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Behind the $700 million Crypto.com deal to rename the fabled Staples Center

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Kris Marszalek, co-founder and CEO of Crypto.com, and Dan Beckerman, AEG CEO and president, join Yahoo Finance Live to break down the Staples Center renaming and the role of cryptocurrencies in live event planning.

Video transcript

JULIE HYMAN: The iconic Staples Center in Los Angeles is getting a new name as of Christmas Day. It will be known as the Crypto.com Arena in a 20-year naming rights deal. It's one, by the way, the Los Angeles Times said is worth $700 million. We are joined now by Crypto.com co-founder and CEO, Kris Marszalek and Dan Beckerman, AEG CEO and President AEG, the owner and operator of that arena.

Gentlemen, thank you so much for being here to both of you. Kris, I want to start with you because you guys-- this is only the latest move that you have made and what has been a really aggressive marketing push, especially partnerships with various sports teams. And what is the-- you're spending a lot of money. What is the goal of all of this and all of these partnerships?

KRIS MARSZALEK: Well, first and foremost, we've got a product that people love and we are trusted, secure, regulated platform that operates on a global scale. So we thought that this year is the right moment to amp up a little bit of our brand's visibility. The objective here is to make sure that we are seen by billions of people, and we struck partnerships with when a category exclusive basis with the UFC for 10 years with Formula One for five years. And now there's a naming rights deal for 20 years for what is effectively the world's most iconic venue.

So it's placing the overall strategy incredibly well, and we are just overwhelmed whatever the response we've got since the announcement was out.

JULIE HYMAN: Yes, there definitely has been a lot of attention. This being the second arena in the United States that has actually been named for a crypto related company. Dan, let's bring you into the conversation. Obviously, there has been a real resurgence in live events. Why did this particular naming opportunity make sense? I mean, I'm curious from your perspective when you look at these naming rights deals. Is it just a monetary consideration, is there strategic conversation as well? What are you taking into account?

DAN BECKERMAN: Well, this is an important partnership for us. At AEG, L.A Live and the arena is probably the most valuable asset that we have as a company. We are the largest sports entertainment company in the world. And the arena and L.A Live is really our flagship. So when we look for a partner, it's certainly not is just a monetary consideration.

And with Crypto.com, we wanted to partner with an innovative forward thinking progressive company that was technology-based to really help us chart a course for the next 20 years. We have a very proud tradition of building an iconic venue over the last 20 years, but this agreement really is about a partnership and charting a course for the next 20 years.

BRIAN SOZZI: Kris, as you just mentioned here, this deal is in fact for 20 years and that is a long-- that is a very big statement in terms of the outlook for cryptocurrency. And where do you think cryptos are in 20 years?

KRIS MARSZALEK: That's an excellent question. To be honest, answer to this is we have no idea. What we believe in is that effectively cryptocurrency is going to move beyond just trading and it's going to affect the way we work and live. It's going to be the very fundamental change in how internet works. And there is this belief that Web3 is going to be different comparing to Web2 in a sense that the users, the creators, the builders will be able to own a piece of it and participate in it.

So if I look at how cryptocurrencies today is already changing the world of arts, entertainment, and sports if you extrapolated for 10 or 20 years, this is a brilliant move by Dan and his team because it positions their prime venue right at the epicenter of this change.

BRIAN SOZZI: Kris, I've been talking to a good number of folks in crypto, and a lot of them share their concern that there are too many cryptos and those are trading companies, they are taking a pause on adding new cryptos to the platform. Where do you stand? Do you think there are just too many cryptos out there, and will there be a shakeout here?

KRIS MARSZALEK: Well, first and foremost, we are regulating the business operating on a very large scale. So we take adding assets to our platform with great care. And there's a sense of responsibility that you only should bring them on board absolutely highest quality digital assets. I wouldn't say that the proliferation of digital assets is an issue. It drives a lot of innovation. We need this experimentation, specifically if you want to make sure that the US is at, again, at the center of innovation in this absolutely new and exciting category.

