Opinion
Building on the blockchain

For small sports teams looking to compete with giants, blockchain can be a secret weapon explains Lars Rensing, CEO of Protokol


Revenue for sports teams has always been something of a David and Goliath affair. For smaller football teams, competing with larger, established teams has always been a huge challenge; larger teams have a base of commercial revenue, as well as huge, loyal and often international fanbases. Not only that, but they typically have fruitful relationships with sponsors, due to their larger audiences for advertising.

Although this situation has been largely accepted by the majority in football’s mainstream history, recent technological innovations are challenging this and could see the playing field start to level.

What small sports teams lack in sponsors and international fan bases they can make up for in agility, meaning they’re well-positioned to be at the forefront of technological advancements in a traditionally slow-moving industry.

Using the blockchain
Smaller teams can use blockchain to their advantage, enabling them to create unique experiences for fans that are closer to those of large teams in terms of delivery.

For example, blockchain-based non-fungible tokens (NFTs) – digital collectables that cannot be replicated, forged or destroyed – can be utilised to generate revenue for smaller teams that often struggle to achieve the same level of advertising revenue or the high ticket sales that larger teams are accustomed to.

NFTs open up a new and accessible revenue stream that small teams can leverage, enabling them to offer fans digital trading cards, or take this further by creating personalised NFTs that also reward them – for example, by selling NFTs of players’ trading cards and then offering a personalised message from specific players upon purchase.

This not only engages fans but brings in new revenue streams, so by using blockchain technology, small teams can make themselves more attractive to sponsors and grow a bigger and more engaged fanbase.

Monetising transactions
Clubs have also been exploring the benefits of fan tokens. These digital tokens – created using blockchain – can act as a club’s own virtual currency, which fans can purchase with fiat currencies, such as US Dollars, Euros and Sterling. This makes them a viable and useful revenue stream for teams. Once purchased, fans can exchange fan tokens for merchandise, collectables or exclusive experiences.

The data relating to ownership and transactions using fan tokens is automatically stored in a secure, digital ledger, allowing teams to access in-depth fan interaction data, which can be seamlessly and securely shared with sponsors and business partners. In this way, blockchain enables smaller sports teams to appeal to potential and existing sponsors, by demonstrating a much clearer return on investment.

For larger clubs, such as FC Barcelona, fan tokens act as a tool to monetise their global fanbase. However, for a smaller team, the customisation of these tokens can be taken further, offering fans the ability to use them to unlock discounts on merchandise, access unique experiences, or participate in fan-led decisions through a voting platform.

Cypriot team, Apollon FC, has also explored several voting options, from giving fan token holders the right to choose the team’s kit, to choosing the starting eleven for a friendly match.

Small teams
Blockchain’s uses for small teams don’t stop there, though. In the same way that blockchain can facilitate tokens and collectables to drive fan engagement, it can also be used to facilitate engagement platforms for fans. On these fan engagement 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 collectables.

Not only do these platforms help foster a sense of community, creating a more connected fanbase, they can also enhance a club’s relationship with sponsors and because blockchain is transparent by design, business partners or other stakeholders can be given access to the information stored on it.

Proving impact
The benefits of this transparency can be felt by all parties. For teams, it gives the ability to share real-time, verifiable fan interaction data with sponsors, which is valuable for long-term financial success. For sponsors, it means the availability of verified engagement metrics that let them see where their advertising spend is going and the kind of return it’s generating. Finally, for fans, it means transactions are visible when it comes to being awarded (or spending) loyalty points.

Because the information is decentralised by being stored on a secure blockchain network, rather than a centralised server, there’s no single point of failure, making the data secure and almost impossible to corrupt.

Blockchain, then, can provide reassurance in relation to the validity of the metrics and insights gathered from fan interactions, helping sponsors generate a better ROI. The risk for sponsors is reduced, meaning they’re more likely to invest in smaller teams that don’t have the same authority in the space or established reputations as their larger counterparts.

As blockchain technology continues to mature and smaller sports teams find more varied and innovative ways to adopt it, we’ll see the playing field becoming more level and smaller teams tapping into new revenue streams, expanding their loyal fanbase and facilitating more lucrative sponsorship deals.

More: www.protokol.com

Tech explainers
Lars Rensing is CEO of Protokol, a blockchain consultancy
Blockchain

A decentralised digital ledger that offers a transparent, secure method of recording transactions. Transactions are cryptographically encrypted and distributed across the entire network of computer systems on the blockchain. This wide network means that the blockchain is almost impossible to hack, as there is no single point of failure. Blockchains can also be set up so only certain individuals can be given access to specific information stored in the blockchain.

Non-fungible token (NFT)

Non-fungible means the tokens are unique. For example, a pound coin is fungible, as one pound coin is the same as another and interchangeable for other pound coins. They are also easily replicated or replaced, but a one-of-a-kind digital collectable is non-fungible, this means it is unique and not interchangeable for other collectables. Unlike physical collectables, NFTs cannot be replicated or forged, as the asset is visible on the blockchain.

