Sports marketing deals are slowing down for crypto companies

Yahoo Finance's Josh Schafer highlights the outlook on partnership deals sports teams may be now hesitant to make with crypto companies during a crypto winter.

Video transcript

DAVE BRIGGS: A $700 million naming rights deal for the Lakers Staples Center last year set the tone, crypto is coming hot, to pro sports. But now, the recent crypto crash is being felt across the sports landscape. Josh Schafer is here with that story. Josh, the Lakers deal with Crypto.com is safe for now, but are we seeing deals fall apart around the planet?

JOSH SCHAFER: Yeah, Dave. I mean, that Crypto.com deal really, we should say, kind of came at the top of the market, right? That came last fall. Bitcoin trading near probably $67,000 at that point. Bitcoin year to date down more than 60%. And so we're seeing some issues for sure. Voyager Digital is a company that filed for bankruptcy recently. They have a lot of sports deals, including with the NWSL. And now we're seeing that really impact where companies are spending overall.

So I talked to Peter Laatz, a global managing director at IEG. They track sports sponsorship deals and track how much money these companies are giving and what the leagues are getting. He said there's been a big slowdown, like a really big slowdown. So, for example, a couple of months ago, they were seeing a couple of deals per week in their terminal. Now, no deals. Over the last 60 days, they haven't seen any deals. So it's basically exactly-- it's been shut off.

And so, really, I think the other key thing he pointed out was we saw Staples-- or Staples Center, which is now Crypto.com Arena, right? At $35 million a year, he said that's a market top. We have now seen the top of what we're going to get for sports marketing deals. The money is going to come back down from now. Because if I am a team, and I go and ask you, well, I got this amount from a crypto company, they're going to-- the company is going to turn around and say, aren't you now worried about that crypto company? Maybe they spent a little bit too much.

DAVE BRIGGS: Yeah, and I think you're seeing the warnings with what happened with Mark Cuban and Voyager Digital. Fans are angry. They may never see their money again. What are the implications for the investors and the companies like Voyager Digital and BlockFi?

JOSH SCHAFER: Yeah, so really, what might happen is this-- the takeaway is it's probably definitely going to go to court, right? So I spoke with a sports lawyer who oversees those kinds of deals. And he said when it goes to court, it's going to be normal bankruptcy court, meaning the teams that had deals like, or a league-- say, the NWSL has a deal with Voyager Digital-- they're going to go and look for money. They're probably not going to get what they were fully owed. They're going to get $0.50 on the dollar, $0.25 on the dollar, something like that.

Now, we should note with these deals, about 50% normally comes up front. So they probably gut maybe 50% on the front, especially for some kind of sponsorship jersey deal. But it's, where's that other 50%? It might just never come. And they might be searching for it. And then they're just going to have to look for new deals and kind of resurface without crypto sponsors.

DAVE BRIGGS: Uncertain times across the entire industry. Josh Schafer, good stuff. Thank you, my friend.