Miami Heat drop like a ‘hot’ potato FTX

Article posted by Coliseum, November 15^th, 2022

Image: Heat Nation

FTX, the bankrupt cryptocurrency exchange, conducted numerous deals with sports franchises in 2021, but now teams are slashing their connections rapidly.

‘TheStreet’ stated that the National Basketball Association (NBA) team Miami Heat is the first one to cut its ties with the Bahamian-based brokerage.

FTX is the world’s second largest cryptocurrency exchange – a Bahamian cryptocurrency exchange. The FTX is incorporated in Antigua and Barbuda and headquartered in The Bahamas (country in the Caribbean). The exchange was founded in 2019 and as of February 2022 had over one million users. The FTX also operated FTX.US, a separate exchange available to the residents of United States.

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The Miami Heat is an American professional basketball team based in Miami, US. The Heat competes in the National Basketball Association (NBA) as a member of the league’s Eastern Conference Southeast Division. The club plays its home games at the FTX Arena, and has won three NBA championships.

The 21,000-capacity FTX Arena is a multipurpose arena located in Miami, Florida, US, along the Biscayne Bay. It was constructed beginning in 1998 as a replacement for the Miami Arena and has been designed by the architecture firms Arquitectonica and 360 Architecture. The arena is home to the Miami Heat of the National Basketball Association.

‘TheStreet’ further stated that in 2021, FTX agreed to a 19-year deal to pay $135 million to change the name of the home of the NBA’s Miami Heat to the FTX Arena. It had been named the American Airlines Arena since 1999 after it opened.

The naming-rights holder for the Heat arena, the franchise and Miami-Dade County released a joint statement on November 11^th stating that it would “take action immediately to terminate” its relationship with FTX.

The team plans to “seek a new naming rights partner” for Miami’s venue, per according to the statement.

The team said, “The reports about FTX and its affiliates are extremely disappointing. The Miami-Dade County and the Miami Heat are immediately taking action to terminate our business relationships with FTX, and we will be working together to find a new naming rights partner for the arena.”

The splashy endorsement and sponsorship deals by FTX are now in doubt as the cryptocurrency exchange filed for bankruptcy on November 11^th and its founder and head honcho, Sam Bankman-Fried, also resigned.

Up in the Air

Sports teams had welcomed the multi-million dollar partnerships in 2021 from cryptocurrency companies like FTX.

The future of all those partnerships are up in the air, but not likely to continue since FTX is insolvent.

Investors have been wary in the past of companies purchasing naming rights to stadiums because of the large investment. Many of those deals involving naming rights appear to be cursed and the companies who spent hundreds of millions of dollars wind up filing for bankruptcy protection later on.

FTX’s deal ran the spectrum from Major League Baseball (MLB) to Formula One, a major auto racing competition.

FTX, which was founded in 2019 by Sam Bankman-Fried, invested and partnered with various sports teams, including Major League Baseball, only two years later, spending millions of dollars.

In June 2021, MLB, which includes the 30 baseball teams in the United States, chose FTX as its official cryptocurrency exchange brand in a five-year deal.

FTX also got involved in the world of auto racing by serving as the first cryptocurrency exchange partner of the Mercedes-AMG Petronas Formula One Team. The partnership included motorsport fans being able to trade crypto through the FTX app, buy sell and create non-fungible tokens (NFTs) using the FTX NFT marketplace and pay for daily purchases with crypto through FTX Pay.

The partnership allowed FTX to feature its logo on both the Formula One cars and the drivers’ racing suits and attire.

Binance Short Shrift to FTX

Earlier, software developer and the largest cryptocurrency exchange in the world Binance (Western Caribbean) pulled out of its deal to buy rival firm FTX (Bahamian cryptocurrency exchange) following the latter being on the radar of the US Securities and Exchange Commission over its handling of customer funds. Binance has almost dropped like a hot potato FTX. Very recently, the Binance had struck a deal to purchase FTX which was struggling to stay afloat following withdrawals as its workings had come under cloud.

The above development had put the ‘heat’ not just on FTX but also the National Basketball Association (NBA) team Miami Heat as the FTX held the naming rights to the Heat’s home arena – the FTX Arena in Miami, Florida.

Facing ‘Heat’

The Miami Heat landed in a double whammy situation as the FTX filed for bankruptcy and the Miami Heat was in a soup as they were left with no other choice but to go through the entire exercise of hunting for another naming rights partner which they have finally decided to do so as mentioned above.

However, with the very gloomy world economic situation and pink slips handing spree by companies’ world over, analysts doubt as to there will be how many eager-beaver-companies who would like to see their names on the Heats’ home.

Under Cloud

‘Reuters’ earlier stated that the U.S. securities regulator is investigating crypto exchange FTX.com’s handling of customer funds amid a liquidity crunch, as well its crypto-lending activities, a source with knowledge of the inquiry said on November 9^th.

Binance is a cryptocurrency exchange which is the largest exchange in the world in terms of daily trading volume of cryptocurrencies. It was founded in 2017 and is registered in the Cayman Islands in Western Caribbean. Binance was founded by Changpeng Zhao, a developer who had previously created high frequency trading software.

‘heatnation.com’ stated that in recent days, FTX Trading came under incredible controversy and accusations of mismanaging money from investors, and on November 11^th, the company did what many expected it would do by filing for bankruptcy.

It’s an ugly situation and brings the entire makeup of cryptocurrency back into question. Investors in both the crypto and stock markets have suffered major losses over recent months as inflation, global uncertainty and many other factors have led to massive dips in values of even some of the most powerful companies.

Given all the economic uncertainty at the moment, it may take the Heat some time to find an attractive partner to purchase their arena’s naming rights though they have decided to scout for another naming rights partner now that the team has snapped ties with the FTX.

As some of the most valuable companies in the world have begun laying off massive amounts of employees, it’s hard to imagine that there’s a company out there that would spend millions simply to have its name on an arena.

‘heatnation.com’ further stated that however, that is ultimately probably what will happen. It seems likely that there’s a company somewhere out there that would jump at the chance to have the kind of advertisement and level of prestige that comes with having its name on a professional sports arena.

Interestingly, the Heat is not the only team to play in an arena currently named after a company related to the cryptocurrency industry. The NBA team Los Angeles Lakers had their arena renamed to Crypto.com Arena (the 20,000-capacity arena in Los Angeles, California) last year. Fans of the storied franchise mourned when the arena lost its famous name.

Binance had earlier signed a letter of intent to buy FTX, which also sponsors Major League Baseball (MLB).

‘Reuters’ further stated that the Securities and Exchange Commission (SEC) is examining whether the platform (FTX) is following securities laws related to segregation of customer assets and trading against customers. The probe began a number of months ago.

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