Updated: Aug 3, 2022
While cryptocurrency is still foreign to many, crypto exchanges are heavily investing into sports. Crypto.com Arena will be the new name for the legendary Staples Center beginning on December 25 after AEG, the owner and operator of the arena, struck a 20-year deal with the crypto exchange in a deal valued at over $700 million. This makes it one of the biggest naming deals in sports history. Since the deal, the Crypto.com token, $CRO, is up 30% in 24 hours. This will give the crypto exchange a lot of exposure in one of the largest sports markets in the world, especially with multiple teams playing in the arena. The exposure could potentially help the transition into crypto for the public.
Earlier this year, the Crypto exchange FTX agreed on a deal with Miami-Dade County until 2040 for $135 million for the naming rights to the Miami Heat arena. FTX has also signed on some of the biggest stars in American sports in Steph Curry, Tom Brady and most recently Shohei Ohtani as global ambassadors. These players received cryptocurrency and equity in FTX. Baseball fans may have seen the FTX patch on umpires throughout the season, because they have a deal with MLB. Although FTX is a company that was created in 2019, they have made a big splash in sports and are expected to be around for a while as evidenced by these deals. With Ethereum and Bitcoin, the two largest cryptocurrencies, recently hitting all-time highs, it gives exchanges like Crypto.com and FTX some cash flow to be able to secure big deals.
How can crypto be used in the future by sports teams? As we’ve seen with some European soccer clubs, teams can create their own fan token. These tokens are mostly built on the Chiliz ($CHZ) blockchain and can be used by fans in a variety of ways. It gives holders access to fan-related membership perks like voting on club decisions and rewards, while still maintaining monetary value. For example, Paris Saint-Germain have a fan token that is trading for approximately $20 a token at the time of writing. People can buy and sell these tokens as they please, the more tokens a fan has, the more voting power they have. In a sense, it’s similar to buying a share of a team.
While fan tokens are rising in popularity, you have teams that are giving away NFTs (non-fungible tokens) along with the purchase of a ticket. NFTs are usually bought using cryptocurrency, so it made sense that for the Miami Heat home opener, fans received a t-shirt with a QR code. Once scanned, the QR code awarded the person with a limited edition NFT. Similarly, the Dallas Mavericks give fans an NFT with a purchase of their ticket for every home game. These NFTs can be bought and sold. Some games may be more valuable than others. For example, the NFT for the game where Luka Doncic hit a game-winning shot against the Celtics is going for $2,000 as the lowest price at the time of writing. For Mark Cuban, this is the Mavs version of a fan token.
These NFTs can be collected with rewards for collecting along with the ability to buy and sell them. A benefit of an NFT is that you don’t have to worry about it being damaged since it is digitally held and makes it harder to lose since it’s digitally stored on the blockchain. There is no surprise that Mark Cuban is leading the use of NFTs as he has allowed the purchase of Mavericks merchandise and tickets using many of the top tokens like Bitcoin, Ethereum and Doge. Crypto and blockchain could have a big role in sports going forward, although it remains to be seen how long it will take for the sports world to embrace the two technologies.
Greg Termolle is a 2L at the Elisabeth Haub School of Law at Pace University. You can follow him on Twitter at @GregTerm.