The collapse of the cryptocurrency exchange FTX sent shockwaves through the crypto world, with reverberations being felt across the many industries that invested in and used the exchange. Unfortunately for the Miami Heat, the sports industry was no exception, as on January 11, a federal bankruptcy judge ruled that the agreement between Miami-Dade County (the owners of the arena) and FTX has been terminated. Not even two years after the crypto-exchange pledged $135 million in a deal spread out over 19 years to the county, the naming rights for the Heat’s arena are once again up for negotiation[1].
The Heat were not the only sports organization to suffer from the implosion of FTX, as Major League Baseball was forced to do some damage control and remove the FTX sponsorship patch from the shirts of their umpires. In November, Commissioner Manfred said that it would be a “pretty good bet” that the league won’t have their employees don the FTX logo for the upcoming season[2]. MLB and FTX had agreed to a sponsorship deal in June of 2021, making FTX the league’s “official cryptocurrency exchange” and making history as the first non-athletic brand to adorn the shirts of MLB umpires.
Along with these organizations, a number of professional athletes that served as brand ambassadors for the company were named in a class-action lawsuit filed in November[3]. Stars like Tom Brady, David Ortiz, Shohei Ohtani, Shaquille O’Neal, and Stephen Curry were all named in the suit, which claimed that the use of these “big names” gave the company an “aura of credibility” and drove American consumers to invest[4]. All of these athletes are generally liked among sports fans, and have had little-to-no controversies in their careers, but the collapse of FTX and their roles in promoting it could certainly shift some public opinion.
Now, for the Miami Heat and for Miami-Dade County, a new arena sponsor is on the horizon. After the judge’s ruling to end the agreement, the stadium crews will remove all FTX branding from inside and outside the arena, leaving it “un-branded” as of the writing of this article. I’m curious to see what a temporary name would be, or if they already have a deal lined up to replace FTX, what the details of that deal would be. Considering the original deal with FTX in March of 2021 was supposed to pay $90 million of the total directly to the county, it is likely that the county will seek to match or exceed that mark in a new deal[5]. A new deal could be beneficial to Miami-Dade and the Heat however, as just a few months after FTX secured the rights to the Heat’s arena, another cryptocurrency exchange, Crypto.com, made a historic deal with the owners of the Lakers’ arena (AEG Worldwide) for $700 million over 20 years to rename Staples Center to Crypto.com Arena[6]. Although the arena where the Los Angeles Lakers, Los Angeles Clippers, and Los Angeles Kings play is undoubtedly a more valuable investment than the Heat’s arena, the county should nevertheless be able to get more than they did in their original FTX deal back in March of 2021.
During this in-between phase for the naming rights to the arena, the county and the Heat are in uncharted territory. With the Heat welcoming fans to their arena this week for a back-to-back versus the Milwaukee Bucks, the arena owners will either need to secure a deal in record time, put up a temporary name for the stadium, or perhaps leave it un-sponsored for the remainder of the season while they search for a new partner. Regardless of the path the county takes, I’d be surprised if they agree to a deal with another cryptocurrency company. The risks associated with these companies and the extreme fallout from the collapse of FTX is not something that sports leagues or teams will want to have to concern themselves with. Even though such companies can provide lucrative deals, like the Crypto.com Arena deal, their long-term viability is unproven, and can leave organizations susceptible to unnecessary risks.
Greg Moretto is a Pre-Law Student at Boston College ‘23. He is a member of the BC Sports Business Society E-Board. He can be found on Twitter @gregjmoretto.
Sources: [1] https://www.wsj.com/articles/goodbye-ftx-arena-miami-heat-stadium-ditches-crypto-sponsor-11673462807 [2] https://www.coindesk.com/business/2022/11/17/mlb-commissioner-its-a-pretty-good-bet-ftx-patches-wont-be-on-umpires-next-season/ [3] https://www.rollingstone.com/culture/culture-news/larry-david-tom-brady-shaq-ftx-class-action-lawsuit-1234632046/ [4] https://www.rollingstone.com/culture/culture-news/larry-david-tom-brady-shaq-ftx-class-action-lawsuit-1234632046/ [5] https://www.thenextmiami.com/ftx-arena-getting-a-name-change-after-just-19-months/ [6] https://www.thenextmiami.com/ftx-arena-getting-a-name-change-after-just-19-months/
