How Crypto Companies Are Changing The Sports Landscape
If you’ve watched the UFC lately you may have noticed a new sponsor sprawled across the front of the fighter shirts, Crypto.com. Likewise, if you are a fan of Formula 1, you have by now, no doubt, noticed the proliferation of crypto companies entering the space, whose logos occupy prime real estate on the cars themselves, from Redbull’s partnership with Tezos, to Aston Martin’s partnership with Crypto.com and Fantom’s partnership with Alpha Tauri, there seems to be no shortage of crypto companies willing to shell out big bucks to partner with mainstream sports brands. Case in point, crypto exchange FTX agreed to pay over 135M for the naming rights to what was formerly the American Airlines Arena, where the NBA team the Miami Heat play.
At first glance this may seem like a lot of money but the crypto companies themselves are getting a lot more out of these deals than just visibility. Unlike companies in other spaces, the crypto companies are able to (in some cases) secure exclusivity with the entities they are sponsoring for a whole host of on-chain initiatives that could lead to huge revenue gains in the near future. The first of those areas worth exploring is IP (intellectual property) rights.
Most sports teams are sitting on a goldmine in content. Their intellectual property (IP), can be used for NFTs and sold to fans and speculators alike. Anything from F1cars, to iconic moments or apparel can be turned into NFTs and commoditized. A growing number of properties are aware of the NFT market, but few understand just how valuable this potential revenue stream is. It’s akin to the music industry not understanding how valuable streaming would be. This knowledge gap creates an opportunity for Crypto and blockchain companies to win IP entitlements and earn mutual revenues through the release of premium NFTs. The Tezos and Redbull partnership is a good example of this. In addition to securing a prime spot for their logo on Redbull’s Formula One car, Tezos secured on-chain exclusivity with Redbull Racing, meaning that any blockchain activities, including the creation and sale of NFTs has to be done on the Tezos blockchain. These strategic deals help the network build momentum and a bulge of value transactions which drives momentum towards genuine adoption. On-chain exclusivity comes in many forms and is an area of additional value beyond the release of premium NFTs.
On Chain Exclusivity:
There are many activities that can (and will likely) take place on the blockchain outside of the creation and sale of NFTs in the future. Business components like ticketing and digital payments to the distribution of social tokens can be done more transparently on the blockchain. So in securing on-chain exclusivity a crypto company can also secure these exclusive rights, many of which are only being pioneered. The potential revenue from these activities will be game changing if executed properly and it provides the sponsoring company an avenue to recoup their investment.
Who are the sponsors?
Centralized cryptocurrency exchanges, Layer 1 blockchain protocols and companies with crypto wealth management products have been the initial first wave of sponsors. These companies are in a prime position to help sports teams develop their IP and move their operations onto the blockchain or drive successful user acquisition campaigns through the exposure. They also have the right funding and ambitions to justify large capital outlay needed to support these partnerships.
As these engagements begin to develop and entertainment brands begin to take notice we can expect to see more niche partnerships take place outside of the world of sports and in the broader world of entertainment as a whole. Case in point, concerts and E-sporting events are likely to be the next foray into branding and partnerships for crypto companies. In many cases blockchain can evolve fan engagement for these properties and even revolutionize some of their other core business functions. The major question isn’t if they’ll realize the opportunity but more of when in the arc of adoption they are going to join the herd!
At Kairon Labs we are in a unique position as an independent dealmaker to guide and educate these large IP rights holders towards the most suited and legitimate crypto sponsors. Over the last few months we have built a track record of successfully closing some of these very large deals. Please do reach out if you have any questions or are interested in an exploratory conversation about these opportunities.