Similar to artists, competitive athletes have big dreams. Yet, while they may have the talent, they often lack the funding to take those aspirations to the next level. That’s where crowdfunding for sports teams and athletes comes in. Turning to their fanbase, sports teams and aspiring athletes are raising money to train, travel, and take their talent to the world stage. While these methods are enabling more athletes to reach their dreams, they often fall short of the mark particularly when it comes to fan engagement. Now, there are more effective ways of raising funds that are being explored by innovative sports organisations.
With adoption more widespread and more use cases being explored, blockchain technology is helping to transform the sports and esports industries in a number of ways. These include incentivising and rewarding fans, creating markets for digital collectables, and verifying memorabilia authenticity. However, one of the biggest ways the technology is changing the industry is in relation to the tokenisation of teams and athletes, leading to a form of fan crowdfunding.
How Blockchain Crowdfunding for Sports Teams is Opening Up New Opportunities
2020 was a hard year for sports due to covid-19 restrictions, with traditional sources of revenue such as food and drink, tickets, and sponsorships on the decline.
According to data, ticket revenue losses for the NBA when the season was suspended in March 2020 amounted to $690 million. As a result, the sporting ecosystem needs to find innovative solutions to mitigate the effects of covid-19 on the world of sport.
One such solution is engaging fans digitally, through innovations such as blockchain technology. Due to the technology being explored for more applications, the sports industry is realising the benefits that blockchain and crypto can bring, whether that’s attracting sponsors, monetising fan engagement or enticing a global market that seemed impossible before. By enabling sports teams to bring in revenue via alternative methods, it helps mitigate some of the losses from the pandemic, and help monetise an increasingly digital-native and global audience.
Let’s consider a few use cases…
Use case 1: Tokenisation of teams = Fan Tokens
With crypto changing the way we buy and sell commodities, it should come as no surprise that the sports industry is the next to be revolutionised by a type of cryptocurrency.
Known as fan tokens, these allow the holder to gain access to a range of perks, including club rewards, experiences, and voting rights. Fan tokens shouldn’t be confused with non-fungible tokens (NFTs) in art and gaming, as fan tokens are fungible. This means that they can be exchanged for club merchandise and other VIP experiences.
Fans that have access to club perks feel more involved in the club they support. The more tokens they purchase, the higher up the ladder they climb, which will eventually lead to bigger VIP benefits. This, in turn, is advantageous to sports clubs as they’re able to unlock new revenue streams through the fanbase, essentially crowdfunding parts of their business.
Several sporting organisations have already turned their attention to fan tokens. FC Barcelona and Juventus and the National Basketball Association (NBA) are a few examples that have invested in fan tokens to engage fans and drive revenue. FC Barcelona, for instance, raised over $1.3 million, selling out with their initial 600,000 BAR tokens in two hours. These tokens are the club’s own cryptocurrency and are purchased with fiat.
Use case 2: Tokenisation of athletes using smart contracts
Securing fundraising for athletics takes time and effort. Even though athletes may have the talent to raise initial investment and support through fundraising, there are goals they need to attain in order to maintain these fundraising contributions.
There is one method that the athletics industry is turning to in order to optimise fundraising: the tokenisation of athletes using smart contracts. Blockchain tokenisation is a way of creating a digital representation of a right, for instance a tradeable right or ownership of intangible assets. These tokens may represent partial or complete ownership of an asset that can easily be transferred between users.
And they have the potential to level the playing field with the sports industry. For example, fans can purchase “shares” in an athlete’s future potential earnings. For the athlete it means immediate revenue and funds and for the fans they have the chance to support up and coming athletes while seeing it as a potential for future earnings. This is all secured through blockchain smart contracts, with payments automatically paid out according to predetermined conditions. Smart contracts are what enable the buyer and seller to agree to set terms, which are directly written into lines of code. Stored on blockchain, they execute immediate outcomes without requiring an intermediary, and most importantly, cannot be forged or manipulated.
An example of this taking place was in 2019 when the National Collegiate Athletic Association (NCAA) ruled in an unanimous vote that college athletes would benefit from a digital representation of themselves to place them in a better position in an increasingly competitive market.
Use case 3: Digital Collectables
Going one step further, it’s now possible for fans to own a digital collectable or NFT of their favourite athletes. These digital trading cards or collectibles are generally one-of-a-kind, or at least one of very few.
NFTs are typically seen in the art world, but are steadily being applied to sports. These tokens work on blockchain technology where it’s easy for owners to track and trace the authenticity and scarcity of their digital collectables. Acting as another form of crowdfunding and tokenisation, sports teams and athletes alike are selling digital collectables to fans to unlock new revenue streams. One example of a digital collectable highlight was of NBA player LeBron James slam dunking a shot that sold for $200,000. The potential of digital collectables for sports teams is huge and is a unique way of boosting fan interaction with their favourite athletes.
Yet, while the opportunities to utilise blockchain technology for crowdfunding for sports teams are numerous, as a new technology, sports teams often lack the capabilities in house to leverage blockchain technology. Luckily, there are providers and experts who can help consult and build custom solutions to enable sports teams to take advantage of these profitable new revenue streams.
Protokol can help you monetise your fanbase, unlock new revenue streams and increase profitability with our fully customisable blockchain solutions for the sports and esports industries. Created with our ARK Core blockchain technology platform, the services we offer are completely tailored to the needs of your sport. For teams and athletes who’s budget has been impacted by the pandemic, there are even white label solutions and revenue share models to suit every budget. Our modular solutions and focus on simplicity means set up is fast and easy with Protokol.
Why not book Protokol in for a free consultation where we’ll show you how you can utilise innovative blockchain technology for crowdfunding your team and athletes. You’ll also have the opportunity to learn more about blockchain technology and its impact on the sports industry.