A strong legal battle is brewing in the crypto realm, with football giant Atletico Madrid reportedly planning to sue crypto exchange WhaleFin for failing to pay €40 million ($44 million) in sponsorship revenue.
These developments underscore other football clubs’ dilemma with delayed and unpaid sponsorship deals from crypto projects.
Atletico Madrid vs WhaleFin
Atletico contends that the popular Singapore-based exchange violated the terms of the agreement by defaulting on the agreed payments. The Atletico-WhaleFin deal was reached in 2022 when the 2 secured a five-year collaboration with WhaleFin, replacing Plus500 as the main shirt sponsor for the 2022/23 season.
As per reports, the footballing behemoth is hunting for a hefty €20 million ($22 million) in compensation from the crypto exchange.
The current payment default follows reports last December indicating that Amber Group, the parent company of WhaleFin, was facing significant financial strain. The financial issues were so severe that they prompted the termination of a $25 million per annum sponsorship deal between WhaleFin and EPL club Chelsea.
While Atletico complains, reports indicate that the club ended the fiscal year with profits north of €360K, revenues of €357.76 million, and a 19% reduction in wage costs. Yet, the club noted that the sponsorship money was critical to its budget.
Meanwhile, Atletico Madrid is working to secure more sponsorship deals, including a 10-season agreement with Cívitas Hispania worth €84 million for the naming rights of the Metropolitano stadium.
A Major Dilemma with Crypto Sponsorships
The Atletico Madrid situation exposes a dilemma other footballing giants are facing with some crypto sponsorships. Italian clubs Roma and Inter Milan recently ceased their contracts with DigitalBits due to a sponsorship fee payment default.
These defaults arose when crypto companies faced a bearish season, which sent Bitcoin to the sub-$16k mark.In contrast, other sporting giants are having good experiences with crypto sponsorships. Earlier this year, popular exchange network BitMEX expanded its sponsorship partnership with Italian football giant AC Milan. OKX, another crypto exchange giant, expanded its collaboration with Manchester City.