Crypto’s ties to sports raise ethical questions

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Sports fans who look up to their favorite players as role models might also think twice about following their financial advice.

The bankruptcy of FTX and the arrest of its founder and former CEO raise new questions about the role that famous athletes such as Tom Brady, Steph Curry, Naomi Osaka and others have played in lending legitimacy to the largely unregulated landscape. of crypto, while reframing the conversation about how costly blind loyalty to favorite players or teams can be for the average fan.

Cryptocurrencies are digital money that uses the blockchain as a database to record transactions. It is not endorsed by any government or institution and it remains a confusing concept that was at first largely the niche of tech-savvy coders, people who distrusted governments and centralized banking systems, and speculators with money to risk.

But now that risk is increasingly being taken by investors who can’t afford to lose, and the wealth disparity between celebrities and their fans creates an ethical dilemma: sports stars, teams or leagues should they tout products that could drive their fans? to financial harm? Or should fans take responsibility for their own risky behavior, no matter who encourages it?

In retrospect, it was a reckless business association that brought Curry and Brady together with bad company, Mark Pritchard, a professor at Central Washington who has studied the intersection of ethics and sports, said in an email to the ‘Associated Press. I’m not sure how much due diligence was given to the decision, but it brings to mind a quote from Warren Buffet: “Be afraid when others are greedy and greedy when others are afraid.”

The marriage between crypto and sports was formed a few years ago and has only grown stronger since, despite all the turmoil plaguing the industry. A study by sponsorship group IEG, for example, found that FTX and other crypto firms spent $130 million on sponsorship in the NBA alone during the 2021-22 season; the previous season, the sum was less than $2 million.

FTX itself had many ties to the sport before its eventual collapse: the company paid an undisclosed amount to place patches on MLB umpires’ uniforms, $135 million for arena naming rights where the Miami Heat play and an additional $10 million to Currys basketball team, the Golden State Warriors, for ad placement in its arena and throughout the Warriors organization.

While these deals, and others, fell apart when FTX declared bankruptcy, there are many more that remain. They include the naming rights to the home of the Lakers, which was once known as Staples Center but is now known as Crypto.com Arena, at a reported cost of $700 million over 20 years. There are crypto offers in cricket, football and Formula 1.

Separately, dozens of athletes have endorsed crypto and in the process led some of their fans to follow suit and others to file lawsuits against Curry, Brady and other high-profile figures for using their status celebrity to promote FTX. failing business model.

Ben Salus, a Philadelphia sports fan who lost money in crypto, said he was uncomfortably surprised at the sudden increase in crypto-related signage around his favorite teams.

It’s a very strange transition, especially because I don’t know if the world was ready for the importance of crypto,” Salus said. “You get these big personalities who support something that they, or their teams, know something, but not much.

The debate has become even more complex over the past five years, with the intersection between cryptography, digitized works of art offered as non-fungible tokens (NFTs), legalized sports betting and online gambling, as well as the ever-expanding virtual games. Metaverse reality increasingly popular among major factions of sports stars and fans.

It’s a lot more connected than people realize,” said Ryan Nicklin, who studies the role of crypto in sports as part of his PR business. When you spend on one of these Metaverse games, you are essentially playing since you don’t know if the value of that asset you purchased will go up or down.

Crypto’s move into the mainstream was not driven by sports, but as it became a more well-known commodity, sports leagues and teams and their athletes were never shy about trying to cash in on the latest trends.

Many mentions are tied to an emotional attachment, said Brandon Brown, who teaches sports and business at New York University’s Tisch Institute for Global Sport. It would therefore make sense for these (crypto) businesses to work with a sports team or sports celebrity, as there is an emotional attachment that comes with this partnership.

A key moment came in 2020 when a few players, including Carolina Panthers Pro Bowl lineman Russell Okung, announced that they would be taking some or all of their multimillion-dollar salaries in crypto.

So many people are buying Bitcoin to get cash rich, Okung tweeted shortly after the announcement. I bought it to be free of money. Shortly after, Bitcoin.com proudly stated that Bitcoin price increases essentially doubled the $6.5 million portion of Okung’s salary that was paid in crypto.

Bigger names followed. Actors Matt Damon and Larry David were among the Hollywood types. The mayors of New York and Miami caused a stir when they too said they would take their salaries in crypto.

Aaron Rodgers, Shaquille O’Neal, Beckham Jr. and Trevor Lawrence were among a large group of top athletes who also got in on the act. A popular ad involved Tampa Bay Buccaneers quarterback Brady and his then-wife Gisele Bndchen calling friends to talk crypto and playfully asking them: Are you in?

The relationship between crypto and sports also regenerates a debate about how athletes should use the platform that they otherwise would not have without sports. Colin Kaepernick’s kneeling, not to mention the racial tensions laid bare in the United States by the 2020 killing of George Floyd, upended the old cliché and offered many athletes an opening to use sport to send a message. .

Curry is among those who have been unafraid to delve into some of society’s toughest topics, speaking out after Floyd’s murder and contributing to the Players’ Tribune website where athletes blog about their opinions not filtered by mainstream media.

Now, Curry is making headlines again as one of FTX’s many paid endorsers. But aside from being named in the class action lawsuit and being ridiculed on some social media sites that are heavily engaged in crypto discussions, there has been no major backlash against Curry for his investments. and its endorsements and there may never be any.

When the currency explodes, will people have a bad image of the currency, or will people have a bad image of Brady or Steph Curry? said Brown. I would venture to say that people are likely to have such a strong connection to their sports personalities that they will cling to said sports personality and blame the other party, which in this case is FTX, or the currency.

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AP Business Writer Ken Sweet contributed to this report.

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