The bankruptcy of FTX and the arrest of its founder and former CEO are raising new questions about the role celebrity athletes such as Tom Brady, Steph Curry, Naomi Osaka and others played in lending legitimacy to the largely unregulated landscape of crypto, while also reframing the conversation about just how costly blind loyalty to favorite players or teams can be for the average fan.

Cryptocurrencies are digital money that use blockchain as the database for recording transactions. It isnt backed by any government or institution and it remains a confusing concept one that at first was largely the niche of tech-savvy coding specialists, people who distrusted governments and centralized banking systems and speculators with money to risk.

But now that risk is increasingly being taken on by investors who cant afford to lose, and the disparity in wealth between celebrities and their fans creates an ethical dilemma: Should sports stars, or teams, or leagues, be touting products that could lead their fans to financial harm? Or should fans bear the responsibility for their own risky behavior regardless of who is encouraging it?

In retrospect, it was an unwise business association that put Curry and Brady together with bad company, Mark Pritchard, a professor at Central Washington who has studied the intersection of ethics and sports, said in an email to The Associated Press. Not sure how much due diligence was paid to the decision, but it does call to mind a Warren Buffet quote: Be fearful when others are greedy and greedy when others are fearful.

Crypto and sports

The marriage between crypto and sports formed a few years ago and has only strengthened since, despite all the troubles plaguing the industry. A study by the IEG sponsorship group, for instance, found FTX and other crypto companies had spent $130 million for sponsorship in the NBA alone over the 2021-22 season; the season before, the sum was less than $2 million.

FTX itself had numerous ties to sports before its eventual collapse: The company paid an undisclosed amount to place patches on the uniforms of MLB umpires, $135 million for the naming rights on the arena where the Miami Heat play, and another $10 million to Currys basketball team, the Golden State Warriors, for ad placement in its arena and throughout the Warriors organization.

While those deals, as well as some others, cratered when FTX declared bankruptcy, plenty more live on. They include the naming rights for the home of the Lakers, which was once known as the Staples Center, but is now known as Crypto.com Arena, at the reported cost of $700 million over 20 years. There are crypto deals in cricket, soccer and Formula 1.

Separately, dozens of athletes have endorsed crypto, and in doing so, have led some of their fans to follow suit and others to file suit, against the likes of Curry, Brady and other high-profile personalities for using their celebrity status to promote FTXs failed business model.

Ben Salus, a Philly sports fan who has lost money in crypto, said he was uncomfortably surprised at the sudden increase of crypto-related signage around his favorite teams.

Its a very odd transition, especially because I dont know if the world was ready for the prominence of crypto, Salus said. Youre getting these big personalities backing a thing that they, or their teams, know something about, but not very much.

The debate has become even more complex over the past five years, with the intersection between crypto, digitized artwork offered in the form of non-fungible tokens (NFTs), legalized sports wagering and e-gaming, along with the ever-expanding virtual-reality Metaverse all growing more popular among large factions of sports stars and fans alike.

Its a lot more connected than people think, said Ryan Nicklin, who studies the role of crypto in sports as part of his public-relations business. And theres a lot more crossover from the crypto world to the gambling world and into gaming, because when you spend on one of these Metaverse games, youre essentially gambling since you dont know whether the value of that asset youve purchased is going to go up or down.

Cryptos move into the public mainstream wasnt driven by sports, but as it became a better-known commodity, sports leagues and teams and their athletes never shy about trying to make a buck off the latest trends got into the act.

Emotional attachment

A lot of endorsements have to do with an emotional attachment, said Brandon Brown, who teaches sports and business at New York Universitys Tisch Institute for Global Sport. So, it would make sense for these (crypto) companies to work with a sports team or a sports celebrity because theres an emotional attachment that goes along with that partnership.

One key moment came in 2020 when a few players, including Carolina Panthers Pro Bowl lineman Russell Okung, announced they would take all or some of their multimillion-dollar salaries in crypto.

