Tales from the Crypto: Will digital assets save sport sponsorship or prove a horror story?
When you think of US cable TV giant HBO, blockbuster drama series like Game of Thrones, The Sopranos and The Wire immediately spring to mind.
One of the first major triumphs for the network, though, was Tales from the Crypt, a horror anthology inspired by a cult 1950 comic book series.
The series was successful in no small part because of its ability to attract major Hollywood stars to the small screen, years before the likes of Netflix and HBO itself put premium box-set TV on the same pedestal as cinema.
Arnold Schwarzenegger, Tom Hanks, Demi Moore and Whoopi Goldberg all directed, starred or had cameos in episodes, while there were also early sightings of Daniel Craig and Ewan McGregor.
The latest drama in sports sponsorship seems to be following a similar path.
Tales from the Crypto has become a gripping story of success and failure with some of the best-known athletes getting involved in a sector for which sport, with its legions of fans worldwide, offers a rich seam of opportunity.
As the world of NFTs collides with that of FCs, F1 and the NFL, current and former players across a range of sports have been enlisted to drive the popularity of digital assets registered on the blockchain.
Former England stars Michael Owen and John Terry are prominent advocates while current NFL players including LA Rams’ Super Bowl-winning wide receiver Odell Beckham Jr have negotiated to have their salaries paid in the cryptocurrency Bitcoin.
This has coincided with a rash of substantial sponsorship deals being signed by crypto-related brands.
F1 is proving popular, with Crypto.com becoming a global partner of the sport, while the Red Bull Racing team has signed a $150m deal with exchange Bybit, part-funded by cryptocurrency tokens.
It is football, however, that has experienced the most controversial moves. As a sport under pressure over the extent to which it values finance over fans, a series of deals involving both big-name clubs and the governing bodies that run the game has raised eyebrows among supporters.
Uefa’s deal with fan token platform Socios received a cool reception from Football Supporters Europe, who suggested it “legitimises risky investments in highly volatile and largely unregulated financial assets”.
Socios also has a portfolio of deals with many of the leading clubs in the world including Barcelona, Juventus and PSG and claims to offer clubs better ways of interacting with their fanbases through the issuing of its tokens.
Away from those relatively well-known names however, the challenge for rights holders in any sport is to gauge the credibility and authenticity of crypto entities seeking to partner with them.
Last year Barcelona cancelled a partnership with Ownix based around the creation and marketing of NFT assets amid allegations of fraud, while Manchester City suspended a sponsorship agreement with 3Key Technologies on the basis its purported owners were less than forthcoming in their efforts to prove the company even existed.
Yet still the money flows into sport and, according to Deloitte, nearly 5m sports fans will purchase or receive an NFT in 2022, while NFTs for sports media will generate more than $2bn in transactions, twice that recorded in 2021.
Such projections have not gone unnoticed at the Premier League, which is reportedly on the verge of announcing two major deals in the crypto space that could net in the region of £434m over four years. A deal with ConsenSys could focus on the minting of still image NFTs while Dapper Labs are rumoured to be in the running for video rights.
The appetite for crypto assets is clearly immense, and perhaps the risks associated with the relatively new financial asset class form part of their appeal to fans and investors.
The challenge for rights holders and the increasing number of brands seeking to embrace the world of NFTs is to somehow manage to undertake the due diligence it would apply to partners in more traditional sectors to an industry that is essentially defined by its lack of regulation.
Consumer insights company Nielsen, meanwhile, expects sports sponsorship by crypto-related entities to reach $5bn by 2026. So the question of whether crypto becomes a commercial horror story or a genuine game changer for the sponsorship industry looks set to be a major storyline for sport in the coming years.
Neil Hopkins is a director and global head of strategy at M&C Saatchi Sport and Entertainment.