FTX negotiated $100M sponsorship with Taylor Swift

Sam Bankman-Fried’s FTX was in the final stages of negotiating an endorsement deal worth more than $100 million (R$ 522 million) with Taylor Swift, but talks with the pop star were abandoned within months. before the cryptocurrency exchange crash in November.

Discussions included a ticketing deal that would involve digital certificates known as NFTs (non-fungible tokens) from the author of the smash hit “Anti Hero,” according to people familiar with the matter.

FTX’s talks with Swift and the nine-figure figure being negotiated underscore the ambition and extent of the cryptocurrency group’s efforts to partner with celebrities before it filed for bankruptcy last month.

FTX had signed football star Tom Brady and supermodel Gisele Bündchen to contracts, as well as tennis star Naomi Osaka and basketball players Shaquille O’Neal and Steph Curry.

People familiar with the talks also said the episode exposed FTX’s unorthodox decision-making process and the conflicts between Bankman-Fried’s closest aides and more senior executives brought in from outside the company.

Bankman-Fried and a rep for Taylor Swift declined to comment.

Bankman-Fried, 30, initially defended the contract, in part because he is a “Tay Tay fan,” said a company employee, using the nickname Swift. Claire Watanabe, a senior executive on FTX’s business development team, was seen by former employees as driving the pursuit of Swift’s contract, and was also a fan of Swift’s music. Watanabe could not be reached for comment.

Those who insisted on ending the negotiations, which began at the end of last year and ended in the second quarter, considered the partnership with Swift too expensive and questioned whether previous contracts with celebrities had provided a good cost/benefit ratio.

The deal was opposed by several members of the marketing team. “No one really liked the idea. The contract was too expensive from the start,” said one person briefed on the talks, adding that the price was “too high… Really too high. football”.

Bankman-Fried was urged out of the talks by senior executives, including FTX’s US chairman Brett Harrison, who had more than a decade of experience at finance companies such as Jane Street and Citadel before joining FTX, and vice president general counsel Ryne Miller, a former partner at the law firm Sullivan & Cromwell, according to people briefed on the matter.

Skeptics also questioned whether the singer, the second most-streamed artist on the streaming service on Spotify this year, would be relevant to the demographic of would-be cryptocurrency investors. A former employee said that there were people at the company who “felt that [Swift] would not add value to our user base”.

Another former employee said FTX had looked for a “soft endorsement” of Swift on social media. A person close to the talks said Swift never considered endorsing the cryptocurrency exchange.

“Taylor wouldn’t, and didn’t, agree to a deal that involved endorsing the company. The discussion was around potential tour sponsorship, which didn’t happen,” the person said.

FTX’s rise to prominence was fueled by extravagant spending on sports marketing contracts and hiring celebrities as spokespersons. The company spent US$ 135 million (R$ 704.7 million) to acquire the “naming rights” of a basketball arena in Miami, and invested US$ 20 million (R$ 104.4 million) in an advertising campaign starring by Brady and Bündchen late last year. Several cryptocurrency exchanges have spent a lot on marketing and sports sponsorships to attract new cryptocurrency investors.

The failure of the negotiations means Swift has escaped being associated with FTX, which filed for bankruptcy in Delaware last month, owing money to up to a million creditors and revealing a $1 billion shortfall in client assets. Bankman-Fried blamed the collapse on serious mismanagement, but faces allegations of misuse of client money, which he denies.

The company’s advertising has also come under fire for over-promoting risky cryptocurrency investing to inexperienced investors. FTX’s multimillion-dollar commercial aired during the Super Bowl broadcast in the United States was criticized for trying to foster a so-called “fear of missing out”.

“Consumers are being inundated with cryptocurrency advertising, and anyone who has watched the Super Bowl knows what I’m talking about, designed to stir up feelings of urgency and fuel fears of being left out,” said U.S. Senator Amy Klobuchar at FTX hearings last week.

The ad featuring comedian and actor Larry David described FTX as “a safe and easy way to get into cryptocurrencies”. David, who in the commercial portrays a tech-sceptic guy, would mutter, “I don’t believe it. And I’m never wrong about these things,” he would say.

Translated by Paulo Migliacci