As Formula One’s 2023 season kicks off, it’s clear that the bearish crypto market that’s also marred with numerous scandals and regulatory issues has hit the industry hard. Last year, blockchain-related companies, token issuers, and digital-asset exchanges flooded sponsorships over F1 teams and events. Now, the number of crypto sponsors in the sporting organization has fallen by 40%, with some teams ending partnerships with the crypto sector altogether.
F1 Crypto Sponsors are Nearly Down in Half
According to a Bloomberg report, every F1 team is backed by at least one company related to crypto or Web3 last year. This can be seen plastered all over the livery of the cars, uniforms and helmets of the drivers, and the race track. However, their numbers have suddenly dwindled this year to 60%.
Big Names that have Been Cut
The shift has been driven by various factors. One of them includes the FTX debacle that reportedly led to the Mercedes-AMG Petronas team filing a claim in its bankruptcy proceedings. Sources have also said that the three-pointed star marque is working hard to distance itself from the disgraced crypto exchange, but this may be hard to come by at the moment because the logos of the defunct firm can still be seen in the uniforms, cars, and merchandise of the team every time the focus goes to them in the Drive to Survive Netflix series.
Another sponsorship fallout also happened between Ferrari and Velas in January. It should be noted that the Velas-Ferrari affair was supposed to run on a long-term deal but the Swiss blockchain firm prematurely terminated the deal. This allegedly resulted in a $30 million loss in revenue for the Italian team.
Both parties have remained mum on the circumstances of the event but there were claims that it had something to do with the F1 group’s refusal for the company to produce Ferrari-themed NFTs. Other news outfits dismissed it as a mere excuse for Velas to weasel out of the deal due to the tanking crypto market.
Big Names that Remain
Despite the industry’s recent struggles, some crypto companies are still sponsoring Formula One. Binance, Opensea, Crypto.com, and Socios are among those sticking with the sport. Meanwhile, Red Bull’s partnership with exchange Bybit and Tezos‘ arrangement with British rival McLaren remain in place.
With the crypto industry facing significant headwinds, it is unlikely that F1 will heavily rely on crypto sponsorships to the same extent as it did in the past. Nevertheless, some teams are still exploring opportunities in the crypto sector. McLaren has revealed that it is exploring several new web3 initiatives, and other teams are likely to follow suit as they seek new ways to generate revenue amid a challenging environment for sports sponsorships.
Overall, while the crypto industry and Formula One have had a close relationship in recent years, the fallout from the crypto winter is now impacting the world of motorsports. As teams look for new sponsors and explore alternative revenue streams, it remains to be seen whether crypto companies will continue to play a significant role in the sport’s future.
Giancarlo is an economist and researcher by profession. Prior to his addition to Blockzeit’s dynamic team, he was handling several crypto projects for both the government and private sectors as a Project Manager for a consultancy firm.