Professional esports team gets $ 210 million to change its name

The conversation began with a direct message on Twitter from one 29-year-old entrepreneur to another: “Yo, what’s up? It ended in one of the most lucrative naming rights deals in recent sports history.

On Friday, TSM, a competitive Los Angeles-based video game organization, announced that it was changing its name to TSM FTX – and that it would be paid $ 210 million over 10 years in the process. FTX, a booming Hong Kong-based cryptocurrency exchange, will foot the bill.

The annual payment of $ 21 million is larger than many deals companies have made with traditional sports teams over the past decades to have their names attached to stadiums and arenas. It is similar to recent deals like Citibank’s deal with the Mets ($ 21 million per year), MetLife’s deal with the Giants and Jets (about $ 19 million per year) and the British bank Barclays with the Nets ($ 20 million a year).

Of course, the big difference here is that TSM is changing its name – the equivalent of the New England Patriots, which play at Gillette Stadium, renamed New England Patriots Gillettes.

The deal between the two companies comes as cryptocurrencies and gaming took on new importance during the coronavirus pandemic, with people trapped at home looking for online entertainment and ways to invest and save money. make money, sometimes in unconventional (and risky) ways. Interest in video games has grown dramatically over the past year, including in esports, where some professional gamers are making millions of dollars and competing for the championships in leagues dedicated to games like Fortnite and League of. Legends. More than 57 million people in North America watched an esports event in 2020, according to Newzoo, a game analytics company.

The value of cryptocurrencies like Bitcoin has also skyrocketed in recent months; even with a recent downturn, a Bitcoin was worth over $ 36,000 on Thursday, down from just under $ 10,000 a year ago. This has led to huge business for cryptocurrency exchanges, which helps consumers buy and sell digital currencies through a so-called digital wallet, taking a share of every sale.

Sam Bankman-Fried, the managing director of FTX, which stands for Futures Exchange, said he quickly saw the parallels between his company and TSM after a series of Twitter posts with Andy Dinh, founder and CEO of TSM.

“Take a huge industry and then reimagine it in the digital age: that’s kind of what esports is to sport, and that’s kind of what crypto is to invest and fund,” he said. said Bankman-Fried.

TSM, which was originally known as Team SoloMid before changing to its three-letter abbreviation, lines up teams in more than 10 different video game leagues and was rated by Forbes last year at 410 million. of dollars, which makes it the most valuable esports company in the USA.

Dinh said he initially contacted Bankman-Fried with the intention of investing in FTX, but the naming deal was quickly concluded. He said the money would be used to attract star players with better salaries and to build teams in more esports leagues. TSM, Dinh said, would also open offices in China, Europe and South America.

“It gives us a solid foundation to really grow our brand on a global scale,” Dinh said. “We really want to be a global esports team. We have to invest to have bases in several places. “

For FTX, the deal gives the cryptocurrency exchange greater recognition in the United States, where it operates a small platform. Earlier this year, FTX has signed a deal with the Miami Heat and Miami-Dade County, Fla. for $ 135 million over 19 years to secure the naming rights to the arena where the Heat play. Working with TSM, Bankman-Fried said he hoped the crypto exchange, which launched in 2019, would become familiar to more Americans and make them more comfortable doing business with it. exchange.

FTX is currently fundraising that would value him at $ 20 billion, he said.

The majority of FTX sales take place outside of the United States, where FTX allows people to buy and sell what are known as tokenized stocks and crypto derivatives: essentially, bets on the future value of currencies. like Bitcoin, as well as betting on other future policies and financial possibilities.

Such bets are relatively new, largely unregulated, and can be risky, so they are generally not offered by US cryptocurrency exchanges or US legal sports betting (some casinos outside the US allow betting. on elections). The US FTX operation only offers traditional cryptocurrency trading.

Some international exchanges may offer symbolic shares without collateral, which increases the risk of dealing with offshore exchanges, which can make it difficult for clients to find them or take legal action against them if necessary. “The effect is to deprive its users of the right to exercise their rights against this exchange if something goes wrong,” said Christine Duhaime, an expert financial crime lawyer.

But FTX says it is not an improvised transaction: Its token shares have a guarantee through a registered brokerage firm, and it is more secure than other offshore exchanges, the company said. .

Bankman-Fried, a graduate of the Massachusetts Institute of Technology who was described in a Wall Street Journal Profile as a “vegan billionaire” who sleeps on an ottoman in his office in Hong Kong, has sought to bring some credibility to the practice of trading such stocks with FTX.

He said FTX was simply ahead of the curve in offering currencies and bets that people were interested in, and predicted that the United States would eventually regulate such stocks.

“There are some fragmentary exchanges on an international scale; I think there are also professionals, ”he said.

Friday’s deal, the two CEOs said, was just the start of their companies’ partnership.

“TSM could potentially have a bigger and brighter future than it means today,” Dinh said.


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