SBJ Marketing: Cloudy State for Crypto Category

More than six months ago, Brian Corcoran had an opportunity to strike a crypto deal for permission to a non-sports venue represented by his Shamrock Sports & Entertainment. The original offer was reasonable, but he turned it down. “It just didn’t pass my smell test,” said Corcoran, a 26-year-old sponsor vet who is credited with the cold calling that earned NASCAR his 10-year contract with Nextel to win Winston as the stock car circuit’s title sponsor substitute.

Flashbacks are forever infallible, but with FTX’s recent crash and fire followed by its declaration of bankruptcy, what remains of crypto as a sponsorship category? still casts a large shadow, with deals putting its nameplate on LA’s former Staples Center, as well as top-tier sponsorships with the FIFA World Cup, F1 and UFC. Binance, the world’s largest crypto exchange (not operating in the US), is deeply involved in European and South American soccer sponsorships and their squad includes Cristiano Ronaldo.

Around the world, there were more than 300 crypto brands doing over 770 sports sponsorships last year. FTX had about 10% of it. Despite all the remaining deals from this category, the biggest question now is how long it will last, or if it will be remembered in the annals of sports marketing as this decade’s SpongeTech, a “pump and dump” stock scam that left millions in unpaid Brought sponsorships and advertising bills to nearly three dozen sports companies in the mid to late 2000s. When SpongeTech filed for bankruptcy in 2010, its more than 100 creditors included MSG and the Mets.

“Nobody knows how long the rehabilitation of this category is going to take,” said Randy Bernstein, CEO of Playfly Premier Partnerships, who recalls being “one of many” sales guys who packed a field office and waited more than a decade to to sell sports marketing assets to SpongeTech. “This is clearly a much larger category. Crypto has overheated so quickly; I would say there was irrational exuberance on both the buy and sell sides.”

In a similar situation to Corcoran, Tim McGhee, another sponsorship marketer with years of experience, advised a NASCAR team seeking his advice on whether to take cryptocurrency. His advice: get at least 50% upfront, and if they don’t make the payments within 10 days, remove their name from the car.

“It feels like the ‘crypto winter’ is more like an ice age,” said Intersport President Brian Graybill. “It will take years, not months or quarters, to recover. If you are a venue or rights holder, I would plan to look at other categories over the next 24-36 months.”

While crypto sponsorship funds will now be deposited in US dollars or in escrow, “it’s often just as much about finding the right brand that’s right for each large property,” said Adam Davis, Two Circles’ North America managing director helped land Crypto. com’s jersey patch deal with the 76ers when he was chief commercial officer at Harris Blitzer Sports & Entertainment.

When (from now on) will crypto be the right brand for every property?

An unintended consequence of the sport’s flirtation with companies like FTX – the price of other sports facilities has skyrocketed. “For a year or two, so many properties were using crypto to use everyone else,” said a senior agency source familiar with FTX’s marketing and sponsorship strategy. “We heard, ‘if you don’t give us $15 million, we’ll just sell it to someone in crypto for $20 million,'” the source said. “This industry is always chasing the shiny new dime, but it’s one thing to chase something just because it’s new; it’s another to do it if it means leaving your wife for a younger, better looking girl. Even sustainability has its by-nights, like any new category.”

According to a proprietary study by Nielsen Fan Insights Q3, around 12% of the general U.S. population has crypto or blockchain investments, versus 18% of those who identify as sports fans. Cryptocurrency is the most popular blockchain product owned by sports fans at 63%, followed by NFTs (32%) and team/player tokens (27%).

There are a number of crypto properties that are hauling the cargo for the NBA. Coinbase has NBA league sponsorships, and brands like, Webull, Coinbase, and FTX spent more than $130 million on NBA team sponsorships last season, making it the league’s second-largest sponsorship category made.

That being said, 40% of NBA fans surveyed by Nielsen said they intend to buy crypto in the next six months, down 14% from the same period last year. Note that this investigation has been carried out before FTX flared out.

Another guiding question: will the taint on crypto affect everything related to blockchain technology? Prime Minister Bernstein advised: “The deconstruction of the category and the drawing of new lines of distinction is now more necessary than ever. It really can’t happen soon enough.”

There is anticipation across the industry for NFTs with real value for applications ranging from second ticket sales to fan traffic/loyalty programs. And the blockchain’s ability to authenticate itself and provide the original owner with a means to receive a portion of any subsequent sale is something special everyone with significant IP would treasure.

“At this point, there is a high level of awareness of the whole blockchain, but a low level of understanding,” said Graybill, whose agency works with blockchain-based companies Dapper Labs and Algorand. “Most people think that crypto and NFTs are mumbo jumbo or just something for speculators. We’re really seeing a new frontier of fan engagement and utility there. We’re at the forefront of the first innings of using blockchain to help brands and IP holders create more loyalty with every partner out there.”

Monumental Sports Chair Ted Leonsis remained bullish on blockchain at our recent Dealmakers conference — even as FTX collapsed. “Am I optimistic about blockchain? Yes, yes, yes,” he said. “Accountability and transparency in transactions. All thumbs up. … The valuations set and traded on (crypto)currencies? You live by the sword; you die by the sword.”

McGhee, the former executive director of sponsorships at AT&T, is now working on such projects in his new role as SVP/strategic partnerships with NFT firm Sweet. An “All Access” pass is in the works for sale to fans of all teams, which would instantly convert to “real perks” in the form of merchandise, free tickets and experiences. “True functionality is what makes NFTs meaningful to consumers and marketers,” he said.

In this new age of legal sports betting, perhaps the safest NFL bet is to settle for fewer crypto ads for the Super Bowl. There were four in Super Bowl LVI in February, including one for FTX in which Larry David declined a request to come on board, stating, “I don’t think so. And I’m never wrong.”

As for the future of cryptocurrency in sponsorships? “FinTech seems to be the real growth area in terms of new sponsorship money,” said Corcoran, whose wife works in finance. “Something that solves real problems for consumers. I see that’s where we put down roots and start new business.”

  • MassMutual and the Red Sox today officially unveiled their jersey patch deal for the 2023 season, news first reported by SBJ in July. Excel Sports Management backed MassMutual in talks with the Sox.
  • Interpublic Group’s Jack Morton agency wants brands to know that while their expertise is rooted in experience and events work, they also have enough acumen in sponsorship marketing to serve clients as large and complex as General Motors. Accordingly, Jack Morton is bundling and launching its sponsorship advisory services and expertise under a new sub-brand, Jack 39.
  • Overtime Elite drew on its players to help create new jersey designs, team names, logos and emojis for the burgeoning basketball league’s second season, notes SBJ’s Eric Prisbell.
  • My boss Abe Madkour wrote on his forums this week about the launch of Horizon Sports & Experiences, noting that the additions of Chris Weil and David Levy “greatly enhance the agency’s profile and positioning.” Michael Neuman has done “strong work” building Scout Sports and Entertainment, “but he would agree that the agency missed opportunities because they needed more in-house senior leadership.” Madkour: “It’s evident that Horizon Sports & Experiences will be a much more aggressive player.”

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button