The New NFL Rules On Crypto Sponsorships
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Few industries have accelerated at the speed that crypto has over the last several years. And whether you believe in the long-term potential or not, it’s undeniable that professional sports have benefited from that growth immensely.
In total, billions of dollars in sponsorships have been announced, and virtually every major sports league and team have attached themselves to this asset class.
Here are just a few examples:
FTX signed a 19-year, $135 million agreement to become the naming-rights sponsor for the Miami Heat’s arena, making them the first crypto exchange to sponsor a major US professional sports venue.
FTX signed a 10-year, $210 million naming rights deal with esports organization TSM, the largest deal of its kind in competitive gaming history.
Crypto.com is paying the UFC $175 million over ten years to become its first official crypto platform partner and secure branding on fight kits worn by UFC athletes and their corner team in competition.
Crypto.com signed a five-year deal with Formula One worth more than $100 million, including brand presence around F1 events.
Still, the NFL announced last Summer that they wanted to do their due diligence on digital assets and that no teams would be allowed to sell sponsorships to cryptocurrency-related trading firms in the meantime.
The league-wide memo said, “Clubs are prohibited from selling, or otherwise allowing within club controlled media, advertisements for specific cryptocurrencies, initial coin offerings, other cryptocurrency sales or any other media category as it relates to blockchain, digital asset or as blockchain company, except as outlined in this policy.”
This wasn’t necessarily a surprise to me. I mentioned at the time that the NFL is notoriously slow when it comes to exploring new marketing partnerships.
For example, the NFL initially prohibited alcohol companies from advertising, and they spent millions of dollars lobbying against sports gambling in the United States, both of which fell by the wayside when billions of dollars in ad money came rolling in.
Moreso, I felt the obvious explanation was that they wanted to approach this from a top-down perspective. And that’s exactly what they did. The NFL announced a partnership with Dapper Labs later in the year and launched “NFL All Day,” an NFT marketplace similar to NBA Top Shot.
And with that platform launched, the NFL also changed its rules at a team level.
The NFL announced last month that individual teams would be able to sign sponsorship deals with crypto exchanges this year. The league office mentioned they are “extremely bullish on blockchain technology,” and deals are already rolling in.
The Dallas Cowboys announced a multi-year deal with Blockchain.com.
Fan token company Socios has partnered with 13 NFL teams across the league.
The Tennessee Titans have partnered with a third-party service that will allow them to accept payment from fans in Bitcoin.
There are some rules, of course. The NFL doesn’t want the agreements to exceed three years. You can’t promote crypto companies on stadium signage. Fan tokens are prohibited, and the NFL has explicitly banned the promotion of an individual cryptocurrency — exchanges are less risky, and the NFL wants to guide teams that way.
The NFL memo stated: “The League has identified certain blockchain-related businesses that we believe may be engaged for League and club promotional relationships without undertaking excessive regulatory or brand risk, provided that the companies in question and the specific products being promoted have been properly vetted.”
This was inevitable, in my opinion. But it’s certainly a step in the right direction. The NFL lost billions of dollars due to the COVID-19 pandemic. And with players receiving a nearly 50/50 split on league revenue, the ability to recoup some of that money (and expand!) through crypto partnerships makes sense.
Now they just need to be careful that they don’t take it too far.
I hope everyone has a great day. I’ll talk to you tomorrow.
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