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The Drone Racing League and Algorand have Reached a $100M Sponsorship Agreement

The New York-based Drone Racing League( DRL) announced that has reached a five-year sponsorship agreement with crypto platform Algorand of $100 million.

The specific terms of the agreement regarding the cooperation and sponsorship have not been disclosed, but the Algorand cryptocurrency platform will take over the ownership of DRL from the sixth season which starts on September 29.

Rachel Jacobson, President of DRL, stated that the cooperation with Algorand is by far the most important sponsorship agreement and described the cooperation as “transformative” and “perfect marriage” according to the report from CNBC.

Rachel Jacobson added that:

“When you look across what’s happening with crypto and blockchain, you have to make sure that you’re targeting the right audience.”

Former NBA executive Jacobson described contemporary young people as digital masters and said that athletics can help new companies to raise awareness of the brand, but cryptocurrency companies still need to educate young audiences about the field.

Established in 2015, DRL is the global, professional drone racing property for elite pilots. The current global audience is more than 75 million.

The Boston-based Algorand Foundation is dedicated to fulfilling the global promise of blockchain technology by leveraging the Algorand protocol and open-source software, which was initially designed by Silvio Micali and a team of leading scientists.

Last year, Coinbase and Circle Centre Consortium have expanded USDC from Ethereum to Algorand’s blockchain as part of its multi-chain USDC framework—to bring scalability and performance improvements to the digital dollar stablecoin for global consumer payment adoption.

Crypto is demonstrating its strength and power in the sports field. As reported by Blockchain.News on March 3, Hong Kong-based crypto exchange Crypto.com has partnered with Aston Martin Formula 1 team, ahead of the British car maker’s 2021 F1 car launch.

Indian Cricket Regulator Bans Teams from Partnering With Crypto Firms

The Board of Control for Cricket in India (BCCI) has issued a directive to all franchises in the world’s richest cricket league, the Indian Premier League (IPL), to desist from partnering with crypto exchanges in any form.

According to the Economic Times of India, the stance of the BCCI was borne out of the fact that the nascent asset class is not regulated in the country, with the watchdog committed to maintaining the ban until the government changes its position on cryptocurrencies.

As per the Economic Times report, some of the Cricket teams have received interest from crypto exchanges to be their sponsors ahead of the next season of the T20 Cricket league. From the BCCI directive, about two different teams have had to call off the deal with the crypto firms, calling the development a major loss.

“It’s a major opportunity loss. The kind of money they were offering for the main sponsorship was 1.5 times of what the current sponsor is paying,” one executive said. “They wanted to build their brand with our association and were ready to pay for that.”

While the deal with crypto exchanges is often involving targeted advertisements to millions of Indian cricket fans home and abroad, insiders are of the opinion that the ban is more of politics as IPL executives have never had an issue with crypto partnerships thus far.

Different countries around the world have their own model of handling crypto-related developments. It is becoming a common occurrence to see sports teams sign sponsorship deals with crypto-focused entities as in the case of PSV Eindhoven sponsorship deal with Total Payments as reported by Blockchain.news back in August.

Different regulators have different approaches to cracking down on the dominance of crypto-related ads, one of the major contentions of the sponsorship deal. A London Assembly member from the Green Party, Sian Berry, recently pushed for a broad crackdown on advertisements featuring digital currencies on the London Transport System. This is in response to Floki Inu’s adverts flooding buses, and underground transport tunnels in the city. In the same vein, the BCCI and other watchdogs may believe related crackdowns are aimed at protecting consumers, a position crypto proponents beg to differ on.

Crypto Supports Formula 1 Racing in Modern Technology , Says Mercedes Lead

With 80% of racing teams in the 2022 Formula 1 (F1) grid featuring at least one crypto sponsor, Mercedes team principal Toto Wolff believes that cryptocurrencies are part of modern technology that cannot be ignored.

Wolff pointed out:

“I think when we are looking back in 10 years’ time having made payments that take two days and can’t be done outside of week hours, it is something that is going to be a relic of the past and this is where cryptocurrency has come in.”

The partnership between Formula 1 and crypto companies was inevitable based on the growth experienced in the cryptocurrency market, according to Wolff.

He added:

“You can’t shut yourself down to modern technology. It is definitely an area that will grow. They have become a major player in the financial world and obviously seek exposure through Formula 1. We all benefit from it but also learn from it.”

F1 is the highest international racing class for open-wheel single-seater formula racing cars, and the Mercedes team faced fierce competition from Red Bull last year. It was a battle of titans between Lewis Hamilton of Mercedes and Max Verstappen of Red Bull.

Wolff also noted that caution should be taken regarding the energy sustainability issue linked to cryptocurrencies. He stated:

“The sustainability argument is extremely important, but it is not only about mining and the energy it consumes but also where the energy comes from.”

The presence of crypto companies in the sporting arena continues to be felt based on the whopping amounts being invested.

For instance, to get more limelight during the annual playoff championship game of the National Football League (NFL) called the Super Bowl, crypto exchange Crypto.com spent $6.5 million on a 30-second ad that featured LeBron James, NBA’s four-time most valuable player (MVP).

Coinbase, a US-based crypto exchange, spent more than double this amount at $14 million for its Super Bowl advertisement.

Crypto.com Pulls Out UEFA Champions League of $495m Sponsorship Deal

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Cryptocurrency exchange Crypto.com has cancelled a five-year sponsorship deal worth $495 million with the UEFA Champions League, an annual club football competition organized by the Union of European Football Associations. Fortune media reported the matter on Thursday.

