Flush with a bucket load of cash from the last 18 months’ bull run, crypto companies are making headlines after throwing hundreds of millions of dollars in sports sponsorship deals. Moreover, the sporting industry has realised the potential that cryptocurrencies and blockchain technology have to further monetise fan engagement, attract sponsors and engage a global market in ways that were unheard of only a decade ago.

In today’s day and age, each fan—a citizen of digital technology—consumes sports and related content beyond the actual duration of a game thanks to social media. Thus, teams, individuals and sporting bodies are coming up with innovative ideas to survive in this new digital age and meet the fans’ expectations.

However, for digital currencies to continue this upward trajectory, they need to expand the investor base. By expanding, I mean less sophisticated investors willing to up the prices of Bitcoin, Ethereum and any other cryptocurrency that is the flavour of the day.

Thus, because of the restrictions brought upon by the COVID-19 pandemic, the sports industry has had to devise new strategies to ensure the clubs/teams and their fans remain connected in a socially distanced world, with the industry recognising cryptocurrency’s capabilities of revolutionising revenue streams and enhancing fan experience through targeted sponsorship deals, fan tokens, non-fungible tokens (NFTs) and many more.

 

 

Partnerships and Sponsorships

A strong association between crypto companies and sporting organisations has been taking shape for the past couple of years. Hence, sponsorship/partnership deals have led to increased awareness regarding cryptocurrencies amongst viewers and investors alike.

The list below provides some notable examples of sports teams/clubs expanding their advertising budgets to partner with new and upcoming crypto-exchange companies:

 

Also Read – 10 Biggest Crypto Deals in Sports

 

Use of Cryptocurrency

Apart from sponsorship deals and partnerships with prominent sports teams, Bitcoin and other cryptocurrencies are also being incorporated and accepted as a method of payment. In recent years, we have seen how cryptocurrencies are being used to sell match tickets and merchandise to clubs/teams, even paying the players’ salaries and transfer fees.

Below, I have given a few examples of such instances where cryptocurrencies have been used in sports as a mode of payment, be it a transfer fee or a player’s salary:

 

 

Fan Tokens

From the standpoint of various sports teams and cryptocurrency firms, one of the most exciting and enticing innovations in recent memory has to be fan tokens.

A “fan token” is a fully fungible digital entity that gives fans access and influence over certain decisions made by their favourite sports team/personality.

These tokens provide their owner(s) the right to vote on club matters such as kit designs, training ground names or picking charity initiatives. It is similar to a membership card that provides fans with exclusive rewards, including special VIP access and treatment to a variety of events.

However, this can be distinguished from other initiatives such as “United Managers”, which attempted to give fans the opportunity to vote on a team’s tactics in games but was shut down by the French Football Federation (FFF) in 2019. Any arrangement that gives fans or other third parties direct influence over clubs’ operations, policies or performances would be contrary to FIFA’s (and other domestic associations’) third-party ownership (TPO) regulations.

For instance, in 2018, cryptocurrency platform Socios.com signed a multi-year deal with Juventus football club to create official Juventus fan tokens. The Italian team were the first club in the world to launch a fan token, and their supporters have been using them to participate in mobile voting and express their opinions regarding certain matters.

Since then, other clubs, too, have tied up partnership deals with Socios.com, with clubs like Paris Saint-Germain, FC Barcelona, AC Milan, Atlético Madrid, BSC Young Boys, and Manchester City having come on board. According to many reports, Chiliz’s $CHZ currency is among the top 35 cryptocurrencies in the world, with a market cap of US$3.3 billion.

 

Also Read – WHAT ARE FAN TOKENS AND HOW DO THEY WORK?

 

NFTs and sports-collectibles

Non-fungible token (NFT) is the latest crypto spin-off gaining momentum in the world. NFTs represent a wide array of tangible and intangible items stored in digital wallets, from collectible sports cards to virtual real estate and even a part of your body. An NFT is not interchangeable since each NFT represents a unique digital item.

NFTs also contain distinguishing information that is unique and easily verifiable on the blockchain network – each accruing value as each specific NFT cannot be replicated. Some of the examples include:

 

Conclusion

Despite the growth and the rise in popularity of digital currency, sporting clubs and athletes must remain conscious of the risks in play with this still-emerging market. The valuation of these cryptocurrencies continues to be volatile, and despite the sudden surge in interest, the legal and regulatory landscape remains uncertain.

Moreover, with the lack of stability in this market, these athletes and sports teams need to have a contingency plan in place to save money in case the valuations of these currencies drop dramatically. However, the rise and potential of cryptocurrency cannot simply be ignored, as it has provided the sports industry with a never-before-seen revenue injection.

 

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