The current downturn in the cryptocurrency market has had a negative impact on financial institutions, especially those dealing with digital currencies.
Some firms are now starting to feel the heat from the other side. This includes sponsorship deals between these digital currency companies and sports teams. This is especially important for crypto firms that have already spent hundreds of millions of dollars on it.
Crypto winter is gaining momentum
As of 2021, it has been reported in the news that many digital currency companies have invested billions of dollars in sports sponsorship. These companies believed the same thing would happen in 2022, only to wake up to the dawn of a downturn in the cryptocurrency market.
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As the crypto winter rolls around, some digital currency firms are taking losses. This forced them to make some difficult decisions such as cutting costs and cutting headcount. Moreover, companies that have entered into major sports deals are looking for ways to support their activities. As a result, there is a need to cut costs.
According to reports, digital currency exchange FTX has pulled out of a jersey patch offer for the Los Angeles MLB Angels. This happened a few weeks ago when the digital currency market plummeted. However, according to the news, in March 2020, FTX shelled out $135 million to rename the house “Miami Heat”.
Sources gave another example of a failed deal as a result of the collapse of the crypto market. It involved a bug fix deal between the crypto firm and the Washington Wizards of the NBA. Many crypto companies consider the Washington Wizards patch desirable.
This is because the regulators and politicians who control their games are more likely to attend. However, there was no response from the parties (Washington Wizards and FTX).
Going further, Joe Favorito, professor in charge of sports at Columbia University, made a statement about the situation. There will be no sports partnership or sponsorship announcements from his performance until the bulls take over the market.
In addition, it was revealed that huge amounts of money were invested in sponsorship deals during the last bull market trend.
Some examples of crypto firms mentioned were Crypto.com, FTX, and Tezos. For example, sources noted that Crypto.com offered around $700 million to name the home of the Los Angeles Lakers for almost 20 years. In addition, FTX offered $135 million in March 2021 as previously stated. This was done in order to replace the Miami Heat’s home arena name with the FTX Arena.
Moving on to Tezos, the company was offering $27 million a year to maintain the Manchester United uniform logo. However, the current market trend does not change solid deals between NFT companies and real products. This means that related parties can still enjoy certain benefits.
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An example is Budweiser, the maker of Golden beer in partnership with Zed Run, a well-known horse racing platform. Another example of a source is Tom Brady’s Autograph NFT marketplace in partnership with ESPN. Again, the idea was to develop important content for a sports television network.
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