According to the report, Crypto.com cancelled the deal due to regulatory concerns in the U.K., France, and Italy, with legal issues surrounding the scope of its licenses to operate and trade.

In March, UEFA, Europe’s governing body for soccer, originally cancelled the Gazprom contract following Russia’s invasion of Ukraine.

The deal, which had been agreed in principle, would have seen Crypto.com take over as sponsor from Gazprom, a Russian majority state-owned multinational energy corporation.

The Singapore-based exchange has taken an enthusiastic approach to sports advertising over the previous year.

Last November, Crypto.com signed a 20-year naming deal with the Staples Center in Los Angeles for $700 million.

In June last year, the exchange invested a sponsorship deal worth $100 million into Formula One racing motorsports.

Furthermore, in last October, Crypto.com invested $100 million for an advert featuring Hollywood actor Matt Damon, a campaign that was run in more than 20 countries for several months as the exchange looked to cash in on last year’s bull market.

Market Downturn

Basically, cryptocurrency firms poured billions of dollars into sports sponsorships in 2021. This year, however, crypto prices have plunged, referring to what is known as crypto winter.

As a result, most companies have trimmed costs. Firms that splashed funds heavily on sports deals last year have cut costs recently.

In June, Crypto exchange FTX pulled out of talks to sponsor a jersey patch with the MLB’s Los Angeles Angels, an American professional baseball team based in the Los Angeles, as the crypto market tanked.

Another patch deal between FTX and the NBA’s Washington Wizards, an American professional basketball team based in Washington, D.C., was also cancelled with the market’s collapse.

It will be surprising to see if any major new crypto sponsorships are implemented during the current downturn.

The spending slump comes after major crypto exchanges embraced sponsorship deals in 2021 as part of an effort to woo sports fans. Many of them had adequate funds facilitated by the bull market over the last year.

Crypto Firms Spent Over $3B on Sports Ads, Research Shows

Crypto firms are eyeing this sector to harness a new generation of investors, according to a study by Safe Trade Binary Options.

The financial information website revealed that crypto firms have used more than $3 billion in 2022 on global sports advertising to spark awareness among Generation Z and millennials, who are deemed lucrative and tech-savvy.

Saqib Iqbal, a Safe Trade Binary Options analyst, stated:

“For many years, non-crypto businesses such as Red Bull and Coca-Cola have targeted young people through their sports team affiliations. Crypto firms have observed this and are beginning to adopt a similar approach in order to broaden their appeal and bring in a new, more tech savvy generation of investors.”

Crypto firms have realized that sports businesses are a significant outlet for high-profile marketing collaborations, major sponsorship deals, and spending. Iqbal noted:

“The largest partnership so far is Crypto.com’s $700 million deal for the naming rights to the Los Angeles arena, which was formerly known as the Staples Center.”

The crypto sector’s spending on Super Bowl 2022 advertisements surpassed those of alcohol, airlines, quick-service restaurants, and wine firms combined, according to data by sponsorship consulting firm IEG.

For instance, crypto exchange Coinbase spent a whopping $14 million on a minute-long Super Bowl ad, but it raked in the dividends because traffic reached historic highs. The Coinbase app jumped to the second spot from the 186th position on the Apple store, Blockchain.News reported.

Iqbal pointed out:

“2022 has really been a turning point for Crypto marketing and we’re seeing many brands seriously ramping up their sports advertising.”

Meanwhile, Toto Wolff, Mercedes team principal, noted that cryptocurrencies were part of modern technology that could not be ignored, given that 80% of racing teams in the 2022 Formula 1 (F1) grid featured at least one crypto sponsor.

Ferrari Terminates Crypto Sponsorship Before 2023 Formula One Season

Scuderia Ferrari, the racing arm of luxury automotive maker Ferrari, is the latest organization to take this action. Scuderia Ferrari is the latest in a growing list of Formula One racing teams to break its relations with cryptocurrency sponsors.

In order to be ready for the 2023 season, Ferrari dissolved its multi-year partnership agreements with Velas Blockchain and the chip manufacturing giant Snapdragon. This decision ultimately resulted in a loss of around $55 million for the Italian club as a whole.

The connection between Ferrari and Velas, which was scheduled to begin in 2021 and was estimated to be worth $30 million yearly, sought to increase the amount of fan contact by increasing the usage of non-fungible tokens (NFTs) and other collaborative ventures.

According to RacingNews365, the team was not in compliance with the regulations that would have let Velas to produce NFT images. This would have allowed Velas to take photographs throughout the race.

A loss of $15 million was incurred by Mercedes in November as a result of the company’s decision to terminate its affiliation with FTX. This decision was made at the same time that the cryptocurrency exchange filed its Chapter 11 bankruptcy petition.

The partnership between Red Bull Racing and the Tezos Foundation is claimed to have come to the same unfortunate conclusion, with the blockchain platform citing a lack of strategic alignment as the reason for its decision not to continue the arrangement as the reason for terminating the partnership.

Toto Wolff, the team principal and CEO of the Mercedes-AMG Petronas F1 Team, has issued a warning to the effect that other teams may have the same problems.

Despite this, there is a significant amount more to the link between Formula One and the ecosystem of cryptocurrencies than just basic agreements.

In October, Formula One said that it planned to create an online marketplace for cryptocurrencies, meta tokens, digital collectibles, crypto-collectibles, and NFTs. The platform would also support NFTs. Formula One also registered trademarks for the phrase “F1” about the same time it did so for other terms.