Source: www.ledgerinsights.com
mercedes f1 announced the suspension of the Formula 1 sponsorship deal with cryptocurrency exchange FTX following its Chapter 11 bankruptcy filing. Mercedes’ suspension could be one of several sports sponsorships to be canceled after FTX signed lucrative sports offers valued at hundreds of millions of dollars.
“As a first step, we have suspended our partnership agreement with FTX,” Mercedes said, according to Autosport. “This means the company will no longer appear on our race car and other brand assets starting this weekend. We will continue to closely monitor the situation as it evolves.”
Before its collapse, FTX made big bets on the sport to raise its profile, especially in the United States. For 2022, FTX has partnered with leagues and players from multiple sports, including big names like the NBA Warriors, Miami HeatMLB and MLB star player shohei ohtani. The endorsements were very valuable, with the Miami Heat stadium naming rights valued at $135 million over 19 years. On Friday, the Miami Heat and Miami-Dade County said they would terminate the agreement. Therefore, the collapse of FTX has a huge impact on customers and also puts some of its partners in the sports industry in a precarious position.
The FTX catastrophe has also resulted in additional scrutiny and calls for transparency for other crypto companies. This weekend, crypto exchange Crypto.com acknowledged that the exchange mistakenly sent approximately $400 million in October to rival exchange Gate.io, which later recovered. Despite being much smaller than FTX, Crypto.com has made even larger investments in sports sponsorship, including the 2022 FIFA World Cup, making Crypto.com a exclusive cryptocurrency trading platform for the biggest sporting event this year. He also had a naming rights deal for a sports stadium, valued at $700 million. And he has a $100 million deal with the organizers of F1, among others.
In the case of FTX, sports sponsorship was cited as a competitor as a red flag. Jesse Powell, CEO of cryptocurrency exchange Kraken, labeled “big ego buys, like 9-fig sports deals,” a red flag in a thread. tweets. “The damage here is enormous,” Powell continued. “An exchange implosion of this magnitude is a gift to bitcoin haters around the world… We are going to work to undo this for years.”
These are not the first cryptocurrency sponsorships to be cancelled. In early 2022, the McLaren Racing Formula One team, the Sporting de Lisboa football teams and the Italian Spezia they terminated their endorsement deals with the Turkish crypto company Bitci. Reports highlighted that Sporting Lisbon’s decision was due to Bitci’s failure to make payments.
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