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Interesting stuff. Here’s a couple more pieces to add: The contract is for 20 years. Presumably the money will be spread out fairly evenly (as governments pre
by MR4D 4y ago
Interesting stuff. Here’s a couple more pieces to add:
The contract is for 20 years. Presumably the money will be spread out fairly evenly (as governments prefer predictable revenue). So for simplicity, let’s say $35 million per year.
Second, according to this article [0], it seems the arena hosts over 240 events per year, including the Grammy’s. That works out to roughly 145,000 per event.
So the question I would have is does Crypto.com expect to make $35M ÷ 0.4% = $8.75B per year in trading volume.
That is a much more reasonable proposition, even though the overall number sounds insane [1].
[0] - https://theathletic.com/2995939/2021/12/06/why-crypto-com-made-a-700-million-bet-to-rename-staples-center-and-doesnt-even-expect-you-to-use-the-name/ https://theathletic.com/2995939/2021/12/06/why-crypto-com-ma...
[1] - you also have to take into account inflation which reduces that effective cost a bit each year, so year 20 will be cheap compared to year 1 when measured in real dollars (dollars after adjusting for inflation)
- Aperocky 4y agoFunny that whoever controlled Staples Center believed that crypto.com have a high probability to last 20 years.. Even 2 years would have been an unknown.
- mattmaroon 4y agoCan't be sure they did. Perhaps they got a good downpayment and good annual payments and even if it only lasts two years they'll be happy with what they got and just find another sponsor. The LA Lakers don't have a hard time selling naming rights.
- TedDoesntTalk 4y agoThese are vanity purchases that have nothing to do with ROI or stockholder interest. It’s like buying a vanity license plate. There’s no ROI. Probably some exec is a fan of that particular sports team and get it in their mind to buy the naming rights to claim himself “biggest fan ever”
- Jabbles 4y ago> So the question I would have is does Crypto.com expect to make $35M ÷ 0.4% = $8.75B per year in trading volume. That's $8B extra due to the stadium naming, not in total.