JULIE HYMAN: Yes, you certainly are not alone within the crypto world of calling for perhaps some more regulation of the industry. Dan, what role is crypto playing in your business? At the Staples Center, are you guys going to be accepting crypto as payment? Is that something you're also considering or already have in place at other of your venues around the globe?

DAN BECKERMAN: Well, as Kris just mentioned, this is an evolving space, and we think over the course of 20 years. Anything is possible in terms of purchasing tickets, purchasing merchandise and food and beverage in the venue. So as this partnership evolves and as we learn more and more, we're going to look at every possible opportunity. There's NFT options blockchain and cryptocurrency.

So that's what's exciting about it to us is being at the center of the innovation, and really being on our front foot as we look at what's possible in creating the best possible experience for our fans, really not just at L.A Live, but at our venues around the world.

JULIE HYMAN: And so it sounds like, you know, you have this partnership, this naming rights partnership on this particular venue. Are you going to be working with Crypto.com on perhaps the development of all of that at other venues as well?

DAN BECKERMAN: Yeah, absolutely. As Kris mentioned, this space is it's evolving, it's dynamic, it's growing, it is a new category, which in the sports and entertainment business is, you know, critical to continue to evolve our business, evolve the fan experience. So this space is really fertile ground to do that. So with our venue platform throughout the world in Europe and in Asia and throughout the United States, we have a large network of venues of over 300 owned and managed venues in the United States and Europe alone. So we absolutely want to look to expand that and really evolve the platform.

JULIE HYMAN: Gotcha. Kris, I want to ask question-- another question about your business as well. You guys are well known for sort of offering different perks, right? You also allow people who trade on your platform to take on leverage, you have various sweepstakes. How do you address sort of concerns about the industry that people are becoming over levered or taking on too much risk that then could become, at least somewhat systemic or if not entirely systemic when you have people who are trading on margin, for example?

KRIS MARSZALEK: We do not allow margin trading for customers within the US. It's purely sport-based. In some of the markets around the world, we offer this in line with local regulations. I think it's important to encourage responsible trading, people always should do their own research and consider the kind of risk that they're should be undertaking. You know, there's lots of causes still-- it's still fairly new and there's plenty of volatility. Frankly speaking, I don't think for a majority of these cases leverage is required at all.

JULIE HYMAN: Gotcha. That is good to know. And finally, Dan, I got to ask you generally about the sports and entertainment business more broadly, and kind of where we are now because it definitely has felt like it is two steps forward, one step back or even the opposite in some cases. So what are you seeing in your venues? What are you seeing in your business?

DAN BECKERMAN: We are back. We had an event last night and I was thinking about it this morning with Kris. This really is sort of the ideal. I could see why this platform is of interest to him. At L.A Live alone in the next four days, we have seven major events. We have two sold out concerts tonight and tomorrow night. We have four sporting events this weekend in two consecutive double headers with the Lakers Kings and Clippers. And Sunday across the street at the Microsoft Theater, we have the American Music Awards with BTS and Bad Bunny and Olivia Rodrigo.

So not only are we seeing it at L.A Live, but we're seeing it all over the world that our business is back and it's come back strong.

JULIE HYMAN: As an ardent concertgoer, I'm very happy to hear that. But just finally, I have to ask you on a more sober note about Astroworld and the events happened at Houston with, of course, a Live Nation run festival. But what do you think the industry needs to do to prevent these types of tragedies from happening?

DAN BECKERMAN: Yeah, it's a tragic event that affects the entire industry. And that is a reminder of what can happen and the measures that we need to take from a security and a planning standpoint. But it's one that a horrible tragedy that we all take very seriously and it's resonated throughout the entire live event business.

JULIE HYMAN: Gentlemen, thanks to you both covered a lot of ground and I appreciate that, Kris Marszalek, Crypto.com co-founder and CEO Dan Beckerman, AEG CEO and President on that fascinating news about the renaming of the Staples Center as the Crypto.com Arena. Thanks again--

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