It was about a year ago when it was announced that Crypto.com would be taking over the naming rights for the sports and events arena in downtown Los Angeles formerly known as the Staples Center.
There were mixed reactions from the fan side on the reported 20-year $700 million deal, with proponents praising the move as forward thinking for AEG, the company that owns the home of the Lakers and Kings.
Detractors made fun of everything from the new name of the arena to Crypto.com itself.
What wasn't debatable is that cryptocurrency arrived in a big way in 2020 and 2021, and with its name on one of the most popular buildings in L.A., exchange Crypto.com was a player to be reckoned with.
Of course all of this occurred before the crypto winter that has knocked digital tokens off of the all-time high they hit during the heights of the pandemic.
Meanwhile, sponsor revenue for the leagues is reaching new heights thanks in part to the influx of crypto dollars. Earlier this year, Sportico reported that NBA sponsor revenue hit $1.64 billion in 2022.
Now the question is whether those 8- and 9-figure sports advertising deals will come back to haunt the crypto industry.
Crypto Winter Spending
While the largest crypto exchanges and coins have enough assets to withstand the most recent downturn, other crypto companies haven't been as sturdy.
When Terraform Labs, the developer of the Terra blockchain network, crashed earlier this year, there were questions whether its $38 million deal with MLB's Washington Nationals would be affected.
Much like the Lakers, the Nationals are using the funds, all of which they reportedly received up front, to make upgrades to the fan experiences at the ballpark.
The Nats deal featured naming rights to the Nats exclusive luxury fan club and signage around the park, including for the seats behind home plate.
But the intended positive effect of attaching Terra's name to a premium product had the opposite effect as its Luna coin bottomed out and its founder absconded with $80 million.
Neither Terraform Labs or the Washington Nationals responded to a request for comment about whether the branding will stick, but since Terra already paid the money it's probably safe to say you will see the same signage when the park opens back up next April.
Earlier this year, the New York Post reported that crypto exchange FTX, which spent $135 million for the naming rights for the NBA's Miami Heat home arena, nixed talks to be the jersey patch sponsor for the Los Angeles Angels.
Change in Tactics?
The topic of conversation during Coinbase's earnings call was the company's expenses during the crypto winter.
"We focus on managing expenses closely to make sure that we can outlast any kind of down cycle, and we intentionally raised capital in 2021 to ensure that we had a really strong balance sheet going into this downturn, which has been great." Brian Armstrong said.
While Armstrong didn't mention any of the money the company already spent to be the NBA's official crypto partner, or the $14 million it spent on a 60-second Super Bowl ad earlier this year.
Back in February when the ad aired, bitcoin was still trading at double the $19,000 level at which it currently trades.
Coinbase took about $500 million in non-cash impairments as the value of its crypto assets fell below their carrying value on the company's balance sheet,
But a case can still be made for Coinbase's foray into sports advertising and partnerships.
The company's "brand" is to be the most trusted crypto exchange option in the industry, Armstrong said during the company's earnings call.
Nothing says trust like being the official crypto partner of an entity as big as the NBA.
But eventually, the price of that partnership may not be worth the money if crypto's recovery never comes.
