Crypto crash sends strong impact on various sports clubs

Crypto has been on a tough crash for the last six months, and no one can deny the fact that it is starting to affect the future of a lot of sponsorships for football clubs as well. This is why there is a huge uncertainty that is starting to take over the relationship between crypto and sports.

So far, cryptocurrency has been at a standstill - albeit on a tougher stance with all the downward trend in the crypto market so far. This just shows that there is still more to expect from companies to make bigger decisions to let go of sponsorships in the long run.

The future of the crypto-sports connection is still shaky and might continue to do so for the next few months. There is yet to be an improvement when it comes to the market value of crypto, meaning that there is a possibility that crypto may even fall deeper than before.

Crypto companies backing out and lawsuits

Top-notch crypto exchange FTX has reportedly backed out of talks in their campaign to provide a jersey patch to the MLB club Los Angeles Angels. The same case can be said for the Washington Wizards in the NBA when their patch deals with an undisclosed crypto company. 

In January 2022, a crypto-based fan platform Iqoniq went into liquidation for their primary shirt sponsorship. They owe Spanish La Liga club Real Sociedad at least £820,000 on that note and are now facing lawsuits for the said complaint. English Premier League club Crystal Palace has also started its legal action against the same company over missed payments.

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Falling value for crypto and its effects

To start off 2022, the crypto market fell apart by about 55% of its starting value. That went from a market cap of $2 trillion all the way down to $900 billion as of time of writing. Experts claim that it is now a ‘crypto winter’, which is a term for a longer stretch of lower crypto prices.

Crypto’s crash led to a lot of desperate measures from various companies. Coinbase has opted to take out 18% of its workforce while Gemini parted ways with at least 10% of theirs. There are sites that remain unaffected by the falling value of crypto, such as Gamdom, which does not have a sports deal as of the time of writing.

The falling value of crypto has turned into a tough problem for most crypto companies that are also looking to make deals with sports clubs. Coinbase’s move to strike a partnership with Manchester United’s Cristiano Ronaldo was just a small push to hype people into investing in crypto again but is not enough to fully kick start a spark in value.

2021’s sponsorship frenzy may be a bad move

A lot of sports companies signed deals with multiple crypto companies in 2021, which includes a handful of Bitcoin casino and sports betting sites. That says a lot about the hype of crypto and now its impending downfall in the coming months if the market value continues to plummet.

Crypto.com’s move to sign a 20-year deal for the naming rights of the iconic Staples Center was one of the biggest highlights of the industry in 2021. It was followed by a flurry of deals by crypto companies with sports entities, and these increased by a staggering amount of 1,100% from 2019 to 2021.

With the falling crypto value, these 2021 moves are starting to look like a rushed deal that was influenced by hype. There is no telling how crypto can get back to its stable value, which means little hope for those companies who want to push for more sports deals.

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Words: Paul Daniel Flores