Speaker 1: This is Bloomberg Crypto Daily Bloomberg I heart podcast, and
Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News.
Speaker 1: It's Monday, November seven. Hey, my name's Moses and I'm
Speaker 1: one of the producers on the Bloomberg Crypto Podcast. Today's
Speaker 1: episode is all about Formula one or F one. For sure,
Speaker 1: F one is all about speed, innovation and engineering, so
Speaker 1: perhaps it's no surprise the crypto is emerging as one
Speaker 1: of the biggest sponsors of F one. Companies ranging from
Speaker 1: FDx to Crypto dot Com have spent millions of dollars
Speaker 1: on flashy deals, and around of F one teams have
Speaker 1: at least one crypto partner, Crypto dot com even as
Speaker 1: a one hundred million dollar deal with the Formula one
Speaker 1: creup itself. But in this current market, how long can
Speaker 1: crypto firms keep splashing the cash? And is it even
Speaker 1: worth it? Bloomberg Senior editor Anna Era, there's so much
Speaker 1: talking crypto about utility, right, do we actually need crypto?
Speaker 1: What is it for aside from trading? And Bloomberg crypto
Speaker 1: blogger Emmy Nicole and met a fan at the Silvis
Speaker 1: and GP in the UK over the summer, who spent
Speaker 1: more than twenty thousand tokens on being able to go
Speaker 1: to the race with a Asta Martin like v I
Speaker 1: p experience here today to discuss the future of cryptos
Speaker 1: fast cast sponsorships. Hi, Emily, thank you for joining me today.
Speaker 1: Thanks for having me. So we're going to chat about
Speaker 1: your story, which was a long one in the making.
Speaker 1: You did a lot of reporting for it. Um can
Speaker 1: you start off by giving us a sense and setting
Speaker 1: the context for what's going on with Formula one in
Speaker 1: crypto companies. If you're somebody who watches Formula One like
Speaker 1: I was, I discovered it like many other people through
Speaker 1: the Netflix show Drive to Survive, which probably to a
Speaker 1: Formula one fan is like heresy to say, but anyway,
Speaker 1: that's how I found it. Hit Netflix show Drive to
Speaker 1: Survive has brought Formula one Racing to a huge new audience,
Speaker 1: particularly in the US, weaving together the sports, fierce rivalries
Speaker 1: and electrifying accident And I realized through watching through the
Speaker 1: seasons like since to sev onwards, that we were seeing
Speaker 1: more and more crypto names pop up. With each season.
Speaker 1: You were seeing more and more companies appearing on cars
Speaker 1: appearing on uniforms, and I was like, they were definitely
Speaker 1: rising as a brand in the race for sure. And
Speaker 1: what piqued my interest about it is because Formula one
Speaker 1: is a sport where it costs a lot of money
Speaker 1: to be a sponsor. It's something that costs way more
Speaker 1: than any other sport pretty much. It's one of the
Speaker 1: pricest things to do. And so as crypto companies started
Speaker 1: to kind of accrue wealth as the ball market really
Speaker 1: set in, they kind of spent the early days of
Speaker 1: the bare market building up some of that wealthy one
Speaker 1: was the year they could really spend. This was obviously
Speaker 1: like a really big way to make a splash, to say, Okay,
Speaker 1: we've got a Formula one sponsorship. I'm going to sponsor
Speaker 1: my favorite team, or I'm gonna sponsor this Grand Prix
Speaker 1: and get the title rights. And we've seen hundreds of
Speaker 1: millions of dollars spent on this race. Now, obviously that
Speaker 1: was the ball market and that was then. Today the
Speaker 1: situation is quite different for crypto companies than the crypto markets.
Speaker 1: So how has that sort of changed with regards to
Speaker 1: Formula One. We've definitely seen fewer sponsors. I think making
Speaker 1: a big splash. There have still been some for sure,
Speaker 1: because I think especially with sponsorships in sport we've done.