Clubs can use blockchain to create unique experiences for fans Credit: Photo: fizkes/shutterstock
 


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SELECTED ISSUE
Fit Tech
2023 issue 1

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Leisure Management - Building on the blockchain

Opinion

Building on the blockchain


For small sports teams looking to compete with giants, blockchain can be a secret weapon explains Lars Rensing, CEO of Protokol

Fan tokens can act as a club’s own virtual currency Photo: Jacob Lund/shutterstock
Clubs can use blockchain to create unique experiences for fans Photo: fizkes/shutterstock

Revenue for sports teams has always been something of a David and Goliath affair. For smaller football teams, competing with larger, established teams has always been a huge challenge; larger teams have a base of commercial revenue, as well as huge, loyal and often international fanbases. Not only that, but they typically have fruitful relationships with sponsors, due to their larger audiences for advertising.

Although this situation has been largely accepted by the majority in football’s mainstream history, recent technological innovations are challenging this and could see the playing field start to level.

What small sports teams lack in sponsors and international fan bases they can make up for in agility, meaning they’re well-positioned to be at the forefront of technological advancements in a traditionally slow-moving industry.

Using the blockchain
Smaller teams can use blockchain to their advantage, enabling them to create unique experiences for fans that are closer to those of large teams in terms of delivery.

For example, blockchain-based non-fungible tokens (NFTs) – digital collectables that cannot be replicated, forged or destroyed – can be utilised to generate revenue for smaller teams that often struggle to achieve the same level of advertising revenue or the high ticket sales that larger teams are accustomed to.

NFTs open up a new and accessible revenue stream that small teams can leverage, enabling them to offer fans digital trading cards, or take this further by creating personalised NFTs that also reward them – for example, by selling NFTs of players’ trading cards and then offering a personalised message from specific players upon purchase.

This not only engages fans but brings in new revenue streams, so by using blockchain technology, small teams can make themselves more attractive to sponsors and grow a bigger and more engaged fanbase.

Monetising transactions
Clubs have also been exploring the benefits of fan tokens. These digital tokens – created using blockchain – can act as a club’s own virtual currency, which fans can purchase with fiat currencies, such as US Dollars, Euros and Sterling. This makes them a viable and useful revenue stream for teams. Once purchased, fans can exchange fan tokens for merchandise, collectables or exclusive experiences.

The data relating to ownership and transactions using fan tokens is automatically stored in a secure, digital ledger, allowing teams to access in-depth fan interaction data, which can be seamlessly and securely shared with sponsors and business partners. In this way, blockchain enables smaller sports teams to appeal to potential and existing sponsors, by demonstrating a much clearer return on investment.

For larger clubs, such as FC Barcelona, fan tokens act as a tool to monetise their global fanbase. However, for a smaller team, the customisation of these tokens can be taken further, offering fans the ability to use them to unlock discounts on merchandise, access unique experiences, or participate in fan-led decisions through a voting platform.

Cypriot team, Apollon FC, has also explored several voting options, from giving fan token holders the right to choose the team’s kit, to choosing the starting eleven for a friendly match.

Small teams
Blockchain’s uses for small teams don’t stop there, though. In the same way that blockchain can facilitate tokens and collectables to drive fan engagement, it can also be used to facilitate engagement platforms for fans. On these fan engagement 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 collectables.

Not only do these platforms help foster a sense of community, creating a more connected fanbase, they can also enhance a club’s relationship with sponsors and because blockchain is transparent by design, business partners or other stakeholders can be given access to the information stored on it.

Proving impact
The benefits of this transparency can be felt by all parties. For teams, it gives the ability to share real-time, verifiable fan interaction data with sponsors, which is valuable for long-term financial success. For sponsors, it means the availability of verified engagement metrics that let them see where their advertising spend is going and the kind of return it’s generating. Finally, for fans, it means transactions are visible when it comes to being awarded (or spending) loyalty points.

Because the information is decentralised by being stored on a secure blockchain network, rather than a centralised server, there’s no single point of failure, making the data secure and almost impossible to corrupt.

Blockchain, then, can provide reassurance in relation to the validity of the metrics and insights gathered from fan interactions, helping sponsors generate a better ROI. The risk for sponsors is reduced, meaning they’re more likely to invest in smaller teams that don’t have the same authority in the space or established reputations as their larger counterparts.

As blockchain technology continues to mature and smaller sports teams find more varied and innovative ways to adopt it, we’ll see the playing field becoming more level and smaller teams tapping into new revenue streams, expanding their loyal fanbase and facilitating more lucrative sponsorship deals.

More: www.protokol.com

Tech explainers
Lars Rensing is CEO of Protokol, a blockchain consultancy
Blockchain

A decentralised digital ledger that offers a transparent, secure method of recording transactions. Transactions are cryptographically encrypted and distributed across the entire network of computer systems on the blockchain. This wide network means that the blockchain is almost impossible to hack, as there is no single point of failure. Blockchains can also be set up so only certain individuals can be given access to specific information stored in the blockchain.

Non-fungible token (NFT)

Non-fungible means the tokens are unique. For example, a pound coin is fungible, as one pound coin is the same as another and interchangeable for other pound coins. They are also easily replicated or replaced, but a one-of-a-kind digital collectable is non-fungible, this means it is unique and not interchangeable for other collectables. Unlike physical collectables, NFTs cannot be replicated or forged, as the asset is visible on the blockchain.


Originally published in Fit Tech 2023 issue 1

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