As Crypto Recovers, Sponsorship Questions Remain

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Jessica Williams has been leading sponsorships since 2021 at cryptocurrency exchange Coinbase, which has a portfolio including NBA rights, and team deals with the Bulls and Knicks. His years were a volatile time with plenty of marketing spend: exchanges FTX, Crypto.com, Coinbase, and eToro all bought ads during the 2022 Super Bowl.

During his tenure, Williams saw major cryptocurrencies Bitcoin and Ethereum fall to two-year lows, amid the bankruptcy of exchange FTX, which had its mark on MLB umpires’ uniforms during the most of the last two baseball seasons.

BlockFi, another crypto exchange, filed for Chapter 11 bankruptcy protection last November. Coinbase’s publicly traded shares reflect this uncertainty, ranging from a 12-month high (as of last week) of $154.93 last April to $32.46 at the end of 2022 – a precipitous drop of 477% .

Through all this turbulence, there was one constant.

“Incoming calls from referral salespeople haven’t slowed down and haven’t slowed down AT ALL,” Williams said.

Coinbase stock price rallied to $67.36 (last week) and Bitcoin climbed to $29,535.50 from last year’s low of $15,649. Williams said the Coinbase brand has shown a substantial increase in awareness, preference, and likelihood of using Coinbase, especially among NBA fans. As a result, the exchange is likely to renew these offers as they arise.

But how much are the crypto rights worth after FTX? What will happen to the cryptocurrency, once the race car of sports sponsorship, but now relegated to the status of ride-sharing vehicle?

“We like what they [sponsorships] have done for our brand,” Williams said. “But so much has changed, then we’ll have to make sure we’re paying market value.”

76ers jersey sponsor Crypto.com weathered the storm. But teams are wary of new offers.getty images

With seemingly digital speed, crypto has gone from shiny new Bitcoin in sponsorship marketing, with naming rights deals in NBA arenas, to high-end sponsorships with F1 and UFC, to a category that no major property dares approach. A category that was responsible for setting record prices is now dormant as Cape Cod resort town in February.

Just as marketing spend is inexorably tied to sales, the future of crypto sponsorship will be tied to its level of trading. “Crypto has been on life support, but his heart is still beating and I see him coming back as the overall market recovers,” said Randy Bernstein, CEO of Playfly Premier Partnerships, which has done strategy and valuation work. assets for crypto brands, including Bittrex. “Financial services brands are always struggling to differentiate themselves, and eventually they will need a masthead property to achieve that.”

“There has to be a level of trust before you put anything in front of the fans, and we’ll be very careful,” said MLB CRO Noah Garden, who designed the FTX MLB sponsorship, “but I think it’s a real category, and part of the challenge with any new business is to shake up the real gamers.

Wait and see the approach

Adam Davis sold the 76ers jersey advertising patch to Crypto.com when he was business manager at Harris Blitzer Sports. “Yes, there are brands like Crypto.com that can now say ‘we’ve weathered the storm,'” Davis, now managing director, North America, told Two Circles, “but the stigma is still there, so I would say we’re 18 months away from any deal. Right now, there’s not a big enough check.

Even on the sell side, some have treated crypto like it’s COVID. While selling the naming rights to the Louisiana Superdome two years ago, Oak View Group’s Dan Griffis rejected an offer from FTX that was 20% higher than the winning offer from Caesars Entertainment.

“We have explicitly told our team to stay away,” said Griffis, president of global partnerships at OVG. “As long as he [crypto] remains unregulated, we are still not interested. We don’t have such a high risk tolerance.

When crypto was a prominent sponsorship category, banking sponsors, many of whom funded the sites they later sponsored, or might hold property wealth, had to uphold what they saw as entrenched category rights. . “Some teams were okay with it, some weren’t,” said Chase sponsorship czar Frank Nakano, who compared the crypto bubble burst to the Spongetech scandal of the 2010s. that the crypto/bank friction continues. “Crypto didn’t exist when we entered into many of our partnerships, so we changed [contract] language and we will continue no matter what happens in this category,” Nakano added.

Crypto exchanges were like steroids for a sponsorship industry desperate for home runs after the financial pain of the pandemic. According to Sponsor-United, the number of crypto sponsorship deals in North American and European sports has grown from 20 brands and 55 deals in 2020 to an astounding 173 brands supporting 419 deals in 2022.

“Crypto is a cautionary tale that our industry needs to learn from,” said Elizabeth Lindsey, president of brands and properties at Wasserman, whose firm won a hotly contested agency assignment for FTX in early 2022. Among many others in the industry, Lindsey says Blockchain technology and NFTs will have a much deeper impact on sports than crypto. Blockchain authentication, supposedly impossible to hack, and the “ledger effect”, whereby a permanent secondary market is built via blockchain, could be solutions to long-standing problems in the industry.

“It means creators and owners of music or sports can worry less about protection and receive better compensation,” Lindsey said. “This is significant for any owner of valuable intellectual property.”

The crypto bubble has given blockchain a black eye. Andrew Cohen, Vice President of Global Sponsorship Strategy at Visa, observed, “Crypto has become this catch-all, which is probably a misnomer. Blockchain and things like digital fidelity with NFTs as the foundation can be a fundamental part of sports and entertainment. But it’s not yet clear whether this will be a referral category or just an additional monetization opportunity.

This is a matter the industry will be watching, especially if the cryptocurrency price continues to recover.

“Blockchain technology is versatile and highly applicable to many of our businesses,” MLB’s Garden said. “Is it a leader in financial services all the way? I do not know yet.

Estimates of the cryptocurrency’s total global value hit $1.3 trillion, down a third from a year ago.

“Crypto will never be as high as it used to be,” said Jason Pearl, senior vice president of business development for the San Francisco Giants, “but it’s not going away. We’re at least a year away from any meaningful deal, but there are stable companies in the space, so soon may be the best time for them to start taking that message to the world.

Terry Lefton can be contacted at [email protected]

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