But Darren Heitner, a lawyer and sports law professor at the University of Florida, said that he doubted whether the deal would be a useful guide for traditional sports teams that make naming rights agreements in the future.
“While leagues have become more liberal as of late” with advertising opportunities, Heitner said, “I believe they are still a bit away from allowing teams to sell their actual names to the highest bidder.”
For FTX, the deal gives the cryptocurrency exchange greater recognition in the United States, where it operates a small platform. Earlier this year, FTX signed a deal with the Miami Heat and Miami-Dade County, Fla. for $135 million over 19 years to secure the naming rights to the arena where the Heat play. By working with TSM, Bankman-Fried said he hoped that the crypto exchange, which launched in 2019, would become familiar to more Americans and make them more comfortable with doing business with the exchange.
FTX is currently raising money that would value it at $20 billion, he said.
The majority of FTX’s sales happen outside the United States, where FTX allows people to buy and sell what are known as tokenized stocks and crypto derivatives: essentially, bets on the future value of currencies like Bitcoin, as well as wagers on other future political and financial possibilities.
Such bets are relatively new, largely unregulated and can be risky, so they are generally not offered by U.S. cryptocurrency exchanges or legal U.S. sports books (some casinos outside the United States allow gambling on elections). FTX’s U.S. operation only offers traditional cryptocurrency trading.
Some international exchanges might offer tokenized stocks without collateral, compounding the riskiness of dealing with offshore exchanges that might make it difficult for customers to find them or pursue legal action against them if necessary. “The effect is to deprive its users of the right to exercise their rights against that exchange if something goes sideways,” said Christine Duhaime, a lawyer who is a financial crime expert.
But FTX says it is no fly-by-night operation: its tokenized stocks do have collateral through a registered brokerage firm, and it is safer than other offshore exchanges, the company said.