With FTX's demise over the last few days I do feel for all the investors who are struggling to retrieve their funds. The problem is much bigger than we think as it is not only the investors who want their own funds back but also the partnerships that were agreed outside the exchange.
FTX grew by over a 1000% rom 2020 until now which was driven by what the exchange offered and also by it's marketing campaigns tied to sport. The Superbowl adverts we know are not cheap and FTX was never going to skip this space. The company spent a reported $7 million for the 30 second slot which doesn't add up as the advert was longer so something tells me more was spent.
According to reports FTX had big plans for the sporting space with a reported $900 million earmarked for sponsorships. The 20 year deal with the Miami Heat for their naming rights of their the Miami Stadium was the biggest yet estimated in the region of $140 million. The problem is now they are seen as creditors as FTX has or will break that agreement resulting in penalties having to be paid. The sad reality is the investors who are still stuck on the exchange will be paying these bills. Not your keys not your crypto is the lesson to learn here and use the exchange for trading but once done get it off into a cold wallet in your control.
There are a ton of partnerships and agreements and I have no clue what the fine print stated so how many 100's of millions will have to be paid out to the sporting teams involved? This was not a list of all of them either as there are more.
The Mercedes Formula One team also had a FTX sponsorship deal even though it is smaller than some of the others. This won't be a major blow as most of the smaller sponsorships are in the region of $20 million per season and this season is nearly over. I expect this has already been paid and thus the livery will not change until next season. This will probably be the last advertising you see around featuring FTX as others will no doubt be removing theirs over the coming days.
Another sponsorship was with TSM ESports for 10years at $21 million per year. The one part of the deal was that players and TSM employees would receive crypto as part of the payment sponsorship. Imagine being paid out in FTT thinking wow this is going somewhere and to hold on to what you have. $80 at the all time high and now less than $4 and most likely heading to $0.
This is not to mention the deals done with the likes of Tom Brady who became a figurehead for marketing the FTX brand. The one advert shows Brady contacting his mates which I hope was not the case roping them all in as investors. Things can head South very quickly taking your mates with you which is why influencing others is never a good idea investing is a decision made by the individual.
Brady along with ex wife Giselle Bundchen and Stephen Curry were FTX figure heads helping with the marketing creating adverts. They were given shares via an equity deal so who knows how they have come out of this. Whatever they worked for looks like for free now as those shares will not have any value shortly.
No one can blame these companies for getting involved with FTX as 6 months ago Sam Bankman Fried was seen as someone who could do no wrong. he was talked up by so many as the new kid on the block and has basically rug pulled them all by his ignorance and greed.
When choosing a sponsor from the Crypto world due diligence needs to happen like all of us do when looking for an investment. This latest event has been a food learning lesson for those not knowledgeable in crypto as lets face it the majority of outsiders have no clue what is going on.
Whatever happens over the next weeks and months is that there will be a long line of creditors standing in front of all the investors expecting some type of compensation. This for me is wrong as this is the investors money that will be used and personally SBF should be the one emptying his pockets first. Kind of sickening when you hear reports estimating the guy has close to $1 billion still and everyone else is being rekt.