Tom Hoffarth / FartherOffTheWall.com
How much are you invested yet – financially, emotionally, intellectually or otherwise — in Crypto.com?
Considering it’s still fresh in our minds how the cuddly super-sized arena in downtown L.A. just abandoned a loyal partner to have its naming rights changed, it might be penny-wise to see how miscalculations are heating up in Miami these last few weeks.
The FTX Arena, home of the NBA’s Miami Heat, needs a quick fix.
A crypto currency company that just last year pledged Miami-Dade County some $135 million to add its name to the marquee for 19 years, plus give $5 million toward local causes concerning a reduction of gun violence, is now bankrupt.
It gave the county some $20 million up front for the first two years and the check has cleared apparently. A $5.5 million installment is due in less than two months.
Talk to the CEO, who resigned amidst a massive missive of social media mea culpas.
The custodians who run the place — it opened in 1999, same year as L.A.’s Staples Center, with the seemingly secure American Airlines Arena title in place — said they’re immediately dropping the FTX name and are “extremely disappointed.”
The people making these decisions shall remain nameless.
Due diligence and some common sense in how dollars are created out of thin air and then dispersed might be helpful.
“Crypto collapses have become par for the course,” Will Gottsegen writes in The Atlantic. “But now, crypto feels less ready for the mainstream than it has in years. Even as crypto slunk into a bear market in recent months, there was still the dream of crypto as it was originally conceived in the aftermath of the 2008 financial crisis: Part of the blockchain’s raison d’être lay in cutting out greedy bankers and creating greater trust between transacting parties. Now, in 2022, the crypto markets are controlled by an industry that’s proved time and time again just how similar to the existing financial system it really is.”
There’s that, and there’s the advice we once got from broadcaster Al Michaels, famous for his financial acumen. He suggested whenever a company in your investment portfolio announces it has spent millions in its marketing budget to buy the naming rights to some sports facility, that’s the moment you sell the stock. They are likely in over their skiis, and the investment will never pay off.
History is littered with examples. The Wall Street Journal recently listed eight instances – and there’s likely more – where one could say a “stadium branding curse” occurred. That’s a nice way of saying, again, poor vetting took place.
The most famous may be Enron Field in Houston – once securing a 30-year, $100 million deal with the Astros’ home park in 1999. Two years later, the CEO of the energy company went to prison over an accounting scandal, trying to hide billions of debt from failed deals. Fraud, money laundering, etc. The place is now called Minute Maid Park provided the juice once Enron was unplugged.
Another was Adelphia Coliseum in Nashville, home of the NFL’s Titans. It held the title name briefly from 1999 to 2002, filed for bankruptcy, its founders imprisoned for fraud, and the communications company went under. Those who frequented Dodger Stadium at the turn of the century may recall a time when the swanky restaurant down the right field line was called the Adelphia Stadium Club, as then-Fox Entertainment Group ownership was doing deals with its media distributors. Fade to black.
Those are the failed businesses, but there’s also the confusion generated when more than one company over time buys naming rights to the same place and patrons aren’t sure what to make of it any more. Ask any San Francisco Giants fan to tell you the name of their team’s home park, then be prepared to laugh.
Recently, the Pittsburgh Steelers’ home field was changed from Heinz Field (after the local condiment company deeply embedded with the city history) to Acrisure Stadium (a Michigan financial tech and insurance company that many of the local know or care little about). A new Acrisure Arena is also under construction in the Coachella Valley, soon to house a minor-league hockey team.
You’ve been warned.
When did all this become a thing, especially in L.A.?
We remember a time decades ago when Jerry Buss, then owner of not just the Lakers and Kings, but also the Inglewood palace they played in, told a bunch of reporters to be prepared for an announcement that could change the way sports and business work for years to come.
It was 1988. The Forum – which had been known from a marketing slant as “The Fabulous Forum” – formally was to be known as the Great Western Forum. The brown painted columns on the outside would be now blue. A GW logo went up on the marquee and all the signage.
There are still people today who think the Great Western Forum was just its proper name. They had no idea the Beverly Hills-based bank had bought the naming rights and gave Buss a reported $1 million a year to secure the name for at least 15 years, and perhaps 30.
“Maybe the name sounds kind of strange to them now,” said a Forum spokesman at the time. “But we expect they’ll get used to it.”
After it was sold off, and used for a time as a church, it went back to being called “The Forum, presented by Chase” — a reference to the bank that ended up buying out Great Western’s legal successor, Washington Mutual, a few years earlier and the building exterior returned to the original brick red.
Now get used to it being called the Kia Forum, owned by Steve Ballmer. The Clippers’ bankroller is also in the process of finishing off a new arena just down the street and has already taken to call it the Intuit Dome.
What do your intuitions tell you about all this?
