Team Ferrari suffered a loss of $55 million as a result of the termination of deals with Velas blockchain and Snapdragon.
In 2021, the F1 team collaborated with Velas to create NFTs and unique fan experiences.
Since early 2022, cryptocurrency promotional spending has decreased drastically.
With many sports teams and leagues jumping at the chance to secure profitable deals with crypto firms. However, the collapse of the crypto exchange FTX has raised a security concern over these deals.
As a result, Mercedes became the first sports company to end a partnership deal with crypto platforms. Mercedes ended its deal with FTX shortly after the exchange filed for bankruptcy in November 2022. In the same month, Esports company TSM also ended its partnership with FTX.
Furthermore, Crypto.com walked away from a $495 million deal to sponsor Europe's premier football club championship, the UEFA Champions League. In mid-December 2022, Tezos also ended its partnership with Red Bull Racing.
However, the trend of sports contracts being terminated with cryptocurrency companies doesn't appear to be ending anytime soon. Because the F1 Team Scuderia Ferrari recently ended a multi-year deal with the Velas Network.
On January 3, the Legendary Formula One Team, Ferrari, ended its ties with the Crypto Sponsor, Velas, an Ethereum Virtual Machine compatible chain. The sports community believes that the fallout of the crypto exchange FTX casts doubt on the sponsorship deal.
The F1 team signed Velas as a premium partner in 2021 to help deliver fans digital collectibles and unique experiences. As per the deal, Velas' logo will appear on the team's F1-75 car and on the livery of its two drivers, Charles Leclerc and Carlos Sainz. Reports reveal that the deal was worth around $30 million.
In addition, Ferrari has also reportedly terminated a deal with data analysis partner Snapdragon, reducing its revenue by another $25 million. This indicates that the team suffered a $55 million loss as a result of the termination of these two deals.
Meanwhile, it has not been confirmed whether the deal was terminated due to the volatile cryptocurrency market, but it would be a logical explanation.
The FTX bankruptcy and the arrest of former CEO Sam Bankman-Fried resulted in a decline in advertising spending, at least for the time being, as investigators unearth the morass of Bankman-Fried’s alleged misdeeds.
Experts and the crypto community believe that this is just the beginning of the agony for the crypto industry as a whole. Moreover, if last year is any indication, the presence of NFTs and crypto companies in F1 is poised to decline in the coming seasons.
What are your thoughts on the ongoing termination of sponsorship deals between cryptocurrency companies and sports teams? Please share your valuable thoughts in the comment section below.
Also read: FTX Founder SBF Trial On October 2, 2023; Could Get 115 Years
