The Surprising Connection between Football, Blockchain, and Crypto
Chelsea Football Club has agreed to a £20 million shirt-sleeve sponsorship contract with a digital asset platform as the Premier League club prepares to exit the Roman Abramovich era. According to a person familiar with the situation, WhaleFin, a cryptocurrency trading and lending platform has agreed to sponsor the London team beginning next season.
Do Cryptocurrencies Make Sense For Sports Teams?
The adoption of cryptocurrency in the sports industry is not a new phenomenon. According to GlobalData, crypto businesses spent more than $107 million on sports sponsorship deals in the first half of 2021. "2021 was a watershed year for the crypto industry. There were 49 new partnerships struck last year between cryptocurrency companies and rights holders in the sports business," Patrick Kinch, Sports Analyst at GlobalData, stated in July 2021.
Watford FC announced that their new shirt sponsorship contract’s payment would be in cryptocurrencies in the same month. Watford's chairman, Scott Duxbury, told the BBC that the club has a dedication to innovation and an ambitious outlook. Other similar technologies, such as non-fungible tokens (NFTs), are likely going to be useful. They will be useful in monetizing fan involvement further as football teams and clubs strive to revolutionize their income sources.
In light of this, here are a few examples of how blockchain has changed the core dynamics of the sports industry:
Increasing Shareholder Trust in Esports
Esports has many investors, including players, game developers, team management, sponsors, and the media. This implies many transactions, which necessitates repeating information for each party. Intermediaries are also important since it is impracticable for one party to keep track of such vast amounts of data. Blockchain's decentralized structure can provide a single platform to connect all these parties, allowing stakeholders to engage without intermediaries. Indeed, blockchain provides a more fluid method for moving players, prize money, or media rights thanks to programmable smart contracts. This boosts confidence and alleviates concerns about prize money or transfer of payments done unjustly. Furthermore, it fosters a feeling of community and trust.
Getting Rid Of Ticket Fraud
Ticket touting and counterfeiting have long been a source of concern in the sports industry. However, many sports teams have gradually found the right solution in blockchain in their hunt for more effective solutions. Because of the technology's openness, anybody can verify a ticket's validity and trace it back to the club to ensure its legitimacy. Blockchain also makes ticket transfers easier by enabling peer-to-peer transfers without intermediaries. This allows fans who are unable to attend an event to safely transfer their tickets without incurring penalty fees or central actors. This is also true for postponing or canceling sporting events, making rescheduling easier for everyone.
Rewarding Fans on Engagement Sites
Sports clubs and teams can use blockchain technology to build fan engagement platforms. They can create loyalty programs on these platforms. They can reward fans for creating and sharing content and accumulating points or rewards that fans can use to buy products, tickets, and digital collectibles. Such platforms help to foster a sense of community and belonging among supporters. They do this while also strengthening the club's relationship with sponsors. In addition, the technology's open nature enables the seamless exchange of fan interaction data with marketers. As a result, it helps them achieve a higher return on investment.
Another Adoption in the Works — Chelsea-WhaleFin Crypto Deal
WhaleFin, a digital investing platform founded in 2017, closed a US$200 million financing round in 2021. The corporation is worth $3 billion. The Blues established a partnership with the Singapore-based Amber Group, which runs the WhaleFin digital asset platform, on May 5, 2022. In addition, WhaleFin's insignia, which has a blue whale pattern, will cover the sleeves of both the men's and women's teams beginning next season, replacing Hyundai after four years.
Chelsea is presently subject to government penalties that prevent them from negotiating a contract. However, the contracts were signed in January, before owner Roman Abramovich and his valued assets were sanctioned. Hyundai called off its sponsorship when the sanctions were reeled off. However, their logo stayed visible on Chelsea's sleeves owing to logistical and supply problems.
Aside from collaborating with Chelsea, WhaleFin is also almost sealing up a deal with La Liga club Atletico Madrid. Several Spanish news sites have announced that the agreement would be for five years and will be worth more than €40 million each year. Unlike Chelsea, the Amber Group-owned WhaleFin brand will be Atletico's principal jersey sponsor from next season, replacing Plus500.
Opposition to Crypto in Sports – Risks and Concerns
Despite the surge in interest in digital money, athletic teams should be aware of this new technology's pitfalls. The value of crypto-assets remains unpredictable, and despite spectacular development, the legal and regulatory landscape remains unsettled. Because of the lack of consistency in this area, sports companies will need to implement contingency plans to save money if values shift. On the other hand, the emergence of crypto-assets provides potential and excitement for the athletic world.
Global Policy Reactions
The Fédération Internationale de Football Association (FIFA) and its six regional organizations must acknowledge and act on the global scope of risks, not only the benefits that cryptocurrency-and-digital-fan-token issuing may involve. These risks include diverting player and fan energy into innovative types of online gambling, digital data collection, speculation, and the associated surveillance and monitoring. Simultaneously, such interactions fail to materialize other forms of club ownership, player engagement, and fan participation. Therefore, fan organizations, such as Football Supporters Europe, must also raise awareness of these risks.
According to a recent Bloomberg Businessweek piece on "crypto and sport," "sports fans have historically been easy target for sport companies driving risky or addictive behavior, which the teams do little to nothing to put off." While club initiatives to globalize and digitize in difficult times are reasonable, we urge regulatory policies to ensure that fans and players of sports, particularly the beautiful game, do not succumb to the vagaries of 21st-century hyper-capitalism.