Esports Organization Is Getting Paid $210 Million to Add Three Letters to Its Name
| LAST UPDATE 06/06/2021
What do esports and crypto-currency have to do with one another? Well, for one, they're all about taking something traditional and reimagining it in the digital age. And second, they're both behind a $210 million deal.
TSM, formally known as Team Solomid, started out as a professional esports organization based in L.A. On June 4th, TSM made history by securing one of the most profitable naming deals in sports history. They announced that one simple rebrand - from TSM to TSM FTX - would take place, and they would get paid $210 million over a decade to do so. But who would be willing to pay that much for three letters?
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Well, that would be FTX. The Hong Kong-based cryptocurrency giant took on the bill for this deal. The agreement came with a big check, but FTX knew it was all worth it. Their contract fell amongst some of the industry's most remunerative deals. For context, Metlife paid the New York Jets and the New York Giants around $19 million per year and Barclays paid the Brooklyn Nets $20 million per year.
But without a stadium to plaster their logo on, what made this deal so worthwhile for FTX? Well, the answer lay within the two companies' foundations. Yes, cryptocurrency and professional esports happen, for the most part, remotely. But that's what made the deal so appealing for the Hong Kong company. If the pandemic taught them anything, it was that people learn to adapt to new platforms when stuck inside. Esports viewership (and therefore revenue) and nontraditional banking investments skyrocketed during the pandemic, and there were stats to support it. Newzoo, an esports analytics group reported that in the year 2020, nearly 60 million North Americans watched an event. That made for a huge market worth tapping into.
Though these types of unconventional deals come with risks, FTX believed that this sort of transaction was the future of business. "Taking a huge industry and then reimagining it in a digital age: That's sort of what esports are to sports, and it's sort of what crypto is to investing and finance," the company's chief executive said. Eyes are now on competing companies to see if this is a trend worth following...
