Former CEO of FTX, Sam Bankman-Fried negotiated a sponsorship deal of more than $100 million with the famous Taylor Swift but later the pop star took herself out of the deal just months before the company collapsed in November.
According to people familiar with the matter, the discussion was mainly about arranging tickets with digital certificates that are known as non-fungible tokens from the record-breaking “Anti Hero” singer-songwriter.
This conversation and deal between FTX and Taylor Swift indicate the ambition and reach of the crypto group’s drive for celebrity partnerships before it fell into bankruptcy last month.
FTX had made contracts with US football star Tom Brady and supermodel Gisele Bündchen, as well as tennis star Naomi Osaka, and basketball players Shaquille O’Neal and Steph Curry.
People with knowledge of the talks told the procedure also underscored FTX’s unnatural internal decision-making, and conflicts between Bankman-Fried’s internal circle and more skilled managers brought in from outside.
Thirty-year old Bankman-Fried initially condoned the deal, in part because he’s “a fan of Tay Tay”, one employee said, using Swift’s nickname.
Claire Watanabe, a senior executive in FTX’s company development team, was noticed by ex-employees as a driving influence behind the goal of Swift and was also a lover of her music.
Those pushing to discard the talks, which started last autumn and finished this spring, employees said, believed the alliance with Swift was too costly and challenged whether prior celebrity contracts were providing value for money.
The deal was disagreed upon by several members of the marketing team. “No one really liked the deal. It was too expensive from the beginning,” said one person familiar with the negotiations, adding that the price was “very high . . . really fucking high. That’s front of the soccer jersey level prices”.
Bankman-Fried was instructed to decline the talks by senior executives including FTX US president Brett Harrison, who had more than a decade of knowledge at monetary companies such as Jane Street and Citadel before joining FTX, and US general counsel Ryne Miller, a retired Sullivan & Cromwell partner, according to people familiar with the matter.
Skeptics also challenged whether the singer, the second-most streamed artist on Spotify this year, would catch the target demographic for would-be cryptocurrency dealers. One former employee said some at the company “felt like [Swift] would not add value to our user base”.
Another former employee said FTX had sought a “light degree of endorsement” from Swift on social media. A person close to the discussions said Swift never contemplated agreeing to endorse the exchange.
“Taylor would not, and did not, agree to an endorsement deal. The discussion was around a potential tour sponsorship that did not happen,” the person said.
FTX’s rise to prestige was fuelled by wasteful spending on sports marketing contracts and celebrity acceptance. The company spent $135mn to ensure the naming rights to Miami’s basketball stadium and splashed out $20mn on a publicity campaign featuring Brady and Bündchen last autumn. Several crypto exchanges have disbursed heavily on commerce and sports deals to lure new DIY crypto investors.
The ruin of negotiations meant Swift has escaped association with FTX, which filed for Chapter 11 bankruptcy in Delaware last month, owing capital to up to 1 million creditors, and indicating a billion-dollar shortfall in client acquisitions. Bankman-Fried has accused serious management disappointments for the destruction but confronts accusations of misusing client money, which he rejects.
The company’s star-studded advertising also drew criticism for overselling difficult cryptocurrency investment to first-time investors. FTX’s multi-million dollar television publicity spot at the US SuperBowl has drawn fire for striving to develop fears of missing out.
“Consumers have been inundated with crypto advertising, anyone that watched the superbowl knows what I mean, aimed at stirring feelings of urgency and stoking fears of missing out,” US senator Amy Klobuchar said in hearings on FTX last week.
The advert featuring comedian and actor Larry David described FTX as “a safe and easy way to get into crypto”. David, who portrayed a tech-skeptic in the advert, demurred. “I don’t think so. And I’m never wrong about this stuff,” he said.