FTX meltdown means Cal needs a new stadium sponsor
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In August of last year, Cal secured a lucrative new sponsorship deal. Massive cryptocurrency exchange FTX signed on to sponsor the football field at Cal Memorial Stadium for a 10-year, $17.5 million dollar contract. As part of the deal, FTX also pledged to fund the "Cameron Institute for Student-Athlete Development to support veterans, underrepresented students and homeless people in the Berkeley area."
If you've been following financial news at all, you know where this is going. FTX filed for bankruptcy earlier this week in what may end up as one of the most spectacular financial frauds ever.
On Monday, images of Cal removing FTX images from the stadium began to surface on social media. On Thursday night, a Cal athletic department spokesperson provided me with this statement, after I sent over a few questions:
"LEARFIELD’s Cal Bears Sports Properties, working in collaboration with Cal Athletics, has suspended the FTX naming rights sponsorship with Cal Athletics."
The spokesperson declined to elaborate or provide additional comments when I asked if Cal would immediately look for a new field sponsor, or if FTX owed them, or LEARFIELD, any money.
So did Cal actually get paid here, or...
The short answer appears to be yes. According to the press releases after the deal was completed, FTX paid LEARFIELD, Cal's MMR partner, entirely in Cryptocurrency. But LEARFIELD then converted those assets into cash, which they presumably then paid to Cal. If you're interested, we talked to LEARFIELD CFO John Brody about how the deal came together nine months ago for Collegiate Sports Connect:
What isn't immediately clear is if FTX paid for the entire ten-year sponsorship deal up front, or if anybody is actually out any money. Cal's football field wasn't the only major sports sponsorship deal FTX did, and it looks like FTX might owe Miami quite a bit of money. Of course, FTX owes a whole hell of a lot of people money right now, so I think it's an open question as to how much any sport contracts are going to get, and when.
This is especially painful for Cal
I think back to this 2017 headline from Deadspin..."Cal is F****'d because of its stupid stadium deal" which...turned out to be pretty accurate. Central campus has taken on more than $230 million in stadium debt to help clear the books, but the department is still facing major financial pressures. They sit in one of the most expensive markets in all of FBS, have badly struggled in flagship sports over the last few years, and now face an uncertain broadcast revenue future thanks to the defections of UCLA and USC.
So, quite frankly, they could really use the money. And to make matters even worse...this isn't even the first time a stadium sponsorship deal hasn't really worked out.
Fortunately, the school should (eventually) be able to find a new sponsor
I reached out to Dr. Nels Popp, a professor at North Carolina and somebody who has studied naming rights deals for college and professional stadiums, if this instability would hurt Cal's ability to find a new sponsor.
"I’ve never really seen anything suggesting a previous naming rights holder’s poor public image could hurt future sales of those rights", he told me. After all, Enron used to hold naming rights for the Houston Astros's stadium, and plenty of other companies were happy to bid big money for those rights once they hit the market again.
He did note that sponsorships may become less valuable the more they change hands, simply because fans sometimes take a while to call a stadium by the new name. "As a Brewers Fan, it’s still hard for me to think of Milwaukee’s stadium as American Family when I’ve always known it as Miller Park."
I legitimately had no idea the stadium wasn't Miller Park anymore until I transcribed this quote, for what it's worth.
Now, it's not like there was much deep-seated tradition in calling it FTX Field at Memorial Stadium or whatever, just like there wasn't years of history calling it Kaboom Field or whatever.
This might be a bit softer of an advertising market than Cal would like, and perhaps the field goes without a sponsor while Cal waits for the market to rebound (or for any potential litigation to clear up). But eventually, the school should have options.
For their sake, and for Cal fans, I hope the school is more careful picking their next sponsor. If, I dunno, some patent medicine company or something calls the school up with a great offer...maybe they should let that one go to voicemail.
We also covered this story, along with a few others, on this week's Going For Two:
If you subscribe to the podcast, you'll have it already, but if you'd like to watch it on YouTube, it's right here:
Beyond digging into the FTX scandal, we also discussed the upcoming UC Regents meeting, and whether we think they'll actually prevent UCLA from joining the Big Ten, whether they'll require UCLA to pay Cal a tax, or perhaps something else...or nothing at all!
We also talked about my big trip this week, the Brawl of the Wild. I'm flying out to Montana this morning, and will be in town until Sunday afternoon. Let the record state that I bought this ticket and booked this trip WELL before College GameDay announced they were coming. Which is a good thing, because uh, Bozeman doesn't have a ton of hotels and I could have been in real trouble.
There may or may not be another Going For Two this week, depending on internet in Montana and travel schedules. But the best way to know for sure, and to support the show, is by subscribing.
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Here's what else I wrote this week:
- I took a few mailbag questions, including why I think the travel burden for UCLA in the Big Ten is significant, where Chicago State might end up in a conference, how the Big Ten might spend their massive TV deal, and a few more:
- I interviewed the commissioner of the Pioneer League to better understand why a group of FCS schools are competing without offering football scholarships, and where that league may end up in a post Transformation Committee world.
- I made a little quiz to see if you can tell the difference between one of the D-II/NAIA schools that have played paycheck basketball games against D-I opponents this season...and schools I completely made up. Over 3,000 of you have taken the quiz so far, and the average score is like, a D+. Apparently it was pretty hard!
- I also added a few more contracts and updates to our FOIA Directory.
Making all of this stuff is a lot of fun. But sadly, it isn't free to make.
Flying to Montana and staying there for a few days is pretty expensive. Paying for Surveymonkey, Ghost, the rest of our tech stack and all of our FOIA fees can add up in a hurry as well. I love making Extra Points, but making the best product I can does take resources.
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Thanks for reading, everybody. I'll be dropping some photos on Instagram and Twitter, and will share more from the ground as soon as I can. Provided I don't freeze to death. I've checked the weather in Bozeman...you never know.
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