The 1st Overall NBA Pick Is Being Paid In Bitcoin

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Hey Friends,

Less than three weeks removed from being named the first overall pick in the 2021 NBA Draft, Cade Cunningham is already starting to think about his investment portfolio.

Cunningham announced an exclusive, multi-year partnership with BlockFi yesterday, a popular brokerage platform to buy, sell, and earn cryptocurrency.

The interesting part? The nineteen-year-old former Oklahoma State Cowboy has accepted 100% of his signing bonus in Bitcoin.

In return, Cunningham will collaborate with BlockFi on “educational videos, promotional giveaways, exclusive interviews, and other efforts to raise awareness about the value of cryptocurrencies.”

We could sit here and debate the intrinsic value of various cryptocurrencies for hours; I’m not interested in that. Whether people agree with the underlying fundamentals or not, these deals are becoming more common within the world of sports & entertainment.

The #1 overall pick in the 2021 NFL draft, Trevor Lawrence signed a deal with Blockfolio earlier this year and accepted his signing bonus in crypto. Additionally, Russell Okung announced last year that he was being paid 50% of his NFL salary in Bitcoin.

Saquon Barkley recently announced that he would be paid 100% of his $10 million-plus annual endorsement income in Bitcoin, and Tom Brady signed a deal with crypto exchange FTX in June where he received equity in the company and a signing bonus paid in crypto.

Hell, even global soccer icon Lionel Messi accepted part of his PSG “welcome package” in fan tokens, the french clubs attempt to build a new digital fan community.

That doesn’t even include the $1 billion-plus that companies like Crypto.com and FTX have spent on marketing deals with Major League Baseball, the Miami Heat, Formula One, the UFC, esports organization TSM, and others.

The reality is that these companies have a lot of money to spend. The two largest cryptocurrencies, Bitcoin & Ethereum, are up 300% and 650%, respectively, over the last year, and crypto exchanges like BlockFi & Coinbase have seen their business explode in popularity.

Coinbase Q2 Earnings (Y/Y Increase)

• Net Revenue: $2.03 billion (+1,042%)

• Trading Volume: $462 billion (+1,550%)

• Assets on Platform: $180 billion (+593%)

• Monthly Transacting Users (MTU): 8.8 million (+486%)

In simple terms, with markets becoming gamified for younger participants and the continued rise in digital assets, transactional revenue within crypto has skyrocketed.

And what do you do with that money? Don’t forget; the government allows you to deduct marketing expenses from your taxable income that are used to generate or keep customers. So that’s what these businesses are doing.

Wild Stat: A few years after launching the product, Robinhood now makes *significantly* more money from crypto trading than from equity trading.

As for Cade Cunningham and other athletes, I think these endorsement deals have become much more controversial than they deserve.

Cade will be paid more than $45 million over the next four years through his NBA contract. However, depending on how his investment strategy takes shape, the Bitcoin he receives through this endorsement deal will most likely end up representing a small portion of his overall investment portfolio.

If, instead, you were told that his investment portfolio consisted of millions of dollars in stocks, bonds, currencies, commodities, real estate, and more, with just 1-3% allocated toward crypto, would you even blink an eye?

The answer is no because it’s an uncorrelated asset class, diversified, and has been the best-performing financial asset over the last decade. Not to mention the cash income and marketing exposure he’ll also receive from the deal.

Athletes will individually choose how they want to be compensated, and everyone’s risk tolerance & belief in crypto is different. However, as these exchanges continue to grow in popularity and value, these cash & crypto agreements will only become more common.

Have a great weekend. I’ll talk to everyone on Monday.

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