It really was just a matter of time before the beautiful game and blockchain became entangled.
This week two struggling football clubs have announced plans to solve their financial issues through tokenized crowdfunding, according to reports by the Times.
Both Newcastle United and Cardiff City (English Premiership Teams) are reportedly in discussions with SportyCo, a decentralized investments and funding platform for sports teams. To help launch their ICOs.
Through the reported partnership the clubs would begin to sell their private tokens as either security or utility tokens. Purchasers would either gain a stake in the club or receive benefits by using tokens to gain access to services and purchases not available to non-token holders. The details of their ICOs are currently not available.
French football club Paris Saint Germain (PSG) has revealed in a press release that it is partnering with Socios, a blockchain based platform. Their intentions are to issue Fan Token Offerings (FTO) that will come with some limited voting rights and can be representative of their holder’s VIP status.
Socios’s platform is powered by chiliZ, a sports blockchain venture based in Malta that have already secured support from some major industry players. Binance and OKEx are examples of these industry players. They have reportedly raised $66 million US dollars in funding to date.
The planned FTOs will allow the token holders to vote on certain club matters. But it appears at this stage they will not allow them to get involved in club transfers and will be limited to more “cosmetic” issues such as kit design, club logo, deciding man of the match, summer tours and friendly matches. They are not designed to disrupt corporate hierarchies but instead to maximize the monetization of fan engagement through crypto.
The token holders will be able to trade them on the socios.com marketplace, only against the chiliZ native token ($CHZ). Their FTO is reportedly due to take place sometime before the start of the next football season.
They want to get hundreds of clubs on to the platform. They plan to start with the biggest first. Socios is making exclusive five-year deals with every club they onboard. This will help them ensure they have time to develop and refine their product.
These are not the only football based blockchain ventures. Michael Owen has launched his own crypto currency and Lionel Messi has endorsed a blockchain supporting smartphone. In January 2018, Arsenal FC in collaboration with CashBet Launched a new cryptocurrency, the CashBet Coin. The CashBet coin is specifically been designed for iGaming.
The London Football Exchange has some ambitious blockchain plans. Charles Pittar, Corporate CEO of the London Football Exchange, has stated:
“Our vision is to allow football clubs to take advantage of the token funding economy for their financing needs by providing them with a tokenized financing infrastructure, which involves token-design and issuance services.”
Pittar then explained:
“The LFE aims to become a ‘one-stop shop’ for clubs of all sizes to raise capital via equity sales and also offer LFE contributors a wealth of fan experiences and social interaction.”
The proposed tokens will be incentives for a clubs fanbase to be used both in the local market and with participating partners. Token holders could benefit through discounts and exclusive offers, although at this stage the exact proposition has not been publicly disclosed.
Due to the transparent nature of blockchain technology all information would be publicly available and if correctly implemented empower fans to resist disastrous takeovers and launch their own bids to buy the club. It could help less prestigious clubs successfully float their shares publicly. Due to the international nature of football fandom, smaller clubs can more easily raise funds across international borders.
Blockchain can simplify one of the most important aspects of the game, the sale of players themselves. Back in 2006 two Argentine footballers, Javier Mascherano and Carlos Tevez arrived at West Ham FC. They had transferred from Brazilian side Corinthians. However, it turned out the club did not actually own the players in the first place. They were instead owned by a group of companies. The fallout from this saw West Ham being fined £5.5 million GBP. The botched sales resulted in the abolition of third-party ownership in the English Premier League.
Using blockchain and smart contracts we could ensure something like this never happened again.
Lu Zurawski, practice lead for retail banking at ACI Worldwide told The Independent:
“The ledger entry for a single player could be divided into multiple shares, each capable of being sold individually to create a fractional ownership scheme. Depending on the type of ledger technology used, these shares would be tradable and could be bought and sold via exchanges — real folding money being used in exchange for player tokens.”
The LFE has also started to investigate how blockchain could revolutionise ticket sales, season tickets and the illegal resale of tickets.
Football business expert Michael Broughton of the advising firm Sport Investment Partners spoke when talking to the BBC said:
“At present, most sports venues do not know exactly who is coming into the stadium. At Premier League football clubs, it is not unknown for people to let friends use their season tickets when they cannot get to games.
“The football clubs may know a ticket was used, but not always by whom. So, they will never be able to target any further club marketing toward these spectators. You will have less fan engagement. Most clubs and stadiums have this issue.
“If you put your ticketing system onto the blockchain, you can verify if people attended or who they gave their tickets to. If people want to transfer these tickets to friends or others, then it has to be recorded on the blockchain.”
UEFA has successfully trialled a mobile based blockchain ticket system. The tests reportedly ran smoothly resulting in a second trial involving Real Madrid and Atletico Madrid.
Blockchains must power to disrupt and improve all the world’s most popular sports. But with an estimated 4 billion football fans worldwide, it seems that football is where blockchain will have the biggest effects.