So many purchase Bitcoin to become cash rich, Okung tweeted not long after the announcement. I bought it to be free from cash. Not long after, Bitcoin.com proudly stated that the increases in the price of Bitcoin had essentially doubled the $6.5 million portion of Okungs salary that was paid in crypto.

Bigger names followed. Actors Matt Damon and Larry David were among the Hollywood types. The mayors of New York and Miami made a splash when they, too, said they would take their pay in crypto.

Aaron Rodgers, Shaquille ONeal, Beckham Jr. and Trevor Lawrence were among a large group of high-profile athletes who also got into the act. One popular commercial involved Tampa Bay Buccaneers quarterback Brady and his then-wife, Gisele Bündchen, calling friends to talk crypto and playfully asking them: Are you in?

The relationship between crypto and sports is also regenerating a debate about how athletes should use the platform they wouldnt otherwise have but for sports. Colin Kaepernicks kneeling, to say nothing of the racial tensions laid bare in the U.S. by George Floyds killing in 2020, upended the old shut up and play cliché, and presented many athletes with an opening to use sports to send a message.

Curry is among those who has been unafraid to delve into some of societys more difficult topics, speaking out after Floyds killing and contributing to the Players Tribune website where athletes blog about their views unfiltered by traditional media.

Now, Curry is in the headlines again as one of many paid endorsers of FTX. But aside of being named in the class action lawsuit and being ridiculed on some social media sites that are heavily engaged in crypto discussions, there hasnt been any major blowback against Curry for his investments and endorsements and there may never be.

When the currency blows up, will people look poorly on the currency, or will people look poorly on Brady or Steph Curry? Brown said. Id venture to say that people are likely to have such a strong connection with their sports figures that theyll latch onto said sports figure and blame the other party, which in this case is FTX, or the currency.

AP Business Writer Ken Sweet contributed to this report.

The chief investment officer at Peconic Partners expects persistent pricing pressures to force the hands of the Federal Reserve in 2023, upsetting any hopes for a pivot. Stocks may rally periodically, he says, only to fade when reality sets in that rates will stay higher for longer, earnings are poised to fall and equities are far from cheap. 

The S&P 500 will be trapped in a band between 3,500 to 4,400 in the next 18 to 36 months, according to the market veteran who oversees $1.2 billion. Thats a range that has confined the index since its trough in June. The gauge closed near 3,850 Friday.

Rates will be sticky. And with the S&P at 19 times earnings, its going to be tough for the index to be doing much, Harnisch, who began his career in the financial industry in 1968, said in an interview. Its going to be a pretty broad trading range.

The managers record stands out at a time when many stock pickers have failed to deliver amid a violent selloff and dramatic shift in market leadership. Over the past three years, Peconic has returned 43% annually, compared with a gain of 9% in the S&P 500 over the same period. 

Peconic, which started in 2004, has a team of a dozen to discover companies that will expand faster than the economy in the long run. These stocks, the kernel of its portfolios, are usually held for seven to eight years. On the short side, the team builds hedges to offset the risk from the core holdings while looking for mispriced shares. 

With the specter of a recession on the horizon, Harnisch prefers companies whose revenues and profits will continue to increase regardless of how bad the economy goes. Businesses that offer that kind of resilience, he says, are those that tap into the ever rising demand for things like high-speed internet and clean energy areas where the government also plans to spend billions of dollars to promote growth.

Peconic counts power-line builder Quanta Services Inc. and Wesco International Inc., a distributor of electrical gear, among its top holdings on the long side. Shares of Quanta are up 25% this year, while Wesco has lost 9%. Both are ahead of the S&P 500, which is down 19%.

The people on the ground like Quanta, Wesco theyre not looking at a recession, Harnisch said. When you add up everything that is taking place, the industrial space is not so much the soft landing story as much as it is whats happening to these companies and why theyre not seeing a slowdown. Its a tsunami. 

