Scuderia Ferrari, the luxury car manufacturer’s racing division, contacted several teams for racing Formula One to terminate collaborations with their sponsors in the crypto space.
Ferrari quits its multi-year collaboration contracts with Snapdragon (a chip manufacturing platform) and Velas Blockchain. This resulted in a loss of up to $55 million for the Italy-based team in advance of the season 2023.
Ferrari Ends Links with Its Sponsors in Crypto Sector before 2023 Season
During 2021, the collaboration between Ferra and Velas witnessed a $30M per-year allocation while targeting the escalating fan involvement via non-fungible tokens (NFTs) as well as the rest of the initiatives. Nonetheless, the team was not complying with the clauses that allow Velas to develop NFT images, as per RacingNews365.
Back in November 2022, Mercedes additionally witnessed a huge loss of nearly $15M following the suspension of its collaboration with FTX.
The collaboration broke as the crypto exchange filed a Chapter bankruptcy application. Another participation between Red Bull and Tezos Foundation additionally went through analogous consequences as the blockchain firm reportedly determined not to renovate its contract.
While taking this decision, it referred to the strategy misalignment.
The CEO and team chief of the Mercedes-AMG Petronas F1 Team, Toto Wolff, cautioned that the rest of the teams could also experience such consequences. Nevertheless, the connection between F1 as well as the rest of the crypto ecosystem is spreading beyond collaborations.
In October 2022, a trademark application for ‘F1’ was filed by Formula One. It disclosed its strategy to organize an online marketplace.
The marketplace would cover the products like non-fungible tokens (NFTs), crypto-collectibles, digital collectibles, meta tokens, and crypto.
Amid the growing bear market in the crypto world, the projects within the Web3 sector have occupied a significant position to fortify fan engagement as well as the span of sports leagues. Formerly in 2022, a report was published by Deloitte on the overall condition of the sports industry.
In that report, the platform anticipated that an elevation in the start of the digital and real worlds would take place. In addition to this, it also predicted a remarkable growth in the markets dealing with immersive technologies such as non-fungible tokens (NFTs).
According to the reports, the deficiency in the easy-to-use forums has turned out to be the topmost trouble hindering the mainstream adoption of the tech sector.
Alex Alexandrov, an entrepreneur, established Velas back in 2019. It is a chain compatible with Ethereum Virtual Machine (EVM) and asserts to process 75,000 transfers every second.
The grand popularity and profits of the crypto firms grasped the attention of the rich audience of F1. In September, more than eighty percent of the teams of F1 had crypto-related sponsorships. Formula One Group locked a contract of up to $100 million with Crypto.com.
2022’s Crypto Collapses Slow down Linkage between Crypto and Sports Sectors
However, many contracts turned out to be unfruitful following the enormous crashes in which up to $2T worth of market capitalization in the crypto sector vanished. Crypto.com and Coinbase consequently cut their staffs to a significant extent as the macroeconomic scenario became unsupportive of the industry’s advancement.
A strong role in all this was played by the continuously declining investor interest that endangered the important revenue flows. In November 2022, Crypto.com abandoned a deal of $495M for the sponsorship of the UEFA Champions League (Europe’s flagship competition between football clubs).