UFC continues to bet big on cryptocurrencies despite market downturn
The Ultimate Fighting Championships is no stranger to cryptocurrencies and companies using blockchain technology.
Last month, the leading mixed martial arts organization announced a marketing partnership with VeChain, the public network used in various supply chains. The deal, which makes VeChain the “official layer-1 blockchain partner” of the UFC, is reportedly valued at nearly $100 million.
As part of the agreement, VeChain, which has international offices in nine countries, including the United States, Singapore, Ireland, Italy and France, will be highlighted and integrated into events and live broadcasts. of the UFC, as well as promoted in the original content on social networks. media. VeChain will also feature in the official fighter rankings, as well as the Performance Institute and APEX.
“VeChain is a globally recognized leader in blockchain technology, and we couldn’t be happier to welcome them as an official UFC marketing partner,” said Paul Asencio, UFC Senior Vice President of Global Partnerships. , in the official press release.
“VeChain’s expertise in using real-world blockchain applications to help the public and private sectors achieve their carbon neutrality goals is an effort we are proud to support. We look forward to working with VeChain to leverage the global popularity of UFC to promote a positive message that blockchain technology can be used to protect our environment for future generations.
VeChain made its Octagon debut at UFC 275 in Singapore, one of the first numbered Pay-Per-View events to take place in Southeast Asia, and has since featured prominently on subsequent broadcasts .
Nonetheless, UFC’s new partnership with VeChain – a partnership announced during a major crypto market downturn that saw the industry lose over $2 trillion in value – marks the organization’s latest deal. MMA is a cryptocurrency or blockchain related company. The crypto sector has been a huge boon for the UFC, which has managed to land several lucrative deals and opportunities in what is quickly becoming the hottest category among sports sponsors.
NFTs, Fan Tokens and Blockchains
UFC first dabbled in the blockchain space in 2020 when it partnered with Dapper Labs to create Video Moments Non-Fungible Tokens (NFTs). The project launched in January as UFC Strike, a line of collectibles that reached $8.5 million in sales volume in the six months since its launch.
The UFC continued to forge its way into the crypto space in 2021, reportedly filed several trademark applications indicating its intention to launch a UFC-branded cryptocurrency, as well as an application allowing users to manage NFTs and other digital assets.
The MMA organization then partnered with Chiliz, a leading digital currency and blockchain provider for the sports and entertainment industries, in May 2021, and announced plans to launch a $UFC fan token. on the Socios.com fan engagement and rewards platform. Those who purchase the tokens will receive exclusive content on Socios.com, including fan voting, VIP rewards, exclusive promotions, AR-enabled features, chat rooms, games, and contests.
“We are continually looking for ways to increase engagement with our fans,” said Tracey Bleczinski, Senior Vice President, UFC Global Consumer Products. “The UFC has over 625 million fans worldwide, and Fan Tokens are a unique way to connect with them through a compelling and authentic product that brings them closer to the UFC and empowers them. while rewarding their passion for the sport.”
In July 2021, UFC announced a long-term partnership with Crypto.com, one of the fastest growing crypto exchanges in the world. Worth $175 million over 10 years, the deal elevated Crypto.com to the status of the UFC’s first-ever “Global Official Fight Kit Partner”, allowing the crypto platform to display its mark on UFC fight kits worn by fighters and fellow corners during competition.
Crypto.com’s investment in the UFC marked its latest foray into the sports industry. The platform has spent over $1.4 billion on sports sponsorship deals across Formula 1, hockey, basketball, soccer, MMA and esports, including fees of $700 million to rename the Staples Center, home of the LA Lakers, to the Crypto.com arena.
Crypto.com has also expanded its partnership with the UFC to include a cryptocurrency “fan bonus” to its pay-per-view events. The crypto exchange will be handing out $60,000 in bitcoins to fighters that fans voted as the most deserving of the prize. The highest vote gets $30,000 in bitcoins, with $20,000 for second place and $10,000 for third.
The bitcoin bonuses join the two $50,000 performance bonuses the UFC hands out at each event, as well as the two $50,000 “Fight of the Night” bonuses awarded to each athlete in the fight.
Most recently, the UFC and DraftKings announced plans to release UFC-focused “gamified digital collectibles.” According to the official press release, “DraftKings Marketplace will have access to fighter IP from over 500 different athletes on the UFC’s active roster from which to choose to build the Reignmakers UFC Collection” as part of the new agreement. .
The NFT-based game is expected to go live later this year.
With UFC’s now-expanding list of blockchain assets and sponsorships, it’s obvious the organization is betting big on crypto. However, with the influx of referral dollars comes a variety of concerns, including the potential exploitation of gullible fans through digital assets and tokenization, especially amid the current market downturn.
Last month, Bitcoin and other cryptocurrencies fell sharply as investors dumped risky assets on rising inflation, rising interest rates and other macro factors.
Bitcoin has plunged over 50% this year and currently sits around $20,000. The world’s most popular cryptocurrency has lost over 75% of its value since hitting an all-time high of around $69,000 in November 2021.
The crypto meltdown has since rocked the rest of the market, with the overall market capitalization of crypto assets falling to less than $1 trillion from its peak of $3 trillion in November 2021.
The current bear market has also had an impact on NFTs, with sales hitting a 12-month low following the crypto crash. NFT’s sales totaled just over $1 billion in June, which is significantly deflated from its high of $12.6 billion in January. Even an attempt to sell an NFT of Twitter co-founder Jack Dorsey’s first tweet, originally bought for $2.9 million, was dropped after bids hit $14,000.
Given the millions invested in promoting crypto – often with celebrity endorsements – legal action after the crash was inevitable. Boxer Floyd Mayweather Jr. is among those prosecuted for alleged false statements promoting crypto miner EthereumMax.
Mayweather isn’t the only celebrity promoting cryptocurrency in exchange for big payouts. Matt Damon appeared on a Crypto.com commercial telling viewers that “fortune smiles on the brave” when investing in crypto. Those listening to the A-list actor at the time would likely have lost a significant portion of their investment.
This brings us back to UFC, the entity that encourages its fans to invest in NFTs, fan tokens, while advertising crypto exchanges such as Crypto.com. For the UFC, its alliance with crypto entities has helped the organization increase profits through sponsorships and fan spending while containing costs. This likely takes into account the recent revelation that the UFC now generates over $1 billion in revenue per year.
Nevertheless, while the UFC remains focused on its results, its decision to promote cryptocurrencies and blockchain technologies during a stock market crash raises various concerns. At best, it’s an easy money grab; at worst, they are exploitative marketing practices targeting the organization’s own gullible audience.