Evidence Shows That Crypto and Football Are an Incompatible Combination

In recent years, the cryptocurrency industry has made significant strides in the world of sports sponsorships. Companies like Crypto.com, Webull, Coinbase, FTX, and Socios have become prominent sponsors, adorning jerseys, arenas, and vehicles across various sports. These partnerships have provided clubs with much-needed revenue streams, particularly in the wake of the COVID-19 pandemic and the restrictions on betting agency sponsorships. However, recent developments, including bankruptcies and issues with crypto transactions, have raised concerns about the viability and security of such partnerships. This article delves into the rise and fall of cryptocurrency sponsorships in the sports world and explores the potential impact of the so-called “crypto winter.”

The Rise and Fall of Crypto Sponsorships

Cryptocurrency sponsorships experienced a meteoric rise as clubs sought alternative sources of income. These partnerships were mutually beneficial, allowing cryptocurrency companies to gain exposure and credibility while providing clubs with financial support. Football, basketball, motorsports, and eSports were among the sports that embraced these sponsorships, with the logos of crypto companies proudly displayed on jerseys, arenas, and vehicles.

The FTX Bankruptcy and Its Ripple Effect

The bankruptcy of FTX, a prominent cryptocurrency trading company, marked a turning point in the crypto sponsorship landscape. FTX had secured significant sponsorships with NBA teams such as the Golden State Warriors and the Washington Wizards. The company also placed its logo on the cars of Formula 1 drivers Lewis Hamilton and George Russell. Furthermore, FTX acquired the naming rights to the Kaseya Center in Miami, the home of the Heat, for a 19-year period. However, FTX’s subsequent bankruptcy sent shockwaves through the sports world, leading to a decline in sponsorships and prompting clubs to reevaluate their partnerships with crypto-related companies.

Reassessing Partnerships: Clubs’ Response to the Crypto Winter

The failure of FTX and the overall instability of the cryptocurrency system forced clubs to reconsider the viability of crypto sponsorships. The drop in cryptocurrency prices eroded clubs’ confidence in these partnerships as they became less economically viable. The initial rush to forge ties between clubs and crypto companies occurred during a time of economic crisis caused by the pandemic. This hasty association challenged traditional marketing models and exposed clubs to reputational risks. To safeguard their reputations and minimize potential damage, clubs have begun terminating partnerships earlier than expected. For example, Atletico Madrid refrained from releasing its new WhaleFin-sponsored away shirt for sale on its online store.

Token Prices and the Loss of Sponsorship Deals

As the prices of cryptocurrency tokens decrease, companies in the sector are losing sponsorship deals. This decline in token value has had a significant impact on trust and confidence in the cryptocurrency industry. Many clubs that launched their own tokens seemingly approached the crypto world superficially, trivializing investments and taking advantage of fans’ lack of experience or gullibility. The result is a loss of trust between clubs and cryptocurrency companies, which further erodes the foundation of these partnerships.

The Premier League’s Involvement in Cryptocurrency Sponsorships

The Premier League, renowned for its financial prowess among Europe’s top five leagues, has been heavily involved in sponsorships with cryptocurrency companies. Numerous clubs within the league have launched their own tokens, only to witness their value diminish over time. The Athletic highlighted this issue in a report, shedding light on the declining fortunes of these tokens. Curious cases have also emerged, such as Watford’s sleeve sponsor, the meme coin Dogecoin, and Manchester United’s training sponsor, the open-source blockchain Tezos. Fans have raised concerns about the potentially parasitic nature of cryptocurrencies and tokens, which can cause financial harm due to their highly volatile valuation, as observed in Serie A.

Concerns Raised by Fans and the Perception of Parasitic Sponsorships

The increased involvement of cryptocurrency companies in sports sponsorships has sparked concerns among fans. The volatility of cryptocurrencies and tokens raises questions about the stability and long-term viability of these partnerships. Fans worry that clubs may be at risk of financial damage due to the highly unpredictable nature of these investments. The perception of cryptocurrencies and tokens as parasitic entities that feed off clubs’ financial stability adds to these concerns.

Shifting Focus: Leveraging the Blockchain to Engage Fans

While sports clubs may not completely abandon partnerships with trading companies, a shift in focus is likely. Instead of relying on crypto sponsorships as the primary economic driver, clubs may leverage the blockchain’s ability to create communities and engage fans. In the digital era, football relies heavily on a global fanbase, and clubs can harness digital initiatives to connect with supporters. However, clubs must exercise caution when selecting sponsors, ensuring they align with the club’s values and deliver on their promises. Superficial promises with little substance can damage clubs’ reputations and harm fan loyalty.

Conclusion

The world of sports sponsorships is undergoing a significant transformation as the crypto winter takes hold. The bankruptcy of FTX and the subsequent decline in cryptocurrency prices have prompted clubs and leagues to reevaluate their partnerships with crypto-related companies. The fragile nature of the system and the decreasing value of tokens have eroded trust and confidence in the sector. Sports clubs, particularly those in the Premier League, are now faced with the task of striking a balance between economic gain and the long-term interests of their fans. As the sports world navigates the challenges presented by cryptocurrency sponsorships, clubs must carefully select partners who can deliver on their promises and contribute to the creation of vibrant fan communities.