Why S'pore-based Crypto.com spent $957m to rename Staples Center

Why S'pore-based Crypto.com spent $957m to rename Staples Center

Nov 29, 2021

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SINGAPORE - In the past nine months, Singapore-based cryptocurrency exchange platform Crypto.com has raised eyebrows by spending more than $1.4 billion in more than 10 sports-related sponsorship deals across basketball, e-sports, football, Formula One, ice hockey and mixed martial arts.

The biggest one of them all was the US$700 million (S$957 million), 20-year deal to rename Staples Center - home of one of the National Basketball Association's most storied franchises the Los Angeles Lakers as well as the Clippers - to Crypto.com Arena, which was announced on Nov 17.

When asked why it is splurging on sports sponsorships, Crypto.com chief executive Kris Marszalek told The Straits Times from his Hong Kong office: "We want to make sure that our brand is visible to billions of people, and sports has this unifying power.

"People don't watch much TV today, unless it's a live sports event. So it's a natural choice to give our brand the right type of exposure."

Its end game?

World domination in the form of "five billion people holding cryptocurrency", which the 42-year-old Pole believes could happen within the next five years as the industry becomes mainstream.

Marszalek projected that the figure will leap from 300 million and cross the one-billion mark next year, and added: "If you look at the attention the renaming of Staples Center has given us, it was talked about in all the (American) daily evening shows, it was covered by all the major newspapers.

"It's like we are going from the early adopters to the early majority... crossing the chasm for the entire industry. Once you reach this point, things will scale very quickly."

Founded in 2016 as Monaco by Bobby Bao, Rafael Melo, Gary Or and Marszalek, Crypto.com says it has more than 3,000 employees and 10 million users worldwide.

Marszalek, a university drop-out, said: "It was already clear at that time that programmable money is the future of business, and the next computing platform. So you should always try to build in areas where there's an opportunity to disrupt afforded by a massive technological shift."

Crypto.com now has its own CRO coin, a non-fungible token (NFT) business and its own visa credit card which allows users to move cryptocurrency balances from their accounts to the card to make purchases or withdraw cash.

It generates revenue each time users spend on the card or trade cryptocurrency on its platform. A conservative estimate of the transaction fee would be 0.3 per cent, which leads to considerable returns when billions of dollars worth of transactions are taking place each day.

Citing data from digital asset specialist analytics company CryptoCompare, The Financial Times reported that Crypto.com "processed more than US$415 billion of trades on its exchange since March last year".

It has also entered NFT partnerships with various sports organisations to produce unique digital collectibles for fans to express their support for their teams, trade and make money digitally.

While Marszalek declined to reveal how much Crypto.com is currently worth, he did share with ST that its revenue exceeded US$500 million in the second quarter, and grew 20 times year-on-year.

Deloitte South-east Asia sports business group leader James Walton felt that cryptocurrency platforms entering sports sponsorships makes as much good sense as banks partnering sports outfits.

He said: "It's no different. It's another financial services avenue into sports sponsorships. It fits with their target demographics of middle to higher income, digital-savvy 16 to 50-year-olds.

"The thing that surprised me most about the Staples Center deal is the sheer length of the commitment given the relative infancy and the uncertain future for cryptocurrency in light of the regulatory environment.

"In theory, Crypto.com can ride the wave as long as you fundamentally believe that cryptocurrency is an area that's going to be invested more. So they can ride that wave into NFTs and the next thing when it comes to the future of value transfer."

Aware of the scepticism surrounding the cryptocurrency industry and criticism he has copped with Monaco's initial failed bid to launch its credit card, Marszalek sought to dispel the "common misconception that this industry is hyper-volatile".

He said: "In cryptocurrency, if you want volatility, you may have it. If you want stability, you can have stablecoins... it's your choice.

"In terms of us as a business, this is not an investment firm. We generate revenues through services that we provide to millions of customers around the world. Obviously, we are going to generate substantially more revenue during upwards market cycles, but given the scale of our platform, we're going to be profitable even if the market conditions suffer.

"I've been an entrepreneur my whole life and I'm really proud of all my battle scars because it turned me into an effective operator. Crypto.com would not be anywhere near where it is today if I didn't have 20 years of past experiences and learning and company building.

"The Monaco card is today the largest Visa crypto card programme in the world. We have got probably 80 per cent market share in this category... so I would say that our launch, even though it was a little bit delayed, turned out to be extremely successful over the long term."

With Crypto.com "expanding aggressively" and moving more of its employees to its 100-strong Singapore office at One Raffles Quay, Marszalek felt it is inevitable it would get involved in supporting local sports eventually.

He said: "Singapore is a fantastic place and definitely the epicentre of the crypto industry on a global scale today. So we're very happy to be there.

"Our approach (with sports sponsorship) is top to bottom, so we have just gone for the biggest global impact with the biggest names first and then gradually we will look at local opportunities."

Crypto.com's billion-dollar sports-related deals

March

- Announces a multi-year global partnership with Formula One outfit Aston Martin Cognizant.

- Agrees a one-year deal with National Hockey League side Montreal Canadiens that gives Crypto.com branding on the neutral zone ice at Bell Centre.

May

- Becomes official cryptocurrency and NFT sponsor of the 2021 Coppa Italia, and the Serie A's first cryptocurrency partner, making the Italian top tier the first football league to have such a collaboration.

June

- Signs on as the first cryptocurrency sponsor and NFT partner of Formula One, as well as the inaugural global partner of the new Sprint qualifying series for 2021. CNBC reported this is a five-year deal which took effect on July 17 and is worth more than US$100 million.

July

- Becomes top MMA organisation Ultimate Fighting Championship's first global official fight kit partner and cryptocurrency platform partner in a 10-year deal worth US$175 million, according to CNBC.

August

Becomes the Italian Serie A's first innovation & technology partner, as presenting partner of Virtual Assistant Referee (VAR) and Goal Line Technology. Serie A's VAR Center in Lissone will also be co-branded the Crypto.com VAR Center. Crypto.com will also present the Serie A Goal of the Month.

September

- Inks multi-year agreement with French football giants Paris Saint-Germain to become their first cryptocurrency platform partner. Sports Business Journal wrote that the deal is worth €25 million to €30 million (S$46.4 million) over three years, with a "significant portion" paid using the cryptocurrency token CRO.

- Makes its first foray into e-sports to become the inaugural global cryptocurrency partner of London-based competitive gaming organisation Fnatic in a five-year sponsorship deal US$15 million.

- Signs a six-year jersey patch sponsorship deal with NBA side Philadelphia 76ers worth "in the eight figures" annually, Crypto.com CEO Kris Marszalek tells the Philadelphia Business Journal.

November

- Becomes the first global marketing partner and cryptocurrency platform partner of e-sports tournament Twitch Rivals in a multi-year deal

- Secures naming rights to Staples Center, most famously known for being the home of National Basketball Association sides LA Lakers and LA Clippers, for US$700 million. Crypto.com will also become the cryptocurrency partner of the Lakers and NHL's LA Kings.

- Agrees to be one of the NFT licencees of the Conmebol Libertadores from 2022 and its official partner for the 2023-2026 cycle. It is South American football's top club competition.