Why is Ferrari set to face a $55 million hit? The Prancing Horse sees drama beyond grid in 2023

Ferrari are set to take a massive hit financially in 2023, as they lose two of their major sponsors Velas and Snapdragon.

The Italian team had partnered with Velas in what was supposed to be a long-term deal, but with the apparent lack of compliance from both parties, the association has ended.

In a recently released report by RacingNews365:

"Ferrari and crypto company Velas will not continue their partnership after an acrimonious first year. The blockchain brand has been removed from the brand's partner list, as has the logo of chip semi-conductor company Snapdragon."

"Both were ranked as premium sponsors of the Scuderia. Ferrari announced a long-term deal with crypto company Velas in late 2021, with branding appearing on cars and driver suits."

According to the report, in the case of Velas, the Crypto partner was said to be in a financial breach, while Ferrari too had not complied with the terms. The report said:

"A source close to both companies has indicated that Ferrari did not comply with clauses that permit Velas to create NFT images, while the latter is said to be in financial breach. According to the source, legal action is being contemplated by the parties."

In the case of Snapdragon, the split is mutual as a joint statement seems imminent from both parties. By the looks of it, Snapdragon might be hopping across the grid to Mercedes, the report said:

"Regarding Snapdragon, another source indicated to RacingNews365 that the split is mutual, with a joint statement expected in due course. Snapdragon is likely to move to another F1 team, potentially returning to Mercedes after the semi-conductor’s parent company Qualcomm and Mercedes recently announced a major ‘cockpit’ electronics joint venture."

The Velas deal was supposed to be worth $30 million, while the Snapdragon deal was worth $25 million. So the Italian team are looking at a financial hit of $55 million overall.

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Ferrari not the only team hit by loss of Crypto partnerships

The Italian team is not the only one hit by the recession in the Crypto market. In the 2022 season, Mercedes endured a similar fate, as their partnership with FTX was terminated.

In a statement, Mercedes boss Toto Wolff said that most of the partnerships in the sport based on Crypto were going to take a hit. He said:

"Every team has sponsors like that, and so does the Formula 1 organisation as such. So everyone would be affected."

The ongoing crypto market crash is surely going to affect other teams on the grid as well, as most teams had entered into crypto partnerships early in the 2022 season.