Speaker 1: We've kind of talked about this before on the podcast
Speaker 1: as well, but it's the kind of thing where there's
Speaker 1: like a little bit of a hangover because these deals
Speaker 1: are signed, and they're signed for many years in one
Speaker 1: and they'll pay for it all up front on occasions,
Speaker 1: so you kind of get all the all the money
Speaker 1: and one go. Um. And so this is something that
Speaker 1: like you might even see crypto names hang around for
Speaker 1: a while and they're they're not really contributing or having
Speaker 1: a great time in the markets. But there's definitely been
Speaker 1: a bit more reticence among crypto companies to consider how
Speaker 1: they're spending their money and where um. And so some
Speaker 1: companies like FTX, which sponsors the Mercedes team, said things like, well,
Speaker 1: you know, we want to value these things on an
Speaker 1: annual basis to really get an idea of like what
Speaker 1: this is costing us and how much it's benefiting us
Speaker 1: going forward. And how has sort of regulation affected crypto
Speaker 1: sponsorships of Formula one. I think the situation change have
Speaker 1: changed a bit with the single poregram pre yeah. I
Speaker 1: think this was the year that rules around advertising crypto
Speaker 1: really started to kick in because that was an easy
Speaker 1: thing for regulators to do, right. Financial promotions are pretty
Speaker 1: like pretty standard laws as they come, and so adding
Speaker 1: crypto to the basket of high risk investments was an
Speaker 1: easy thing to do, and that made it more difficult
Speaker 1: for sponsors to be able to say with certainty, oh yeah,
Speaker 1: I'll be able to display my logo at France Grand Prix,
Speaker 1: and I'll be able to do it in Italy, and
Speaker 1: I'll be able to do it in Singapore. Um, And
Speaker 1: so that meant that there was like some negotiations had
Speaker 1: to be made or some changes had to be made
Speaker 1: depending on the location. So in France you didn't see
Speaker 1: any crypto sponsors kind of around the track or sometimes
Speaker 1: even they dropped off the uniforms in the cars. In
Speaker 1: Singapore it was just on uniforms and cars and not
Speaker 1: around the track, which for one team in particular McLaren,
Speaker 1: they chose them to cover their car in their crypto
Speaker 1: sponsor Okay exp for Singapore because that was the one
Speaker 1: place they could put it. Have These sponsorships actually helped
Speaker 1: crypto companies like what has been the return on investment,
Speaker 1: they're super prisy. Um did they help them get more customers?
Speaker 1: And does that actually even matter these days when you
Speaker 1: know volumes have dropped if you're an exchange, like you know,
Speaker 1: should they should? I mean, I know it's not for
Speaker 1: you to, I guess say, but would have been wiser
Speaker 1: to maybe keep the money in there and their carfs?
Speaker 1: Are we talking about companies that have so much money
Speaker 1: anyways that it kind of doesn't really matter. It's not
Speaker 1: maybe the types of crypto firms that would have gone down,
Speaker 1: it's like really the big big players. Yeah, I think
Speaker 1: definitely in the earlier days, the crypto sponsors that were
Speaker 1: getting involved in F one may have been companies you
Speaker 1: hadn't really heard of. So we've definitely had a few
Speaker 1: crypto sponsors over the years appear enough one and then
Speaker 1: quietly drop away from F one um and not really
Speaker 1: much explanation was providing. If I would say those names
Speaker 1: to you now, you wouldn't really recognize them as companies
Speaker 1: like bit to you for example, which was a Turkish exchange,
Speaker 1: which really isn't on many people's radar anymore. That they
Speaker 1: were McLaren's first crypto sponsor and I think that was
Speaker 1: one of the teams that was the first sign of
Speaker 1: crypto sponsor ever for Formula one UM. Now they have
Speaker 1: Crypto Exchange okay X, which told me that since doing
Speaker 1: the deal, there's definitely been like, you know, a bit
Speaker 1: of an uptick overall this year, they've had their revenues
Speaker 1: go up, and the deal with mccaren is a big
Speaker 1: step forward in that UM and FDx they said that
Speaker 1: there has been a noticeable increase in new customers since,
Speaker 1: and I think just getting on people's radar is important.
