The rise of crypto in the world of football: tokens and sponsorship deals

Almost bankrupt. Anyone looking at FC Barcelona’s books two years ago was shaking their heads in worry. The club had a mountain of debt of no less than 1 billion euros.

“We have to find new sources of income, restructure debts and control costs,” said Joan Laporte, now president of the club, in an interview with the BBC.

100 million

These new sources of income seem to have been found. Last week, Barcelona raised 100 million euros by partnering with Socios.com, a company that trades cryptocurrencies for supporters, known as fan tokens.

Socios.com becomes a technology partner for the club. For the million deal, it gets a share of 24.5 percent in the football club’s own audiovisual studio.

Previously, the Spanish club has already collected 500 million euros by transferring a quarter of the television rights for the next 25 years to the American investment company Sixth Street.

Fortuna Sittard

Soccer has become an interesting market for crypto companies. About 50 clubs around the world have their own cryptocurrency for fans. It concerns top clubs such as Paris Saint-Germain and Juventus, and Fortuna Sittard, for example, participates in our own country.

Around 200,000 fan tokens have been issued by the Limburg club. The first batch of 100,000 coins was on sale for 1.50 euros. “The rest went to the value of the coin, which had fallen slightly,” a spokesman said.

At its peak, in November 2021, the coin was worth 3 euros. It is now only sixty cents. Part of the money collected goes to the club. Another part goes to Socios, the inventor of the coin that the crypto company Chiliz is behind.

At almost all clubs, you see the same pattern after the coin’s launch: the price of the coin shoots up, only to fall sharply afterwards. The fans won’t get rich from it.

Fan the coin drops in value

“Many tokens have dropped considerably compared to the issue value,” says crypto expert Peter Slagter of crypto platform LekkerCryptisch. “Not surprisingly, these are financial products that move with the market. They were issued at a time when the market was doing well, and now we are in a period where financial companies are massively on their ass.”

According to Slagter, two types of people buy fan tokens. On the one hand, the real fans who buy the coin because there is something in return. “Often, as the owner of the fan token, you have the right to something good, for example a meet and greet with players.” At Fortuna Sittard, fans with a token can vote in certain decisions of the club.

Additional funds to invest with

“On the other hand, you have people who buy fan tokens solely to speculate with them. They have nothing to do with the club itself and want to make money. This also ensures that the coins fluctuate in value,” says Slagter.

More clubs will work with crypto companies, the crypto expert expects. It is a new method for clubs to get money. “They are taking that opportunity. They are extra liquid assets to be able to invest in players. I hope fans buy the coins purely for the fan’s benefit and not for speculation. The latter can be dangerous if they buy a lot of coins that lose money .”

Sponsorship amount paid in bitcoin

Chiliz is not the only crypto-affiliated company active in the world of football. In August 2021, Ajax and the crypto app Blox entered into a sponsorship agreement. Blox commits to the club for three years. It is unknown how much money is involved in the deal. It is clear that Ajax will be paid the money in euros due to the stock market listing.

At Club Brugge and NEC, two other clubs that work with Blox, the situation is different. These clubs get the sponsorship amount paid out in bitcoin.

Bitcoins for victory

According to Slagter, this poses no risk for the club: “They can choose to immediately convert bitcoins into euros at the moment of receipt. And if it’s a small amount of money, you can also choose to keep the bitcoin wallet. That’s what Sparta did. for example, when it beat together with Knaken Cryptohandel in 2020.”

Sparta received bitcoins for special achievements, for example many goals or a victory. “The club saw it purely as an extra, where it would not be a disaster if the currency lost value.”

Leave a Comment