Inter Milan is the latest great alliance of cryptocurrency companies to expand their audience
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For more than a quarter of a century, the logo of Italian tire manufacturer Pirelli has graced the shirts of reigning Serie A champion Inter Milan. But this season, Inter’s black and blue striped jerseys are going for crypto trading signals.
As cryptocurrencies and blockchain technology proliferates, the companies behind the nascent industry are increasingly turning to sports sponsorship to accelerate their decade-long journey from the depths of the internet to a massive speculative asset – say the analyst of SafeTrading.
- European soccer clubs are poised to lose 9 billion euros ($ 10.5 billion) of revenue from the pandemic, according to the governing body, UEFA, as the disruption of broadcast schedules and games played without fans in stadiums have affected the balance sheets.
- As the UK reviews its laws, some soccer executives have also warned that revenue could be affected if lawmakers follow the lead of Italy and Spain in restricting sponsorship.
Related Reading: What are the Benefits and Drawbacks of Crypto Trading?
Cryptocurrency companies, which have benefited from the rise in bitcoin and other digital currencies, are willing to fill the gap. The Inter Milan jerseys, in a deal for an undisclosed sum, will start promoting the Socios.com exchange. Sports and crypto executives say these types of sponsorships are growing, with some reaching seven or eight figures a year.
“I don’t think it’s opportunistic in the sense that cryptocurrencies have done really well during the pandemic, the sport is on its knees and will make its money from wherever it can get it,” said Ben Pincus, director of trade associations in Formula 1.
In June, F1 added Crypto.com, which offers digital wallets and crypto trading signals, to a list of sponsors that includes Swiss luxury watchmaker Rolex, Pirelli, and oil company Saudi Aramco. The deal amounts to $ 30 million a year, according to a person close to F1.
Doubts and partners
But there are doubts about the sustainability of the cryptocurrency deals, which drag on for several years. Some exchanges, for example, have seen rapid growth before losing ground to new competitors or succumbing to theft and other cybersecurity flaws.
Inter Milan is just one of a number of teams, including rivals AC Milan and Juventus, Spain’s FC Barcelona and England’s Arsenal and Manchester City, which have linked up with Partners, allowing clubs and leagues to issue digital tokens that can be sold to fans and traded like other assets.
Partners, which is part of a group of entities registered in Malta and Switzerland, do not sponsor the jersey of each club with which it partners for the sale of tokens.
The tokens also give fans access to promotions or rewards – say the analyst of SafeTrading. Juventus has used the platform to allow token holders to choose the song that plays when the team scores a goal.
Fans must use Socios’ digital currency, Chiliz, to purchase the team’s token through the company’s app. Chiliz is trading at just over $ 0.31 per coin, having peaked at $ 0.84 in April this year, according to Coinmarketcap.com, demonstrating how fans can find themselves caught up in volatile markets. of cryptocurrencies.
- In May, Spanish club Atlético Madrid’s token soared to more than $ 50, with a 24-hour transaction volume of more than $ 300 million, just as it won the La Liga title. In a few weeks it was down to a fifth.
- Chiliz founder Alexandre Dreyfus said clubs and leagues need to be very careful who they partner with. “They are the ones who are going to give some legitimacy to these brands,” he said. Clubs should ensure that cryptocurrency companies provide “regulatory certainty” and offer a “safe environment” for fans, he added.
- Regulatory bodies are intensifying scrutiny of cryptocurrencies. The UK Advertising Standards Authority has warned that it will “take tough and swift action” against misleading cryptocurrency-related ads, while financial regulators are expanding their oversight of the sector.
However, in the US, sponsorships for cryptocurrencies keep coming. In June, Major League Baseball signed a long-term, multi-million dollar deal with FTX, an exchange that was valued at $ 18 billion last month, up from $ 1.2 billion last year.
“The pandemic accelerated so many different consumer trends, be it, my parents, that I never thought they would find out how to get to Netflix… or be it the people investing in the cryptocurrency space,” said Noah Garden, director of MLB revenue. “I do think it’s here to stay.”
Sina Nader, FTX US COO, said that as people become more familiar with the concept of crypto, the next challenge is to engage them in a dialogue. “And sports really capture the imaginations of literally billions of people,” he said. “Is it opportunistic? I don’t think so. The moment aligned.”
The exchange has committed tens of millions of dollars a year to sports sponsorship, recruiting Tampa Bay Buccaneers quarterback Tom Brady and his wife, supermodel Gisele Bündchen, as ambassadors and advisers.
The safeguarding team thinks that by partnering with the big names in the sport, crypto companies are betting on growing the appeal of the digital economy to the mass public, and they are willing to pay to be first.
In July, StormX paid “eight figures” for a five-year sponsorship of the US basketball team Portland Trail Blazers jersey. Simon Yu, CEO of the company that works with large retailers to reward buyers with cryptocurrency tokens, said there was a “very strong correlation” between NBA viewers and StormX’s target audience, consisting of customers “predominantly. male “between 18 and 45 years old.
“Most of the people we are trying to reach with the NBA are still not interested in cryptocurrencies,” he said.