Speaker 1: But the appeal of F one is that not only
Speaker 1: is it an expensive support sponsor, it's an expensive support
Speaker 1: to be a fan of. It's really expensive to get
Speaker 1: tickets if you can manage it at all. If you
Speaker 1: want to go to a race that's not the one
Speaker 1: in your hometown, you're going to have to pay for
Speaker 1: international travels. That's really expensive too, And even just to
Speaker 1: watch it on your TV is really expensive because branding
Speaker 1: rights and well sorry, broadcasting rights for everyone UM are
Speaker 1: like highly competitive, and TV channels will pay lots of
Speaker 1: money to be able to broadcast F one. So either
Speaker 1: you're going to go down to your local pub or
Speaker 1: bar and watch it there, or you're going to pay
Speaker 1: for that kind of exclusive streaming access to watch Formula
Speaker 1: one live. All of that means that crypto companies are
Speaker 1: able to tap into a slightly wealthier set of buyers
Speaker 1: or clients. Um, they're also able to do things like
Speaker 1: maybe reach a younger set. Since the advent of Netflix,
Speaker 1: it's definitely broadening out the age range and appeal of
Speaker 1: f one. Do you think I mean that it's just
Speaker 1: about the types of fans that they can engage, or
Speaker 1: it's just even getting a sense for themselves so feeling
Speaker 1: more like we've made it, you know, like going for
Speaker 1: these big like like marquee deals, Like is it is
Speaker 1: it really necessary? I definitely think it's a bit of both, right, Like,
Speaker 1: so yes, there is maybe a wealthier fan than you
Speaker 1: can access. And then also we've made it because we
Speaker 1: can take our clients to like some flashy race and
Speaker 1: you know, really like treat them and drops them up
Speaker 1: to the dines um. But also I think like one
Speaker 1: thing that I would I wrote throughout the piece was
Speaker 1: that it's like this has become a bit of a
Speaker 1: status symbol and crypto, you know, like being able to
Speaker 1: say that you're one of the top companies that has
Speaker 1: a sponsorship with Matt Damon, or you have an F
Speaker 1: one sponsor, or, you sponsor, you have your name on
Speaker 1: the top of a a football stadium or a basketball stadium.
Speaker 1: These are all like landmark things that some of the
Speaker 1: crypto industry's biggest companies are now chasing and saying, oh,
Speaker 1: we have this, and now more than ever, it's almost
Speaker 1: even more important because if we take crypto dot Com
Speaker 1: as an example, anecdotically anyway, they are probably the biggest
Speaker 1: spender on sports sponsorships. They've spent hundreds of millions of
Speaker 1: dollars across different sports, but Formula one is one of
Speaker 1: their biggest ones, is one of their first sponsors as well. Um,
Speaker 1: they've really tried to make their stamp on that and
Speaker 1: this year for crypto dot Com has been pretty difficult,
Speaker 1: so having that to fall back on has been really
Speaker 1: good for them. I think in terms of image, they
Speaker 1: can say things like, Okay, so you saw that headline
Speaker 1: that says we laid off a bunch of staff, but
Speaker 1: look our names on top of the Miami GP, so
Speaker 1: things can't be all that bad. Did you get a
Speaker 1: sense of whether they pre paid for them, or that
Speaker 1: a lot of these still have to be paid. I
Speaker 1: think they. So there's there's definitely like a when you
Speaker 1: speak to teams anyway. So like I spoke to Zach Brown,
Speaker 1: who's the CEO of McLaren Racing and he drives the
Speaker 1: team there. Um, they are definitely conducting more due diligence
Speaker 1: than they might have done in the past. So they're
Speaker 1: keen to make sure that the companies they do deals
Speaker 1: with can afford it that they're good for it. They're
Speaker 1: probably going to keep the payments going if they don't
Speaker 1: even pay up front in the beginning, which I think
Speaker 1: some might. Um, we have heard reports of other script
Speaker 1: re sponsor in the past who maybe didn't make all
Speaker 1: the payments they were meant to and then that sponsor
Speaker 1: quickly went away. And even speaking to marketing experts who
Speaker 1: do these kinds of deals for Formula One teams, they
Speaker 1: say things like, well, you know, if you stop paying,
Speaker 1: it's pretty common enough one to just drop a sponsor
Speaker 1: at the drop of the hat, and you'll it won't
Speaker 1: be until you know, we see the cars unveiled in
Speaker 1: mid February next year that we'll really see who was
Speaker 1: able to continue holding onto that sponsorship from this year
Speaker 1: to next. We'll be right back with more from Bloomberg
Speaker 1: crypto blogger Emily Nicole. So we also heard about sort
Speaker 1: of crypto fan tokens for F one teams as well
Speaker 1: as n f T s. What's going on with that that? Actually?
