Cryptocurrency Exchanges Target Sports Sponsorships

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For more than a quarter of a century, the logo of Italian tire manufacturer Pirelli has adorned the jerseys of defending Serie A football champions Inter Milan. But this season, Inter’s black and blue striped tops are going crypto.

As cryptocurrencies and blockchain technology proliferate, companies behind the fledgling industry are increasingly turning to sports sponsorship to energize their decade-long journey from the depths of the internet to traditional speculative assets.

European football clubs are on the verge of missing € 9 billion in revenue due to the pandemic, according to the UEFA governing body, as disruption to broadcast times and matches played without fans in the stadiums hammered the balance sheets. As the UK revises its gambling laws, some football executives have also warned of a potential revenue impact if lawmakers follow Italy and Spain in cracking down on sponsorship betting.

Crypto companies, which have taken advantage of the growing value of bitcoin and other digital currencies, are ready to fill the void. Inter Milan shirts, in a deal for an undisclosed amount, will now advertise the crypto exchange Socios.com. Sports and cryptocurrency executives say these sponsorships are growing, some are worth seven or eight digits a year.

“I don’t think it’s opportunistic in that, [crypto has] really well done during the pandemic, sport is on its knees [and] will take his money wherever he can get it, ”said Ben Pincus, director of business partnerships for Formula 1, the world racing series.

In June, F1 added Crypto.com, which provides digital wallets for storing and paying with digital currencies, to a list of sponsors that includes Swiss luxury watchmaker Rolex, Pirelli and oil company Saudi Aramco. The deal is worth up to $ 30 million a year, according to a person close to F1.

But there are questions about the sustainability of crypto deals, with deals spanning several years. Some exchanges, for example, grew rapidly before losing ground to new competitors or succumbing to theft and other cybersecurity loopholes.

Inter Milan shirts, as part of a deal for an undisclosed sum, will now advertise the crypto exchange Socios.com © Mattia Ozbot – Inter / Inter via Getty

Inter Milan are just one side of a series of teams including domestic rivals AC Milan and Juventus, FC Barcelona in Spain and Arsenal and Manchester City in England, in partnership with Socios , which allows clubs and leagues to issue digital tokens that can be sold to fans and traded like other assets.

Socios, which is part of a group of entities registered in Malta and Switzerland, does not sponsor the jersey of every club it partners with for token sales.

Tokens also allow supporters to access promotions or rewards. Juventus have used the platform to allow chip holders to choose which song is played when the team scores.

Fans must use Socios’ own digital currency, Chiliz, to purchase Team Tokens through the company’s app. Chiliz is trading at just over $ 0.31 a coin, after hitting $ 0.84 in April this year, according to Coinmarketcap.com, demonstrating how fans can get caught up in volatile crypto markets.

In May, Spanish club Atlético Madrid’s token soared to over $ 50, with a 24-hour trading volume of over $ 300 million, just as it won the La Liga title. . It has fallen to a fifth of that in a matter of weeks.

Socios and Chiliz founder Alexandre Dreyfus said clubs and leagues need to be very careful with their partners. “They are the ones who will give legitimacy to [these] brands, ”he said. Clubs need to ensure that crypto companies provide “regulatory certainty” and provide a “safe environment” for fans, he added.

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Regulators are stepping up scrutiny of crypto. The UK’s Advertising Standards Authority has warned it will “crack down hard and quickly” on deceptive crypto-related ads, as financial regulators expand their oversight of the industry.

Yet in the United States, crypto sponsorships continue to pour in. In June, Major League Baseball signed a long-term, multi-million dollar deal with FTX, an exchange valued last month at $ 18 billion, up from $ 1.2 billion last year.

“The pandemic has accelerated so many different consumer trends, whether it’s my parents who I never thought would figure out how to access Netflix. . . or if these are people investing in the crypto space, ”said Noah Garden, MLB chief revenue officer. “I think it’s here to stay.”

Sina Nader, chief operating officer of FTX US, said that as people become more familiar with crypto as a concept, the next challenge is to engage them in a dialogue. “And sport really captures the imaginations of billions of people. We aspire to reach these billions of people, ”he said. “Is it opportunistic? I do not think so. The timing has arrived to line up.

The exchange has spent tens of millions of dollars a year on sports sponsorship, recruiting Tampa Bay Buccaneers quarterback Tom Brady and his model wife Gisele Bündchen as ambassadors and advisers.

By partnering with the biggest names in sports, crypto companies are betting the digital economy’s appeal to mainstream audiences will increase – and they’re willing to pay to be the first.

In July, StormX paid “eight figures” for a five-year jersey sponsorship from the US Portland Trail Blazers basketball team. Simon Yu, chief executive of the company that works with large retailers to reward buyers with crypto tokens, said there was a “very strong correlation” between NBA viewers and StormX’s target audience of customers. “predominantly male” aged 18 to 45. .

“Most of the people we’re trying to reach with the NBA aren’t into crypto yet,” he said.

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