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Atletico Madrid, one of Spain’s leading football clubs, is reportedly preparing to take legal action against Singapore-based cryptocurrency exchange WhaleFin in a surprising move. The legal action stems from allegations that a significant payment of 40 million euros has not been made as sponsorship revenue.
The football club entered into a five-year partnership with WhaleFin at the start of the 2022/23 season, with the cryptocurrency exchange planned to be one of the main sponsors. However, Atletico Madrid claims that WhaleFin has failed to meet its financial obligations and alleges that the contract has been violated. In response, the club is demanding 20 million euros in compensation.
This situation reflects a familiar narrative in the world of football sponsorships involving blockchain and cryptocurrency companies. Previously, the owner of WhaleFin, Amber Group, faced financial difficulties and abruptly terminated its annual sponsorship agreement with English Premier League club Chelsea worth 25 million dollars just seven months after the agreement was signed in December 2022.
This development aligns with similar financial difficulties faced by Italian clubs Inter Milan and Roma. Both clubs severed ties with blockchain company DigitalBits after failing to meet their payment obligations, resulting in a loss of over 16 million euros for Inter and over 11 million euros for Roma.
A Reflection of Risks in the Crypto World
While the legal process continues, the Atletico Madrid case serves as another example highlighting the complexities and risks associated with cryptocurrency sponsorships in the sports industry. Following failed financial commitments, questions arise about the long-term feasibility of such partnerships and the necessary diligence football clubs must exercise when engaging with crypto assets.
Football is not a foreign sector to the crypto space. Particularly, Chiliz, the project behind the cryptocurrency CHZ, has made moves towards various areas of sports, including football. Through fan tokens, clubs have established a strong connection with their fans, allowing them to participate in decision-making processes and engage in activities such as ticketing and interaction.
The cryptocurrency world brings its own set of risks, and the financing problem encountered in the Atletico Madrid sponsorship can be seen as a reflection of the prolonged bear market.