Speaker 1: Did anything actually happen? Quite a few teams have launched
Speaker 1: n f T collections and quite a few teams have
Speaker 1: fan tokens. Not all teams though, so it's worth noting that,
Speaker 1: you know, some teams are being more cautious. But for
Speaker 1: those that I don't know what a fan token is,
Speaker 1: it is a crypto asset like it's a tradeable thing,
Speaker 1: but it's something that is tied to a team and
Speaker 1: generally can be earned. There's a bit like a reward
Speaker 1: or a loyalty point. So there are certain teams that,
Speaker 1: for example, don't make their Formula one to trade team
Speaker 1: tokens tradeable on next Exchange. You can only earn them
Speaker 1: with the provider that makes the token. You can earn
Speaker 1: them through engaging in the app, doing things like voting
Speaker 1: on someone's helmet or participating in a poll um and
Speaker 1: then you can spend those tokens on things. So I
Speaker 1: met a fan at the Silverson GP in the UK
Speaker 1: over the summer who spent more than twenty thousand tokens
Speaker 1: on being able to go to the race with a
Speaker 1: Asta Martin like v I p X experience. UM. But
Speaker 1: that didn't cost him any money. He earned all those
Speaker 1: tokens through engaging in the app for probably a very
Speaker 1: long time, UM, And that's how he did it. That's
Speaker 1: not to say that fan tokens aren't like that homogeneously though.
Speaker 1: Everywhere in football, for example, it's been very controversial that
Speaker 1: fan tokens are tradeable and excelling exchanges, and so their
Speaker 1: price fluctuates. And what's been happening as they gain more
Speaker 1: steam and more people are buying them is actually it's
Speaker 1: become a way to bet on a team's performance. You know,
Speaker 1: you think they're going to win a game, you probably
Speaker 1: think the prices token is going to go up, so
Speaker 1: maybe you buy some when it's lower. Similarly, I think
Speaker 1: they're gonna lose a game, it'll go down. UM. And
Speaker 1: that's been quite concerning for regulator as well, thinking about,
Speaker 1: you know, whether the fantokens should be considered as akin
Speaker 1: to sports bedding and gambling or financial instruments. So you know,
Speaker 1: you met a real life fan who used a real
Speaker 1: life token, Like what was the sense you got from
Speaker 1: that person? Like they found it worthwhile? They must have
Speaker 1: been pretty excited to be there. Like, you know, because
Speaker 1: there's so much talking crypto about utility, right, do we
Speaker 1: actually need crypto? What is it for aside from trading?
Speaker 1: And it seems in this case like some at least
Speaker 1: one guy got to go to watch a race, even
Speaker 1: though maybe he had to spend like a million hours
Speaker 1: on his phone but playing with an app. But you know,
Speaker 1: it might have been worth it. He might not have
Speaker 1: been able to. I don't even know if you can
Speaker 1: buy tickets for the v i P experience, So you know,
Speaker 1: what was the sense you got? I think you probably
Speaker 1: could buy tickets if you had a lot of money, Okay, yeah, yeah, yeah,
Speaker 1: I know. Yeah, but even for like a base ticket
Speaker 1: for for example, it's like three hundred pounds, I think
Speaker 1: if you're able to get in in the very like
Speaker 1: initial drops um And for him, he was like this
Speaker 1: is a once in a lifetime thing, like to be
Speaker 1: able to do it at this level of like v
Speaker 1: i P access and see all these people, see these teams.
Speaker 1: The seats, by the way, they were pretty like standard,
Speaker 1: but you know, the bit of all of the nice
Speaker 1: stuff around the day was really great. And so for him,
Speaker 1: he was like I would never normally get this opportunity.
