Crypto: The sports marketing fallout from the ‘fastest arms race we’ve seen’

July 12, 2022 – Media Mention
Yahoo! Finance

Irwin Kishner, co-chair of Herrick's Sports Law Group, was quoted in Yahoo! Finance in a piece on the impact on sports marketing and sponsorships as a result of the cryptocurrency market downturn. Cryptocurrency prices have declined throughout 2022, including a nearly 60% drop in the value of Bitcoin (BTC). The article cited the bankruptcy of crypto broker Voyager Digital, which had sports partnerships with the National Women’s Soccer League (NWSL) and the NBA's Dallas Mavericks, as well as several other crypto companies struggling to support their sports partnership deals. However, the article also referenced multi-million dollar sports deals from FTX and, "from league-wide deals to stadium naming rights deals and jersey patch sponsorships."

Kishner said that most defunct deals with bankrupt companies will likely be settled in court. He estimated, "I don't think teams or owners of the inventory are just simply going to walk away... There's likely value to be had in having a default judgment or a legal victory when you're trying to collect damages because there are obviously damages involved with that in terms of a team or an owner of the inventory was expecting a revenue flow which is no longer coming in."

The article stated that Kishner explained how "most brand deals typically involve some payment up front, potentially nearing half of the overall deal, followed by occasional installments. It’s likely most of these entities like the NWSL and the Mavericks received some of their payment prior to Voyager turning belly up." He reflected that this situation, in which companies will ultimately reach settlements of their crypto partnerships, parallels the unraveling of the dot-com bubble. Some companies, Kishner predicted, will accept "nickels on the dollar" in these settlements. 

Kishner concluded, "As the economy sorts itself out, you're just going to see more of this[.]"

Read the full article in Yahoo! Finance here.