Sports Crypto Sponsorships Continue to Take a Hit as Ferrari F1 Drops Velas Deal

F1 team scuderia ferrari prematurely terminates a multi-year agreement with the velas network that the failure of ftx casts doubt on the future of crypto sponsorship.

A source told ScuderiaFans.com that Team Ferrari did not heed clauses related to Velas’ creation of non-fungible tokens (NFTs), with Velas also reportedly in financial distress. Both companies allegedly filed lawsuits to terminate the deal.

Ferrari gets $55 million early notice.

The F1 team signed Velas as a premium partner in 2021 to help bring digital collectibles and unique experiences to fans. Velas' logo was shown on the team's f1-75 car and on the livery of its two drivers, charles leclerc and carlos sainz. The contract was worth approximately 30 million dollars.

Ferrari would also have dropped snapdragon data analytics partner, reducing its revenues by an additional 25 million dollars.

Alex Alexandrov, an entrepreneur and cryptography investor, founded the company in 2019. Velas is an Ethereum Virtual Machine (EVM) compatible chain that claims to process 75,000 transactions per second. 

Ferrari joins Mercedes as part of Ending Crypto Deals.

During the 2022 season, crypto companies flush with cash tried to appeal to F1’s wealthy audience. As of September 2022, as many as 80% of F1 teams had crypto sponsorships, and the one group has entered into a $100 million agreement with crypto.com.

But several cases went south after notable collapses saw $2 trillion capitalization from the crypto market swept through. COINBASE and CRYPTO.COM laid off significant proportions of staff at a time when macro-economic conditions and declining investor confidence threatened vital sources of income.

Team Mercedes suspended its partnership with FTX shortly after the exchange filed for bankruptcy in Nov. 2022. The FTX had already stated that it had noticed an increase in registrations following the agreement with Mercedes. The esports tsm partnership with ftx was suspended on Nov. 16, 2022. Miami-Dade County has petitioned a judge to free it from an earlier deal with FTX to call the Miami Heat basketball team’s stadium the FTX Arena.

At about the same time, crypto.com relinquished a $495 million contract to sponsor the flagship competition of the European football club, the UEFA champions league.

For different reasons, terminated its deal with Red Bull Racing in mid-Dec. 2022. The foundation's business director, Mason Edwards, stated that the partnership no longer corresponded to the organization's strategy. 

The partnership between red bull and bybit looks intact for now.

Expenditures are likely to pick up under more stringent guidelines.

The collapse of the FTX has brought an industry to its knees that has spent hundreds of millions of dollars in marketing campaigns. 

FTX's failure and CEO Sam Bankman-Fried's arrest, at least at the present time, means that his advertising expenses fall to zero as investigators uncover the quagmire of suspected bankman-fried misdeeds.

Says marketing company SensorTower, Online advertising spending at crypto.com fell about 90% from the first quarter to about $1.6 million in the third quarter of 2022, while Coinbase reported in a third quarter results report that it reduced promotional expenses because of its "lower efficiency" in the third quarter.

Therefore, spending on crypto marketing is on a downward trend as trade understand their next move.

The president of an F1 sponsorship agency said F1 has a revolving door of partners and predicted that a minimum of two crypto companies could abandon deals due to market uncertainty.

"They're going to need to come together and balance the market next season," says Bloomberg. 'when the cars are unveiled in February. Next year, you're going to see who's gone."

But previous crypto recoveries indicate that its upcoming bull pivot will help restore lost revenues and conduct even more lucrative sponsorships.

Joseph panzarella, chief marketing officer of yeshiva university, said the difference this time will be that businesses will be regulated.

"I suppose they have to eat a small raven and say something like, "Hey, we're now [open to] being regulated," he said at the end of last year.