Examples of NFTs.
Examples of NFTs.

Football and Crypto: the new frontiers

The phenomenon of NFT and metaverse are progressively affecting the soccer industry

The more than 700 clubs participating in the 55 European Top Divisions recorded a total loss, in terms of lower revenues, of about 7 billion euros during the 2019-2020 and 2020-2021 seasons, those actually impacted by the consequences of the pandemic.

Facing new challenges 

The more than 700 clubs participating in the 55 European Top Divisions recorded a total loss, in terms of lower revenues, of about 7 billion euros during the 2019-2020 and 2020-2021 seasons, those actually impacted by the consequences of the pandemic.

In other words, the soccer industry needs to adopt a new business model – able to be competitive in the context of globalization of the market – and the new technologies, such as crypto and NFTs, are becoming more and more relevant as players in this field.

Today the business of soccer is facing the challenge of keeping its product competitive and attractive even for new generations: there is a growing disaffection of younger people who are constantly looking for new stimuli and emotions, exclusive experiences, often in omni-channel mode. On the other hand, it has to find new sources of revenue due to the fact that the effects of the pandemic in terms of revenues and losses are not yet absorbed.

Anyway, the soccer business still represents the main world sport system all over the world from all points of view and especially from the socio-economic one. Indeed, in 2021 soccer alone accounts for 40% of the turnover produced worldwide by the Sports Business in the media rights market: 20,8 billion dollars compared to the total of 52.1 billion dollars, which means an increase in the incidence of +16.8% compared to 2020.

The transformations in the clubs’ sponsorships

Thinking about revenues, one of the most important sources for soccer clubs has always been sponsorship. Currently, the crypto industry rules as part of the sponsorship of clubs, leagues and sporting events, after the domain of the betting industry, especially in the world of soccer (and in Italy). Just think that, between January 2021 and June 2022, the value of sports sponsorships by companies related to the cryptocurrency industry exceeded 1.5 billion dollars according to Bankless Times estimates.

Moreover, until April 2022, sports clubs and companies operating in the crypto world signed 289 sponsorship and marketing agreements – with an estimated economic value of USD 570 million – and 54% of these agreements have as contractors a soccer club: a clear demonstration of the need for the crypto business to exploit the greater visibility/popularity and economic return enjoyed by the world of sport, especially soccer.

It is interesting to say that, among the tools of the crypto industry, fan tokens are the most exploited digital assets in the sports industry. The numbers demonstrate their success: 156 sports organizations – 88 soccer clubs and 31 basketball clubs – have launched a fan token or tight agreements with companies in this industry.

However, the fan token market is less productive than the other financial services, due to the strong decrease in its average quotation. Moreover, these tokens are still acting more as tools for fans to interact – even if in a limited possibility – in the lives and decision-making processes of clubs rather than real financial instruments and, above all, they are also the subject of regulatory discussions about their regulation.

New leaders in the market

Taking into consideration the sports sponsor’s sector, in 2022 the new leader – and benchmark – has become Crypto.com, the cryptocurrency trading platform founded in 2016 and which today boasts more than 10 million users.

This company, which was the official sponsor of the 2022 FIFA World Cup in Qatar, also owns the naming of the Staples Center with a $700 million deal signed with Anschutz Entertainment Group (AEG) and it signed many other sponsorship agreements signed with impressive high figures: 100 million dollars to become the principal partner of the Miami F1 Grand Prix, 175 million to become the first global partner of the official UFC Fight Kit (the world’s largest arts organisation mixed martial) also working on the creation and launch of the first Non-Fungible Token (NFT) authorized UFC.

Moreover, Crypto.com have also sponsorship agreements with the Philadelphia 76ers (NBA franchise) the Aston Martin Formula 1 team, and the International Ice Hockey Federation league and since the 2021-2022 season it has been one of the official sponsors of the football championship Series A, as well as the first Innovation & Technology Partner of Italian football. The cryptocurrency platform has already entered into the Italian national cup, sponsoring 2021 final and launching a special collection of NFTs that included, among others, the official trophy and highlights of the match.

Crypto.com signed also an agreement with the Spanish soccer championship and, outside of the world of soccer, since July 2021 it is a partner of Formula 1: a five-year deal worth more than $100 million that consists of showing the logo of Crypto.com in F1 events and on the track during the races and being the official (and exclusive) provider of Formula 1-themed NFTs.

Nowadays Crypto.com is still the benchmark company in the sponsorship sector, while another important case of exploiting the new technologies in the world of sport is that of Socios.com: the true pioneer in this new trend. The company – born in December 2019 – became a partner of Juventus, Inter, PSG and other main European soccer clubs for a total of 36 partners. This company deals with fan tokens, a tool – as already affirmed – used to get fans the right to participate actively in the life of the club. Indeed, these tokens are a successful marketing tool in order to increase customer loyalty.

In general, the collaboration between the clubs (especially soccer ones) and the crypto companies has its origins in the economic crisis produced by the pandemic and it is based on a mutual benefit for both these companies. On the one hand, clubs have a strong need for liquidity and economic-financial resources. On the other hand, crypto companies want to increase their visibility and the world of sport, especially that of soccer, is the perfect way to conquer more and more customers on a planetary scale.

