Cryptocurrency: The future of sports

Cryptocurrency: The future of sports

The sports industry is a truly money-spinning industry as it leverages sponsorships, matchday revenue and global merchandising initiatives. The world of sports has seen fan engagement and sponsorships reach previously unimagined heights, even as clubs continue to seek innovative ways to reach more fans through digital technology.

The Covid-19 pandemic has necessitated sports teams to turn to cryptocurrencies and blockchain technology to increase revenue streams and enhance fan experience. Crypto-sponsorships, non-fungible tokens (“NFTs”) and fan tokens are some avenues that clubs are exploring to enhance their relationship with fans.

This article highlights ways in which sports teams are gradually buying into the crypto wave.

Crypto-backed sponsorships and partnerships

The prevalence of cryptocurrency in everyday use and media has led to increased awareness of its potential use in sports. Sports teams are expanding their advertising budgets to include new and upcoming cryptocurrency exchange platforms, to gain further traction and increase brand recognition.

Here are some notable crypto-backed sport sponsorships:

  • In December 2014, US-Bitcoin payment processor, BitPay signed a sponsorship deal with ESPN events. It was one of the first recorded crypto-backed marketing campaigns.
  • Arsenal signed a crypto-sponsorship with CashBet Coin as the club’s official and exclusive Blockchain partner.
  • The light heavyweight title fight between Jon Jones and Alexander Gustafsson at UFC 232 in 2018 saw Litecoin become the official cryptocurrency partner.
  • In March 2021, Aston Martin Cognizant became the first Formula One team to partner with a cryptocurrency company, Crypto.com, which has over ten million active users.

Blockchain and cryptocurrency technology in sport

Blockchain technology has benefited sports teams as it has been used to facilitate the purchase of tickets and merchandise by fans.

It has also been used to pay transfer fees and salaries of players. The technology has also helped in providing ticket exchange markets that are more secure and transparent.

In 2018, Wirex and Epayments, international payment service companies afforded fans the opportunity to purchase match tickets for the FIFA World Cup using cryptocurrency. The same year saw Omar Faruk Kiroglu, 22 at the time, bought by Harunustaspor, a football club based in Turkey. He received 0.0524 in Bitcoin ((£385) and ₺2,500 (£470) as part of the deal.

Gibraltar United FC in 2018 partnered with cryptocurrency company, Quantocoin, which led to them paying players partially in cryptocurrency.

Tokens and crypto-assets are not left out

A very impressive innovation from the use of Blockchain technology in sports is the emergence of fan engagement tokens. It is a digital utility token that is fully fungible and it gives fans the influence over certain decisions made by their sports teams.

Fan tokens are similar to membership cards in the sense that they give fans the opportunity to vote on club matters. Fans can participate in issues such as kit designs, names of training ground and picking of charity initiatives. Socios.com, the fan token website and cryptocurrency, Chiliz ($CHZ), offer fan engagement tokens focused on sports and e-sports.

Socios partnered with Paris Saint-Germain and Juventus to create fan tokens, $PSG and $JUV, creating a whole new experience for their fans to vote on decisions on whom their clubs face during friendly matches. These fan tokens are listed on Binance, Paribu and Upbit, the world’s leading exchanges.

Final thoughts…

While there is increasing acceptability as regards cryptocurrency, there is still the risk of volatility in value, coupled with the fact that the legal and regulatory landscape is still unclear. This lack of consistency means that sport teams must be wary of placing too much income in crypto assets.

However, the rise of cryptocurrency means that there will be opportunities to benefit from the system that multiple sport teams will be willing to tap into.

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