Crypto Industry’s Grip On Formula 1 Sponsorship Under Pressure In Singapore

At the Formula 1 Miami Grand Prix in May, presentations from the cryptocurrency companies sponsoring the sport were a must, with Crypto.com’s blue brand covering every conceivable surface along the circuit.

When Singapore hosts the most popular motorsport this weekend, the visibility of digital assets will be much more subdued.

The Monetary Authority of Singapore will allow teams to display the logos of their cryptocurrency sponsors only on Singapore Grand Prix cars and uniforms, but no advertising will be permitted around the track or in the local area.

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This change underscores the changing mood around cryptocurrency, both from a regulatory and financial standpoint.

Jurisdictions in Singapore, the UK and France have stepped up scrutiny this year after digital asset prices plummeted, billion-dollar projects collapsed and major market players went bankrupt.

As a result, F1’s new crowd of advertisers are finding ways to make their mark without moving too boldly.

The cryptocurrency rout over the past few months, which has wiped out an estimated $2 trillion in value since November, has left cryptocurrency brands more cash-strapped but still eager to maintain what they already have. invested in keeping a foothold on the world stage.

Jeremy Walls, a senior executive at the Miami site who helped broker the deal with Crypto.com, said the current market dynamics could lead cryptocurrency companies “to be a little more thorough and thoughtful” about the agreements they sign in the future.

“I still see people doing crypto partnerships now, maybe it’s not the pace it used to be,” Walls said.

Partnering with an F1 team has become a status symbol for cryptocurrency companies, a flashy multi-million dollar prop that signals wealth and success at a time when market prices reflect otherwise.

Around 80% of F1 teams have at least one cryptocurrency partner, in addition to Formula One Group itself, which has its own $100m deal with Crypto.com.

Zak Brown, director of McLaren Racing, said F1 teams “don’t want to be left behind” when a new sponsor or trend emerges.

McLaren signed a five-year deal worth hundreds of millions of dollars with cryptocurrency exchange OKX in May and will launch a special cryptocurrency-themed car for circuits in Singapore and Japan , in line with stricter advertising guidelines.

Aston Martin Lagonda Global Holdings F1 team marketing director Rob Bloom said the need to rebrand sponsors to suit different locations is normal in sport.

Some places require bans on the marketing of alcohol or tobacco, for example, where companies like Philip Morris International have historically shown the shape or color mark of their cigarettes without displaying a logo.

Along with logos emblazoned on drivers’ uniforms and cars, F1 teams are getting into cryptocurrency themselves. Several now offer fan tokens — team-specific cryptocurrency assets that can be earned, traded, and used to pay for experiences or rewards — and non-fungible tokens assigned to individual car parts.

What makes F1 a promising proposition for sponsors is its global and loyal following. Next year’s competition is set to reach a record 24 races in 21 countries, held over a nine-month period.

Cryptocurrencies – in pictures

Fans are also generally wealthier thanks to the sport’s high cost of entry, where tickets start at hundreds of dollars and TV stations pay hefty fees for exclusive broadcast rights.

Whether cryptocurrency firms will be able to maintain the pace of esports transactions remains unclear, with declining demand for digital assets now taking their toll.

Crypto.com and Bybit were among several big companies that laid off staff earlier this year, while firms like FTX opted to value their F1 partnerships on an annual basis, according to Avi Dabir, the exchange’s vice president for business development.

Since signing with Mercedes, Mr Dabir said FTX has seen a “noticeable” increase in new customers, as well as increased interest from existing customers who want to take advantage of access to F1 racing.

McLaren also had a former cryptocurrency partner in Turkish exchange Bitci.com, which at the time was the first to run a fan token for an F1 team.

The deal was quietly completed in February after less than a year, Bloomberg reported at the time, along with two other Bitci.com deals with European soccer clubs after it failed to make payments to some partners.

“It’s one we got into pretty quickly,” Brown said. “You need to do your homework to understand” a cryptocurrency deal. As a result, the subsequent partnership with OKX was reviewed by a 15-person external advisory board, he said.

Due diligence has become even more important this year amid a series of major cryptocurrency meltdowns, in addition to increasing regulation.

McLaren is now exploring a new fan token with OKX, which it hopes to launch in 2023 after taking its time to ensure “really robust” development, the director of licensing, e-commerce, e-sports and gaming has said. the team, Lindsey Eckhouse.

Although racing team sponsorships are generally more expensive than other sports, Crypto.com chief marketing officer Steven Kalifowitz said his deals with F1 were among the first the exchange has made.

“I was really looking for ways to meet a global audience and get to them quickly,” Mr. Kalifowitz said. “F1 really offers that in a way that I don’t really think any other sport can do.”

But with the cryptocurrency hovering around yearly lows and the general economic environment signaling a potential deterioration, the future of F1’s multi-year deals hangs in the balance.

It’s typical in sport for partners to come and go, if a sponsor suddenly can’t raise the millions of dollars needed to stay in the game, said Ted Dobrzynski, chairman of F1 sponsorship agency VIAGP.

Updated: October 02, 2022, 03:30

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Crypto Industry’s Grip On Formula 1 Sponsorship Under Pressure In Singapore


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