Tom Brady, Steph Curry among athletes caught in Binance, FTX headwinds

Yahoo Finance’s Josh Schafer joins the Live show to discuss the ongoing crypto market chaos following the scrapping of Binance’s FTX deal and how it's affecting athlete investors like Tom Brady and Steph Curry.

Video transcript

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AKIKO FUJITA: Well, Tom Brady, Steph Curry, and Major League Baseball, among those key players and leagues involved with FTX. But now with Sam Bankman-Fried's crypto exchange on the verge of collapse, a lot of these sports players as well as franchises having to do deal with the fallout. Let's bring in Yahoo Finance's Josh Schafer, who's been tracking all this. And, Josh, I know that celebrities have gotten a lot of-- of the attention over the last few days, but I am really curious about what happens with the Miami Arena--

JOSH SCHAFER: Right.

AKIKO FUJITA: --that was named after FTX. What about the stadium over in Berkeley? I mean, how-- what is that fallout--

JOSH SCHAFER: Right.

AKIKO FUJITA: --likely to look like?

JOSH SCHAFER: Yeah, Akiko, I mean, it's really going to be a public example of how bankruptcy court works, if that's where FTX goes with this, and that's sort of how it's going to play out. We're going to see all these people and these different companies basically become creditors and look for some solution in court. So to kind of go through who does have relationships with FTX, you mentioned a couple off the top there. Brady we all know from all the ads. He actually has an equity stake too. So a little bit different than, say, a sponsorship. And that's what the Miami Heat have. That's actually owned by Miami Dade County. And the arena is itself.

And then you have a F1 team is related. There's FTX patches on the umpires. But the Miami one is interesting, Akiko, because it's the county itself that owes-- owns the arena. It was a 19-year, $135 million deal. 19 years. And we're only a couple into it. And so Miami has already come out, according to the information, and said, basically, they'll do whatever it takes legally, if that's where this goes. So I think that'll be a fascinating thing to watch is, can they get the money?

And the way this works from a couple of lawyers I've talked to-- this has happened in the past, of course, with sponsorships. This would not be the first company ever that sponsored sports teams to then go defunct. And basically, they either get the money in bankruptcy court. Or they just rip the name off the stadium and they never see the money again. And they'll go and they'll get a new sponsor, and they'll put a new name up there. And hopefully, that company is more successful than FTX has been.

AKIKO FUJITA: Well, I mean-- I mean, that's the key, right? That last part, whether the company is more successful, because it was just a few months ago, Josh, that we were talking about Crypto.com putting their name on former Staples Center, more than $700 million. And the question was, is this kind of a repeat of what happened during the dot-com boom where we saw these names kind of disappear overnight? I mean, what's the loss that's likely to be incurred by some of these stadiums if, in fact, that's the way it goes? And what about the MLB?

JOSH SCHAFER: Right. Yeah, I mean, my understanding from lawyers I talked to-- and we've been covering this since the Voyager fallout a couple of months ago, Akiko. Remember Voyager Digital, which FTX actually came in and supposedly saved, had a lot of sports partnerships as well. And it's going to be pennies on the dollar if they get anything, and then it essentially will just get dropped from there.

And Crypto.com is an interesting one to watch because-- I spoke with both these companies back when I was doing that Voyager story in June and July, and they felt confident in where they were from a funding standpoint. They felt confident in where they were to keep paying out these sponsorships. So we can see now that that sort of extrapolated itself out. And so these companies might look safe now, but you just don't know.

And that was sort of the sentiment I got then too. Well, if the market downturn continues, you just don't know. And obviously, there was more at play with FTX. But it's a little bit uncertain. And I think if you are the Staple Center, you do have to be worried right now about what could happen.

AKIKO FUJITA: Really quickly, Josh, what does this mean for any future partnerships? There are still crypto companies out there that are looking to partner to get their name out.

JOSH SCHAFER: Right. From talking to those people, it's been interesting to see people that sort of broker those deals, Akiko. A lot of teams just kind of go for money at some point. Yes, there's due diligence. And yes, they are trying to understand what the company does, and they want to be strategic in some ways. But these crypto companies, during the bubble last year when they had all this money, they had too much money for teams to say no. And that was why teams kept saying yes.

And you saw so many crypto sponsorships on NBA jerseys and things like that. So I think as the market, the crypto market, itself slows down, you're going to see the deals, of course, slow down, but I wouldn't be surprised to see a crypto deal at some point in the future too if the money is there. The teams-- it's a business-- they want to make money, and they're really not at fault if for some reason the company goes defunct.

AKIKO FUJITA: Yeah, it's all about money, at least in that moment. Josh Schafer, thanks so much for that.