The Largest Naming Rights Deal In History
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I feel like we have been talking about the infiltration of crypto within professional sports for some time now.
Athletes like Aaron Rodgers, Saquon Barkley, Russell Okung, and others have all elected to receive a portion of their paycheck in Bitcoin, while crypto exchanges like Crypto.com and FTX have signed sports sponsorship deals collectively worth billions of dollars over the last 12 to 24 months.
Still, yesterday’s announcement seemed to shock a lot of people.
After operating as the Staples Center for all 22-years since its opening in 1999, Crypto.com is reportedly paying around $700 million over 20 years to rename the iconic Los Angeles venue “Crypto.com Arena” starting in December.
That’s $35 million per year, or nearly $100,000 per day for the next 20 years, and makes it the largest naming rights deal in U.S. sports history.
Even crazier, that’s nearly 2x the entire $375 million that it cost to build the arena.
The Singapore-based crypto company has been extremely active in sports this year.
As they have watched the market cap of all global crypto assets, including stablecoins & tokens, explode from $250 billion in 2019 to nearly $3 trillion today, the business has been printing profits.
So, as a result, Crypto.com has heavily invested in marketing, specifically focusing its efforts on sports—data suggests sports fans are 2-3x more likely to be interested in crypto than the average person—and signing deals with a variety of teams, leagues, and brands, including:
Ultimate Fighting Championship (UFC)
Italy’s Serie A
In total, they’ve committed to spending more than $1 billion on sports sponsorships.
Still, there’s an emotional element to removing the Staples Center name.
The Lakers have won six NBA championships during their tenure in the arena, including three straight in its first three years of operation. In addition, the WNBA’s Sparks have won three WNBA titles while at Staples Center, and the Kings won their first two Stanley Cup Championships in the building, clinching both on home ice.
Not to mention all the iconic individual moments the building has housed.
Kobe Bryant’s 81 point game in 2006 was at the Staples Center. Travis Pastrana did the first double backflip in X Games history at the venue in 2006. The Grammy Awards have been hosted at the LA arena nineteen times, more than any venue in history. The building also held memorial services for Kobe Bryant, Michael Jackson, and Nipsey Hussle.
But professional sports are also a ruthless business.
AEG, the sports and entertainment conglomerate that previously owned a portion of the Lakers, signed a lifetime deal with Staples for the naming rights to the Los Angeles arena in 2009.
The deal ended up coming at a steep, steep discount — Staples agreed to pay the same fee they were paying since 1999 in perpetuity — and AEG ended up buying back the rights in 2019 to find a new sponsor.
Now, just two years later, they’ve signed a $700 million deal with Crypto.com.
Some people will say Crypto.com overpaid at $35 million per year, while others will say the naming rights are priceless and that AEG should have never sold it in the first place.
Regardless, there are rumors that AEG will use a substantial amount of the money to fund a renovation on the 22-year-old arena. People adopt name changes quicker than most usually expect, and I believe that most fans will eventually appreciate the updated arena.
We saw various sports sponsorships come and go during the dot com era, including Pets.com Park, Floorz.com Field, and Enron Field. Still, I think it’s premature to make claims that Crypto.com won’t be able to see the end of this 20-year, $700 million deal — they most likely have enough money to fund it now.
Sports are emotional. We all know this, but I’m more focused on the rise of crypto as a multi-billion-dollar asset to the sports marketing space. The category was irrelevant just four to five years ago, but today, it’s become the fastest-growing revenue stream in pro sports.
I hope everyone has a great day, and we’ll talk tomorrow.
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Jim joined Hyperice in 2014 and has led the business from less than $1 million in annual sales to over $200 million last year.
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You can also watch the YouTube video below.