The Miami Heat is severing ties with the Crypto Firm, FTX after revelations that it has filed for Chapter 11 bankruptcy last week.
Miami Heat cut FTX Sponsorship
Miami – Dade Country and the Miami Heat have announced that they are ending their sponsorship deal with the cryptocurrency firm FTX. The deal, which was worth $135 million over nineteen years, was the largest of its kind between a professional sports team and a Crypto company.
FTX is a major player in the cryptocurrency industry, and its partnership with the Miami Heat was seen to legitimize the young industry. However, the recent revelations of insolvency have sent shockwaves through the Crypto industry as the prices of cryptocurrencies continue to tumble and clients were left unable to withdraw their funds from the exchange.
The Miami Heat said in a press release that “The reports about FTC and its affiliates are extremely disappointing. Miami – Dade Country and the Miami Heat are immediately taking action to terminate our business relationship with FTX, and we will be working together to find a new naming rights partner for the area” It is not clear if the team will seek out another crypto sponsor or if they will look to traditional companies for future partnerships.
Further NBA contagion includes FTX sponsorship deals with The Golden State Warriors and Washington Wizards, but also extends to Formula One racing, where FTX entered into a sponsorship agreement with Mercedes.
Mercedes has since announced that it will remove all branding from its team.
Bad week for Crypto Firms
What seems increasingly like a domino effect, has been a disastrous few months for Crypto Firms. NFT Today Magazine reported that European football giants, Inter Milan have ended their sponsorship with DigitalBits due to non-payment, and shortly after an industry insider called them a “shell company” and said that “there was more to come”.
Due to the FTX fallout, Crypto exchanges started to publish their holdings to provide transparency and bring calm to the market, but this might have added fuel to the fire as popular Crypto exchange Crypto.com revealed that 20 percent of their holdings were in the meme coin SHIB. This could have potentially set off a bank run on the exchange.
A bank run is when many people withdraw their money from a bank all at once because they think the bank will fail. This can cause the bank to fail because it doesn’t have enough cash on hand to pay everyone who wants their money.
There is a lot of uncertainty in the Crypto industry now and there will no doubt be more major sports teams and their fans affected as these developments play out.
Rocco Strydom is the Founder of SGM Holdings – finance, energy and media and is the host of the
SGM podcast based in South Africa