Sports sponsorship is a profitable marketing platform, with big brands including Coca-Cola and Nike investing billions of dollars in sponsorship deals to reach audiences worldwide. However, there has been a big uprise in the engagement of crypto companies in sports sponsorships in recent years, with many top-notch experts hailing this as the future of branding.
Socios.com, which is a blockchain-based fan engagement platform, made a deal with French football club PSG in 2018 to become the first major crypto company to enter sports sponsorship. Several other Cryptocurrency companies have since followed the line. But this trend has slowed down over the last few years.
There are several reasons why crypto companies are becoming more involved in sports sponsorships. For one, sports sponsorships allow these companies to increase brand awareness, particularly among younger audiences who are more likely to be involved in crypto investing. Moreover, sports sponsorships provide a way for crypto companies to create positive associations with sports, an industry traditionally associated with healthy and active lifestyles. the rise of bitcoin casinos has also contributed to the surge in crypto companies in sports sponsorship. As online gambling becomes increasingly popular, more and more crypto casinos are looking for ways to reach new audiences.
By sponsoring sports teams and events, they can tap into the massive audience that sports events attract. However, recently these casinos have also contributed to the downfall of the industry as many scams and rigging complaints were reported by customers.
Another reason why blockchain organizations are eager to enter sports sponsorships is that they provide a way to create a sense of community and loyalty among fans. Crypto companies are renowned for their strong online communities, and sponsoring sports teams or events allows them to tap into the fan bases of those entities and potentially attract new users.
Dawn of the Crypto Winter and Its Effects
The Cryptocurrency market has been facing some issues over the past few years, including the infamous “crypto winter” that hit in 2021. The abrupt decline of the market had a notable effect on the entirety of the Cryptocurrency sector, including the world of sports sponsorships. Many high-profile sponsorship deals between crypto companies and sports organizations were canceled or not renewed after the crypto winter, leaving some experts to wonder about the future of crypto sponsorship in sports.
One example of the impact of the crypto winter on sports sponsorships is the deal between crypto exchange FTX and Major League Baseball (MLB). In 2021, FTX signed a one-year deal to become the official crypto exchange of MLB. However, the deal was not renewed after its one-year term ended. Some experts believe that the reason for this was the increased regulatory scrutiny of the crypto industry, as well as the caution that companies were exercising in the wake of the crypto winter.
It’s also worth noting that the impact of the crypto winter on sports sponsorships was not limited to the cancellation or non-renewal of sponsorship deals. The market downturn also had an impact on the value of Cryptocurrencies, which affected the budgets and resources that crypto companies had available for marketing and sponsorship.
Current Situation: Rise or Fall?
The impact of the crypto winter on sports sponsorships in the crypto industry is still being felt in 2023. The crypto industry and sports organizations are likely to shrink even more in the future.
One example is the partnership between the crypto exchange FTX and the Miami Heat. In June 2021, FTX signed a naming rights deal with the Miami Heat Arena worth $135 million. This partnership was successful till late 2022, with FTX sponsoring the team’s jersey patches and using NBA events to promote its brand. However, in January 2023 this deal was terminated by the court as FTX filed for bankruptcy.
In late 2022, Crypto.com signed a multi-year deal to become the first global official fight kit partner and official crypto sponsor of UFC. This partnership has been a success, with Crypto.com using UFC events to promote its brand and introduce more people to the world of cryptocurrencies.
This type of partnership shows that the crypto industry and sports organizations are finding new ways to work together, even in the face of increased regulatory scrutiny and a challenging market.