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Latin American Unicorns Begin Betting on Sports Sponsorship

Startups such as Kavak, Bitso, Nubank, Rappi and Chiliz see sport as a way to achieve their brand-building and customer-growth goals

The logos of unicorns such as Kavak, Bitso, Nubank and others in Mexico and Latin America have begun to appear on shirts, helmets and stadium billboards.
February 01, 2022 | 01:15 pm

Mexico City — Mexico’s national soccer team now has a couple of unicorns as sponsors that will accompany the team in its quest to represent the country in the FIFA World Cup in Qatar later this year.

Used car sales platform Kavak and cryptocurrency exchange Bitso are the soccer team’s newest sponsors, with their logos appearing on the team’s shirts and merchandise alongside the likes of Coca-Cola (KO), AT&T (T), Adidas and Grupo Financiero Banorte (GFNORTEO).

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The increasing participation of startups, tech companies and those offering crypto, NFTs or fan tokens is no surprise to experts on sports sponsorship, however.

“New categories are emerging in life and the economy,” Carlos Cantó, CEO of Spain-based SPSG Consulting, which offers consultancy services on sports sponsorship to companies including Banco Santander and Enel, said in an interview with Bloomberg Línea.

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On an international level, cryptocurrency platforms have gained space in the sponsorship world. Since June 2021. Crypto.com is a global sponsor of Formula 1, and the company’s brand has also reached the NBA, leading to a change of name for the Staples Center, home of the Los Angeles Lakers, which is now the Crypto.com Arena.

Another company in the sector, Binance, is now a sponsor of Argentina’s national soccer team.

In Latin America, companies such as Brazil’s Nubank, which debuted on the NYSE late last year, or delivery app Rappi, are also part of this new wave entering the sport sponsorship space.

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Nubank is a regional sponsor of the World Cup, while Rappi sponsors Colombia’s national soccer team and Formula 1 team McLaren Racing.

Cantó recalled that, several years ago, sponsors of F1 were primarily alcohol and tobacco companies, with their places gradually taken by new kinds of firms, such as banks.

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Kavak, founded in 2016 and which raised $700 million in its most recent financing round, began its sports sponsorship in F1, linking its brand to Mexican race driver Sergio ‘Checo’ Pérez.

The company expanded its participation in sports sponsorship in 2021, and Mexican national soccer team goalkeeper Guillermo Ochoa joined the company as a shareholder. Kavak became a sponsor of Mexico City-based soccer team Club América, which is owned by media giant Grupo Televisa, before becoming a sponsor of the national soccer team in November.

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“One of our main goals is to support the country’s development on all the fronts we can,” Alejandro Guerra, director general of Kavak México, said in a press release announcing the sponsorship deal.

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Guerra said the motivation behind the sponsorship is the inspiration that talented athletes bring to “millions of Mexicans”.

According to SPSG Consulting’s Cantó, companies choose to channel funds into sports sponsorship because it offers them advantages compared to other marketing and promotion strategies.

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On the one hand, these campaigns are not intrusive, in the sense that there is a willingness on the part of the public to receive and digest their messages.

And such campaigns also allow companies to achieve various objectives beyond raising the visibility of their brand, such as obtaining revenues, reaching new customers, growing their reputation and creating pride among their employees to belong to the company due to its links to a sports team.

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Such campaigns also allow brands to reach various segments of the public at the same time, and not just fans and potential customers, opening the brand up to investors and other interested parties.

“That is why sports sponsorship grows, and grows and grows,” Cantó said.

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A Double-Sided Coin

Photo: Courtesy of Club de Fútbol Tigresdfd

Clubs, athletes, events, and properties make sponsorship rights available for a determined period of time, and companies can become sponsors through payments or payments in kind, although the majority of sponsors engage in sponsorship that mixes both.

“It’s a question of both sides of the same coin to take advantage of such collaboration,” according to Cantó.

When Bitso announced in November it would begin a three-year sponsorship deal with Mexican soccer team Tigres, which belongs to the Nuevo León Autonomous University, it was clear that the collaboration between the two would go beyond the linking of their brands.

The alliance includes the possibility for fans to make payments using cryptocurrency in their visit to the stadium and in their purchases in the team’s online store, opening the possibility for the issuing of fan tokens and NFTs.

The deal also allows clubs to analyze the possibility of using cryptocurrency to pay part of their players’ salaries, as well as using them to pay players’ transfer fees.

“These alliances allow us to be agents of change that help to transform the industry,” Mauricio Culebro, president of Tigres soccer club, said during the press conference announcing the Bitso sponsorship deal.

On January 31, the club’s women’s team, Tigres Femenil, made its first international transaction in cryptocurrency through its sponsor, transferring its player Stefany Ferrer to Angel City FC, a team in the U.S. National Women’s Soccer League, using crypto assets.

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Bitso, which in its latest financing round raised $250 million, has a growth strategy focused on other Latin American markets such s Brazil, the region’s economic giant, and has signed sponsorship deals with São Paulo FC, and recently announced it will also sponsor Mexico’s national soccer team.

“Having Bitso as part of the family brings our fans, through cryptocurrencies, a new way of engaging with the national soccer team,” Yon de Luisa, president of the Mexican Football Federation, said in a press release.

In Argentina, soccer team Club Atlético River Plate announced Tuesday that Chiliz, a blockchain solutions company for the sports industry, will launch its official $RIVER Fan Token through the Socios.com app.

Argentina’s reigning champions are the country’s most successful club, with 36 league titles, and one of the most successful soccer teams in the Americas, having won more than a dozen continental trophies, and with 20 million followers on social networks.

The $RIVER Fan Token will allow fans to actively connect with the team, giving them for the first time the ability to participate in decisions the club makes, such as naming club facilities, choosing kit designs and new signing numbers, while benefiting from advantages such as discounts and exclusive promotions, with the chance to win prizes and unique experiences, as well as interact with other fans through chat rooms, games and contests.

With this agreement, River joins the list of world soccer superpowers that have already launched their official Fan Token on Socios.com, and which includes FC Barcelona, Manchester City, Paris Saint-Germain, Juventus, Inter Milan, Arsenal, Atlético de Madrid, Corinthians and Flamengo.

Socios.com is a D2C (direct-to-consumer) platform that uses blockchain technology to offer sports organizations the tools to engage and monetize their fanbase on a global scale, and has more than 120 partners in 26 countries, and more than 1.3 million users in 167 countries.

A ‘Double Investment’

One of the challenges that companies face when entering sports sponsorship is the investment needed to take advantage of such alliances, however.

“When a brand invests in sponsorship it has to invest twice”

Carlos Cantó, CEO of SPSG Consulting

Cantó pointed out that some brands use up all the sponsorship budget in acquiring the sponsorship rights, and then have no resources left to execute the sponsorship. However, a well managed sponsorship can be a profitable investment and measured against its goals.

“Brands are more and more aware that it is a long-term investment,” Cantó said.

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