The now-defunct cryptocurrency exchange FTX, which was once a prominent player in the crypto space, entered into substantial sponsorship agreements during its prime. These agreements have recently come to light during the legal trial of FTX’s founder, Sam Bankman-Fried, who is facing charges that include wire fraud, securities fraud, and money laundering. Among these sponsorship deals was a significant agreement with Riot Games, the developer of the popular game League of Legends, which promised Riot nearly $100 million as part of its sponsorship of the League of Legends Championship Series (LCS) esports competition.
FTX’s hefty commitment to Riot Games unveiled
The revelation of the value of FTX’s sponsorship deal with Riot Games emerged as part of the legal proceedings in New York. This disclosure was previously undisclosed and sheds light on the vast sums involved in the crypto exchange’s sponsorship activities. The sponsorship between FTX and Riot Games was established in 2021 as a seven-year deal that would automatically renew until 2028 unless contested by either party. A recently revealed spreadsheet details FTX’s extensive sponsorship commitments. According to the document, Riot’s LCS was set to receive $4 million in 2021, and $12.5 million in 2022.
The firm was also expected to receive another $12.8 million in the current year, with recurring annual payments until the agreement’s conclusion. Additionally, FTX had also committed to sponsor the esports organization TSM with substantial sums, including over $136.5 million under the “FTX Trading” label and another $73.5 million under its “FTX US” label. This comprehensive 10-year deal, totaling $210 million, was announced in June 2021. The spreadsheet outlines that TSM was entitled to approximately $10.8 million of its total in 2021, $15.37 million in the previous year, and another $16.6 million in the current year as part of the deal.
Crypto sponsorships and the challenges in the crypto market
It now remains unclear how much of these pledged amounts were disbursed to Riot and TSM before FTX’s collapse in November 2022. League of Legends held a special place in the heart of Sam Bankman-Fried, FTX’s former CEO. He was known for his public affinity for the game, often discussing it on social media and even playing it during business meetings and interviews. In a tweet from 2021, Bankman-Fried humorously remarked that he was known for playing League of Legends while he was on phone calls.
League of Legends is one of the most popular competitive esports games globally, boasting approximately 133 million monthly active users, according to data from ActivePlayer. This game, like other successful esports titles, has been an attractive avenue for integrating cryptocurrencies and blockchain technologies to generate revenue. Esports organizations, often grappling with financial challenges and profitability concerns, have increasingly turned to cryptocurrency sponsorships as a viable source of income.
Some esports organizations have heavily relied on sponsorships to sustain their operations, while others, like TSM, M80, and 100 Thieves, have explored various methods, including NFTs and crypto integrations, to engage and monetize their fan bases more effectively. However, the fervor around crypto and esports partnerships has somewhat cooled in recent times, partly due to the prevailing crypto market conditions. Nevertheless, the convergence of the cryptocurrency industry and esports continues to be an intriguing space to watch as both sectors seek mutually beneficial collaborations and new revenue streams.
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