More local history of namecalling for those who’ve stayed true and others who can’t:
= Dodger Stadium: So far, holding steady with sketch logos only on the field, not the park.
= L.A. Memorial Coliseum: It tried in 2019 to do a deal, and failed to get its name change as it wanted.
= Angel Stadium: There are bozos at ESPN (let’s be specific, Chris Berman) who still refer to the Angels’ home as “The Ed,” after Edison Field, which is what it was called during Disney ownership of the team. The Angels won their one and only World Series title in 2002 under that name. It then dropped the sponsorship in ’03 when Artie Moreno took over. We’ll still call it the Big A – a name given to it by the late sportswriter Bud Furillo – until another sponsor steps in, likely when new ownership happens in the near future. Minute Maid Field in Orange County seems at least somewhat congruent.
= Honda Center: For the NHL Ducks, since ’06. It made far more sense when it came into being as was Arrowhead Pond of Anaheim, aka “The Pond.” A missed opportunity to keep it that way.
= Banc of California Stadium: On the plot of land formerly containing the non-sponsored L.A. Sports Arena, it will be known in the history books as the place where LAFC not only called home since its creation but just won its first Major League Soccer title.
It is on schedule for a name modification as well.
Banc of California once signed a 15-year, $100-million deal as the building’s title sponsor when it opened in 2018. But it has bailed out just two years in. It was obviously on shaky ground from the start, but mostly ignored. In ’17, a former bank exec filed a lawsuit against the company with many outrageous claims. Pay no attention to those shenanigans. Banc of California has since been involved in investigations and suits regarding hedge funds and other messiness.
Didn’t see that coming?
= SoFi Stadium: L.A.’s biggest and shiniest new facility, for the NFL’s Rams and Chargers, sold its soul to a San Francisco-based personal finance company and online bank for a deal reported to be covering $600 million through 2040. Is it a fly-by-night organization or one in for the long haul? Who can check their financials?
= Farmer’s Field: Never happened and probably won’t. A stadium in downtown L.A. that would be called this after an insurance company was proposed between 2010 and 2015. Farmers signed up for a 30-year, $700 deal, which could have gone up to $1 billion if two NFL teams moved into the imaginary place next to the L.A. Convention Center. Nothing happened. But we noticed our insurance rates started spiking at the time. We were not pleased and switched carriers (again, the Al Michaels Theory kicks into our head). Even thought Farmers didn’t pay any of it since the project failed to materialize, we haven’t turned back.
= Dignity Health Park: The other MLS team in town, the Galaxy, has played in a quaint little Carson facility (that also briefly housed the NFL’s Chargers) that has tried to stay healthy by IDing itself with this new partner since 2018. It opened up in 2003 first aligned with a hardware store (Home Depot Center) and then 10 years later cashed out to be with a ticket broker (StubHub Center). Any number of title sponsors could come in the next decade, depending if the field doesn’t eventually sink into the landfill below it. Waste Management may be waiting in the wings.
Then there’s the current curious situation in the same neighborhood of South Park concerning what we call the home base of the Lakers, Kings, Sparks and (for now) Clippers.
Staples, the office company that we gave little thought to much before all this, bought the original title rights when the place opened in 1999 – a 20-year commitment for $116 million. Then it became known as a “lifetime deal” during an extension in 2009.
Then, “lifetime” meant nothing.
Enter Crypto.com, a cryptocurrency platform that sold itself to the arena ownership team of Anschutz Entertainment Group (which has also been through this song and partner dance with the Galaxy’s home field). It introduced itself by offering a $700 million, 20-year deal, starting on Christmas Day 2021. Much of that payment was front loaded — taking some risk out of it for AEG — according to sources.
A present to the city? We were hoping for a gift card to Staples.
“This partnership is about the future,” AEG president and CEO Dan Beckerman said in a statement. “AEG and Crypto.com not only share a vision about innovation and the future of sports and entertainment, but we also have a shared commitment to our communities where we work and live. We look forward to partnering with Crypto.com to create meaningful initiatives to bring that vision to life in the years to come.”
Share with us how that vision will be paid for? With some Monopoly money that we’ve been using to push our SoFi account balance out of the red? Pretend we all have pretend money. How does this work when we pay $16 for a Big Mac inside the arena to go with the $12 small fries?
Looking forward, this could pay off handsomely for those who have stock in all this. Or it could go bust. Stapled shut with some court documents never to be talked about again.
We still have this vision of Milton Waddams in “Office Space” wandering around the building asking for the red stapler someone took from him. He threatened to burn down the place if someone didn’t cop to it. If he waited long enough, the place might just self-implode.
Don’t mean to sound cryptic here, but with all happening in South Miami, what are the odds of this all going south in Southern California? Follow the money, for what is visible and invisible.
But who takes the time to learn from history these days when the potential fame and fortune clouds so many judgements? Someone make up an NFT with that phrase on it.