Crypto corner: Could blockchain be the key to allowing small teams to compete with the giants?

When it comes to revenue for sports clubs, it has always been somewhat of a David and Goliath scenario. Take football, for example. For smaller football teams, competing with larger teams which have an established base of commercial revenue, as well as fruitful sponsor relationships and a large, loyal and often international fan base, is simply out of the question.

This has been accepted as the status quo for the majority of the time that football has been a mainstream sport. However, recent technological innovations could see the playing field begin to level. What small sports teams may lack in swathes of international fans and sponsors, they make up for in agility. This means that they are well placed to be at the forefront of technological advancements in an otherwise historically slow moving industry.

Blockchain is one such advancement. The technology can allow teams to offer unique experiences to fans, levelling the playing field between larger teams and smaller ones. For example, several clubs have been exploring fan tokens. These digital tokens – created using blockchain technology – act as a club’s own virtual currency, which fans can purchase for fiat currencies, like dollars, euros, and pounds, making them a viable revenue stream for teams. Fans exchange the fan tokens for merchandise, collectibles or exclusive experiences.

Fan tokens  are a finite, digital asset backed by secure blockchain technology. Data related to ownership and transactions of fan tokens is automatically stored on a secure, decentralised digital ledger, allowing teams to access in-depth fan interaction data that can seamlessly and securely be shared with everyone, from sponsors to business partners. In this way, blockchain also allows smaller sports teams to appeal to sponsors, by demonstrating a much clearer ROI.

For larger clubs like FC Barcelona, this allows them to monetise their global fan base. However, for a smaller team, the customisation of these tokens can be taken even further, offering fans the ability to use their tokens to unlock discounts on merchandise, access unique experiences or participate in fan-led decisions through a voting platform – in fact, Cypriot team Apollon FC has explored several voting options, from giving fan token holders the right to choose the team’s kit, to choosing the starting 11 for a friendly match.

Blockchain-based NFTs can be utilised as digital collectibles to offer a potentially easier way of generating revenue. Smaller teams may struggle achieving the same level of advertising revenue or the high numbers of ticket sales that larger teams are used to. As such, NFTs open up a new and accessible revenue stream that small teams can leverage.

In the same way that blockchain can facilitate tokens and collectibles to drive fan engagement, it can also be used to create engagement platforms for fans. On these platforms, fans can be rewarded for certain things, such as creating and sharing content, or through blockchain-enabled loyalty programmes that allow them to accumulate points or rewards to spend on merchandise, tickets and digital collectibles. These platforms not only help to foster a sense of community for fans but can also enhance a club’s relationship with sponsors.

The blockchain technology that underpins these fan engagement platforms is transparent by design, as everyone on the blockchain can be given permission to access the information stored on it. For teams, this means the ability to share real-time, verifiable fan interaction data seamlessly with sponsors. For sponsors, it means verified and immutable engagement metrics so they can see where their advertising spend is going, and the kind of return it’s generating, and for fans it means visibility over the transactions when it comes to being awarded or spending loyalty points.

Plus, because this information is decentralised (i.e. stored on a secure blockchain network, rather than one centralised server), there is also no single point of failure, making the data incredibly secure and almost impossible to corrupt. Blockchain, then, can provide reassurance of the validity of the metrics and insights gathered from fan interactions, helping sponsors generate a better ROI. This means that the risk for sponsors is reduced, meaning that sponsors are more likely to invest in smaller teams which don’t have the same authority in the space as their larger counterparts.

As blockchain technology continues to mature, and smaller sports teams find more varied and innovative ways to adopt the technology, we could potentially see the playing field between smaller and larger clubs become more level.

Lars Rensing is CEO and co-founder of enterprise blockchain services provider Protokol. He has more than four years’ experience in the blockchain industry, helping to lead and co-found Ark; the open-source blockchain platform which underpins Protokol’s blockchain services. He is passionate about helping everyone from start-ups to enterprises unlock the opportunities of blockchain technology for their business, and as a result currently also serves as an adviser for a number of start-ups leveraging blockchain technology. He leads the overall strategy and direction for Protokol, which is helping businesses across the world solve real challenges though custom blockchain solutions.