3 Charts: Crypto, 🇻🇪 Oil History, 🇺🇸 Sports

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In 1922, Venezuela’s oil reserve — the largest globally — was discovered, and the country was set for an enormously prosperous period. It required foreign companies to pay 50% of their profits to the government in 1943. By 1950, Venezuela was the world’s 4th wealthiest nation per capita. It continued being considered Latin America’s crown jewel for decades later. Thanks to favorable oil prices, the government spent lots on social programs like health care, education, and food subsidies. Workers enjoyed the highest wages in Latin America. Amid this boom, President Carlos Andres Perez nationalized the oil industry and created Petróleos de Venezuela (PDVSA).

Venezuela’s fortunes started to shift in the 1980s when oil prices dropped steadily. The drop was a consequence of an oversupply of oil following Iraq’s invasion of Iran. PDVSA went on a shopping spree of foreign oil refineries during this period, most notably Citgo. The acquisitions amassed extensive debts for the country, and in 1989 the IMF provided a $4.6B rescue package. Over-reliance on oil and divided political institutions caused the economy to continue in a downward spiral.

Hugo Chávez entered the country’s spotlight, first through a failed military coup in 1992 and then was elected through a socialist campaign in 1998. Around the 90s, 66% of Venezuelans lived in poverty, and his socialist agenda appealed to much of the population. Chávez took on several reforms that reduced poverty by 20% but incurred even more debt. He weakened the country’s institutions and ended presidential term limits, becoming an unelected dictator.

The country’s fate continued to go downhill after Chavez’s death in 2013. Oil prices tumbled (and so did the economy), and Nicolás Maduro took office. Since his term started, dozens of countries have enacted sanctions to oppose his military regime. Millions of Venezuelans have since fled a country in crisis.

A few weeks ago, US officials approached Maduro to potentially remove sanctions after cutting out Russia due to its invasion of Ukraine. Although that could be positive news for Venezuelans, history shows that overreliance on its oil reserves and dictators are the real issues that need to be addressed.

The NBA has grown in popularity in Latin America in the last few years at an exploding pace. In 2016, the league claimed to have upwards of 67 million fans. Since then, according to Arnon de Mello, the league’s Managing Director in LATAM, the numbers have doubled. The league expanded its audience through a series of nontraditional marketing strategies like partnering with music venues, fashion events, and soccer players that are basketball fanatics. It has also found innovative ways to make games watchable for the general population - for example, via Budweiser’s social channels and Brazilian streaming star Gaule’s Twitch channel.

While Google Search Trends data suggests that most Latin American countries prefer the NBA over other US sports leagues, there are a few exceptions.

Dominican Republic, Cuba, Nicaragua, and Venezuela prefer the MLB. It’s likely not a coincidence as these four countries are significant sources of athletes for the league. According to Wikipedia, almost 300 players in the MLB are from Cuba, Venezuela, or the Dominican Republic. Additionally, 24% of all MLB players are from Latin America.

Mexico is the only country in the region that prefers the NFL. They’ve been at the forefront of the NFLs entrance into global markets, with women notably making up 48% of Mexico’s NFL fanbase. As we mentioned in our NFL chart two months ago, the league assigned a country for each of its teams as an “International Home Market Area,” granting access to international fanbases through marketing and merchandising. Nine teams were assigned to Mexico, the most out of any country; the Miami Dolphins were assigned to Brazil.

Blockchain technology and cryptocurrencies are on the rise in the continent. Latin Americans sent up to three times as much money to their family and friends back home using cryptocurrency in 2021 compared to the previous year, according to estimations by Chainalysis.

As much of Latin America has struggled with financial chaos, this does not surprise. Amid high unemployment and plummeting reserves, inflation throughout the region has increased significantly. Crypto has become a viable alternative to unstable national currencies despite the risk of cryptocurrency and volatility of digital assets. Its promise of independence, ease of transfer, and digital convenience has appealed a region heavily dependent on remittances.

Still, the path has not been smooth for everyone on the startup ecosystem trying to capture this emerging market. While Mexican Bitso raised $250M in their Series C last year, Venezuelan startup Valiu announced its closure after “great challenges and risks, which became very difficult to overcome,” according to its founder Simón Chamorro.

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That’s all for this week 👋

Comment of the week, from Reddit, in response to our US Cities vs LatAm countries GDP chart. It also relates to today’s chart on Venezuela.

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