FTX Seeks to Reverse Millions of Dollars Paid to Athletes for Brand Hype

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FTX Seeks to Reverse Millions of Dollars Paid to Athletes for Brand Hype
  • FTX examines recovering millions of dollars paid to athletes and teams.
  • Payments to athletes like Shaquille O’Neal and Naomi Osaka are under scrutiny.
  • The report revealed specific payments to Major League Baseball and Formula 1 partnerships.

According to a recent report by Bloomberg, financial advisers working on behalf of FTX Group are examining the possibility of recovering millions of dollars in payments made to prominent figures in various professional athletes and teams. 

The report noted that the payments were made as part of promotional agreements with FTX founder Sam Bankman-Fried before it collapsed in November last year. 

Notably, the FTX financial advisers disclosed their scrutiny of the payments in court documents. They analyze whether these transfers could be clawed back under the provisions of Chapter 11 bankruptcy rules that allow companies to reverse transactions just before a bankruptcy filing.

While the report does not provide a breakdown of FTX’s spending on endorsements, it disclosed how FTX leveraged the star power of celebrity athletes for marketing purposes. It included celebrities from Major League Baseball, National Basketball Association teams, and Formula 1.

Meanwhile, the report does not specify whether FTX’s advisers believe all the payments can be recovered or if any athletes or teams have voluntarily offered to return the funds. 

Moreover, FTX cautioned that these financial disclosures may not be complete due to a lack of detailed historical amortization information and may be subject to further amendments. FTX’s CEO following the bankruptcy filing, John J. Ray III, explained that the company lacked reliable financial information and did not maintain complete financial records.

Nonetheless, the report revealed specific payments made by FTX, including $4.9 million disbursed to Major League Baseball. It also included approximately $12.2 million related to partnership agreements with the Formula 1 racing team Mercedes-AMG Petronas. 

Furthermore, FTX disclosed $3.4 million in payments to the NBA’s Golden State Warriors and nearly $242,000 to star player Stephen Curry’s business, SC30 Inc. 

FTX indicated that some Formula 1-related payments and payments to the Golden State Warriors could be reversed through the Chapter 11 process, based on billing records from the firm’s financial adviser, Alvarez & Marsal.