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European football clubs are kicking cryptocurrencies, but some fans cry lack

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European football clubs are kicking cryptocurrencies, but some fans cry lack

Fan tokens can be traded on exchanges and have attracted the attention of professional investors.

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LONDON – A growing number of major football clubs are launching digital currencies that allow fans to vote on a variety of minor decisions as the sport faces falling revenue caused by the coronavirus pandemic.

But the fans are divided on the so-called fan chips. Some appreciate the novel way of interacting with their teams and helping make decisions, even if only on minor matters, such as the song played in games after a goal is scored or the images used on social media. social. Others dismiss the tokens as a shallow stake that adds to the already rising costs of following their teams.

Clubs that launched tokens in recent months include English Premier League champions Manchester City and AC Milan of Italy. Spain’s national team, which drew its first match of the Euro tournament on Monday, says it plans to launch a similar scheme. Argentina, which kicked off its Copa América campaign on the same day with a giveaway, launched its tokens last week.

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Fan tokens can be traded on exchanges like other cryptocurrencies, and they have also attracted the attention of retail traders and professional investors. And prices are prone to sudden changes and may have little connection to performance in the field. Some of the big-name club tokens have lost around two-thirds or more of their value in recent weeks, reflecting similar declines in the broader crypto sector.

Malcolm Clarke, president of the Football Supporters’ Association, which represents fans in England and Wales, said clubs are trying to make money by allowing fans to have a say in how clubs are run or “are trying to get extra money of supporters inventing inconsequential online ‘turnout’ polls, ”he said. “It’s not a good look either.”

AC Milan flags and clothing for sale at a vendor outside a stadium.
AC Milan flags and clothing for sale at a vendor outside a stadium. Photo by Daniele Mascolo / Reuters Archives

Fan tokens have gained appeal to clubs amid the pandemic’s revenue crunch as the games have been played without fan attendance, executives from three mid-size European clubs said. Sales at the top 20 top-earning clubs in Europe fell 12 percent to € 8.2 billion in fiscal 2020, which for most clubs was the 12 months ending in June, according to the consulting firm and Deloitte LLP accounting.

Those executives and others from larger clubs said the tokens have helped drive engagement with fans who are often found throughout the world. Some tokens also provide access to promotions and contests.

Soccer teams typically partner with a crypto technology company that issues the tokens and makes a portion of the proceeds from their initial sale. Prices vary, but at least several big-name clubs initially launched their tokens at about $ 2 each; prices have fluctuated later.

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Manchester City and the football associations of Spain and Argentina did not respond to requests for comment. An AC Milan spokesperson said that embracing fan tokens was a strategic move to enhance its digital presence and “stay closer” to its more than 500 million fans around the world.

Having a way of interacting with fans during the lockdown “was beneficial for the clubs and the fans,” said Giorgio Ricci, director of revenue for Juventus of Italy, which launched its tokens ahead of the pandemic.

Katia Gigliotti, a fan of Italy’s AS Roma, said she was initially hesitant to pay for the chips, but was grateful for the commitment to the team and other fans during the shutdown.

“Not being able to go to games was traumatic because football means stadiums to me,” said the 48-year-old electrical engineer, who regularly traveled for hours to watch games.

The rise in fan tokens is part of a deepening embrace from the cryptocurrency sports industry. In some sports, teams have offered to pay players and staff in digital currencies, while others accept cryptocurrencies in exchange for tickets or merchandise. Fans and investors can buy and trade non-fungible tokens (NFTs) in the form of officially licensed videos of game highlights from a National Basketball Association branded website.

Football clubs have taken the lead in the supply of fan chips. Several renowned European clubs have partnered with Chiliz, a unit of Malta-based Mediarex Enterprises Ltd.. The Spanish national team and the Scottish Rangers have partnered with a Turkish blockchain platform. Germany’s Borussia Dortmund is working with two other startups.

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Chiliz CEO Alexandre Dreyfus, a former online gambling executive, said the company pays a fee to the club and shares the proceeds from the initial token sale. Chiliz said he is targeting $ 200 million in sales this year; approximately half of its sales are shared with its partner clubs.

Alexandre Dreyfus, CEO of Chiliz.
Alexandre Dreyfus, CEO of Chiliz. Photo by CHILIZ / Brochure via REUTERS

Dreyfus said Chiliz gives some tokens to “hardcore” fans, like those with season tickets, “so there is no additional cost to ‘follow their teams.’

Chiliz has released 20 fan chips with soccer teams. It has also launched eight tokens with teams from other sports, including motorsports and mixed martial arts.

The total market value of the 21 publicly traded tokens issued by Chiliz was around $ 260 million as of June 13, two-thirds more than at the end of 2020, but less than half its May peak, according to blockchain researcher Christian Ott. who runs the Fantokenstats website. Those tokens are mainly related to soccer, but also include teams from other more specialized sports.

Chiliz did not respond to a request for comment on the volatility of the tokens or potential risks to investors.

Some fans object to the idea of ​​being asked to pay to get involved with their teams. “Why do you have to pay to have something to say at the club?” said Sue Watson, president of the West Ham United Independent Supporters Association. She said it adds to the existing costs of following a team, like buying season tickets and soccer fields. “It accumulates, it is not cheap.”

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West Ham’s plans to launch a token with Chiliz last year did not go through, according to the tech company. West Ham did not respond to requests for comment.

Borussia Dortmund have faced opposition from supporters to chips. The club told Reuters it was modifying its plans for a token due to launch in March, without providing further details.

Still, some soccer fans like tokens because they enjoy feeling more involved. “It’s good that the song you voted for is the one you listen to, and you think ‘I participated in that,'” said Giuseppe Bognanni, a 39-year-old retail manager and Juventus fan.

© Thomson Reuters 2021

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