service providers, and other stalwart sports sponsors.
Binance Holdings Ltd., based in the Cayman Islands, has signed contracts with soccer icon Cristiano Ronaldo and the Africa Cup of Nations tournament. Coinbase Global Inc. has struck agreements with the National Basketball Association and top star Kevin Durant. FTX in the Bahamas has arrangements with Major League Baseball and franchises ranging from the NBA’s Miami Heat to e-sports squad TSM. Even the Drone Racing League is getting crypto money.
Cryptocurrency companies have committed more than $2.4 billion to sports marketing in the past 18 months, according to data compiled by Bloomberg, all in the name of luring more users to their Web3 world—the decentralized technology they’re billing as the next chapter of the internet.
Their largesse may prove fleeting, however. This year’s severe slump in the crypto market will test these companies’ willingness and ability to continue throwing money at leagues, teams, and athletes. But for now the deals keep coming, leading franchise owners and executives to view crypto as sports’ next great benefactor.
There’s particular appeal for sports outfits because each deal is additive, bringing on a new sponsor to join incumbents like Nike, Budweiser, or Capital One rather than elbowing them aside. After all, a league’s official crypto provider can easily coexist with its official beer, official credit card, and official outfitter. Nothing has ever come close to the recent crypto flood—even the dot-com explosion of the early 2000s, when unknown startups with names like E-Stamp.com would dump seven figures on Super Bowl ads.
“There’s this avalanche of dollars that’s falling out of the sky,” says Peter Laatz, global managing director of sponsorship researcher IEG.
At Formula One’s inaugural grand prix in Miami this spring, the entire complex was decked out in Crypto.com signage: The racetrack walls, the podium, the grandstands—even the roof of a massive viewing tent was splashed with the brand name so that helicopters could catch it on their cameras.
Steven Kalifowitz, the dealmaking chief marketing officer behind the exchange’s sponsorship blitz, took meetings at the paddock in a black T-shirt and jeans, then headed past the Crypto.com terrace to get to the Crypto.com nonfungible token pavilion at the event that’s formally known as the Formula One Crypto.com Miami Grand Prix.
As the race cars blasted through the main straight and into the circuit’s first section of turns, they passed barriers stamped with the company’s logo as well as green-and-gold banners from a Swiss luxury watchmaker. That display captured the rationale for Kalifowitz’s visual barrage. “I need to be seen at the same level as Rolex,” he says.
Kalifowitz wouldn’t say exactly how much he spent to inundate the 240,000 in attendance and millions of TV viewers around the world with crypto logos over the three-day race weekend. But it had to be enough to make sure Crypto.com would be most memorable. “I can’t play second fiddle.”
Kalifowitz was one of the early movers in crypto’s sports takeover. Before joining Crypto.com in 2020 to lead its efforts to attract more users, he worked at HBO, where he was involved with such programming as Inside the NFL and Real Sports with Bryant Gumbel. That made him quick to realize how sports provided an obvious avenue for reaching the right demographic of young cryptocurrency traders.
Formula One had natural appeal. It’s a global venture with wealthy viewers and historically fewer qualms than its peers about the pedigree of sponsors. A boom in cigarette advertising funded the sport’s golden age in the 1970s and ’80s, with grand prix races covered in Marlboro red and Rothmans blue. In March 2021, Kalifowitz scored the sport’s first crypto deal through a multiyear pact with Aston Martin. By June, Crypto.com was all-in on F1, signing a $100 million agreement that brought it alongside enormous multinational businesses including cloud software maker Salesforce Inc. and the Saudi Arabian Oil Co.
The crypto competition followed suit, with companies snapping up the sport’s other racing teams until practically every one had a sponsor on the blockchain.
These days almost all the most valuable athletic franchises have some kind of partnership with a crypto outfit, including the Dallas Cowboys, FC Barcelona, Golden State Warriors, Manchester United, and New York Yankees.
Perhaps no sport has capitalized on the crypto marketing spree more than the NBA. Coinbase committed to spend almost $200 million over four years with the league, according to a person familiar with the arrangement who asked not to be named because the terms are private. That puts it in the ranks of corporate partners such as Anheuser-Busch InBev, AT&T, and PepsiCo. Crypto helped lift the league’s sponsorship revenue 14% last season from a year earlier, to a record $1.6 billion, data from IEG show. Only the tech sector spends more sponsor dollars on the sport.
Last year, Kalifowitz engineered perhaps the splashiest deal yet in a frenzy he helped ignite, turning the 20,000-seat Staples Center—home to the Los Angeles Lakers and Clippers—into the Crypto.com Arena. The company agreed to pay $700 million over 20 years, according to a person familiar with the matter. That works out to about $100,000 a day.
The deal was announced not long after Bitcoin hit its record high of more than $68,000, a triumph that punctuated other high-profile symbols of crypto’s arrival: Adidas got into NFTs, baseball phenom Shohei Ohtani endorsed FTX, and four-time NFL MVP Aaron Rodgers hosted a $1 million Bitcoin giveaway with Cash App. The pro sports industry was hooked.
The backdrop soon changed dramatically.
Five days before F1’s Miami race, the US Federal Reserve began hiking its benchmark interest rate to combat rising inflation, roiling markets. Soon the so-called crypto winter began, with Bitcoin plummeting almost 70% from its peak and an array of alternative coins tumbling, too. By the end of June, $2 trillion in value had been wiped out.
The crash suddenly threw billions in sports deals into jeopardy. US-based crypto lender and Dallas Mavericks sponsor Voyager Digital Ltd. filed for bankruptcy in July, just eight months after signing a long-term deal with the National Women’s Soccer League. Another lender, BlockFi, which backs NBA star Cade Cunningham, scrambled to secure credit lines to stay afloat. Layoffs came at Coinbase, Crypto.com, and Gemini Trust.
Even as companies retrench or go bust, IEG’s Laatz says he expects sports executives to keep feeding on crypto ads. Indeed, new contracts have been signed since the crash, such as crypto gambling site Stake’s deal with English Premier League club Everton in June. Weeks later, the OKX exchange expanded its sponsorship with Manchester City by a reported $20 million, according to Forbes.
“What you’re going to see is smaller players fall away,” says Conrad Wiacek, head of sports analysis at consulting firm GlobalData. “But those large deals are still, in some cases, being signed.”
And for crypto startups, the most lucrative prize in sports is still up for grabs. The National Football League recently lifted blockades on most crypto money for its 32 franchises, though it still retains many restrictions. That level of caution is common for the NFL, which ended a ban on liquor ads just five years ago and was the last major US sport to embrace gambling. After feeling pressure—and seeing the huge amount of money on the table—the league eventually caved. The NFL approved seven sportsbook betting partners last year, and Diageo Plc became its first-ever spirits sponsor.
It may not be long before crypto gets its shot. Already, four advertisers from the industry were allowed to flaunt themselves at this year’s Super Bowl, spending as much as $7 million for 30 seconds on air.
Kalifowitz hasn’t lined up anything new since the crash. But he’s now prepping for what will be Crypto.com’s most wide-reaching sponsorship event: the FIFA World Cup set to take place in Qatar in November, which is expected to attract more than 5 billion viewers. It’ll be the “exclusive cryptocurrency trading platform sponsor” of the tournament, with match-day giveaways for users and abundant signage inside and outside Qatar’s stadiums.
“We think crypto will be ubiquitous,” Kalifowitz says. “So we’re carefully looking at how we become ubiquitous.”Read next: The Disastrous Record of Celebrity Crypto Endorsements
©2022 Bloomberg L.P.
