Cryptocurrency partnerships are no longer popular in the world of Formula 1. We have just learned that Scuderia Ferrari has canceled its deal with Velas. The move follows similar news from Mercedes and Red Bull.
Ferrari terminates the contract with Velas
In December 2021, Ferrari signed a major multi-year deal with the Velas (VLX) blockchain. This year had also seen the signing of several partnerships between major blockchain players and entities related to the discipline.
We recall, for example, the large contract between Crypto.com and Formula 1, with a commitment of 100 million dollars. A few months ago, most teams had a blockchain partner.
But last week, Ferrari ended its sponsorship deal with Swiss blockchain company Velas. The Italian automaker’s racing division has done the same with Snapdragon chip maker.
Termination of partnership with Velas and Snapdragon leaves Ferrari with a $55 million shortfall. This amount is a huge blow to the stable’s budget as it represents about a quarter of the annual support income.
We recall that the partnership with Velas represented 30 million dollars per year. Among other things, it was for Velas to have his name and logo on the rear wing of Ferrari F1 cars.
Velas was one of Ferrari’s most important sponsors for the 2022 season. The long-term contract with the Italian company aimed to increase fan engagement through the creation of the NFT.
According to a person familiar with the matter interviewed by RacingNews 365, Ferrari did not comply with the terms of the contract allowing the creation of the NFT. Another information indicates that Velas would be in financial difficulties. Termination of this partnership may lead to legal proceedings to resolve these disputes.
The Scuderia is not alone in this case
However, Scuderia Ferrari is not alone in this situation. Red Bull also terminated the contract with the Tezos Foundation due to strategic differences.
“The Tezos Foundation has decided not to renew the agreement with Red Bull Racing, as it no longer corresponds to our current strategy. »
Similarly, Mercedes-AMG terminated all cooperation with FTX after the crypto giant filed for bankruptcy on November 11. Sam Bankman-Fried’s platform was the main sponsor, which will blow a $15 million hole in next season’s budget for the F1 team, which regularly competes for the drivers’ and drivers’ titles.
Everything shows that these incidents are not isolated, but a new trend. Mercedes-AMG Petronas F1 Team Managing Director Toto Wolff has warned that other Formula 1 teams could find themselves in a similar situation.
This is a trend that can be seen almost everywhere: the back-to-back crashes of the two major players in the market, Terra (UST) and FTX, and the subsequent price declines have created great resistance in the market ecosystem.
Therefore, it will certainly take time for crypto companies to be favored by the sports world again.
Despite this news, Formula 1 and the crypto world are still in touch. Various Web 3 projects have the ability to increase fan engagement and sports leagues. Therefore, the relationship between these two universes represents more than a simple sponsorship contract.