Crypto companies are making jump shots with sports deals, here’s why
On 18 December 2022, when we witnessed the showdown between Argentina and France, during the greatest World Cup of all time, emotions ran high and spectators deemed it the single most thrilling experience of their life.
The Argentinians were enamored with Lionel Messi, while the French were love-struck with Kylian Mbappe, and the day marked a fairy tale ending for the “messiah” of the football world. Ending my uncalled tribute here, I would like to draw your attention to the sidelines, the literal sidelines, of the world cup.
It was impossible to miss, Crypto.com’s name plastered in blue and white on the sides for the world to see. This brings me to the topic of discussion, why are crypto companies so invested in sports?
The crypto-sport affair
The answer is pretty simple, just two words, in fact – mainstream appeal. Sports teams want the money and crypto companies need more users for their platforms. And crypto firms are entering these tie-ups in the hope that their name on the teams’ jerseys or on the sidelines will bring in more brand awareness and ultimately, new users.
This is in no way different from the marketing strategies used by companies like Adidas or Coca-Cola.
The World Cup was not the first such deal for Crypto.com, nor was it the first crypto company to venture into sports sponsorships.
According to data from Nielsen Sports, 84 new crypto-related deals were signed globally through the first three quarters of 2021. That’s up 664% from the 11 signed back in 2019 in the same time period.
The number of inked deals dramatically rose between 2019 and 2021. The sponsorship of sports facilities, teams, and leagues grew rapidly as crypto prices soared over 2020 and 2021.
Money goes dribble, dribble!
The biggest crypto-sports deal in 2021 was the purchase of the Los-Angeles’ Staples Centre by Crypto.com. The stadium, which has witnessed the games of legendary players like Michael Jordan and Kobe Bryant, was bought by the crypto exchange for nearly $700 million. The stadium was renamed the Crypto.com Arena and many called it the end of an era.
Let’s not forget Coinbase, which is the official crypto partner of the NBA. In fact, this U.S. exchange in 2021 became the exclusive cryptocurrency partner of the NBA, WNBA, and USA Basketball.
FTX, before its downfall, was super involved in sports sponsorships as well. FTX purchased the naming rights to the Miami Heat’s arena. The company also made Golden State Warriors star Steph Curry its brand ambassador.
Crypto exchange OKX became a primary partner for McLaren Formula 1 team in 2022. And the list of companies that got into sports sponsorships goes on. But the question remains, why are crypto companies so focused on big sports sponsorships?
Answering the WHY
Let me take you into some well-researched facts for this. According to Nielsen,
“Crypto advertising and sponsorships in sports makes sense for an array of reasons, with visibility typically being the top driver, especially among new brands and categories.”
In the U.S. alone, sports programming accounted for 98% of the most-viewed programs across broadcast and 72% of the most-viewed programs on cable television between January and September, with Super Bowl LV accounting for 20.3 billion minutes viewed.
If this isn’t enough, let me give you another reason why companies are specifically choosing sports. An interesting fact from a Nielsen survey says 81% of global consumers either completely trust or somewhat trust brand sponsorships at sports events.
This is just behind recommendations from friends and family and branded websites.
By delving into the sports world, crypto companies are getting access to billions of people and the love they show toward their favorite clubs or team.
Factoring in these reasons, it shouldn’t be a surprise that by 2026 sports sponsorship from crypto firms is estimated to reach $5 billion.
The deal breaker
Though all seemed good in 2021, the crypto sector was not ready for the whirlwinds that 2022 brought. This led to a decline in sports sponsorships as well.
According to a Fitch report, cryptocurrency market volatility in 2022, including the bankruptcy filings of FTX and BlockFi, highlighted the viability risks of these firms as sponsorship partners for U.S. sports teams, leagues, and facilities.
Fitch further added,
“Heading into 2023, the worsening macroeconomic environment could lead to a slower timeline for replacing or renewing sports sponsorships, as companies look to reduce expenses by trimming advertising and marketing budgets.”
Companies started to separate themselves from unnecessary expenditures. The best example is this tweet from Binance CEO. He said the company is prioritizing hiring over lucrative advertisements.
It was not easy saying no to Super bowl ads, stadium naming rights, large sponsor deals a few months ago, but we did.
— CZ ? Binance (@cz_binance) June 15, 2022
Some might argue that given the volatility of the space, crypto companies should not be spending extravagantly. But a fact to keep in mind is, this sector is just in its infancy. And it needs all the attention it can get.
Lastly, the crypto sector stands to gain more from these sports partnerships than traditional sectors like auto or retail. With the right strategy and right sponsorships, crypto companies can navigate these rough waters and come out on top.