Cryptocurrencies have crashed in value since late last year, and the fallout is impacting sports sponsorships.

Two high-profile deals between teams and crypto exchanges have reportedly fallen apart due to the value drop, according to the New York Post.

• In the past few weeks, FTX suspended talks with the Los Angeles Angels on a jersey patch deal.
• A patch deal between a crypto company and the Washington Wizards was also scuttled. With crypto companies spending heavily on lobbying, the Wizards, who play in the nation’s capital, are considered especially valuable real estate.

The prices of bitcoin and ethereum, the two most valuable cryptocurrencies, have respectively dropped by 69.1% and 76.7% since their November peaks.

Shopping Spree Stopped

The pullback comes after a period when crypto companies poured billions into sports sponsorships. 

FTX and Crypto.com both inked high-profile arena naming rights deals, with FTX securing the Miami Heat’s home in March 2021 in a 19-year, $135 million deal, and Crypto.com landing the arena of the Los Angeles Lakers, Clippers, Kings, and Sparks, in a reported 20-year, $700 million deal in November.

Crypto.com would reportedly have to pay $385 million to pull out of the naming rights deal.

In the 2021-22 NBA season, crypto companies jumped to the second-biggest spenders — with $100 million to $150 million in sponsorship deals — after placing 43rd the previous season.

New York’s mobile sports betting laws have forced gambling operators to cautiously watch spending on marketing and promotional offers to combat ongoing financial losses. 

New York got off to a hot start with an official handle that totaled more than $1.62 billion in January — topping the single-month record for any state despite only six mobile operators. 

A few of those operators, including DraftKings and Flutter Entertainment’s FanDuel, have requested New York legislators to change laws regarding current sports-betting tax rates. 

• Each operator is required to pay a 51% tax rate to the state for 10 years.
• The average sports-betting tax rate in the U.S. is 19%, per Morgan Stanley.

New York’s current tax rate for mobile sportsbooks has led to huge profits thanks to more than 20 million residents in the state, making it the largest online sports betting market in the U.S.

Gov. Kathy Hochul’s budget plan reportedly expects $357 million in sports betting tax revenue in FY2023.

Double Tax 

Operators in New York are also taking a step back due to promotion revenue that is taxed by the state, which has made it “untenable to run a business,” according to the Tax Foundation. 

As a Bloomberg report notes, if bettors receive and lose a free, promotional bet, it’s still counted as gross revenue for the sportsbook — even though no money changed hands.

The tax rate as a percentage of revenue could be more than 77%, including federal tax.

The cost of the 2020 Tokyo Olympics has fluctuated since the city was named the Games’ host, but on Tuesday, the organizing committee released its final number: $10.5 billion, or 1.42 trillion Japanese yen.

Tokyo was awarded the Games in 2013, and at that point, the bid committee initially projected total costs would land around $7.3 billion. In late 2019 — even before the games were postponed due to the pandemic — that estimate was pushed to $12.6 billion.

After the Games were postponed and then closed off to fans, organizers lost $800 million from ticket sales alone. One of the biggest bills was the construction of National Stadium, which cost $1.4 billion.

At the conclusion of the Games last year, organizers expected the total cost to be $15.4 billion, but lowered the number to $13.6 billion four months later.

The public paid about 55% in total expenses — around $7.1 billion in Japanese taxpayer money. 

• The organizing committee contributed $5.9 billion.
• The IOC covered $1.3 billion.
• Local sponsors spent $3.4 billion.

Exchange Rate

When looking at the final figure, it’s important to note the shift in the exchange rate between the yen and the U.S. dollar. Today, $1 buys about 135 yen. Last year, it bought roughly 110 yen.

Under the exchange rate about one year ago, the $10.5 billion number would have totaled around $13 billion. Leading up to the games, the organizers reportedly often used 107 as the exchange rate, which would total $13.3 billion as a final price tag.

Naomi Osaka is getting into show business.

The tennis star is launching media production company Hana Kuma with her agent Stuart Duguid, in partnership with LeBron James and Maverick Carter’s The SpringHill Company. 

The company, whose name means “flower bear” in Japanese, intends to produce:

• Scripted and unscripted television series
• Documentaries
• Anime
• Branded Content

Hana Kuma’s first named credit will come on a New York Times op-doc project on Patsy Mink, the first woman of color to be elected to Congress. It is also working on a project with Amazon-owned cable channel Epix. 

Evolving Portfolio

Hana Kuma is the latest venture from the 24-year-old, four-time Grand Slam champion.

Last month, she launched an agency, Evolve, with Duguid. The company signed Australian player Nick Kyrgios as its first client on Monday. She also has a skincare line, Kinlò, which launched in September and struck a distribution agreement with Walmart in April. 

Carter noted that The SpringHill Company is in talks with other star athletes about similar partnerships.

“Naomi can just plug into what we have built,” said Carter.

Osaka made $57 million last year, per Forbes, mostly through sponsorships including Nike, Beats by Dre, Nissan, and Mastercard.