How Does One Monetize Football Fans?

    02 Sep 2021

    Using the blockchain, naturally. And as it turns out, it works pretty well. Football club fan tokens are now a small world onto themselves. It is quite possible to make money in it, but the market will always be niche and limited.

    The sports and entertainment field is evolving, and with it, the demand for monetizing fans is growing. And football, as the world’s most popular game, has proven to be a pioneer here as well. At this point, it is difficult to say who even came up with the idea of ​​issuing tokens of your favorite club, but it happened – as did many crypto world innovations – sometime in 2017. The idea did not really “explode”, but it did fall onto fertile ground.

    By the spring of 2021, more than a hundred football clubs (FC) of various sizes have issued their tokens; NFT cards are also rapidly gaining popularity. In the pandemic year, there was a boom in placements of football club fan tokens: Paris Saint-Germain, Juventus, Barcelona – about a dozen of the largest clubs issued their crypto coins. This way, they tried to partially compensate for the income they couldn’t receive from ticket sales.

    Back in 2018, the French Paris Saint-Germain became one of the first football clubs to announce plans for issuing their own tokens (ticker: PSG). But it was only at the end of January 2020 that the club finally delivered on its promise and began selling the tokens to fans for € 2 through the platform. Then the team’s official Twitter placed a statement saying fans could download the application and “compete for a unique experience”.

    Using the example of Paris Saint-Germain, one can look at the economics of the process from the FC’s point of view. Token holders cannot influence fundamental issues, but they get the illusion of being involved in the club’s inner workings. For instance, they were able to vote on the armband inscription that the club captain Thiago Silva would wear during the game. Similarly, through cryptocurrency, fans could choose the player of the month or the color of a new uniform, or receive the opportunity to meet their favorite footballer in person. Other options included buying the right to put yourself on the stadium screen during the game or stream from the club’s locker room.

    Basically, it’s up to each team’s imagination. Voting with fan-tokens chose a song that plays after a goal is scored for Juventus, and Milan got a new motto.

    Football clubs don’t always issue cryptocurrencies to raise money. For example, Manchester City distributed tokens for free, while Juventus, PSG, and Barcelona sold tokens for only € 2. The main task of such projects is to involve fans deeper in the life of the club and expand the limits of fan interaction.

    The football token economy really took off in 2020, when the Covid-19 pandemic made digital platforms the only way clubs could interact with fans. And here is an excellent opportunity to look at everything “from the other side” – as a blockchain business.

    The process by which football clubs create and host fan tokens on partner blockchain platforms, where fans can purchase them at a fixed price, is called Fan Token Offering (FTO). After being listed on the exchange, the fan token’s value is determined by market supply and demand. The total capitalization of football tokens is currently about $ 300 million.

    In December 2020, PSG tokens began trading on the Binance cryptocurrency exchange. Their initial price was about $ 13, but it rose to $ 35.25 on the very first day of trading. At the moment, one PSG costs $ 34.38, and there are almost 2.91 million tokens in circulation out of 20 million possible. Their capitalization is nearly $ 100 million.

    Italian Juventus’ JUV tokens started trading simultaneously with PSG. The club announced plans to release its cryptocoins at the end of 2019 and issued the € 2 token around the same time. In March 2021, Juventus striker Cristiano Ronaldo became the first footballer in the world to receive a JUV bonus from the club. The club’s president, Andrea Agnelli, gave the football star a “G.O.A.T.” (greatest of the time) t-shirt and 770 JUV (the number of times Ronaldo scored in his adult career).

    JUV is now trading at $ 13.78 per token; its market cap is $ 18.1 million, with 1.32 million JUV issued.

    Other popular football fan tokens include AS Roma Fan Token (ASR), Atletico Madrid Fan Token (ATM), AC Milan Fan Token (ACM), FC Barcelona Fan Token (BAR).

    In terms of tech, clubs implement third-party IT platforms to issue tokens, and there are already some of them specialized for these purposes. The most famous one is Socios, used by such renowned clubs as Barcelona, Juventus, Roma, and Atletico Madrid. The platform released its Chiliz (CHZ) cryptocurrency on the Ethereum blockchain as early as 2018, and in November 2019, Juventus used it to hold its first FTO.

    Since the fall of 2019, CHZ has been trading on Binance. Its price has soared by almost 500% compared to the beginning of the year, leading to a $ 2.23 billion capitalization. The token’s value grows as new projects (football clubs) are added, which makes the asset deflationary. The Socios project also has its own exchange where you can buy and sell fan tokens, with CHZ as its primary cryptocurrency.

    However, there is little to back “fan cryptoeconomics”, as CHZ and fan tokens are used only for speculation. The fan token model itself is, of course, unique, as fans will keep the tokens of their favorite club without any profit motive. That being said, there is no significant value to be extracted from them apart from speculative. Events like Euro 2020 or the upcoming Champions League in the fall will, of course, push the price of CHZ up, but a crash will inevitably follow.

    In addition to the Socios platform, there are other platforms for tokenizing football clubs. Bayern Munich is collaborating with Stryking Entertainment, Real Madrid uses a Fantastec SWAP blockchain startup, and Ukrainian Dynamo Kyiv FC announced in January 2021 that it would launch its own cryptocurrency ecosystem with the Moonwalk app.

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