Advisers hired by FTX are looking to recoup some of the money the exchange paid to several sports stars for partnerships and endorsements.
Alvarez & Marsal, financial advisers for Sam Bankman-Fried’s failed crypto exchange FTX, are reportedly probing whether millions of dollars paid to celebrity athletes, including tennis star Naomi Osaka and four-time NBA champion Shaquille O’Neal, can be recovered.
In a recent court filing, the company disclosed that it had reviewed several payments made to individual athletes, Major League Baseball (MLB), and Formula 1 racing teams to determine if they were subject to Chapter 11 rules that would allow FTX to reverse them. The advisers hope the funds may be used to offset claims made by the bankrupt exchange’s customers and creditors.
FTX used its association with sports stars and leagues such as the MLB, NBA, and Formula 1 (F1) to elevate its status. It reportedly paid $4.9 million to the MLB and $12.2 million to Formula 1 before filing for bankruptcy in November 2022.
The MLB deal required umpires to wear FTX-branded patches for a time, while the Formula 1 payment was to foster a sponsorship between FTX and one of F1’s leading teams, Mercedes-AMG Petronas.
According to the document, FTX paid $2.5 million to Authentic Brands, a company associated with O’Neal. It also revealed that the exchange paid Osaka $2 million only days before it filed for bankruptcy. The FTX advisers claim the exchange paid $4.3 million to O’Neal and $3.2 million to Osaka.
FTX also disclosed it had paid $3.4 million to the Golden State Warriors and an additional $242,000 to SC30, a company owned by the team’s star player Stephen Curry.
According to Alvarez & Marsal, a portion of the F1 payment could be recouped if Chapter 11 rules were applied.
Other athletes who made money from FTX endorsements include Trevor Lawrence of the Jacksonville Jaguars, who received $500,000, and former Boston Red Sox David Ortiz, whose charity got $600,000.