The latest murmurs from the financial and legal worlds suggest that the disgraced FTX cryptocurrency founder, Sam Bankman-Fried, could be facing a huge chunk of jail time. Some say, “Life.” Many compare him to former Ponzi scheme guru Bernie Madoff. Bankman-Fried appears to have memory problems; when asked, he allegedly has no recollection of what happened to large chunks of investor money. By “large,” we are referring to billions.
However, the one thing the FTX company seems to have been successful at is in the area of sports sponsorships. Sam Bankman-Fried wanted to be a player, and by player we are not talking third base for the Astros or outside linebacker for the Chiefs. He wanted the city lights and the adulation.
Deals Built on Air
FTX, at one time infused with other people’s money to burn, heavily invested in professional basketball, baseball and Formula One racing naming rights and advertising partnerships. According to Jennifer Korn writing for CNN (November 11, 2022):
“In 2021, FTX inked a…$135 million, 19-year deal with the NBA’s Miami Heat to rename the American Airlines Arena as FTX Arena. Major League Baseball struck a five-year deal in 2021 to name FTX as its official cryptocurrency exchange, a partnership that includes putting FTX patches on umpires’ uniforms. FTX is also the official cryptocurrency exchange partner of the Mercedes-AMG Petronas Formula One Team.”
In addition, FTX reached down onto the collegiate ranks. Sam Bankman-Fried’s parents are college professors at the University of California, Berkeley. And, in his bid (perhaps) to be the apple of his parent’s eye, he signed a $17.5 million, 10-year naming rights partnership with the school.
The CNN piece also stated that, “Los Angeles Angels superstar Shohei Ohtani became the exchange’s global ambassador in return for a stake in the company; NBA star Steph Curry and his foundation, Eat.Learn.Play., signed a partnership with FTX in 2021; and football legend Tom Brady has an equity stake and has served as an ambassador for FTX.”
Dominoes Anyone?
As I speak on ethical behavior on an international basis, and also function as a consultant on ethical behavior, I am wary when business (and make no mistake professional and collegiate sports are in large part businesses) fail to engage in due diligence and react, rather than respond to the promises and illusions of big money. They were tying their partnerships to “air.”
Back when Bernie Madoff was promising greedy investor’s double-digit returns (no matter what), cooler minds prevailed and said, “No way, Madoff. No one can guarantee steady returns of that magnitude.”
But a lot of minds weren’t so cool back then and lost everything.
In similar fashion, FTX has largely gone under and frankly, crypto-currency is still cryptic as hell. The sports programs, executives, athletes, and auto manufacturers who chased after Bankman-Fried’s promises must now scramble to attract investors and recoup losses. The best game in town in Sam Bankman-Fried’s domain may be dominoes, and they are falling.
The elements of fraud are well in place within the FTX culture. Sam Bankman-Fried operated in an absence of oversite, he had a need for money, power and status, and he rationalized his behavior without ethical guardrails. He screwed over many people who made poor choices in believing FTX was on the level.
Sports Ethics often operates at the crossroads of sports and business, and in this situation we can safely say neither area was ethically served.
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