Why did a crypto exchange pay $700m to have their name on a building?
This past weekend an estimated 177m people tuned in as Matthew Stafford’s (strong surname BTW) LA Rams defeated the Cincinnati Bengals at Super Bowl LVII.
Los Angeles played host to the biggest game in the American football calendar for the first time since 1993. Built in the city’s Inglewood district as part of a local regeneration project, the sparkly new stadium brought the stars out in force. Some of the biggest names in the world of entertainment and business, from Drake to Gary Vaynerchuk, converged to take in the action.
And for fintech fans, one name in particular will have stood out - SoFi. The fintech pay a record-breaking $30m a year for naming rights privileges.
The costly trend of fintechs and FS companies sponsoring venues is growing. The NBA alone has the Fiserv Forum, FTX Arena and Paycom Center, to name a few.
The costly trend of fintechs and FS companies sponsoring venues is growing.
And across town from the SoFi Stadium is the most controversial yet - the Crypto.com Arena, formally the Staples Center and home of the LA Lakers and Clippers.
Announced at the end of 2021, the latter deal alone is reportedly worth over $700m over the next 20 years. More than a few feathers have been ruffled in the process, with fans and journalists still referring to it as the Staples Center.
But why are FS companies paying this? And is it worth it?
Let’s start with the big risk because that’s more fun.
This is a doozy that plenty of businesses have fallen foul of - after you pay a fortune to rename something, it just doesn’t stick.
Say it with me: PEOPLE DON’T LIKE CHANGE.
Old habits die hard, particularly when those habits are a venue with lots of nostalgic value.
Just ask Mike Ashley. The former owner of UK Premier League sleeping giants Newcastle United tried to sell the naming rights to St. James’ Park, the team’s home for more than 100 years.
Things got ugly. There were protests. The fans became further disillusioned with the club’s ownership and the city’s MP even brought the matter up in the House of Commons. And more importantly, no one bothered to call it its new name.
There’s an elephant in the room when it comes to SoFi. LA is set to host the Olympic Games in 2028 but as per the IOC’s strict sponsorship rules, the stadium will be temporarily renamed for the duration of the games. The global audience for the Olympics will be huge, but SoFi will reap none of the rewards.
Trust is the key
At 11:FS, one of the biggest things we talk about with fintechs is trust. If they want to be successful, they need to build trust. And quickly.
Fintechs are new to market. When it comes to trust, big banks have an advantage - they’ve had longer to build customer loyalty. Something that is vital when you want people to put their money into your hands.
Fintechs are new to market. When it comes to trust, big banks have an advantage - they’ve had longer to build customer loyalty.
People trust their sports team, so attaching your brand to that can be hugely beneficial.
The UAE’s biggest airlines, Etihad and Emirates, sponsor Manchester City and Arsenal - and the UK’s perception of the Middle East has changed measurably as a result.
They used football to help build trust with UK travellers.
In 2020, nearly 400,000 people from the UK visited Dubai. The UAE city, known for its year-round sunshine, welcomed more UK visitors than any other country except India and Saudi Arabia.
Have fintechs looked at this and decided to copy the formula?
An important point to note, both stadiums above (as with SoFi) were named this from the beginning. So they didn’t have history to contend with.
Culture. Culture. Culture.
The Crypto.com Arena is probably the most prestigious venue in America, rivalled only by The Forum in LA and Madison Square Garden in New York City.
Home of the Lakers, Sparks and Clippers basketball teams, the LA Kings Ice Hockey team and the Grammy Awards, concerts, boxing matches and so much more, it's difficult to think of a single building that sits at the apex of sports, music, fashion, film and celebrity as much as it does.
Michael Jackson’s funeral was even held there!
Crypto.com haven’t just paid to have their name on a building. They’ll now have an immediate guaranteed association with some of the biggest global cultural influencers and events of the next 20 years.
Considering the current crypto-pop culture crossover, this makes perfect sense.
Off the top of my head the following celebrities currently own at least one NFT - Jimmy Fallon, Travis Barker, Serena Williams, Jay-Z, Snoop Dogg, Eminem, Logan Paul, Reese Witherspoon, Ashton Kutcher… the list goes on.
It could also act as a huge on-ramp for the uninitiated.
Crypto.com could give a free NFT to everyone who attends events at the arena. They could power ticketing through blockchain tech or accept payments in crypto. There’s so much opportunity there.
So. Is it worth it?
The numbers and deal lengths doing the rounds are staggering.
The big winners seem to be the companies that got involved early. SoFi in LA, Emirates in London, Etihad in Manchester. The one thing they all have in common is that they were called that to begin with. They were sold naming rights, not renaming rights.
Will Crypto.com Arena stick? Or will ‘The House That Kobe Built’ still be referred to as something else? Time will tell.
But direct access to cultural icons? The opportunity to build trust in a notoriously difficult industry? And the potential to be the crypto on-ramp to the 700,000 people who walk though its doors every year?