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A professional e-sports team gets $ 210 million to change its name

The conversation started with a direct message on Twitter from a 29-year-old entrepreneur to another: “Yo, what’s going on?” It ended with one of the more lucrative name deals in recent sports history.

On Friday, TSM, a competitive video game organization based in Los Angeles, announced that it changed its name to TSM FTX – and was paid $ 210 million over 10 years in the process. FTX, an upcoming Hong Kong-based cryptocurrency exchange, will pay the bill.

The annual payout of $ 21 million is greater than many agreements companies have made with traditional sports teams in recent decades to have the names associated with stadiums and arenas. It is similar to recent transactions such as Citibank̵

7;s agreement with the Mets ($ 21 million per year), MetLife’s contract with the Giants and Jets (approximately $ 19 million per year) and the British bank Barclays’ agreement with the Nets ($ 20 million per year).

Of course, the big difference here is that TSM is changing its real name – similar to the New England Patriots, who play at Gillette Stadium, and rebranding as the New England Patriots Gillettes.

The agreement between the two companies comes as both cryptocurrencies and games have gained new relevance during the coronavirus pandemic, with people sitting at home looking for online entertainment and ways to invest and make money, sometimes in unconventional (and risky) ways. Interest in video games has increased significantly over the past year – including in e-sports, where some professional players earn millions of dollars and fight for championships in leagues dedicated to games such as Fortnite and League of Legends. More than 57 million people in North America watched an e-sports event in 2020, according to Newzoo, a gaming analysis company.

The value of cryptocurrencies such as Bitcoin has also risen in recent months; Even with a recent decline, a Bitcoin was worth more than $ 36,000 on Thursday, up from just under $ 10,000 a year ago. This has led to a huge business for cryptocurrency exchanges, which help consumers buy and sell digital currencies through a so-called digital wallet, and take a cut of every sale.

Sam Bankman-Fried, CEO of FTX, which is responsible for the Futures Exchange, said he quickly saw the parallels between his company and TSM after a series of Twitter messages with Andy Dinh, a TSM founder and CEO.

“Taking a huge industry and then imagining it in a digital age: it’s kind of what e-sports is for sports, and it’s kind of what crypto is investing and financing,” Bankman-Fried said.

TSM, originally known as Team SoloMid before switching to the three-letter abbreviation, fielded teams in more than ten different video game leagues and was valued by Forbes last year at $ 410 million – making it the most valuable e-sports company in the world. United States.

Dinh said he first reached out to Bankman-Fried, who had planned to invest in FTX, but the naming agreement came together quickly. He said the money would go to attract star players with better salaries and put together teams in several e-sports leagues. TSM, Dinh said, would also open offices in China, Europe and South America.

“It gives us a strong foothold to really expand our brand globally,” Dinh said. “We really want to be a global e-sports team. We need to invest in having bases in several places. ”

For FTX, the agreement gives the cryptocurrency exchange greater recognition in the United States, where it operates a small platform. Earlier this year, FTX signed an agreement with the Miami Heat and Miami-Dade County, Fla. For $ 135 million over 19 years to secure the naming rights to the arena in which the Heat play. By working with TSM, Bankman-Fried said he hoped the cryptocurrency exchange, launched in 2019, would be known to more Americans and make them more comfortable doing business with the exchange.

FTX is currently raising money that will value it at $ 20 billion, he said.

The majority of FTX’s sales take place outside the United States, where FTX allows people to buy and sell so-called tokenized shares and cryptocurrencies: mainly focusing on the future value of currencies such as Bitcoin, as well as betting on other future political and economic opportunities.

Such games are relatively new, largely unregulated, and can be risky, so they are not usually offered by US cryptocurrency exchanges or legal US sports books (some casinos outside the US allow gambling by choice). FTX’s US operations offer only traditional cryptocurrency trading.

Some international exchanges may offer tokenized shares without collateral, which exacerbates the risk of dealing with offshore exchanges which may make it difficult for clients to find them or pursue legal action against them if necessary. “The effect is to deprive users of the right to exercise their rights against that exchange if something goes awry,” said Christine Duhaime, a lawyer who is a financial criminal expert.

But FTX says there is no fly-by-night operation: its tokenized shares are secured through a registered brokerage firm, and it is safer than other offshore exchanges, the company said.

Bankman-Fried, a graduate of the Massachusetts Institute of Technology, who was described in a Wall Street Journal profile as a “vegan billionaire” sleeping on a beanbag in his Hong Kong office, has tried to bring some credibility to the commercial practice. such shares with FTX.

He said that FTX was simply at the forefront of offering currencies and games that people were interested in, and predicted that the United States would eventually regulate such actions.

“There are some sketchy exchanges internationally; I think there are also some professionals, “he said.

Friday’s deal, the two CEOs said, was just the beginning of their company’s partnership.

“TSM could potentially have a bigger and brighter future than just what this means today,” Dinh said.

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