The exchange platform had forged numerous partnerships with sports giants, who are now backtracking on their commitments.
The collapse of the FTX cryptocurrency exchange sent shockwaves through the sports world where the platform had woven its web with commercials and partnerships.
Since the announcement of the company’s bankruptcy last week, many sports organizations, which had entered into partnerships with the fallen company, have hastened to reconsider their commitments.
The Miami Heat NBA team has thus suspended its commercial relations with FTX with which it had nevertheless signed a contract of 135 million dollars in March 2021 for the granting of “naming” rights.
The room where the Florida franchise evolves, renamed FTX Arena, will therefore change its name again. Photos shared on social media showed that the FTX logo had already been removed from the enclosure.
Mercedes, whose Formula 1 team had also concluded a “naming” agreement with the platform, for its part confirmed that the FTX logo would no longer appear on its racing cars.
Complaint against celebrities
The debacle also took a legal turn: On Wednesday, an investor filed a lawsuit against the company, its ex-boss Sam Bankman-Fried and several famous sportsmen, including basketball player Stephen Curry and his Golden State Warriors team, the former NBA glory Shaquille O’Neal, tennis player Naomi Osaka and quarterback Tom Brady.
The plaintiff accuses these athletes, who have all associated their image with the platform, of having contributed to a “fraudulent project […] designed to take advantage of uninformed investors.” Comedian Larry David, appearing in an advertisement for FTX aired during the last Super Bowl, is also quoted.
In its class action lawsuit, filed in a Miami court, the investor estimates the damages suffered by American consumers at more than $11 billion.
Implications
FTX had also made a remarkable foray into the world of e-sports by forging a 10-year, $210 million partnership last year with the TSM group, known among other things for its team of League of Legends players.
“After monitoring the situation and discussing internally, we are suspending our partnership with FTX with immediate effect,” the company announced on Wednesday.
“This means the FTX branding will no longer appear on any social media profiles of organisations, teams and players and will also be removed from our shirts,” she said.
Other cryptocurrency exchanges have invested in the sports world in recent years, benefiting from the surge in the price of bitcoin and other virtual currencies from 2020. This is the case of Crypto.com, present in the field of arts mixed martial arts (MMA) or WhaleFin, sponsor of British football club Chelsea FC.
sector in free fall
For John Fortunato, a professor at Fordham University’s business school in New York, the spectacular fall of FTX could, in the short term, put a chill on teams and athletes wanting to associate themselves with a plummeting sector whose reputation has been seriously tarnished.
“There might be some reluctance to enter this product category,” says the academic.
Increased regulation by the American and European authorities and stricter legislation could also dampen some enthusiasm. However, the crisis in the virtual currency market should have a fairly limited financial impact for teams and athletes who have bet on the sector, believes Mr. Fortunato.
“Sports leagues are quite resilient when it comes to finding revenue streams,” says the communications and media management professor.
“They are always looking for opportunities and will find other sponsors,” he adds.