Speaker 1: And the race was on a Sunday, and he got
Speaker 1: access to the ticket on like the Friday afternoon, like
Speaker 1: it was like a last minute thing. Oh, I can
Speaker 1: spend my focus if I want to go and see
Speaker 1: this race and be able to participate with a team
Speaker 1: that he supports UM in a way that he wouldn't
Speaker 1: have had access to normally. And so I'm not normally
Speaker 1: like the crypto advocate UM, but in this instance it
Speaker 1: was like a really great opportunity for this guy. And
Speaker 1: as long as there's I think, like mystigating measures on,
Speaker 1: you know, like if you're having to invest real money
Speaker 1: and this stuff, then then that's always going to be
Speaker 1: a benefit, right, especially to have one teams who are
Speaker 1: just thinking of ways like how can I re engage
Speaker 1: with my fan, how can I re engage with consumers
Speaker 1: in a way that benefits us as a team, benefits
Speaker 1: us as an industry, but also comes with relatively low risk.
Speaker 1: So now I want you to take out your crystal ball,
Speaker 1: which I know like during this love doing being addressed myself.
Speaker 1: But what what do you what do you think is
Speaker 1: going to happen in the next few months? What are
Speaker 1: we going to see? Are going to see more like
Speaker 1: beachy type which is a weird name to say, but
Speaker 1: um type sort of pull outs? Will we see more sponsorships?
Speaker 1: Like what was the sense you got? Because you I
Speaker 1: mean you you ended this like you published a story
Speaker 1: quite recently, so you know, but you started reporting it.
Speaker 1: I guess was it still bullmarket days when you started
Speaker 1: reporting it or no, it was okay, so it was
Speaker 1: always during the crash, okay, so yeah, so it wasn't
Speaker 1: looking all great, but maybe they weren't quite up to
Speaker 1: speed with what was going to happen. But you know, what,
Speaker 1: what do you think is next? I think that I mean,
Speaker 1: one person I spoke to who helps arrange these sorts
Speaker 1: of deals predicted that probably at least two of the
Speaker 1: crypto sponsors that we have now across the I think
Speaker 1: it's something like eight or nine F one teams that
Speaker 1: have sponsor to the minute in crypto, and we'll probably
Speaker 1: drop off for next year. I know who will they be. UM.
Speaker 1: But that said, that doesn't mean that I think especially
Speaker 1: certain teams have learned the hard way about doing a
Speaker 1: deal with a sponsoring industry that can be as volatile
Speaker 1: as crypto and so hopefully this year when they were
Speaker 1: signing them, they would have been a lot more homework
Speaker 1: done so like McLaren for example with Okay, because they
Speaker 1: had that deal approved by a fifteen person strong external
Speaker 1: advisory board before they would say yes to having another
Speaker 1: crypto exchange as a sponsor. There's definitely been a bit
Speaker 1: of a learning curve. But if one teams anywhere a
Speaker 1: kind of getting there with the idea that you know,
Speaker 1: if we have a big sponsor, we need to make
Speaker 1: sure they're good for the money. UM. But as I
Speaker 1: kind of said earlier, there's always going to be that
Speaker 1: kind of like natural turnover that happens, and enough one.
Speaker 1: They've always been pretty quick to replace you if you're
Speaker 1: not long no longer serving their needs. All right, Thank you, Emily,
Speaker 1: thanks for having me. You can find more of Emily
Speaker 1: Nichole's reporting on the Bloomberg Terminal on Bloomberg dot com
Speaker 1: and on Twitter at Emily J. Nicole, at E. M.
Speaker 1: I L Y J N I C O L L E.
Speaker 1: On the next episode of Bloomberg Crypto. How did a
Speaker 1: Florida citrus farmer named William John Howie end up being
Speaker 1: one of the most important men in crypto even though
Speaker 1: he died. Why are companies like Ripple fighting the sec
Speaker 1: over something known as the Howie Test? The stakes are high,
Speaker 1: as they always are somehow when Florida is involved. Tune
Speaker 1: in tomorrow for the juice. This is Bloomberg Crypto, a
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Speaker 1: at Crypto. The supervising producer of Oberg Crypto is Vicky Verglina.
Speaker 1: Our senior producer is Janet Babin. Our producers are Mohammed
Speaker 1: Faruk and Sharon Barriro. Our associate producers are Ty Butler
Speaker 1: and Moses on Them. Desta wonder At is our engineer.
Speaker 1: Original music by Leo Sidron. I'm Stacy Marie Schmal. We'll
Speaker 1: be back tomorrow,