Fan Tokens Gaining Popularity Amongst Fans and Teams Alike
In February of 2020, the Catalonian soccer club FC Barcelona announced that it was launching a token in partnership with blockchain firm Chiliz. FC Barcelona has one of the largest fanbases worldwide and has the highest revenue of all the soccer clubs. The Barca Fan Token (BAR) will allow fans to participate in polls and surveys via the Chiliz’ mobile app. Token holders that interact with the app will be given points that can be redeemed for merchandise and club experiences. Features coming to the app will include messaging, token trading, and interactive games.
Socios, a platform that allows users to purchase fan tokens, is built on Chiliz’s blockchain infrastructure. The Chiliz token (CHZ) operates as an ERC-20 token, a utility token on the Ethereum blockchain, as well as a BEP-2 token on Binance Chain. To obtain fan tokens, users must first buy CHZ and use it to purchase Fan Tokens. Some of Socios’s partners include the UFC, Juventus, Paris Saint-Germain, Atlético de Madrid, AS Roma, Galatasaray, CA Independiente, and esports team OG. Socios is also planning to onboard 50 other teams from different sports.
The BAR token officially went on sale in June for two euros (approximately $2.26) each, and the available supply of 600,000 tokens sold out within two hours. Two days after the sale, the price of the token went up to six euros ($6.82). The second batch of the tokens was released that Wednesday and the price of the token went up 200% in the first five minutes and the trading volume hit $1 million within the first 6 minutes. The token even saw a 24-hour trading volume of $2.5 million that day.
Numerous other clubs have also launched tokens that allow for fan engagement. Galatasaray’s token holder got to vote on what song gets played when the team scores, the Paris Saint-Germain F.C.token holders got to decide on what message went on the captain’s armband, the Roma fans voted on the name of the field at the training center, and the first vote for FC Barcelona token holders will determine which mural will be painted in the team’s locker room.
There have been several other recent developments in the sporting industry related to blockchain technology as well. Sorare, the global fantasy football platform, onboarded Juventus in February of 2020 and offered digital, provably-rare collectible blockchain cards. Sorare allows users to collect limited-edition collectibles, manage teams, and earn prizes. Sorare launched different cards that represented non-fungible tokens that were based on ERC-721. Each player had one “Unique” card, ten “Super Rare” cards, and a hundred “Rare” cards that represented them. The firm claims that some of the unique cards have sold for $2,000. The CEO of Sorare, Nicolas Julia, said that the platform has around 3,500 monthly users and that they recorded $350,000 in sales in June. According to the NonFungible database, Sorare’s platform has risen to the top spot in weekly transaction value.
Similar to Juventus, the Major League Soccer Players’ Association (MLSPA) recently announced that it had signed a licensing agreement with Sorare. The deal would bring 700 MLS players onto the global fantasy soccer platform. Sorare creates digital trading cards on the Ethereum blockchain and when users join they are given five random cards that they can use to build a team and participate in weekly competitions. Users can also buy tokens to improve their team and, depending on how their team performs in real life, they may receive rewards such as ETH or more cards.
Given that, during the COVID-19 pandemic, many sports programs and leagues are losing revenue streams, fan tokens may allow organizations to gain capital while growing engagement amongst their fans. Since there are already platforms and models that have been implemented, creating tokens for clubs and teams has become a much more streamlined process.
FC Barcelona as well as MLSPA’s intentions to use blockchain technology to engage fan bases show that tokens and collectibles might start to become more common ways for fans to engage with their favorite sports teams. Allowing token holders to vote on the song that is played, the color of a jersey, a mural, etc… are simple actions that do not consume many resources from the teams but allow the fans to feel engaged with the team. By releasing a token, FC Barcelona garners worldwide interest in its team, allowing further profits to be made by more viewership and interest. Important to consider, though, is that there exist no trustless, cryptographic mechanisms preventing teams from eliminating perks for token holders; while unlikely due to the potential for backlash, such a move would significantly diminish a token’s utility and value.
Fan tokens have spread to soccer leagues, the UFC, the NBA, and their growing interest and acceptance amongst fans shows that fan tokens are revolutionizing the experience. The large demand for the BAR token and others shows that there is a market of people that want to engage with teams uniquely. Fan tokens allow sports teams to raise capital while not forfeiting any equity––and, thus, control over their organization––grow their engagement with their fans, and can grow more interest from fans worldwide. From the perspective of fans, fan tokens allow them to engage with the team uniquely, and gain access to limited experiences. There has always existed demand from fans to engage with players and teams, whether that be through trading cards, video games, or limited-edition merchandise. Fan tokens and collectibles tap into this large fan and sports consumer markets digitally and allow fans and teams to mutually benefit.