This past December, a student appeared in the background crowd shot during a broadcast of ESPN’s weekly College GameDay, holding up a sign that requested financial assistance from his parents.
However, in a sign of the times, in place of the traditional dollar amount he needed, the sign read, “Mom please send . . .” followed by a logo for digital currency bitcoin and a QR code to his personal bitcoin account. Over the next several weeks, the kid received more than $23,000 in bitcoin currency in his account. It was not disclosed how much of that came from his family and how much from the virally concerned public at large.
That incident helped lend credence to a strategy initiated by the executives at BitPay, an Atlanta-based firm that processes bitcoin transactions for firms and individuals.
In June, BitPay signed a deal with ESPN Events and the St. Petersburg (Fla.) Bowl Committee to become title sponsor of the annual postseason college football game previously known as the Beef O’Brady’s Bowl and what for the next three seasons will be the Bitcoin St. Petersburg Bowl, to be played in December at Tropicana Field. This week, BitPay signed a multiyear pact, brokered by IMG College, to become sponsor for the football and basketball programs at Georgia Tech.
IMG College said that deal was paid for using the software-based bitcoins, although the financial details were not disclosed.
Not by coincidence, Tony Gallippi, BitPay’s CEO and cofounder, and Stephen Pair, cofounder and CTO, are both graduates of Georgia Tech.
BitPay said it is working to make the Bitcoin St. Petersburg Bowl a “full bitcoin experience” by expanding the use of bitcoins prior to and during the game, in Tropicana Field and among merchants throughout the Tampa-St. Petersburg area.
The moves enhance a strategy of reaching a target audience of “young tech-savvy males” by aligning BitPay with sports that began in February when the firm signed a deal with the NBA’s Sacramento Kings. This past season, the team enabled fans to use bitcoins to pay for tickets, merchandise in the Kings team store and items at concession stands in Sleep Train Arena. A Kings’ bitcoin Web destination allows consumers to purchase team gear online.
Other teams and leagues either use or are considering the use of bitcoins. The San Jose Earthquakes of Major League Soccer this season, via San Francisco-based Coinbase Inc., brought bitcoin processing to Buck Shaw Stadium.
BitPay said it not only plans to expand its alliance with the Kings this season, but has been in contact with other leagues and teams to include bitcoin payment.
The strategy is not limited to sports. In June, BitPay was assigned to processes the account for rapper Curtis “50 Cent” Jackson that accepts bitcoins as payment for his just-released album, Animal Ambition. During the North American Bitcoin Conference in Chicago (July 18-20)—attended by Gallippi and other industry leaders from across the bitcoin community—a kickoff party in the House of Blues was sponsored by BitPay.
Bitcoin technology was unveiled about five years ago and is currently used by about 1% of the U.S. population, according to industry analysts. Expedia, Dish Network, Dell and Overstock.com are among the companies that accept bitcoin as payment.
Here, Stephanie Wargo, VP-marketing for BitPay, talks about the company’s marketing and financial strategies regarding sports and entertainment and how those connections are helping bitcoins to go mainstream.
What are the biggest challenges facing BitPay and bitcoin itself?
On both points, it’s about educating people and getting them to know what it is, what it does and what the benefits are. Bitcoin is the equivalent to the coins or dollars you have in your pocket. Then there are companies built on top of the bitcoin network that process accounts. It’s similar to Google and Yahoo!, which sit in the Internet. BitPay is one of the leading companies in the bitcoin network. So the challenge there is getting people to know who we are and what we do, and helping to expand the use of bitcoins through our company and the network.
How difficult has that been?
It has become a bit easier. The initial users are tech-savvy and willing to acclimate to a new system. They may not be using it all the time, but they understand it, support the places that accept bitcoins and are able to drive education and usage to others. They get it. Overall, merchant acceptance has been a bit easier than mass-market acceptance at this point.
What is the demographic at this point?
It tends to be young, male, tech-savvy and well educated. Think about the early users of the Internet and e-mail. It tends to be the same demographic. There is a great synergy there between who we are and what services we are providing and who they are and what they are looking for. So we can speak to them and reach them without going through a lot of explanation and demonstration. That community knows bitcoin inside and out.
