Following the announcement that the cryptocurrency exchange, FTX, will declare bankruptcy, Miami-Dade County and the Miami HEAT stated in a recent press release that they would be ending their commercial partnership, with FTX adding to the list of corporations cutting strings with the troubled exchange.
The county and NBA franchise announced in a statement that they planned to find a new naming rights partner for the facility. The statement said, in part,
“The reports regarding FTX and its affiliates are highly upsetting.”
FTX in turmoils
Sam Bankman-Fried, the CEO of FTX, resigned after the bitcoin market crashed. The staff can now cancel the FTX naming rights agreement with the county government to the company’s default and start looking for another sponsor per the contract.
Some compare it to the bank runs that occurred at the beginning of the Great Depression. People utilized FTX as a bank to purchase cryptocurrencies using U.S. dollars. Then, using that money to overleverage the coin they had invented, FTX made some questionable financial actions.
The action deterred Binance, a sizable firm considering buying the whole business. People staged a run on the firm, withdrawing their investments after Binance opted not to purchase FTX due to financial uncertainties. The corporation has declared bankruptcy and is currently $8 billion in debt, endangering the reputation of FTX Arena.
Before announcing the county’s break with FTX, Miami-Dade County Mayor Daniella Levine Cava said,
“It’s a changing scenario for FTX. Naturally, we’re keeping a careful eye on it and looking at every option for preparation. We don’t have any immediate concerns, but we must ensure we have a firm with the arena’s name rights.”
The parties stipulated on page 87 of the contract that, in the event of a default, the county may revoke the contract, seek a new name sponsor, and pursue damages through the bankruptcy procedure. The next step might be challenging since $8 billion in obligations need to be resolved throughout the bankruptcy process.
Weeks remained until the corporation was required under the agreement to pay $5.5 million, and still, all of this transpired. It was approved by Miami-Dade County commissioners approximately a year ago. The county was slated to get $90 million throughout the 19-year contract. After the Miami HEAT and the contract brokers take their cut, the county will receive less than $10 million.
FTX ripple effect
The Golden State Warriors, Miami HEAT, Naomi Osaka, the MLB, Tom Brady, Steph Curry, and other prominent organizations and athletes are just a few of the associations that FTX has ties with.
Brady, Curry, and Osaka are three players that suffered financial losses due to the most recent FTX meltdown. Curry signed his first contract in the cryptocurrency industry with FTX in September 2021, and he expressed his enthusiasm for the cooperation in a press statement.
On the other hand, Osaka acquired a share in FTX in March under a “long-term” arrangement that paid her in digital currency. Curry’s Warriors also have a relationship with FTX because the exchange has committed to pay the club $10 million in December 2021 as part of an international rights deal.