Crypto Sports Sponsorships to Drop Amid Low Returns on Investment

Crypto sponsorship of sports teams is expected to dry up in the coming months as cryptocurrency prices collapse. Companies in the industry have seen meagre returns on their investments after pumping billions of dollars.

Top crypto sports sponsorships

Crypto exchanges and blockchain projects were among some of the biggest spenders in sports sponsorships in 2021. 

FTX and Crypto.com were among the biggest spenders. For example, Crypto.com spent over $700 million acquiring rights of Staple Center. In the same period, FTX bought rights for the home of Miami Heat.

Early this year, crypto companies spent millions of dollars in Superbowl commercials. Some of the firms that spent millions on these ads were Coinbase, Crypto.com, and FTX.

Other crypto companies have used millions to sponsor other sports events. For example, Tezos, an Ethereum rival, sponsored RedBull Racing and Manchester United. FTX sponsored Mercedes Formula 1 team while ByBit sponsored RedBull Racing. Velas, a proof-of-stake network, was a key sponsor of Ferrari F1 car. 

Most recently, companies like Algorand, Crypto.com, and Binance were among the biggest sponsors of the World Cup. 

Meagre returns

Analysts expect that sports sponsorships will dry away in the coming months. For one, most exchanges have not seen return on investments despite spending millions of dollars in sponsorships. Crypto.com is still a relatively small exchange with over $3 billion in assets. It has struggled to become a leader in the industry.

Similarly, blockchains like Velas and Tezos have a small market share in their industry. Algorand has a total value locked of just $148 million while Velas has a TVL of just $6 million. Similarly, Tezos has no major market share in the blockchain industry. 

Therefore, with their tokens being under pressure, there is a likelihood that sponsorships will decline in 2023. The situation has been made worse by the collapse of FTX. Before teams receive funds from crypto companies, they will likely do more due diligence.