How blockchain helps your football team win
There are few things that excite a football fan more than following the transfer news. There is a whole cottage industry that exists around giving fans this information.
This reaches a fever pitch twice a year when the transfer deadline hits and clubs around the world buy and sell players from each other to bolster their title hopes, or to get some much needed money into the club through the sale of players.
Billions of dollars are exchanged in this process and, for some fans, the ebb and flow of the transfer market is almost as exciting as the games themselves.
For the most part the transfer market is viewed through the prism of the buying club. Sports fans are only interested in the sporting side of the equation, after all. The club’s books are irrelevant to them. They just want a new left-back because the one they got is crap!
There is nothing gained when a club sells a player in most fan’s minds. That’s just another weakness that their club needs to fill. Why should they care about anything that doesn’t lead to more wins?
That puts clubs in a difficult situation because, as stated, the selling of players is a vital part of their financial planning, but yet if they sell too many they can also run the risk of fans losing patience with the club and pulling their financial support.
“Why would I pay good money to go watch those bums lose,” the fan might say.
So, it’s a Catch-22 for the clubs.
At least one club in Brail has come up with a new and unique way to deal with that dilemma. They are creating blockchain tokens to several of their players and allowing fans of the club to purchase them as an additional revenue source for the club.
That’s what’s in it for the club. For the fan, they are making an investment into the player that could have a big potential payoff down the line. In turn that, in theory, makes them more interested in the selling of players.
The way it works is that the tokens are priced at the current value of 1/500,000 of 12 selected players’ current solidarity value. Solidarity value is set by FIFA and is paid to clubs as compensation for training costs when a player is transferred anywhere in the world. They are usually relatively nominal, but can be quite significant.
With the tokens, the owner receives 1/500,000 of that fee when a player is sold. That gives them a financial stake in the player and an interest in seeing him succeed, regardless of whether it’s at their club or not.
In terms of the money involved, it would depend on the size of the transfer. Let’s take an extreme example, the transfer of Kylian Mbappé from Monaco to PSG for $215m USD, to see what it might mean in practical terms.
The solidarity payment that a club would have received for that transfer was $10.7m (5%). If the token’s value was set at 1/500000 then each token would have paid $21.40. If the club had priced the tokens at $10 each on the initial offering than fans that invested would have more than doubled their money. However, Mbappé is an extreme example. Most transfers do not bring in $215m, so from the club’s perspective selling the 500,000 tokens at $10 each is going to represent a more consistent and predictable income than an occasional big solidarity fee.
And, that consistent revenue can then be invested back into the club to get better players that will help them win more. Most fans are going to be ok with not making a big return off their $10 investment for a token if it means they get to see their club lift a trophy. Even though the token helps the fan feel part of the selling process, they ultimately can still view their contribution as helping the club win.
It’s clever and for clubs with the foresight to embrace the idea of tokenization, it could represent an advantage for them against their less progressive peers.