Cryptocurrency operators have made a strong entry into the world of sports. It is increasingly common to see logos of companies dedicated to the negotiation of virtual currencies in the major sporting events of the world’s major leagues, or even in the names of stadiums of world-renowned teams. Kimberly Rosales, an Insider in the crypto world, discusses how the world of sports is being plagued by different cryptocurrency sponsorships.
Just by visiting the Crypto.com platform, which operates one of the main applications in the world for the purchase and sale of cryptocurrencies, you can see the group of 15 partners with which they have commercial agreements, 12 of which are from the sports world. It is expected that by 2023, this and more platforms will continue to increase that list.
The Fédération Internationale de Football Association (FIFA) closed two agreements with cryptocurrency platforms this year. One of them is Crypto.com, which will sponsor the Qatar 2022 World Cup, while the company Algorand will do the same with the 2023 Women’s World Cup.
In the US, the NBA, the world’s premier basketball league, agreed to its first sponsorship deal last year with Coinbase. Since then, different companies have agreed to lucrative deals to rename stadiums or place their logo on the uniforms of different teams.
One of the most talked-about investments was the renaming of the legendary Staples Center stadium, home of the Los Angeles Lakers and Clippers, which was renamed Crypto.com Arena. The move came after reaching a $700 million, decade-long agreement with AEG, owner of the arena.
That same year, US company FTX, founded in 2018, reached an agreement with the Miami Heat, also of the NBA. After sealing a 19-year sponsorship for a sum of $135 million, it changed the name of its arena to FTX Arena. While the exchange has since run into financial problems, its role in promoting cryptocurrency sponsorships was already cast.
According to Rosales, virtual currency companies ranked second in terms of revenue generation for the NBA last season, after ranking 43rd a year earlier. For that reason, they were key to the league reaching a record $1.6 billion in revenue by 2021-22.
“Just like soccer and basketball, other sports such as the UFC and Formula 1 have also found in cryptocurrency companies a great window to generate revenue through sponsorships,” explains Rosales. “In fact, Formula 1 held one of its races this year in Miami, under the sponsorship of Crypto.com.”
Rosales said it is becoming increasingly common for cryptocurrency companies to invest in sponsorships. “What these companies are doing is a good effort, because it allows them to educate people and take away the stigma to cryptocurrencies,” she stated.
The specialist also affirmed that the increase in industry sponsorships reflects the growth that these assets are having in the world. However, she highlighted that most of the companies that have invested are related to the exchange of currencies. However, she emphasized that it is necessary to know the risks of investing in cryptocurrencies because, in the end, companies highlight only the most convenient part. “When you see the ads, people get excited, but you also have to look at other important things about the technology and the risks involved,” she explained.
The cryptocurrency companies’ bet on the world of sports is no accident, as activities of that nature attract millions of people from all over the world. This definitely represents a great platform to expose the digital currencies market, increase its popularity and boost its revenues.
In addition to that, sports fans have some knowledge about cryptocurrencies, which could give a clue as to why they have joined efforts to position themselves in this niche. A study by the firm Morning Consult revealed that 47% of fans know about the subject and 27% own some the digital currencies.
“It is a public that is willing, not only to bet on their teams, but also to invest in the business. So, it seems to me that there are some elements that can coincide in targeting that niche. There is already a certain predisposition,” Rosales points out.
A recent report by the expert highlighted the exponential growth in the sponsorship of sporting events by companies linked to the cryptocurrency business. “Given the broad exposure provided by sports, opportunities for crypto-related sponsorships are flourishing, with the number of deals signed increasing dramatically between 2019 and 2021,” the research detailed.
The study shows an increase of 1,100% in sponsorships of companies dedicated to cryptocurrencies or NFT (non-fungible tokens), and they foresee an equal growth of 778% by 2026, when they expect to reach the figure of $5 billion in commercial agreements linked to sports.
However, Rosales makes it clear that to achieve this depends on two key factors: industry legitimacy and fan engagement. Regarding the latter, Rosales states that the great exposure that large cryptocurrency companies have had through sponsorships has increased fans’ interest in this business.