Atlético’s economy suffers a new blow with the WhaleFin ‘crypto-fiasco’

taketonews

02/17/2023 at 09:35

TEC


The digital ‘trading’ platform, main sponsor of the rojiblanco team, with which it signed a five-year agreement (at a rate of 40 per course), is going through a serious crisis

On July 17, 2022, Enrique Cerezopresident of Atlético de Madrid, presented the sponsorship agreement with WhaleFin, the platform for trading digital by Amber Group. She did it accompanied by Michael Wu, CEO of Hong Kong-based cryptocurrency specialist company. “We started a new era to evolve and position ourselves at the forefront of the digital world,” Cerezo envisioned. “The rojiblancos fans will have a metaverse where they will collect digital products,” added Wu.

Barely a semester later, the ‘Atletiverse’ is about to hang the closed sign due to the crisis suffered by Amber Group, with whom Atlético had signed a five-year agreement to appear as ‘main sponsor’ in the rojiblanca shirt (discussed about its design). In the absence of official confirmation, WhaleFin will only have paid the payment for the first course: 42 million euros. The agreement far exceeded the 15 million that Plus 500 (digital broker), the previous sponsor, had paid in the four previous years.

The FTX, beginning of the end

The financial situation of Amber Group has deteriorated in recent months, in which the cryptocurrency sector has suffered a cascading decline after the bankruptcy of FTX, one of the most important platforms. The Bahamas-based company had managed to become a nominee sponsor of the Miami Dade Arenawhere the Heat (NBA) play and had reached million-dollar associations with top-level athletes such as Tom Brady.

As if the signs of risk were few, Atlético received the final one when in December Bloomberg reported that WhaleFin was no longer sponsoring Chelsea. Its parent, Amber Group, had just terminated half the staff at its headquarters. As in the case of the rojiblancos, the sponsorship agreement with the English club dated back to the summer. The breaking of the sponsorships of this platform is one more chapter within the barrage of agreements that have been established in recent years between sports and digital companies.

The massive association reproduces cycles like those that were signed with telecommunications companies in the early 2000s or more recently the network that had been woven with the betting houses. companies like Betway, associated with five LaLiga teams, were left out of the shirts after the regulations approved by the Council of Ministers that became effective in the 2021/2022 season. That caused a hole of about 90 million euros that was partly used by the digital economy.

Among the newcomers, the Turkish Bitci, who ended up sued by Espanyol after breaching the payment terms. He was also the main sponsor of, for example, the Baskonia of the ACB and that competes in the Euroleague. Given the comings and goings, why do top teams like Atlético or Chelsea bet on signing long-term sponsorships with companies like WhaleFin? “Because the soccer industry is short-sighted. They need the capital immediately, they don’t think about what will happen in six years,” he explains to THE SPANISH NEWSPAPERfrom the Prensa Ibérica group, Ivan Cabeza, professor at the Department of Economics and Business at the University of Barcelona and CEO of Unlock.

Until the bankruptcy of FTX, cryptocurrencies lived a golden moment, with investments of 2,400 million dollars and a horizon of 16,000 million in sports marketing by 2026. For Cabeza, a perfect storm has occurred. On the one hand, teams like Atlético de Madrid in need of immediate liquidity.

delicate economic situation

On the other, the ‘crypto’ world, made up of “projects that have made a lot of money in recent years starting from a zero valuation.” It should be remembered that the rojiblanca entity is going through a delicate economic situation that has dragged on since the summer, when it was unable to make important starts, something that it has simply patched up in winter (with starts like Joao Félix, on loan at Chelsea).

To this we must add the setback of the premature elimination of any European competition. The result is a hole around 50 million in an entity that this year has stayed for the entire final stretch of the season with the sole sporting objective of qualifying for the Champions League again. The ‘crypto fiasco’ with WhaleFin forces Atlético to look for another main sponsorwhich will arrive under less advantageous conditions due to the failure of this agreement, which weakens the brand.

“When you have the budget covered, you can consider plans for three or four years, when you have to comply with it, you simply weigh the amounts offered by one or another brand,” says Cabeza, who considers that failures like WhaleFin’s can be the end of a first era, “but You cannot generalize with all digital economy companies or put them in the same bag as cryptocurrency companies.because they will surely be very important in sponsorships”.

hard to chase

Although for this new stage, there must be changes in the cryptocurrency companies. “We are currently talking about decentralized companies, which are not constituted as commercial companies. Therefore, for a club, signing a five-year contract with such a legal entity is a risk. They are very difficult to chase. Associating with them also carries a reputational risk, because the most likely thing is that they comply with the contract”, explains the professor of economics at the University of Barcelona, anticipating failure before possible legal measures that Atlético may carry out for breach of contract.

For ‘crypto-active’ companies, the sports industry consumer is very attractive. Although they are different industries, some traits coincide with the customers of the bookmakers. “It is a sector where customers are fans, apostles of their brands, who have a sense of belonging“, describes Cabeza. Something similar happens with investors in cryptocurrencies, who usually fly the flag of the currencies in which they invest, using hashtags they put in their usernames.

Therefore, despite the blow, the economy based on the ‘blockchain’ is already rooted in the world clubs. Another sample are the token fans or the NFTs that have released practically all the teams, with the exception of Real Madrid, with a preserved sponsorship approachr which, in Cabeza’s opinion, will change due to the drag effect caused by the spiral of a sport in constant search for liquidity. Although this is an obstacle course through which you travel at full speed.



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