Here to Play, Here to Stay
Earlier this month, it was announced that the iconic Staples Center will be renamed Crypto.com Arena as of December 25, 2021, in connection with a 20-year naming-rights deal struck between the rapidly-growing cryptocurrency platform and AEG, which owns and operates the arena. This represents far more than the typical handoff from one sponsor to another as companies’ marketing strategies change and investment priorities shift. It is a cultural moment that deserves to be highlighted and dog-eared in the textbook of economic history that the next generation of business leaders is writing.
The deal is reportedly worth $700 million, giving it an annualized value of $35mm. That’s about 10x the average current annual spend on top-tier sports stadium sponsorships in the US. The location and history of Staples Center certainly demand a premium, but 10x rather than 2x or 3x indicates that crypto has come to play, and crypto is here to stay.
As a sports fan, a branding fan, and someone who studies human behavior, I find this moment equal parts confirmatory and cool. It’s confirmatory in a consumer-psychology context because it validates the need for sponsorships to have a degree of cultural currency. Many younger audiences know what Staples Center is, but do not actually know that Staples itself is an office-supply company that rose to category leadership by famously pressing the Easy button. That’s because, in 2021, it’s ridiculous to think of office supplies as a standalone category that one would shop as a consumer. “Staples Center” is cool because the Lakers, Beyonce, and The Weeknd grace its floors and stages. “Staples” is … well, not cool.
(The sense of confirmation comes from a local-economics context as well. AEG will reportedly use the majority of Crypto.com’s investment to reimagine and reinvent the experience of the new arena, which has become necessary in a world where digital delivery of sports to our homes and devices massively outstrips the value of the in-person experience. And, in a Los Angeles market where SoFi Stadium and the forthcoming Inglewood Intuit Dome are raising the bar on what live-event fans in Southern California will come to expect from the venues in their region, AEG doesn’t want to be an also-ran in the arms race.)
The amalgam of blockchain, cryptocurrency, NFTs – and the intrigue of created by a decentralized group of intelligent, provocative people all around the world disrupting the status quo of fiat currencies and entire macro economies with digital innovations – that’s where the next wave of cool is being created. Enter Crypto.com and its sponsorship. In a world where the NBA has an official cryptocurrency (Coinbase), an official marketplace (Top Shot) for virtual collectibles, and a host of all-star players who invest in rare NFTs, this is a move that makes total sense for the ownership group of an arena whose anchor tenet is the world-famous Los Angeles Lakers. You could even argue that, with this move, AEG is actually playing catch-up to the trend of decentralization that has swept what’s already the most modern and in-touch professional sports league in the world.
While it remains to be seen whether cryptocurrencies built on blockchain technology will have the kind of disruptive impact that PayPal once imagined it could have, there is no question that the virtualization of collectibles, the digitization of art, and the creation of new digital experiences using NFT technologies are trends that are here to stay. And while Lakers fans will probably still have to dish out US legal tender rather than Bitcoin or Ethereum to buy tickets after December 25, the cultural mainstreaming of crypto has taken a huge step forward with the timing, size, and duration of this new deal. I can’t wait to see, hear, and feel the experience improvements the investment brings – and see what branding moves come next between those who are building the future and those who need to modernize in order to survive in it.