Scuderia Ferrari, the racing division of luxury carmaker Ferrari, has joined a growing list of Formula One racing teams to end their partnership with cryptocurrency sponsors. Ferrari pulled out of a multi-year partnership agreement with Velas Blockchain and chip manufacturing giant Snapdragon, resulting in a cumulative loss of $55 million for the Italian team ahead of the 2023 season.
The Ferrari-Velas partnership from 2021 – set at $30 million per year – is aimed at increasing fan engagement through nonfungible tokens (NFT) and other shared initiatives. However, the team did not comply with the clause that allowed Velas to draw NFTs, according to RacingNews365.
In November 2022, Mercedes also suffered a loss of $15 million after suspending its partnership with FTX because the crypto exchange filed for Chapter 11 bankruptcy. Red Bull Racing’s partnership with the Tezos Foundation suffered a similar fate as the blockchain company reportedly decided not to renew the agreement due to a wrong strategy.
Toto Wolff, team principal and CEO of the Mercedes-AMG Petronas F1 team, warned that other teams could find themselves in a similar situation. However, the relationship between F1 and the crypto ecosystem goes beyond partnership. In October 2022, Formula One filed for the trademark ‘F1’ as it announced plans to set up an online marketplace for cryptocurrency, meta tokens, digital collectibles, crypto collectibles and NFTs.
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In the midst of a bear market, the Web3 project has been a leader in strengthening engagement between fans and sports leagues.
Deloitte’s “2022 Sports Industry Outlook” report predicts an acceleration in the mix of the real and digital worlds, along with a growing market for NFTs and immersive technologies. As Cointelegraph reported, the lack of an easy-to-use platform is the biggest challenge to mainstream adoption.