Dangerous game? Football Clubs Seek To Mine Fan Money With Crypto Deals | Cryptocurrencies


When FC Barcelona took to the pitch for the 2021 Spanish Super Cup final, the trophy wasn’t the only prize at stake.

Thousands of blaugrana fans were also keeping tabs on the market for FCB’s “fan token”, the club’s own cryptocurrency. Socios, the web platform that pioneered fan tokens, had promised to ‘burn’ 20,000 tokens for every goal Barcelona scored – and 40,000 if they lifted the cup.

In theory, success in the field would increase the scarcity of the currency, increasing its value. In training, Barcelona lost the game and footballing passions aside, it didn’t make much of a difference anyway. With 3.5 million chips in circulation, not to mention millions more held back by the club for future issuance, a few thousand here or there wouldn’t have moved the needle.

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What is Cryptocurrency?

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Cryptocurrencies are an alternative way to make cash or credit card payments. The underlying technology allows “money” to be sent directly to others without having to go through the banking system. For this reason, they are beyond the control of governments and are not regulated by financial watchdogs – and transactions can be conducted in a way that reasonably keeps you pseudonymous.

If you own a crypto-asset, you control a secret digital key that you can use to prove to anyone on the network that a certain amount of that asset is yours. If you spend it, you’re telling the entire network that you’ve transferred ownership and using the same key to prove you’re telling the truth. Over time, the history of all these transactions becomes a durable record of who owns what: this record is called the block chain.

Bitcoin was one of the first and biggest cryptocurrencies and has been on a wild ride since its inception in 2009, sometimes rising in value as investors piled in – and sometimes plummeting. Dogecoin – which started out as a joke – has also seen a stratospheric increase in value.

Skeptics warn that the lack of central control makes crypto-assets ideal for criminals and terrorists, while libertarian monetarists like the idea of ​​currency without inflation and without a central bank.

The whole concept of cryptocurrencies has been criticized for its ecological impact, with the “mining” of new coins requiring vast energy reserves and the associated carbon footprint of the entire system.

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But the stunt symbolized something more, the budding love affair between football and cryptocurrency, an alliance that promises new revenue streams for a game already awash in money but still craving more.

Football finance expert Kieran Maguire believes clubs have latched onto crypto because revenue from other sources is starting to level off, after growing reliably for decades.

Football clubs have realized that we are now at peak broadcast revenue, with modest growth at most to be expected,” he said.

“When it comes to commercial sponsors, we are seeing agreements being renewed, but not with increased money. The only way to increase game day sales is to raise prices and fans are reluctant.

Manchester United – whether the club is believed or not – boasts 1.1 billion fans worldwide. With a turnover of £488m in 2019-20, that’s just 45p a year per fan.

“Clubs are thinking, ‘Can we ‘find another way to extract money from this huge fanbase?’ This is where tokens come in.

When AC Milan launched a token in early 2021, it raised $6m (£4.4m) in less than an hour, around 12% of the club’s record signing value , Leonardo Bonucci. The most valuable Paris Saint-Germain token has a market value of $45 million.

In the murky, unregulated world of crypto, it’s hard to know how much clubs actually earn. Socios said last year it sold $300 million worth of fan tokens, but would not say how much of that went to the clubs it partnered with.

Other platforms, such as Binance, are also getting into the fan token market, indicating there is room for growth, especially since only a few dozen clubs have entered the fan token market. the market significantly.

Pedro Herrera, principal blockchain analyst at DappRadar, a marketplace for blockchain-related apps, said most fans buy tokens for associated benefits, such as votes on small decisions about which song to play on. the stadium tannoy after a goal, or entering a draw to win a signed shirt.

“It’s a victory for the fan because he feels more involved; it’s a win for the team because it adds a layer of monetization; and it is a victory for the [crypto] the industry because you appeal to the masses and it’s one step closer to mass adoption.

Maguire isn’t against crypto but adds a more skeptical tone: “Lots of fans love crypto and in its purest form it’s great. Banks have been overcharging people for years in terms of transaction fees and if crypto can lower those fees, great.

“The problem is when unscrupulous marketers, especially via social media, seek to exploit fans who think a token is a serious investment product, rather than a glorified collectible.

“These are magic beans. As long as it’s sold as a digital Panini card, it’s fine. But when viewed as a form of investment, it moves into uncomfortable territory.

