Column: Think the name Crypto.com Arena will make cryptocurrencies legit? Think again
There’s something endearing, even adorable, in the faith shown in the power of a sports arena‘s name.
Take the excitement about the rechristening of Staples Center, where the NBA Lakers and Clippers play, as Crypto.com Arena.
The change will take place on Christmas Day. To Kris Marszalek, chief executive of Crypto.com, that will be a red-letter day.
Anything that embarrasses the community is dead on arrival.
Buffalo politician Mark Poloncarz explains why he wouldn’t accept a naming rights bid for the Bills stadium from a company called Tushy
“In the next few years, people will look back at this moment as the moment when crypto crossed the chasm into the mainstream,” Marszalek told my colleague Sam Dean from his home in Hong Kong.
“It’s a bit of a match made in heaven,” said Dan Beckerman, chief executive of AEG, the arena’s owner. He called Crypto.com “an innovative, forward-thinking company to help us chart a course for the future of sports and entertainment events.”
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Beckerman has a vision, all right. A vision of dollar signs. Somehow he got Crypto.com to pay more than $700 million over 20 years for the arena name, one of the biggest such deals ever.
But when it comes to the impact of the deal, whether for the future of cryptocurrencies or the future of sports marketing, Marszalek and Beckerman would be wise to take their enthusiasm down a few notches.
History tells us that naming rights to sports venues signal, at best, a very short-term prominence of the named companies, and at worst a high-water mark followed by a downslide. For the venue owner, they can turn into an embarrassment when the name holder goes bust, or worse.
Remember Enron Field? That was the name of the Houston Astros’ ballpark starting in 1999, when the energy company reached a 30-year, $100-million deal for the rights. Three years later Enron was bankrupt, its name synonymous with corporate fraud. The Astros bought back the rights for $2.1 million in 2002. The field is now named Minute Maid Park.
Leaving Enron aside, over the years naming rights have been symbols of nothing but corporate hubris, and certainly nothing like entry into the mainstream, much less a guarantee of remaining there. The San Francisco Giants’ field at China Basin has had three names since it opened in 2000; two companies no longer exist.
The purchase of naming rights to Candlestick Park by 3Com Corp. in 1995 launched a race to determine which entity, the company or the stadium, would outlast the other. The stadium won, but not by much — 3Com was absorbed by Hewlett-Packard in 2010, and the stadium was demolished in 2015.
And what of Staples, the office supply company that owned the naming rights to the downtown Los Angeles arena when it opened in 1999? That year, Staples Inc. earned $315 million in profit on $8.9 billion in revenue.
In 2016, the company lost $1.5 billion on $18.2 billion in revenue, and it was taken private in a leveraged buyout the following year. It’s still banking on preserving its future by trying to acquire Office Depot, a competing retailer, but the deal hasn’t been done.
Staples signed a deal in 2009 to acquire naming rights to the arena in perpetuity, but AEG, perhaps with an eye to the retailer’s dimming future, bought those rights back for an undisclosed sum in 2019.
For all that, the quest to stick one’s corporate name on a sports venue seldom ebbs. The most interesting saga concerns one of the first naming deals ever. The target was a new stadium for the NFL’s Buffalo Bills.
Under the threat that the team would move — Seattle, Memphis, Tenn., and Tampa, Fla., were the destinations mentioned most often by the team’s owner, Detroit businessman Ralph Wilson — Erie County put up the money to build a new stadium in Orchard Park, a suburb south of the city, in 1972.
As the stadium’s owner, the county owned the naming rights but had trouble finding a bidder; naming rights to a stadium were not judged important at the time.
Finally, a local entrepreneur named Robert Rich stepped up with a 10-year offer for a total of $1 million. Rich made his money from a nondairy coffee creamer, and his goal was to name the stadium Coffee Rich Park.
Wilson objected. After lengthy negotiations, Rich raised his offer to $1.5 million over 25 years for the facility to be named Rich Stadium.
That remained its official name until 1998, but the Bills consistently refused to use it, referring to it in marketing materials as “the stadium” and on tickets as “One Bills Drive.” The NFL’s broadcasting partners referred to the facility as “Orchard Park.” Rich sued and ultimately reached a settlement in which the team would start using the name.