Among other deals, BitPay has an alliance with the NBA’s Sacremento Kings and recently signed a three-year deal with ESPN Events for title sponsorship to the college football Bitcoin St. Petersburg Bowl. Why are these sports deals part of your strategy?
This really supports our strategy of reaching our target demo and also helps to get BitPay into a mainstream conversation. We had been in contact with several teams. But the Kings actually came to us. They had done their research on bitcoin. They approached us at the [Consumer Electronics] Show this past January. Their [majority] owner, Vivek Ranadivé, is very tech savvy. He is constantly looking for innovations for the team and its fans ]via a business philosophy he calls “NBA 3.0,” to make investments in technology, globalization and community partnerships].
Is that what led to working with ESPN Events to acquire naming rights to what was then the Beef O’Brady Bowl?
We started to work with the Kings [in February], which was our first official sports alliance. But even before that happened, Tony Gallippi talked about possibly doing a college football bowl game. This was around the time that kid was shown on ESPN holding up a sign asking his mom to send bitcoins to his account. He received something like $23,000 [in bitcoin value]. The first time Tony said we should be involved in a bowl game I kind of ignored it. When he mentioned it again, I said I would do some research. If we did become associated with a college football bowl game, I wanted to make sure we would be able to have BitPay involved in the entire ticket payment process and have the potential for bitcoins used for tickets, travel, merchandise and items at the concession stands. Ultimately, we were able to work out a deal with ESPN and the St. Petersburg Bowl Committee.
Why call it the Bitcoin Bowl instead of the BitPay Bowl?
That was definitely a big part of the conversation. Ultimately, the strategy was to call it the Bitcoin Bowl in order to have other members of the bitcoin community be part of it. This allows those companies to come in and showcase what they do as part of the bitcoin network.
What are some of your plans for the Bitcoin Bowl as far as engaging the local community and also engaging viewers on ESPN?
We plan to have a massive bitcoin undertaking, driven by BitPay. A full-fledged bitcoin rollout, if you will. As Tony has said, our goal is to establish a system so that someone could plan their entire Bitcoin St. Petersburg Bowl experience using only bitcoin to pay for travel, hotel, tickets, hot dogs, meals, T-shirts and other merchandise. We will make several visits there between now and the actual game to work with the St. Petersburg Bowl Committee and the local businesses to help establish a bitcoin system, setting up iPads and tablets and downloading apps to their phones.
It seems as if college students, and not just those into football bowl games, would be a great target audience supported by this game.
Certainly. We will extend into our message and education to the university students, the educators and the parents of the students. Students are certainly early adaptors and they are ready and willing to share their use and knowledge of bitcoin. You will see us become more involved in college sports and the surround communities.
How did the first season with the Kings work out?
This past season, the Kings began to accept bitcoins for team merchandise and tickets. They told us that they loved the bitcoin system and the way it worked. It goes back to the fact that they are very forward thinking when it comes to technology. They have been very happy with our alliance and we plan to expand our relationship with them in 2014-15.
Have you now heard from other leagues and teams?
We already had been reaching out to other [sports franchises]. It was pretty crazy here after we announced the naming rights deal, but crazy in a good way. We have heard from pretty much every sports organization: basketball, hockey, football, college football, golf, auto racing, sports arenas and stadiums, and from specific teams and organizations. I can’t talk about specific deals that we might have in progress or that we are working on, but I can say that working with the Kings and now with ESPN has pretty much raised our profile in the sports category.
Do you foresee athlete endorsements as BitPay and bitcoin marketing efforts become established?
I don’t see that right now, but we do know of athletes and entertainers who use bitcoin. 50 Cent said he would accept bitcoins as payment for his new album [Animal Ambition]. Although he is not an official endorser, BitPay is handling the transactions and we are pretty excited about it and the potential for the future in the entertainment category.
What are BitPay’s plans for the coming years?
As bitcoin continues to grow you look at the adoption curve. Basically, bitcoin the network is like the Internet and e-mail in 1994. So from an adoption standpoint, we have to continue to educate, build and get more people to understand how this works and what the benefits are. In that context, we want to get over the 2002 hump where everyone was on the Internet, everyone had access to it and everyone understood it. Because of the demographic of the initial bitcoin user, and its mass-market appeal across all ages, genders and race, sports and entertainment is a good way to do that.
This interview was reprinted with permission of NYSportsJournalism.com.
