Crypto Winter Effect on Sports Sponsorship Market

Crypto Winter Effect on Sports Sponsorship Market

Crypto Winter Effect on Sports Sponsorship Market


Bitcoin bear markets have existed before, but the current 70 percent drop from all-time highs is a new situation entirely. The tanking of crypto assets began as a short stint of cutting risk by investors, which they thought would adjust shortly with a quick rebound. However, the situation is akin to the derivative situation that took place in the 2008 financial crisis—it kept on going.

Noteworthy, the current situation in the crypto market that has also affected other stocks in trading platforms does not arise from a financial crisis as seen over a decade ago. It stems from an unlikely position of a prolonged pandemic that halted supply in some sectors, plaguing the delivery of goods and services to people. When vaccines limited the spread of the virus, supply chains were at their knees in some sectors, sparking a crisis that has since moved to the sports sponsorship market.

What Clubs have Crypto-Related Sponsorships?

Plenty of people worldwide have already acquainted themselves with cryptocurrencies. However, this does not prevent eToro, crypto.com, or Coinbase from popularizing their brands much further.

Before the current drop in the stock price of most crypto-related stocks, the sports world was experiencing a wave of new money from the companies involved in Bitcoin and other cryptocurrencies. In 2021, crypto sponsorship deals touched the 100 percent mark for the first time in terms of growth. Reports also show that sponsorships from companies dealing in crypto might reach the $5 billion mark by 2026.

The growth, especially the one experienced in 2021, coincided with the best run of crypto stocks that saw them reach points never seen before. One popular deal is the partnership between Manchester United, a Premier League club, with Tezoz. The deal totals about $27 million per year. Manchester United's top rivals, Manchester City, also shook hands with OKX, which bought the rights to have their name hoisted around the Etihad. Deals between crypto companies and sports clubs are also rampant in the U.S.

Some top deals across the Atlantic are those done between Crypto.com and the Los Angeles Arena. The deal promises naming rights to the crypto firm that cost about $700 million to maintain.

eToro’s Sports Sponsorship Charm Offensive in Europe

Leicester City, Crystal Palace, Everton, and other Premier League clubs have benefited from eToro’s charm offensive in the sponsorship segment to dominate Europe’s biggest sport. The Bundesliga in Germany has also experienced the wave of crypto-related firms sponsoring sports clubs, eToro being a significant player.

Danish, Italy, and Monaco have also welcomed eToro's efforts to improve their sports to capture more audiences outside their home market.

How does a Crypto Bear Market Affect Sports Sponsorship?

Sport sponsorship, in particular, the crypto-based one, is reeling from a prolonged period of crypto winter. The sell-offs result from heightened tensions towards the direction taken by central banks to tame inflation.

An unlikely scenario in the crypto market also worked to spark the crypto winter. The moment some stable coins lost their 1:1 parity with the dollar, the situation pushed more investors to try to liquidate their assets as soon as possible to avert further losses in major exchanges.

Terra dropped to an unlikely low of about 95 cents, pushing other crypto-related stocks to tank. The massive losses have dropped confidence in crypto-backed stocks that also support some sports clubs around the world.

The crypto winter has already devastated many crypto firms and their plans to enter new markets. Many pending sponsorship agreements are now in disarray. However, the existing contracts by many crypto firms to sports clubs continue to exist.

Closing Remarks

Companies dealing in crypto have outdone themselves to sponsor the biggest teams and sports in the world. Football, the NFL and recently naming rights for a sports stadium have highlighted the depth of crypto assets in sports. However, the poor run by crypto assets in the markets is reversing the gains, but as the market adjusts, any shelved new sponsorship deal because of the crypto winter might return on the table.

 


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