Dear Reader,
The sale of the naming rights for sports stadiums and arenas has been happening since the 1950s.
It started off small. But in the last couple of decades, it has turned out to be a material source of revenue for the sports teams and stadium owners. Selling those rights, however, does come with some risks.
Take the Houston Astros for example. The team signed a 30-year deal for $100 million back in 1999 with an exciting up-and-comer in the energy industry that was growing faster than most could believe – Enron.
We know how poorly things ended with Enron, but the Astros managed to do all right aside from the Enron fallout. They were able to buy back the rights for just $2.1 million. And then they turned around and sold the rights to Minute Maid in a 28-year deal for $100 million.
And it was bound to happen in the cryptocurrency industry. After all, in an industry flush with money – in some cases, they “print” their own – and experiencing exponential growth, it was no surprise to see the first deal announced early last year.
One of the largest digital asset exchanges, FTX, managed to secure the naming rights to the arena that is home to the NBA team the Miami Heat. Formerly named the American Airlines Arena, FTX bought the rights for 19 years for a cool $135 million.
The airlines have been crushed due to the pandemic policies. Ironically, the blockchain industry and cryptocurrencies not only survived – they thrived. And exchanges in particular benefit from the kind of mass market brand awareness that comes with naming a stadium.
Yet it’s not just hype. FTX is a fantastic business. It’s still a private company in the same league as asset exchange powerhouse Coinbase. FTX raised $421 million last October at an incredible $25 billion valuation. It has the scale and the money to do a deal like that.
But it’s the most recent deal that happened at the end of last year that really caught my attention.
Singapore-based exchange Crypto.com acquired the naming rights to the downtown Los Angeles sports arena formerly known as Staples Center. This time, the deal was done for a mind-numbing $700 million over 20 years.
I wouldn’t blame anyone for proclaiming, “It’s a bubble!” But before making that jump, the economics are important to understand.
Unlike the Enrons, the Minute Maids, or the Qualcomms – which have only their cash on hand and equity to work with – Crypto.com has its own native currency, CRO.
And while Crypto.com’s deal was struck in U.S. dollars, something interesting happened to its own currency.
As we can see above, on November 3, CRO was listed on Coinbase. And what followed was appreciation in the price.
And shortly thereafter, Crypto.com struck its naming rights deal on November 17. That drove the price all the way up to $0.926 by November 24.
To put that in perspective… The awareness the deal created, and the subsequent increase in the CRO asset price, resulted in roughly a $12 billion increase in the market cap of CRO over the span of just a few days.
That’s enough to pay for the naming rights deal 17 times over. Now, of course, Crypto.com doesn’t control all of the CRO in distribution. However, it does maintain a lot on its own balance sheet.
We don’t know what Crypto.com did, but if the team was smart, they converted enough of their own CRO from their balance sheet into a U.S. dollar stablecoin to cover all, or a big chunk, of that deal.
Problem solved. The deal doesn’t look so crazy after all.
My comments aren’t at all meant to be bullish on CRO. There are far better digital assets out there. What’s interesting to me is this added economic dynamic that comes into play when companies or projects have their own native currency.
That native currency can be used by organizations to not only incentivize employees, but to accelerate economic development with their technology, invest in their own ecosystem, reward major contributions, fund development, incentivize network participants (consumers/users), and, yes, buy naming rights to market and spread the word.
No, it’s not a bubble. We’re witnessing the birth of the next generation of the internet, financial services, and so much more. All of this is happening on an accelerated time frame.
It’s fun to watch and even better to be a part of it.
A company called Subspace Labs just launched the world’s first network-as-a-service (NaaS) offering. This has major implications for the burgeoning metaverse trend…
Subspace Labs was founded in 2018. The company set out to solve one of the most critical problems in the gaming industry – lag. This is what we call a delay in our internet connection.
It may not sound like much, but a “laggy” connection is a big deal. For the top online games out there, it’s common to have gamers from all over the world playing in real time with each other. These are typically referred to as Massively Multiplayer Online Games (MMOGs).
And in most games, not surprisingly, the gameplay is highly competitive.
Under these conditions, any delay in the connection can mean the difference between winning and losing. And certainly, the difference between a good experience and frustration.
Subspace initially focused on eliminating lag in the gaming industry. And the company developed both the hardware and the software to create specialized internet overlays designed specifically for low latency. We can think of this as having dedicated highways for gaming applications.
