Use of Cryptocurrency in Football
Cryptocurrencies and blockchain-based technologies have taken the sports industry by storm. These two dynamic forces have immense potential, which can work wonders for the world of sports in terms of monetising fan engagement, attracting sponsors, and engaging a global market in ways that had never been possible even till very recently. It goes without saying that passionate sports enthusiasts consume sports and related content beyond the actual duration of a match. More often than not, they are also quite familiar with digital technologies. No wonder, sports teams, clubs, and sporting bodies are continuously experimenting and innovating to survive in the new digital age and to cater to meet fan expectations.
As a blessing in disguise, the limitations imposed by the COVID-19 pandemic on the sports industry have risen to the occasion, and accordingly responded and devised new strategies. Consequently, this has ensured that clubs and fans remain connected in a world that has increasingly grown socially distanced. The industry has also opened up to the prospects of revolutionizing revenue streams and the fan experience by optimising the use of blockchain. This can be implemented by increasing crypto sponsorships, fan tokens, non-fungible tokens, or even by the entrance of blockchain providers into the market.
How Crypto is Scoring Big with Football?
While the cryptocurrency and blockchain space is still in its nascent stages, it is undoubtedly a burgeoning industry that is slowly but steadily redefining finance and remittance, individual sovereignty of wealth, and so on. Several firms and organizations have been making moves to incorporate the world of crypto into the football arena in more ways than one, and a major effort in that direction is to be associated with some of the biggest players, teams, and competitions.
As Qatar gears up to host the FIFA World Cup 2022, we cannot help but delve a little deeper into what can be done to make the experience of visitors even more seamless, simple, and easy. Cryptocurrency and blockchain technologies can make a huge impact on the ongoing preparations for the FIFA World Cup 2022. Qatar has no doubt grown in leaps and bounds when it comes to infrastructural development. FIFA President Gianni Infantino, in his recent visit to the country, was all praises for Qatar’s incredible infrastructural progress. Besides, the Al Wakrah Stadium with a 40,000 capacity, along with seven other stadiums that have been proposed as tournament venues, one might ask what else Qatar can offer that will be notches higher than Russia is 2018. The answer to this question might lie in cryptocurrency and blockchain technology, which can set this Football World Cup apart from any world cup event in the history of the world.
Nowadays, more sports are considering the idea of incorporating and accepting Bitcoin and other cryptocurrencies as methods of payment. In FIFA World Cup 2022, Football fans should be able to use cryptocurrencies to purchase tickets and merchandise, while Football clubs can also use the same for paying players’ salaries and transfer fees. Sports clubs and organisations can benefit significantly from blockchain technologies as they implement more secure and transparent ticket exchange markets.
The impact of cryptocurrency is even more pronounced in European Football. For over 26 years, Pirelli, the tyre manufacturing giant, has made an appearance on the jerseys of Inter Milan, the reigning champions of the Italian football league Serie A. However, that’s not quite the case any longer. Ever since the current season has kicked off, the oh-so-popular black and blue shirts of the Nerazzurri instead flaunt an advertisement for “$INTER”, the club’s new cryptocurrency or fan token issued by Socios.com.
In August 2020, a similar report emerged in Lionel Messi’s blockbuster transfer from FC Barcelona to Paris SG. It affirmed that a non-negligible part of Messi’s estimated 30-75 million euro annual salary would be paid not in euros backed by the European Central Bank, but by ‘fan tokens’ issued by the iconic football player’s new club itself.
These two examples aptly illustrate the huge impact of the “crypto-fever” that has taken global sports by revolution over the last few years. Though they still largely have an obscure air about them, receiving inadequate attention from researchers and journalists alike, these developments have given rise to several questions centered around what attracts football clubs around the world to cryptocurrencies, in what forms they are being implemented, what risks they may entail, and if at all policymakers should consider any responses.
Impact of Cryptocurrency on Football
The following are the four broad sets of activities that work in unison and close association with each other to acquaint and familiarize fans, management, and players with the technology and its seemingly ever-expanding array of possibilities:
- Sponsorship deals from cryptocurrency firms: These cases are dominated by the Israeli-based trading platform eToro. It started to enable cryptocurrency trading in 2017 and has roped in the actor Alec Baldwin to promote this service. Sponsors prefer football clubs as they cater to a similar customer base as many cryptocurrencies, i.e. young males.
- Payments in cryptocurrency: Be it salaries of players or purchases of clubs, cryptocurrency is making its presence felt in the football arena, but how? In 2018, Italian Serie C football club Rimini FC 1912 became the first team in history to be purchased in cryptocurrency; when it comes to the acquisitions of clubs by cryptocurrency firms, one is reminded of 2018 when Libereum, a Dutch cryptocurrency company, acquired the Spanish football club Elche CF.
- Management of tickets and stadium by blockchain technology: There have been instances when football clubs sought the adoption of bitcoin or their own proprietary cryptocurrency to facilitate fan business in and around the stadium.
- Issuance of blockchain-based digital tokens: There are several cases in which clubs such as Paris St Germain, Real Madrid, Atletico Penarol, etc. have issued (or plan to issue) tokens.
Needless to say, football clubs are whole-heartedly exploring the revenue opportunity offered by the issuing of crypto tokens. This is further fuelled by the recent trend of using crypto to generate money. Top European clubs such as Barcelona, Paris Saint-Germain (PSG), Juventus, and Manchester City are among those launching crypto tokens.
Fans purchasing these crypto tokens launched by their favorite clubs will enjoy several benefits, including the opportunity to vote on certain decisions about the club. Fans who are drawn by the prospect of having exclusive access to their clubs are hugely in favor of this. However, another section is also somewhat critical of this decision taken by clubs as they believe this will further exploit fans, many of whom are not familiar with cryptocurrencies to make informed decisions.
Crypto in the Sports Industry
This is not the first time crypto is being used in the sports industry. The first half of 2021 witnessed crypto brands spending over $107m on sports sponsorship agreements, as revealed by GlobalData.Patrick Kinch, the Sports Analyst at GlobalData, made a statement in July 2021 that this year has been a landmark year for the cryptocurrency sector. More than 49 new deals have been secured this year between cryptocurrency brands and rights holders in the sports industry. In the same month, Watford FC announced that their new shirt sponsorship deal would be paid in cryptocurrency. What’s more, Scott Duxbury, the club chairman, told the BBC that Watford had an ‘ambitious outlook and commitment to innovation’. The use of other related technologies, including non-fungible tokens (NFTs), to further monetise fan engagement is likely, as football clubs attempt to revolutionise their revenue streams.
Previously within the sports sector, the International Olympic Committee (IOC) had laid the foundation of an official marketplace, wherein fans can buy Olympic collectibles. NFTs are presenting huge opportunities to monetise creative digital content in various industries. The high level of funding for NFT development in recent years speaks volumes about this. Football clubs are also entering into collaborations with start-up crypto firms. For instance, Spain’s national team and Scottish champions Rangers work with the Turkish cryptocurrency platform Bitci Technology to create fan tokens. CagdasCaglar, the founder of Bitci Technology, said: “Sports clubs that are capable of seeing the importance of this trend today will attain a great advantage in the future.”
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