(A digression: I was working in Buffalo at the time, and can say from personal experience that Rich Stadium was one miserable place to watch a football game. Orchard Park sits right on Lake Erie, and the late fall and winter winds are brutal. After a winter storm, spectators had to chip ice off the aluminum bench seats with the heels of their boots. Whether things have gotten any better since the 1970s, I can’t say.)
Rich’s deal expired in 1998. When no new bidder emerged, the stadium was named in honor of Ralph Wilson. The athletic wear company New Era held the rights for a few years but gave them up in 2020. Another bidding contest occurred, featuring a $12.5-million offer from Tushy, a manufacturer of bidets and other toilet equipment.
The company’s proposal to call the venue Tushy Field included an offer to equip the facility with portable toilets and bidets and even to attract a college bowl game to be called the Toilet Bowl (“I think it would be really interesting to go and see the annual Toilet Bowl, wouldn’t you?” company founder Miki Agrawal asked podcaster Chris Gronkowski).
But the bid was summarily rejected by Erie County Executive Mark Poloncarz, who said that even if Tushy filed the highest bid, “anything that embarrasses the community is dead on arrival.” The naming rights ultimately went to Highmark Blue Cross Blue Shield, a local health insurer.
That brings us back to Crypto.com. Whether it will get its money’s worth from the naming deal is uncertain. There’s no dearth of claims for the value of having your company name mentioned incessantly on the air and connected with sports teams that are the cynosure of their local communities and sometimes the national marketplace.
Those claims, however, are typically offered by firms that specialize in marketing brand names and therefore are inclined to hawk new means of branding.
Whether the value rises to $700 million over 20 years is another question. Some companies with naming rights have done well in the consumer markets, some have not — success seems to be more connected to a company’s products and performance than to placing its trademark on a building. Naming the Lakers’ and Clippers’ home arena in itself doesn’t make cryptocurrencies mainstream — it just says that at the moment, Crypto.com thinks it will have $35 million a year (on average) to spend on vanity marketing.
That leaves the question of what Crypto.com is selling through its promotional relationship with the Los Angeles venue. The company and AEG haven’t been specific, but Dean reports that the possibility looms of “integrating cryptocurrency payments into the arena and online purchases.”
That’s ambitious, to be charitable. Notwithstanding the public interest in bitcoin and its ilk, cryptocurrencies have simply not made significant inroads in consumer markets. Converting crypto assets to real currencies is more complicated and expensive than consumers are led to believe, and the asset values are far too volatile for them to serve as currencies themselves.
The idea of someone trying to buy a hot dog through a bitcoin account at a Crypto.com Arena concession stand while patrons line up with traditional payments — credit cards and dollar bills — in hand should tell you all you need to know about the potential for “integrating” crypto into the arena.
That underscores that the utility of cryptocurrencies in the world financial markets has never been established; its virtues seem always to be lurking over the next horizon. Public fascination with crypto more resembles a cult than the product of rational consideration; the price of bitcoin seems to respond more to tweets by Elon Musk than to economic factors.
“One could never price a 30-year mortgage in bitcoin because its volatility makes it completely unpredictable,” software developer Stephen Diehl recently wrote online. “A world in which Elon Musk can tweet two emojis and your home depreciates 80% in value is a dystopia.”
What Musk himself thinks of crypto is hard to gauge. He decreed briefly this year that Tesla would accept bitcoin as payment for its cars but ended the scheme after only a few months. Even while the offer was in effect, customers had to make their payments within 30 minutes of reaching a purchase deal, or the bitcoin price would expire and they’d have to start over. Tesla warned that if you made a mistake — say by entering the wrong recipient code in your bitcoin account so that Tesla never got the money, it would be your problem.
So, kudos to AEG for reaching a record-breaking naming deal. But it should be taken more as a case of getting while the getting is good than as a sign of crypto moving into the “mainstream,” whatever that is. The downside for AEG to a Crypto.com crash is limited, anyway. If the company disappears, Tushy will probably still be around.