Formula 1’s relationship with various crypto platforms is rapidly ending, with Ferrari having become the latest team to drop their partnership with their cryptocurrency sponsor.
The Italians ended their multi-year deals with Velas blockchain and Snapdragon early, a move which will see the Maranello-based outfit lose $55 million as a result.
The cryptocurrency market has been thrown into turmoil following FTX filing for bankruptcy and the arrest of CEO Sam Bankman-Fried, with the future of crypto-based sports sponsorships being put into the spotlight.
Ferrari entered their deal with Velas in 2021 with the aim of creating unique fan experiences and NFTs; however, according to ScuderiaFans.com, Ferrari did not take notice of clauses related to Velas’ creation of NFTs.
To make matters worse, Velas, who were founded in 2009 by crypto entrepreneur and investor Alex Alexandrov, are also in financial difficulties.
Reportedly, legal action is being taken into consideration by both parties to end their short-lived partnership, one which sees Ferrari join Mercedes and Red Bull in parting ways with a crypto sponsor.
The Velas deal in itself was worth $30 million a year, according to reports, whilst Ferrari’s deal with data analysis partner Snapdragon was worth $25 million a year.
It is certainly a huge amount of revenue to lose for Ferrari, especially in the current global climate, with costs rising wherever you look as a result of inflation.
As mentioned, Mercedes and Red Bull’s crypto partnerships have also been terminated, with the Silver Arrows deal having been with FTX.
Mercedes boss Toto Wolff is a huge believer in crypto and was shocked by the sudden demise of FTX, with the Austrian’s warning seemingly coming true.
Wolff warned that other teams could suffer a similar fate with their own crypto sponsors, something that Ferrari have faced with Velas and Red Bull with Tezos.
Tezos terminated their deal with Red Bull before the close of 2022, with the reason being, according to Tezos foundation’s chief commercial officer, Mason Edwards, that the partnership didn’t suit their strategy.
It won’t be a surprise to see more crypto sponsorships terminated before the new season begins, with virtually all the teams and even Formula 1 itself having a sponsor from the crypto world.