The seed for a winning year was sown in September 2021, when Harnischs team spotted a spike in wage gains. While Fed officials largely dismissed inflation as transitory at that time, the money manager saw red flags that wage inflation would persist, forcing policy makers to reverse their zero-interest rate policy fairly soon.

His firm began doubling down on bearish wagers against tech firms and pandemic high-flyers including online retailers Carvana Co. and Wayfair Inc., shares that had surged either on Fed largesse or false hopes for a durable sales boom. 

Those bets paid off handsomely as the central bank has rushed to raise rates at the fastest pace in a generation. Carvana and Wayfair have plunged more than 80% this year while the tech industry hosts some of 2022s worst losers. 

Now Peconic is targeting the next big short, such as cable-services providers, advertising firms and retailers. Harnisch wouldnt identify specific names as his team is still in the process of building positions.

The way Harnisch sees it, optimism that stocks will go back to new highs in 2023 is premature. While Peconic is ready to ride bear-market bounces, as it did during the equity rally in October and November, the money manager expects a combination of weakening corporate profits and higher rates to put a cap on equities. 

After boosting net leverage to 50% during the latest market recovery, the high end of its typical range, the firm started cutting stock exposure as the S&P 500 failed to pierce through the 4,100 level. As of Thursday, its leverage sat near 30%. 

With the tape the way it is, its starting to discount some of the earnings challenges, Harnisch said. Were very comfortable pulling back now and seeing how low it goes. 

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But if youre a man, you might have a better chance of hearing a yes to your request.

According to a recent survey by CNBC, while the same percentage of men and women (11%) asked for a raise this year in response to the rising cost of living, men were more likely to get the salary bump. Fifty-nine percent of men received a raise, compared to only 52% of women. 

This isnt a great look for employers given the persistent gender wage gapper the Census Bureau, women make an estimated 82 cents on the mans dollar. And its far worse for women of color. Not to mention the number of women working full-time plummeted during the pandemic. Today, women are likelier than men to work part-time, or to not work at all. 

For both men and women, reasons they were denied a raise were fairly uniform: 35% told CNBC their bosses didnt provide a reason, 22% said their company didnt have the budget for a salary increase, 15% said they werent eligible, and 8% blamed bad timing.

No one is happy to have their raise denied, and just one-third of U.S. workers think theyre paid fairly to begin with. That may not be surprising, given that CEO pay has skyrocketed by 1,322% since 1978 while the average employee wage grew by just 18%, according to the Economic Policy Institute. In 2020, CEOs were paid 351 times more than a typical employee.

Failing to secure a raise at a critical juncture can cause a ripple effect across all areas of a persons life, from their career to their savings. Forty-four percent of women surveyed told CNBC theyre currently unprepared for retirement; just 33% of men said the same. More immediately, being denied a raise can also push employees to go on the job hunt. A recent survey by Great Place to Work found that 54% of women were planning to look for new jobs this year, in part because they didnt feel like they were paid fairly.

As a result of the gender pay gap, a woman who begins a full-time career today stands to miss out on $417,400 over the course of a 40-year career, according to analysis from the National Womens Law Center. 

Transparency could fix the problem

Experts have long maintained that greater salary transparency, on every level, is one of the best solutions for closing wage gaps between workers. 

Increasingly, cities and states are passing pay transparency laws: They have already gone into effect in New York City, California, and Colorado, and will begin in Washington State as of Jan. 1, 2023. 

A study from the University of Utahs Eccles School of Business tracked the wages and productivity of nearly 100,000 U.S. academics over two decades. They found that pay transparency substantially reduces the gender pay gap as well as other forms of pay inequity [by up to 50%]. 

In response to transparency shocks, as the researchers call it, companies substantially alter their wage adjustment policies, particularly by granting bigger pay increases to those in historically underpaid groups, especially women of color.

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