And it doesn’t stop there.
As Subspace’s tech developed, the company naturally expanded into metaverse applications. After all, the top metaverses will likely bring millions of people together on a daily basis. That only works well if the connection is lightning fast.
So Subspace is suddenly a major player in what’s become one of the hottest trends in technology – the metaverse. The timing is perfect. As metaverses are built out, Subspace’s infrastructure will become critical for their growth.
And Subspace is now modeling itself as a Web 3.0 company. It plans to utilize a digital asset token to build economic incentives right into its network. Right now, the token launch is expected to happen sometime in the second half of this year.
Given how hot metaverse development will be this year, this is a company for us to keep an eye on. We may have a fantastic investment opportunity with its digital asset when it launches.
And I’ll continue to keep readers up to date on how to invest in the metaverse trend as it develops. To see my latest research on this topic, go right here for more details.
One of our favorite companies in The Near Future Report, NVIDIA (NVDA), recently launched version two of its “generative art” artificial intelligence (AI). This largely went unnoticed, but it’s a major breakthrough.
NVIDIA’s generative art AI is called GauGAN2. It’s named after the painter Paul Gauguin. And it can generate incredible, photorealistic images simply based on text and a rough sketch. Here’s a visual:
GauGAN2 Image
Source: NVIDIA
On the left is a sketch input to GauGAN2. The words desert, hills, and sun were included with the sketch.
The AI took these inputs and produced the image on the right. It looks like a realistic depiction of a desert under a blazing sun.
And here’s the most impressive part – GauGAN2 produces these images from scratch based on its analysis of the sketch and the text input.
That’s because NVIDIA used a supercomputer to train the AI on 10 million images as well as words that correspond with those images. It effectively learns from the training, contextualizes the data, and then produces an image.
This process is very similar to the way that you or I would remember how to draw an elephant standing on a tundra. The difference is, of course, that GauGAN2 can “ingest” and retain an exponentially larger amount of knowledge than we can.
The fact that GauGAN2 can work with multiple inputs as shown in the example above is a major development of this kind of technology.
We profiled the Allen Institute for AI’s text generator last September. It operated exclusively from text inputs, and the images it produced tended to be rather abstract. While that’s still impressive in its own right, NVIDIA’s GauGAN2 is on another level.
And, of course, the AI runs on NVIDIA’s graphics processing units (GPUs). NVIDIA made GauGAN2 available to download to anyone with an NVIDIA RTX GPU.
That makes this a fantastic tool for artists, graphic designers, and anyone working with digital imagery. These professionals or hobbyists can leverage the AI to both save time and improve their designs immediately.
That is… as long as they are running NVIDIA’s GPU. It’s a great way for NVIDIA to incentivize professionals to purchase the company’s hardware.
As it stands, we are up 763% on NVIDIA in The Near Future Report, and the company continues to impress.
We’ll wrap up today with a big development in the cryptocurrency space. Early stage company MoonPay just announced a massive venture funding round that will have big implications for the industry.
MoonPay is a company focused on making it easy for consumers to purchase cryptocurrencies using traditional payment methods like debit and credit cards. It removes the complexity and makes it simple to buy crypto.
The company also allows consumers to make everyday purchases using debit and credit cards backed by their digital assets. In this way, consumers can both buy and spend cryptocurrencies using just one company’s services.
Its raise was an interesting one. The company had bootstrapped itself since 2018 and made it to profitability. It never raised a formal institutional round until now. It’s being called a Series A round, but at an incredible $555 million raise – and a $3.4 billion valuation – it feels like a late-stage round.
MoonPay went from zero to unicorn status in just one venture funding round. That doesn’t happen very often. And this demonstrates how much demand there is in the cryptocurrency market right now.
And there were some smart investors in the round like New Enterprise Associates, Coatue, and Tiger Global. They clearly see explosive growth ahead – otherwise they wouldn’t have invested at these levels.
Of course, this begs the question… Why did MoonPay raise so much money if it doesn’t need it?
The company was very transparent. MoonPay will use the capital to acquire other businesses in the space.
It will use this approach to aggressively grow its own business and “roll up” the industry in the process. That’s a strategy to become dominant quickly.
With over half a billion dollars earmarked for acquisitions, we’ll certainly see some interesting things happen in the next 12 months.
And for readers who want to make sure they have all the latest information on this space, you can find more of my research right here.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
