Column: Shohei Ohtani and Major League Baseball take a hit over FTX ties
This should be a banner week for Shohei Ohtani, baseball’s truly global superstar.
This is the week the American League most valuable player and Cy Young awards are announced; Ohtani finished fourth in Cy Young voting and is a finalist for MVP. On Thursday, Ohtani declared that he would participate in the 2023 World Baseball Classic, joining Angels teammate Mike Trout as high-profile entrants in an event too many of baseball’s best players have skipped in previous years.
Alas, this also is the week Ohtani was named as a defendant, one of eight sports stars sued in a class-action lawsuit against FTX, the now-bankrupt cryptocurrency exchange.
The suit alleges FTX needed Ohtani and other celebrity defendants — including Tom Brady, Stephen Curry, Naomi Osaka and Shaquille O’Neal — “to continue funneling investors into the FTX Ponzi scheme.” The suit alleges consumers suffered $11 billion in damages.
Wednesday marked one year since the announcement that FTX had agreed to “a long-term partnership with global icon and history-making MLB Superstar Shohei Ohtani.”
In June of last year, five months before Ohtani signed with FTX, Major League Baseball did. In a five-year sponsorship deal, FTX was named the “Official Cryptocurrency Exchange brand of MLB,” and its patches were slapped onto the jerseys of umpires.
Sam Bankman-Fried’s $16-billion fortune was always a myth. The mystery is why venture firms and the financial press thought it existed.
Imagine that: baseball’s arbiters of fairness and justice, brought to you by a company alleged to have run a Ponzi scheme.
The FTX name is coming off the arena where the Miami Heat play, and the football field where the University of California plays. Is the FTX name coming off the MLB uniform patches too?
“I think that’s probably a pretty good bet,” commissioner Rob Manfred said Thursday.
Manfred declined to say how much money the league would lose, assuming the FTX sponsorship deal collapses, but he did call it “a meaningful deal for us.” Still, the reputation of perhaps baseball’s greatest player has been sullied by his participation in a venture for which the league itself had vouched.
In the news release unveiling the FTX sponsorship, MLB chief revenue officer Noah Garden was quoted thusly: “This is an incredibly exciting announcement for everyone in Major League Baseball as we partner with a global leader in the early stages of their unbelievable growth.”
Unbelievable might have been exactly the right word, as it turned out.
Angels two-way star Shohei Ohtani said Thursday that he has informed Team Japan that he would like to take part in the 2023 World Baseball Classic.
In a court filing Thursday, the veteran lawyer in charge of shepherding FTX through the bankruptcy process wrote that “never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.” The lawyer noted he had more than four decades of work in this legal specialty, including supervision of the Enron case.
The lawsuit filed this week, separate from the bankruptcy case, alleges FTX retained “some of the biggest names in sports and entertainment” to lure investors who would account for “billions of dollars into the deceptive FTX platform to keep the whole scheme afloat.”
The suit claims Ohtani and other celebrities did not carefully evaluate FTX before endorsing the company, whose “fraudulent scheme was designed to take advantage of unsophisticated investors from across the country.”
Although Ohtani was named in the lawsuit, Manfred noted the league itself was not.
“I think we have been careful about the scope of involvement with crypto companies,” he said. “We have a full understanding of the uncertainties and legal risks in that landscape. We’re going to continue to be careful in that area.
“Obviously, individual players take advice from people other than us on those topics.”
Still, while the bankruptcy might have come out of nowhere, concerns about FTX were evident. The enormous moon heads sitting in camera range behind home plate — FTX promoted “Moon Blasts” — might have been cute. Or creepy. Your choice.
Yet, in August, the Federal Deposit Insurance Corp. ordered FTX to stop suggesting cryptocurrency investments were either regulated or insured by the federal government.
Albert Pujols’ personal-services contract with the Angels could potentially prevent him from having any role with the St. Louis Cardinals for 10 years.
“These statements are likely to mislead, and potentially harm consumers,” an FDIC attorney wrote to FTX.
Manfred was asked whether that lack of regulation should give the league any pause in engaging with cryptocurrency entities.
“Obviously, the FTX development was a little jarring,” he said. “We have been really careful in moving forward in this space. We’ve been really religious about staying away from coins themselves, as opposed to more company-based sponsorships. We think that was prudent, particularly given the way things unfolded.
“We will, I think, proceed in caution in the future.”
That would indeed be prudent, lest the drive for sponsorship revenue overtake the diligence in exploring every allegedly revolutionary outfit dangling millions before baseball’s owners. As of Thursday, Ohtani’s reputation had been dinged, and the MLB website still included FTX among the league’s 38 official sponsors.
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