Cryptocurrency exchange FTX spent big on sports sponsorships, and we’re starting to see the fallout from those deals as the firm collapses amid a liquidity crunch. Today, popular Formula One team Mercedes-AMG Petronas said that it is suspending its FTX sponsorship deal.
Early this morning, ahead of FTX announcing its Chapter 11 bankruptcy filing, a Mercedes-AMG Petronas team spokesperson told The Wall Street Journal that it would pause the deal “as a first step” as it evaluates the fallout from FTX’s unraveling.
The team will remove FTX branding from its car for this weekend’s São Paulo Grand Prix in Brazil. On Thursday, the team said that it planned to maintain the branding into this weekend for the season’s next-to-last race. Today, it changed course.
“The company will no longer appear on our race car and other branded assets from this weekend," a team spokesperson said. "We will continue to monitor closely the situation as it evolves.”
FTX has been removed from the partners page on the team’s website, and the previous link highlighting its FTX deal is now broken. However, the exchange’s logo still appears at the bottom of the website, as of the time of publication. Decrypt reached out to a team spokesperson to clarify its plans around the FTX deal but did not immediately hear back.
Mercedes-AMG Petronas signed the FTX deal in September 2021 in the midst of what became the team’s eighth-straight World Constructors’ Championship for amassing the most points during the season. Terms for the sponsorship deal were never disclosed.
In May, FTX launched an NFT initiative with Mercedes-AMG Petronas around the Miami Grand Prix race. The exchange offered up free Solana-based NFT “ticket stub” collectibles for fans to claim at that race and others this season, plus auctioned off Ethereum NFTs tied to artwork from pseudonymous artist Mad Dog Jones. Two of the NFTs came with a piece of the respective cars driven by Lewis Hamilton and George Russell in Miami.
The Mercedes alliance was inked amid a spate of sports sponsorship deals for the then-rising exchange, including agreements with Major League Baseball, the Miami Heat, the Golden State Warriors, and esports club Team SoloMid. Star athletes like Tom Brady, Steph Curry, and Naomi Osaka also signed on to endorse the exchange in return for equity in the startup.
But it’s all crashing down this week amid news that FTX didn’t have enough liquid assets to cover its liabilities, and may have mismanaged customer funds across its businesses. On Tuesday, rival exchange Binance said that it had signed a non-binding letter of intent to acquire FTX, but it changed course on Wednesday citing the scale of the mess it discovered.
Crypto sponsors are everywhere in F1 nowadays
But let's look at some results from the past year. pic.twitter.com/DjXjz3w29w
— FN (@FormulaNetflix) November 10, 2022
On Thursday, FTX founder and CEO Sam Bankman-Fried said that he would instead try to raise funds to salvage the company and make users whole again. But this morning, FTX filed for voluntary Chapter 11 bankruptcy protection in the United States, and Bankman-Fried resigned as CEO as the company pursues next steps forward.
FTX is one of several crypto industry firms that have funneled sponsorship cash towards Formula One. Rival exchange Crypto.com sponsored the racing league itself in 2021 in a five-year deal estimated at $100 million, while blockchain platform Tezos sponsored McLaren and NFT marketplace OpenSea recently linked up with Haas.