Cryptocurrency brand FTX went from $32 billion to bankrupt in just nine days, and the Cal football stadium’s $17.5 million naming rights deal is likely to go down the drain with it.
You may have not been following the spectacular flame-out of cryptocurrency exchange FTX, which just filed for bankruptcy Friday morning. But if you’re a Cal Bears football fan, or if you have any interest in the financial health of UC Berkeley, you will have some interest in this stunning-to-some, completely predictable to the rest of us crypto downfall. Just 14 months ago, this very crypto company called FTX bought the naming rights to Cal Memorial Stadium for $17.5 million. So… what the heck happens to Cal's stadium now?
For starters: FTX is the very company that ran the Larry David Super Bowl ad seen above, the one that mocked cryptocurrency skeptics, and oh is that irony delicious on so many levels right about now. They were one of the most trusted brands in an industry that rightfully drew mainstream skepticism. But a November 2 article in Coindesk exposed that the whole thing was essentially a check-kiting scheme that appears to have been rife with fraud and manipulation. There was a hastily arranged fire-sale acquisition by their top competitor Binance in place earlier this week, but Binance took a look at FTX’s financials and backed the fuck out of that instantly. So FTX is now toast, leaving a trail of burned VC investors, sports stars, and Cal’s case, a naming rights deal.
It's the cryptocurrency naming rights agreement for us 🤩🏟— Cal Athletics (@CalAthletics) August 23, 2021
Alongside @FTX_Official, we are excited to announce our naming rights agreement for FTX Field at California Memorial Stadium!
🔗| https://t.co/Re5kainxC0 pic.twitter.com/XNX3Rszheh
The Chronicle covers this in an article headlined “FTX bankruptcy hits Bay Area venture capital firms — and the Warriors, Steph Curry and UC Berkeley.” Most of us could care less about the Bay Area venture capital firms, it was a spectacularly stupid investment by the billionaires, c'est la vie. Yes, the Warriors named FTX their “Official Cryptocurrency Platform and NFT Marketplace," but those words don’t even mean anything, it’s like being “the official grape jam of the Winter Olympics.” And yes, Steph Curry did some commercials for them, but whatever. Steph got paid I’m sure.
UC Berkeley is another matter. That’s an actual school. What happens to UC Berkeley and the Cal football stadium now that the naming rights deal has surely collapsed?
"If there's no company, the branding goes away," Columbia University professor of sports management Joe Favorito tells Business Insider. "The bigger concern is if you sold rights and you're anticipating revenue coming in that has not come in, then you run into a problem."
Cal is likely still owed money on the 10-year deal, and this probably means their sales staff must hit the pavement and look hard for another sponsor. While it was widely reported at the time of the deal that the $17.5 million “will be paid for entirely in cryptocurrency,” that was never entirely true. As the Bay Area News Group explained, “The agreement was brokered by Learfield, Cal’s multimedia rights partner,” and that “FTX will use cryptocurrency to pay Learfield, which will then make annual payments to Cal in cash.”
So UC Berkeley is unlikely to take the bath here. But they are losing out on millions in money they’d been counting on, and we’ll hope they do a little more due diligence before signing another 10-year naming rights deal.