F1 Suffers 25% Drop in Crypto Sponsors From Last Year

Getting your name associated with a sports brand can prove lucrative for any business or institution and open up many business ventures.

Last year marked the peak of crypto ventures into the sports arena, with crypto exchanges partnering with Formula One teams. Unfortunately, since the start of 2023, many F1 teams have backed out of their deals for several reasons.

According to BanklessTimes.com, the F1 suffered a 25% drop in crypto sponsors from 2022. The drop subsequently led to a decline in the market's global capitalization by nearly 65%.

The site's financial analyst, Alice Leetham, comments:

The drop in crypto sponsors for the F1 teams raises questions on the sustainability of the crypto market. Businesses and companies will have to proceed with extreme caution before investing or joining hands with crypto exchanges."

Banklesstimes financial analyst, Alice Leetham

F1 Teams Drops Crypto Brands

2022 saw about 16 crypto brands jump in to sponsor F1 teams. For the Grand Prix that year, nearly every car on the track had a crypto partner in hand. Now, around six crypto brands have been dropped on their sponsorship deals.

For instance, F1 team Mercedes ended their partnership with FTX following their collapse and sudden bankruptcy. Ferrari followed Mercedes and terminated their contract with Velas due to disputes and litigation issues. Other crypto firms whose contracts were terminated include Fantom, Floki, Vauld and Virtua.

While these crypto brands ended their deals, three more joined and closed new deals. The new entrants to the F1 sponsor list include CryptoDATA, which signed a partnership with the Alfa Romeo Sauber team, and Kraken exchange signed an agreement with Williams. The Red Bull Team also took in Mysten Labs, adding another crypto partner besides Bybit Crypto to their team.

Despite declining numbers, some crypto firms such as Tezos, Binance, Crypto.com, Everdome and OpenSea still maintained their deals.

Why are F1 Teams Reconsidering Crypto Sponsorship?

The collapse of FTX stirred huge waves worldwide, let alone in the Formula One market. Its sudden bankruptcy aggravated concerns over the volatility and uncertainty of crypto reserves. Mercedes pulling out of their deal shook the F1 arena, causing many other brands to reconsider their crypto partnerships.

Despite most Formula 1 teams fully embracing crypto sponsors, most have suffered significant financial losses. Losses came right after the drop in the value of crypto, making many teams question the practicability of crypto.

With many Formula One teams backing out of their deals, we can expect crypto influence in the sports industry to decline. Crypto exchanges have to step up and reassure their partners less they risk losing their deals and influence.