New York
CNN Business
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As the Golden State Warriors and their all-star Steph Curry stormed ahead of the Boston Celtics in Game 6 on Thursday to win their fourth NBA championship in eight seasons, it should also have been a victory for the crypto industry.
The Warriors have previously entered into a sponsorship deal with FTX, a cryptocurrency exchange, allegedly worth $ 10 million. Curry even earlier this year appeared in a commercial for FTX, where he repeatedly notes that he is not an expert on crypto. And the industry was featured in the commercials during the finale, including an ad from Coinbase, another stock exchange, that mocked crypto-doubters by showing various tweets over the years claiming “Crypto is dead,” followed by the words, “Long live crypto.”
But when an NBA season and post-season flooded with cryptocurrency sponsorship ended this week, the crypto industry faced new challenges. The price of many cryptocurrencies has plummeted, with Bitcoin falling to just over $ 20,000 this week, down from an all-time high of nearly $ 69,000 in November. Meanwhile, a wave of layoffs has spread across the sector to prepare for a possible long-term economic downturn. Now the optics of these agreements may have changed.
Every sports fan this year has been bombarded with crypto, including ads, arena name changes, logo on jerseys and NFT offers. But even by that standard, the NBA has stood out. In the last year alone, crypto has jumped to the second highest consumer sector in NBA sponsorship, up from 43rd, according to IEG, a consulting company for sports partnerships. Cryptocurrency brands spent more than $ 130 million on NBA sponsorship this season, up from less than $ 2 million last season, according to the company.
“The influx of spending is unparalleled in anything we’ve ever seen before. I had expected it to be potentially a bit more measured, but it has been like a running train, says Peter Laatz, global CEO of IEG, to CNN Business. “They sprayed money everywhere.”
Only five crypto companies, including Crypto.com, Coinbase and FTX, were responsible for 92% of the sector spending that helped the NBA reach $ 1.6 billion in annual sponsorship fees this season, according to the IEG. The company described the expenses between the companies as a “bit of an arms race”.
Then the market changed. On Tuesday, a day after Coinbase posted its “long live crypto” ad during Game 5, the startup announced that they had laid off 1,100 people. In an email to employees, Coinbase CEO Brian Armstrong noted the possibility of a recession, which he said “could lead to a new crypto winter and could last for a longer period.”
Coinbase said the advertising was a regular part of their standing agreement with the NBA, as the company entered into a multi-year agreement in October with the league to act as the exclusive cryptocurrency platform partner of the NBA and WNBA. “This commercial was part of a pre-arranged package that came with our NBA sponsorship,” according to a company spokesman.
Crypto.com, another cryptocurrency exchange, bought the naming rights to the Los Angeles Lakers Stadium in November, a deal that is reportedly worth $ 700 million. It also signed a multi-year deal to become the Philadelphia 76ers’ official jersey patch partner. Crypto.com announced this week that it is laying off 260 employees due to the market downturn.
In a statement, the company said it remains “focused on investing resources in product and engineering capabilities to develop world-class products, as well as our strategic sports partnerships, and believes they will continue to play a crucial role in our mission to accelerate the world’s transition to cryptocurrency. ”
Binance, the rare crypto company that hires right now, recently looked at the sponsorship deals other startups entered into. In a employment noticeBinance chief Changpeng Zhao said: “It was not easy to say no to Super Bowl ads, stadium naming rights, big sponsorship deals a few months ago, but we did.”
Laatz, from IEG, said the “only” thing he can think of to compare the crypto-sponsorship deals with is business spending under the dot-com bubble. “It all broke and the deals went away,” he said.
But as long as the sponsor checks continue to come in, the NBA will not feel the pain, Laatz said. “The teams … would take the money over and over again,” he said. “Getting it in a couple of years is better than getting nothing.”
With or without the same number of sponsorship agreements in the future, there are other ways the close bond between the NBA and the larger crypto industry can continue, including through NFTs, which are parts of digital content linked to the blockchain, the digital database that underlies cryptocurrencies.
The NBA is involved in the NFT market with the NBA Top Shot, a league-focused NFT marketplace that allows fans to buy, sell and exchange basketball highlights, or “moments”. Top Shot, launched by Dapper Labs, was released to the public in October 2020 and has major investors in the game, including Michael Jordan and Kevin Durant.
