FTX, Crypto.com and the ‘Stadium Curse’

News broke Wednesday that Los Angeles’ Staples Center, longtime home to the National Basketball Association dominating L.A. Lakers team, will be renamed “Crypto.com Arena” in a 20-year, $700 million naming rights deal that appears to be the largest in sports history. While plenty of sports fans seem to be mourning the end of an era, others see the name change as a legitimation of the crypto sector as a whole.

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I would love for that to prove out, but the history of naming-rights deals for major stadiums shows there’s no guarantee. Plenty of companies, particularly companies leaning on new technologies or speculative investments, have gone belly-up after what seemed like victory-lap naming deals. For a time this was so common that people referred to “the stadium curse.” Big spending on naming rights has sometimes even been cited as a reason for investors to question the judgment of company management because the pay-off in branding and publicity remains somewhat unclear.

The “stadium curse” has hit some companies you know and many you don’t. The farkakteh “energy-trading company” Enron, perhaps the most notorious corporate fraud of the past half-century, went belly up just two years after buying the rights to the Houston Astros baseball team’s stadium (now Minute Maid Park). CMGI, an internet investment and holding company, didn’t last much longer after a 1999 naming deal for the U.S. football New England Patriots’ field, now known as Gillette Stadium.

These cases illustrate the fundamental tension at the heart of naming deals. They’re the corporate equivalent of buying a Lamborghini: functionally almost useless, but a huge signal to the world that you’re winning, exactly because you’ve got so much money to set on fire. Much in the way that day-trading gurus flaunt (rented) Lambos, this makes the success signal of a stadium name particularly attractive for companies that haven’t actually “made it” yet.

It’s particularly tempting to apply this rubric to the Crypto.com deal because the exchange has relatively thin brand recognition. It spends a ton on advertising and does decent volume, ranking fourth worldwide among spot markets, according to CoinGecko data. But in contrast to Sam Bankman-Fried’s FTX, which recently bought naming rights to the venue of another U.S. pro basketball team, the Miami Heat, Crypto.com isn’t deeply involved in crypto innovation. Maybe the rise of a purely retail-focused operation is itself an index of sector-wide growth, but at a high level you could see it being particularly vulnerable to a downturn in crypto markets.

(Incidentally, FTX reportedly paid just $135 million for 19 years of naming rights, and the Heat is nearly as hot as the Lakers these days. It seems either FTX got a great deal or Crypto.com got soaked – or maybe this prices in the likelihood that Miami will be underwater in 20 years.)

Read more: Crypto.com Looks to Cash In on Bull Market With $100M Advertising Campaign

Beyond Enron and CMGI, there’s a bit of a “curse” angle to the Staples Center name change itself. The name has become iconic, thanks largely to the legendary championship runs of the Kobe Bryant-led L.A. Lakers circa 2008-2012. In fact, “Staples Center” is probably just as recognizable these days as the actual company Staples, which is still a large retailer but has been shrinking steadily in the era of Amazon.

Bryant’s widow, for instance, seemed unsettled by the name change, and took to Instagram for an oblique complaint.

Vanessa Bryant’s point may be that what players do is always more important than who cuts a big check for naming rights. But Lakers fans are definitely mourning the loss of the “Staples Center” name, which has come to represent a powerful legacy. That demonstrates just how valuable sports naming rights can be: Given a bit of luck, it can lead people to associate your brand with some of the most admired people on Earth.

Read more: Crypto Has a Marketing Issue | The Node

That might not be enough by itself to supercharge a business. But you know who hasn’t had a stadium in Los Angeles named after it for the past 20 years? Office Depot, which Staples has outperformed and is trying to buy. Maybe a coincidence – but it does turn out that the bulk of “stadium curse” cases were clustered around the dot-com bust, and naming rights have been a bit more of a mixed bag for investors since then.

However optimistic you might be about crypto, the current wave of rapid and speculative growth definitely rhymes with the conditions in the tech industry in the late 1990s when Enron and similar naming deals were inked. Whatever the fate of Crypto.com itself, we’ll likely see some reckonings as currently hot crypto operations turn out to be overleveraged bets a la CMGI or outright frauds a la Enron.