In an unprecedented move, financial advisers of the fallen cryptocurrency platform FTX’s Group are considering the recovery of millions of dollars paid for celebrity endorsements. Notable celebrities, such as Shaquille O’Neal and Naomi Osaka, are the figureheads of this investigation, with the aim to identify if their sponsorship fees can be navigated under bankruptcy regulations. FTX has been recognized for its strategy of leveraging celebrity allure, using professional teams and individuals from Major League Baseball (MLB), National Basketball Association (NBA), and Formula 1 to boost its brand image.
Despite the financial turmoil, the real conundrum lies in consolidating thorough financial disclosures. FTX’s recent documents exhibit several prepayment transfers to athletes and teams connected to advertising or sponsorship agreements. However, the company has flagged possible incompleteness due to insufficient record-keeping. John J. Ray III, FTX’s new CEO, confessed the lack of comprehensive financial data at the time of the bankruptcy filing. Consequently, any withdrawals or offset deposits made by athletes or teams before the bankruptcy declaration might go unnoticed.
FTX’s disclosures expose significant payments made to professional athletes and teams. Roughly $4.9 million was allocated to MLB, ensuring umpires wear FTX logo patches for a certain period. Additionally, the disclosures revealed around $12.2 million linked to partnership agreements with the Formula 1 team Mercedes-AMG Petronas. Furthermore, an estimation of $3.4 million was reportedly allocated to NBA’s Golden State Warriors and close to $242,000 to Stephen Curry’s business, SC30 Inc.
The grim turn of events sparked conversations about the potential reversal of these payments in light of the Chapter 11 filing. Reports indicate that Alvarez & Marsal, FTX’s financial adviser, explored retracting payments, including a $2 million transfer to the Warriors just one month before FTX claimed bankruptcy.
In terms of individual endorsements, the disclosures show a $2.5 million payment to an Authentic Brands Group subsidiary linked to O’Neal and a $2 million transaction to Osaka just two days before Bankman-Fried’s resignation and consequential bankruptcy filing.
As the FTX saga unfolds, it underlines the inherent risks tied to the volatile crypto market. While the power of celebrity endorsements can yield high rewards, it may also lead to high risks. As for the potential fund recovery, the future remains as unpredictable as the cryptomarket itself.
Source: Cryptonews
