FTX Is Spending Over $350 Million On Sports Partnerships
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FTX Is Spending Over $350 Million On Sports Partnerships
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Friends,
Whether you believe it was investors searching for inflation-hedged assets after more than $20 trillion in economic stimulus was allocated globally last year or simply just the rise in retail-based day trading, the crypto market exploded over the past year.
Here’s a wild stat: Despite being down almost 50% from its all-time-high, the total market cap of all crypto assets — including stable coins and tokens — has risen from $265 billion to $1.3 trillion over the last 12 months alone.
Investors that parked capital in the largest crypto assets a year ago — Bitcoin, Ethereum, and others — are up 285% & 740%, respectively, but the biggest winners might actually be crypto exchanges like FTX, who collect a fee for every trade processed on their platform regardless of whether asset prices are up, down, or sideways.
FTX Fee Revenue
2020: $85 million
2021(E): $800 million
The result? Not only is FTX reportedly raising $1 billion from investors at a $20 billion valuation, making them one of the largest crypto exchanges in the world, but they’ve been signing 9-figure sponsorship deals to expand their business both domestically & internationally.
Specifically, the crypto exchange founded by 29-year-old Sam Bankman-Fried has aggressively been pursuing partnerships within sports.
In the past six months alone, FTX has signed sponsorship agreements with the Miami Heat, esports franchise TSM, and the MLB that are worth more than $350 million combined.
After American Airlines decided to drop its naming-rights sponsorship in 2019, the NBA’s Miami Heat arena sat un-sponsored for two years.
But with Miami-Dade County responsible for negotiating a new naming-rights deal — contractually obligated to pay the Heat $2 million annually with or without a sponsor — they decided to put an end to that earlier this year.
In March, FTX and Miami-Dade County agreed to a 19-year partnership worth $135 million to change the Heat’s arena name from American Airlines Arena to the FTX Arena.
FTX & Miami Heat Deal Details
19-years
$135 million
$7.1 million annually
Even more interesting, that was just the beginning for FTX.
Just two months later, the Hong Kong-based cryptocurrency exchange agreed to a multi-year, $210 million naming rights partnership with US esports organization Team SoloMid (TSM).
FTX & TSM Deal Details
10-years
$210 million
$21 million annually
The craziest part? TSM will now be known as "TSM FTX," so the comparison isn't exactly identical. Still, at 3x the annual rate — $7.1 million vs. $21 million — it’s pretty wild that an esports organization is pulling in more for naming rights than an NBA arena.
Now, for the third time in just 90 days, FTX has signed another large sports partnership agreement — announcing a five-year deal yesterday to become the official cryptocurrency exchange of Major League Baseball.
Financial details are unknown, but the agreement will see FTX become the first company to sponsor a patch on the umpire’s uniforms during games.
“We're super excited to partner with the MLB on ways that we can grow together: collaborating on products and experiences together and helping to build world-leading brands.” FTX CEO Sam Bankman-Fried said yesterday in a tweet
In the end, maybe these deals are just a creative way to enhance tax-deductible marketing expenses after a record year, or maybe it’s the start of a much larger trend. That’s what I’ll be watching.
Regardless, it’ll be fun to see how FTX partners with some of the largest sports organizations in the world to grow its brand over the next 10-20 years.
Have a great day, and I’ll talk to everyone tomorrow.
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