Football has been a massive part of my life, football has been a huge part of my life, from playing competitively on the pitch to cheering for my favourite club every weekend. Beyond the games I see on screens, my interaction with football, as with the majority, has never gone beyond observation.
With sports becoming super commercialized, it is no surprise to hear club managers making decisions purely based on their “investments” plans. Perhaps, it is a business they need to steer towards profitability.
However, when the pandemic hit, clubs struggled to maintain themselves due to the limitations in ticket revenues financially. This is where some of them started innovating and looking into fan tokens.
One of the biggest football clubs, FC Barcelona, had a sale of fan tokens which netted them $1.3M in a single day, their tokens, sold out in less than 2 hours.
What are fan tokens?
Football fan tokens are utility tokens that give token holders specific benefits. In the case of football fan tokens, holders can vote on official team pools to help the team make fan-related decisions, enjoy exclusive promotions to even VIP experiences. It allows all fans to now engage with a community of like-minded individuals.
Fan tokens allow clubs to democratize and organize experiences and involve fans more in decisions. Tokens also provided a different model to continue earning outside of ticket sales. There are a variety of platforms, most notably, Chilliz, which helps clubs launch and manage their fan tokens.
Unlike NFTs, fan tokens are fungible, which means you can buy a bunch of them, and they are all somewhat the same. However, it is a more extensive community you engage in than a 1-of-1 art piece you identify with.
World Cup 2022
Ahead of the World Cup this year, CHZ has been on a rampage, ignoring all norms of how a typical bear market should function.
Here are the performances of national teams and their performance against BTC leading up to the world cup.
As you can see, if you invested in your football teams one year ago, you are likely up on your investment. That brings me to the point where significant events, like the world cup, often present themselves as ample opportunities for traders.
Market participants aiming to trade the tokens likely entered into a position weeks/months before the event to take profits when the world cup begins.
Just three days into the world cup, some football fan tokens have taken a plunge and experienced corrections; without discounting the crypto market’s current state, fan tokens across the board are drawing more blood compared to BTC and ETH.
Since 18th November, fan tokens for national teams like Argentina are down 17%, Portugal is down the same, and Brazil and Spain are down 21% and 31%, respectively.
Tokens associated with the platforms, like Chiliz, to help these football teams issue fan tokens are also down 21%.
Additionally, FIFA’s official blockchain partner Algorand (ALGO: -9%) and an index of fan tokens of football clubs (FOOTBALL: -21%) have underperformed during the same period.
How do you think fan tokens will fair after the world cup?
Factors influencing football fan tokens
With a moderate positive correlation between the number of holders a token has with its price, it seems that a higher number of owners could likely lead to a higher token price.
There is also a strong positive correlation between the total supply of a token and its price.
However, most of the fan tokens consist of only around 20% of the total supply currently in circulation.
With a low circulation-to-supply ratio, the release of tokens in the future could spell exposure to dilution, which will create downward pressures for token prices. This is particularly important if you are considering holding these tokens for the long term.
Tokens with a significant part of their supply not in circulation yet are probably not the best investments you can make.
While dilution makes each coin less valuable, it is good to know that football fans are built differently.
While the world cup only happens every four years, the deep-rooted loyalty most of these fans have far surpasses the existence of Bitcoin and its maxis.
For fans, there is little to no incentive to sell their tokens, they support their favourite team through thick and thin, and we could classify them as the ultimate “holders” in crypto.
Apart from bringing social and cultural communities of billions of people across the globe, football fan tokens still have much to figure out.
Especially when fans can only vote for a minimal scope of less critical decisions, we will go back full circle to club owners making the final decisions, which does not always translate to the best insights and ideas for the club.
Until then, the idea of giving fans more influence in the club’s decisions has great potential. We continue to take the proper steps towards a direction where one day, the web3 and sporting worlds can coexist harmoniously.
[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]
Featured Image Credit: Chain Debrief