The crypto revolution has lasted barely a year, after multimillion-dollar agreements almost all the brands in the sector have retreated due to different problems.
Just a few days ago the Sauber team announced a major sponsorship deal with Stake.com, an Australian cryptocurrency casino company. The announcement has been surprising, not only because of the large amount (100 million euros spread over three years), but also because it occurs at a time when the reputation and presence of the sector in Formula 1 is at a low point.
Audi has accepted a controversial sponsor, to say the least, so that the team is well financed in the transition time until it officially takes over in 2026. However, there are many risks in the decision.
The fact that the agreement lasts exactly the period that elapses from the start of the absorption process of the Swiss team by the brand with the four rings is no coincidence. Despite this, it is still a very high reputational risk for Audi to be linked to a company in the cryptocurrency sector. There are plenty of reasons for the general suspicion there is today.
Irreparable Damage
The Mercedes team, with Samuel Bankman-Fried’s fall from grace, has suffered much more at a reputational level than for the loss of the 27 million euros that, apparently, FTX contributed to the team’s coffers. When the issue of fraudulent inflation of its value, as well as the outright recklessness and illegality of many of its business operations were discovered, the damage to the team’s image had already been done.
Once the scandal broke out, team manager Toto Wolff’s effort to delete FTX logos on the bodies of the single-seaters were useless. When there are thousands of investors and savers ruined by a fraud that totally smacks of a Ponzi scheme, a company’s reputation will be called into question. Although Mercedes acted in good faith, it inadvertently advertised a fraud and, leveraging on its good image, contributed to project solidity to one of the shadiest business projects.
The Ferrari Case
When the phenomenon of encrypted virtual currencies and their derivatives such as NFTs were discussed, many saw smoke, or at least houses of cards ready to collapse. However, the speech was as seductive as it was powerful: Either you joined the ‘future’, or you stayed behind. And even the most exquisite teams when it comes to selecting their sponsors, such as Ferrari, fell into their networks.
The multimillion-dollar agreement of more than 40 million a year that united Velas with Ferrari did not last a year. Another warning to boaters like the Mercedes and FTX.
If everyone thought that crypto companies could be associated with companies as reputable as Mercedes, Ferrari or Red Bull because they were reliable businesses, misgivings would inevitably arise and, as a consequence, an inevitable drop in the value of a sponsorship. These are the dangers of playing with fire, even if it comes encrypted.
By Audy Castaneda