“It’s unregulated, it’s volatile, and it’s subject to manipulation by people who own large amounts of the asset.”

Fan tokens, however, are just one paragraph in the rapidly unfolding crypto saga in football.

In 2021, crypto sponsors have crowded into football and have been welcomed with open arms by money-hungry clubs, leagues and players.

Watford player with game.com shirt
Watford has perhaps England’s biggest crypto deal, a shirtfront sponsorship of Stake.com, which offers crypto gambling. Photograph: Tess Derry/PA

Exchange app Crypto.com sponsors Italy’s Serie A, one of the most glamorous leagues in the world, while Socios is the shirt sponsor of Internazionale. EToro, a trading platform that facilitates investing in multiple cryptocurrencies, has struck deals with more than half of Premier League clubs.

Southampton players have reportedly had the option of receiving bitcoin bonuses, as part of a £7.5m deal with Coingaming Group. And in January 2021, forward David Barral made history by becoming the first major league player to sign with bitcoin, albeit in Spain’s third tier with Internacional de Madrid.

Much better-known players and former pros, such as Paul Pogba and John Terry, are also promoting cryptocurrencies, trading platforms and non-fungible tokens (NFTs) – the controversial digital art form – as well.

This should come as no surprise given the reach big stars have via social media and the money they can earn from promotions. Other partnerships are perhaps more unexpected. Visitors to former Republic of Ireland international Tony Cascarino’s Twitter profile may have been taken aback by the former striker’s sudden change of pace in the middle of 2021. For a moment he was pondering the latest developments from the Premier League, the next day he was evangelizing the blockchain. Babb bank (no relation to former Irish teammate Phil) and thinking the “crypto market is on fire”.

Even in its early stages, the reputational risks of this new crypto-soccer business pact have become all too clear. Last year, Manchester City’s deal with a mystery firm called 3Key Technologies fell apart within days when it emerged that no one seemed to know anything about the company or its executives.

Arsenal FC advertisement promoting fan tokens
The Advertising Standards Authority has banned Arsenal FC adverts promoting fan tokens. Photography: ASA/PA

In December, Arsenal were slapped on the knuckles by the Advertising Standards Authority (ASA), which banned a club promotion it said exploited “the inexperience or credulity of fans, trivializing investment in crypto assets, misleading consumers about investment risk and not. clearly indicating that the “token” was a crypto asset”.

“For athletes looking for sponsorship, it’s a whole new market of opportunity, but it’s a bit of a landmine that you’re dealing with,” said Bill Esdaile, chief executive of the marketing agency. sportsman Square in the Air.

“My hunch is that such a small percentage of people understand how [crypto] works that too many decisions are made on trust, thinking that if [crypto firms] say they have the money, they have it.

The proposed amounts seem to be increasing.

Premier League wrestlers Watford have perhaps the biggest crypto deal in the country, a shirtfront sponsorship from Stake.com. The site offers crypto gambling, which is not legal in the UK, but may appeal to the league’s hundreds of millions of viewers around the world.

The arrangement even means the sleeves of Watford players’ shirts bear the logo of Dogecoin, a “joke” currency whose value fluctuates wildly, often in response to tweets from Tesla multi-billionaire Elon Musk.

Kieran Maguire estimates the shirt deal could be worth up to £8million, based on the typical value of such partnerships, while a Watford insider told MSN in August that the display of the handle Dogecoin added £700,000 to the mix.

Sums like this will become increasingly difficult for clubs to ignore, he believes, particularly if the government carries out a complete overhaul of gambling regulations which could see football lose the cow to milk jersey deals with betting companies.

“They [clubs] see the token market as slightly out of the way, it won’t be picked up by the gambling review and that will help fill the void,” says Maguire.

“These £5-8m offers could be replaced by NFT advertising and crypto.”

In a recent article, psychology researcher and gambling expert Dr Phil Newall warned that football sponsorship could be on the verge of trading one risky product for another.

“Research found that cryptocurrency traders are susceptible to symptoms of problem gambling and identified psychological similarities between cryptocurrency trading and online sports betting,” Newall wrote. He thinks removing gambling advertising can create more space in which to legitimize equally dangerous products.

As they burn through cash in pursuit of glory, it seems unlikely clubs will care.


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