A step back

The first approach of this collaboration between the worlds of sport and crypto dates back to 2018, when Juventus and Paris Saint-Germain signed an agreement with Socios.com, but – as often happens – the role of avantgarde has been interpreted by the NFL and NBA leagues. The entry of digital realities into the sports sponsorship industry began in the US market, while in 2021 cryptocurrencies have become an authentic reality in the world of soccer: it’s not casual that it is the year after the pandemic.

Currently, the crypto companies are monopolizing the scenario of sponsorship, especially in Italian soccer where the revenue for Serie A clubs exceeds 180 million euros only for the teams’ kit; a figure that exceeds 250 million considering the other forms of partnerships involving the crypto sector.

It is important to state that the sponsorships of the crypto sector exploit in a perfect way the sleeve area that represents 8,5% (20,5 million) of the 230 million euros of revenues of the teams’ jerseys for Series A.

The role of NFTs

Another important field of connection between the worlds of sport and new technologies is that of NFTs, where the English championship of the Premier League acted as an avant-garde. The richest league of soccer in the world has always worked on keeping up with technological innovation and launching new projects in order to offer an attractive and satisfactory product to its target.

Indeed, in June 2022, the Premier League filed its three historic brands at the United States Patent and Trademark Office with the aim of protecting its intellectual property and using them as NFT: the goal of the Premier League is that of entering the metaverse to intercept the target represented by the new generations.

The phenomenon of NFT and metaverse are progressively affecting the soccer industry. At the same time, it is important to state that the regulation of this universe – from a normative point of view – is still the real question mark. In general, the requests for brand applications are growing exponentially, with the number increasing more than 400 times in 2022 in the United States alone.

The first clubs that opened the doors of English football to the NFT universe were Everton with Fancurve and Manchester United with Tezos. In other countries, we can think about the Paris Saint-Germain – the best French club in the last years – that filed trademark applications related to content NFT-supported multimedia concerning cryptographic wallets, and cryptocurrency transaction management. Moreover, an ambitious project is that of Porto and Upland: mapping in the metaverse the city of Porto and the stadium of the club where fans – with their avatar – can attend the matches of Porto in a digital way.

The NFT market is growing at an unprecedented pace: a demand that withstood the drop that has strongly affected cryptocurrencies. The origins of the success of these digital assets in the sport industry date back to the case of the NBA platform Top Shot, whose first collection was sold for over 1 billion dollars (according to CryptoSlam).

An example of mixing NFTs and soccer is that of Sorare, the company that created a sort of fantasy football world where people can buy, trade and collect footballers’ figurines and also use them to create a fantasy team and compete in a fantasy-football tournament against people all over the world: a gaming experience based on building connections in the real world.

Sorare rewards the best fantasy coaches in cryptocurrencies of the Ethereum circuit and it exploits the Blockchain technology in order to guarantee that each figurine is unique, scarce/limited and certified.

Today: the rise of Sorare

Today Sorare can count on an audience of over 600.000 registered users in 2021 and a market of virtual figurines that generated trading card activities for more than 150 million dollars. The company got a second round of investment – initial financing of 4 million euros – with a record figure of 680 million euros (the largest ever carried out in Europe). Indeed, Sorare reached a valuation of 4.3 billion dollars.

At the basis of this project, there is the intersection among NFTs, sports cards and global fantasy sports, for which the estimates predict a turnover of 48 billion dollars by 2027.

Becoming a partner of all 20 soccer leagues globally and of the top 50 soccer teams in the world in competitions both female and male is the real goal of Sorare, which can already count on the licenses of over 180 clubs, including Real Madrid, Liverpool, and Juventus, as well as French, German and Spanish football associations.

Sorare wanted to exploit the fact that soccer is the most important sport in the world in terms of the number of fans, estimated at 1,042 million people – according to the data processed by the FIGC -and followed at a distance by basketball (especially the NBA) with 866 million.

A strategy adopted by many companies in the crypto industry: 157 out of the 289 commercial agreements signed between sports clubs and crypto companies have soccer clubs as part.

On the other hand, this is also the natural consequence of the fact that soccer has always been characterized by the constant research of new financial resources and opportunities in order to ensure the sustainability of investments that are increasingly out of control. Indeed, it is the sport that produces a higher level of debt than the other sports.

The growth of the cryptocurrency industry and that of NFTs demonstrate that sport and technology are and will be more and more interdependent and numbers confirm that this marriage can be profitable for both. According to the estimates of StageUp, thanks to the use of technologies the turnover of sport could reach 40.5 billion dollars, in 2028, from the current 13.6 billion. Moreover, Europe would also be the world leader with 42%, followed closely by North America and the Far East, which would be the area with the highest growth between now and 2028.

Thinking points:

Crypto companies are influencing most of the soccer clubs’ decisions, especially in terms of marketing (see match kit), will the clubs keep their independence in other fields?

Would NFTs represent the new way to keep fans engaged in soccer competitions and elevate the quality of the soccer product?

Looking back at the history of soccer, a game played by factory workers in their free time which got transformed into a globally branded product, what would you say have been the drivers of such change? 

Why do you think so many economical interests are sharing the football space?

Find out more: 

In the following articles you can find data about the topics:

Mckinsey Analysis: Despite Slump, Sports Nfts Aren’t Going Away

NFT Transaction Activity Stabilizing in 2022 After Explosive Growth in 2021

Cryptoslam

Crypto Sponsorship Surpasses $1.5 Billion Since 2021

Broadcasting revenue landscape – big money in the “big five” leagues

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