UFC is still betting big on cryptocurrencies
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The Ultimate Fighting Championships is no stranger when it comes to cryptocurrencies and companies using blockchain technology.
Last month, the leading mixed martial arts organization announced a marketing partnership with VeChain, the public network utilized across different supply chains. The agreement, which enlists VeChain as the UFC’s “Official Layer 1 Blockchain Partner,” is reportedly valued at nearly $100 million.
As part of the deal, VeChain, which has international offices in nine countries including the United States, Singapore, Ireland, Italy and France, will be prominently featured and integrated into UFC live events and broadcasts, as well as promoted in original content across social media. VeChain will also be featured on the official fighter rankings, as well as at 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 Marketing Partner of UFC,” 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 sector achieve their carbon-neutral goals is an effort we are proud to support. We’re looking forward to working with VeChain to leverage UFC’s worldwide popularity to promote a positive message that blockchain technology can be used to protect our environment for future generations.”
VeChain debuted in the Octagon 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 shows.
Nevertheless, the UFC’s newfound partnership with VeChain—a partnership announced during a significant crypto market downturn that saw the industry lose more than $2 trillion in value—marks the latest agreement between the MMA organization and a cryptocurrency or blockchain-related company. The crypto sector has been a huge windfall for the UFC, which has managed to secure several lucrative deals and opportunities in what is quickly becoming the hottest category across sports sponsorships.
NFTs, Fan Tokens, and Blockchains
The UFC first got into the blockchain business in 2020 when it partnered with Dapper Labs to create non-fungible tokens (NFTs) of video moments. The project launched in January with the name UFC Strike, a line of collectables that’s reached $8.5 million in sales volume in the six-month period since it launched.
The UFC continued to burrow its way into the crypto space in 2021, reportedly filed several trademark applications indicating plans to launch a UFC-branded cryptocurrency, as well as an app for users to manage NFTs and other digital assets.
The MMA organization then partnered with Chiliz, a leading digital currency and blockchain provider for sports and entertainment industries, in May 2021, and announced plans to launch a $UFC Fan Token on fan engagement & rewards platform Socios.com. Those who purchase the tokens will be provided exclusive content on Socios.com, including fan voting, VIP rewards, exclusive promotions, AR-enabled features, chat forums, games and competitions.
“We are continually looking for ways to increase engagement with our fans,” said Tracey Bleczinski, Senior Vice President, UFC Global Consumer Products. “UFC has more than 625 million fans around the world, and Fan Tokens are a unique way to connect with them through a compelling, authentic product that brings them closer to UFC and gives them influence, while also rewarding their passion for the sport.”
By July 2021, the 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 UFC’s first-ever “global official fight kit partner,” which allowed the crypto platform to emblazon their branding on UFC fight kits worn by fighters and their corner people during competition.
Crypto.com’s investment in the UFC marked its latest foray into the sports industry. The platform spent more than $1.4 billion in sports sponsorship deals across Formula One, hockey, basketball, football, MMA and esports, including a $700 million fee 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 distribute $60,000 in bitcoin to the fighters whom fans voted on as the most deserving of the award. The top vote gets $30,000 worth of bitcoin, with $20,000 for second place, and $10,000 for third.
The bitcoin bonuses join the two $50,000 performance bonuses that UFC gives out at each event, plus the two $50,000 “Fight of the Night” bonuses awarded to each athlete in the bout.
Most recently, the UFC and DraftKings announced plans to launch “gamified digital collectibles” focused on the UFC. According to the official press release, “DraftKings Marketplace will have access to fighter IP from over 500 different athletes on the active UFC roster from which to choose to create the Reignmakers UFC collection” under the new agreement.
The NFT-based game is expected to go live later this year.
With the UFC’s now-extensive list of blockchain assets and sponsorships, it is evidently clear that the organization is betting big on crypto. However, the influx of sponsorship dollars comes with various concerns, including the potential exploitation of gullible fans through digital assets and tokenization, especially amidst the ongoing market downturn.
Last month, Bitcoin and other cryptocurrencies fell sharply as investors dumped risk assets in the wake of rising inflation, higher interest rates and other macroeconomic factors.
Bitcoin plunged more than 50 percent this year and is currently hovering at approximately $20,000. The world’s most popular cryptocurrency has shed more 75 percent of its value since hitting an all-time high of roughly $69,000 in November 2021.
The crypto collapse has since rocked the rest of the market, with the overall market capitalization of crypto assets having dropped to less than $1 trillion from its November 2021 peak of $3 trillion.
The current bear market has also impacted NFTs, as sales hit a 12-month low following the crypto crash. Sales of NFTs totalled just over $1bn in June, which is significantly deflated from its peak of $12.6bn in January. Even an attempt to sell an NFT of the first tweet by Twitter’s cofounder Jack Dorsey, first purchased for $2.9 million, was abandoned after bids topped out at $14,000.
Given the millions poured into promoting crypto – often with celebrity endorsements – legal action after the crash was inevitable. Boxer Floyd Mayweather Jr. is among those being sued for alleged false statements promoting the minor cryptocurrency EthereumMax.
Mayweather is hardly the only celebrity to promote cryptocurrencies in exchange for hefty payments. Matt Damon appeared on a Crypto.com ad telling viewers that “fortune favors the brave” when investing in crypto. Those who listened to the A-list actor at the time would have likely lost a significant portion of their investment.
This leads us back to the UFC, the entity that is encouraging its fans to invest in NFTs, fan tokens, while also advertising crypto exchanges such as Crypto.com. For the UFC, its alliance with crypto entities has helped the organization increase its profits through sponsorships and fan expenditure while also limiting costs. This likely factors into the recent revelation that the UFC now makes more than $1 billion in revenue a year.
Nevertheless, while the UFC remains focused on its bottom line, its decision to promote cryptocurrencies and blockchain technologies during a market crash raises a variety of concerns. At best, it is an easy money grab; at worst, it is exploitative marketing practices targeting the organization’s own gullible audience.