The Olympics are coming. From sponsorship, NFT to fan tokens, how can the sports industry embrace blockchain?

From | cryptobriefing, compiled by | PANews

Original title: The Olympics are coming. From sponsorship, NFT to fan tokens, how does the sports industry embrace encryption?

Tonight, the 32nd Olympic Games will open in Tokyo, Japan. There is no doubt that a "sports trend" is blowing in this hot summer.

For most people, sports and crypto seem to be two unrelated worlds, but if you look closely, you will find that these two fields actually have a lot of room for cooperation and can provide each other with a lot of things that each other needs.

In recent years, encryption and blockchain technology have developed rapidly, and the application scenarios and scope in various industries have become increasingly extensive. This trend has gradually extended to the field of sports. In fact, cryptocurrencies have been rapidly adopted throughout the sports world. Many teams have received sponsorship from encryption and blockchain companies. Encrypted assets such as NFTs and fan tokens have also created more and newer value for sports organizations.

From sponsorship, NFT to fan tokens, how does the sports industry embrace encryption and blockchain?

Improving Crypto Industry Exposure Through Sponsorship

In 2014, cryptocurrency payment provider Bitpay signed a contract with ESPN to sponsor the St. Petersburg Bowl, an American college football event. Although the St. Petersburg Bowl was small in scale, it was highly symbolic because it was the first time that "crypto elements" were integrated into mainstream sports events, and it was also an important milestone in the crypto industry.

Seven years later, there are more and more deals for crypto companies to sponsor sports events and teams.

In the field of football, in 2021, the New York Giants of the National Football League (NFL) successfully reached a cooperation with Grayscale Investments, the world's largest crypto asset management company, becoming the first professional football team in the league to be sponsored by a crypto company, and also announced to the sports circle: Crypto has begun to enter the NFL.

In the field of football, there is no doubt that football is the world's number one sport, so it is not surprising that it is favored by crypto and blockchain companies. Although the trend of crypto companies sponsoring the football industry only started in 2021, it has developed very quickly, and now it is basically difficult to find a football league that is not related to crypto.

In basketball, the NBA’s Portland Trail Blazers recently announced a partnership with crypto cashback app StormX; earlier this year, the NBA’s Miami Heat signed an exclusive naming rights agreement with cryptocurrency exchange FTX, and is expected to rename its home arena to “FTX Arena.” The naming agreement is rumored to be for 19 years and the deal is worth $135 million.

In the field of baseball, on June 23, 2021, FTX signed a five-year cooperation agreement with Major League Baseball (MBL), which is the largest sports sponsorship deal for crypto companies to date. Frankly speaking, one thing is very clear: for those crypto companies involved in the sports sponsorship industry, they have seen great potential in marketing crypto services and products to sports fans.

Speaking about the partnership with FTX, MLB Chief Revenue Officer Noah Garden said:

“Our fans have always been early adopters of new technologies to engage and interact with the game.”

At this stage, crypto companies that provide sponsorship in the sports industry are mainly digital currency exchanges and payment service providers, highlighting that there are indeed some substantial "intersections" between sports fans and cryptocurrency applications. For example, some teams have begun to allow fans to use cryptocurrencies to purchase tickets. For example, the Oakland Athletics, one of the veteran teams in Major League Baseball, launched a Bitcoin ticket purchase channel earlier this year, allowing fans to directly purchase a package for the entire season.

So why are so many sports organizations and leagues "suddenly" embracing encryption? In fact, for the sports industry, this is a great opportunity to attract young fans and users. According to a survey published by Sport Business Journal in 2017, the aging rate of TV viewers of sports events is now faster than the aging rate of the total US population. The average age of Major League Baseball fans is 57 years old. Only the NBA and WTA TV viewers are growing at a slower rate than the aging rate of the US population. As of mid-May 2017, the average age of prime-time viewers of the four major sports TV stations in the United States has increased by 8 to 11 years.

NFTs are starting to gain popularity in sports

In addition to sponsoring sporting events and sports organizations, blockchain technology also adds value for sports fans in the form of collectible NFTs.

NFT, or so-called "non-fungible token," is an asset that allows creators to tokenize digital art, collectibles, or any other type of asset on the Internet. NFT can increase the value of collectibles because the blockchain technology behind it can prove the ownership and scarcity of collectibles.

When it comes to the combination of the sports industry and NFT, we have to mention the NBA. The NBA is one of the most successful sports organizations that has used NFT and has actively participated in the cooperation of the digital collectible card platform NBA Top Shot. NBA Top Shot is built on the FLOW blockchain, allowing users to buy, sell and trade "NBA Moments" (highlight moment videos of NBA stars) and store them in digital wallets on the blockchain.

NBA Top Shot has been a huge success in 2021, with more than 1 million users in May, and has also attracted a large number of well-funded investors in the secondary market. In April this year, a "Moment" highlight moment of NBA Lakers star LeBron James was sold for $387,600.

In addition to the NBA, European football is also benefiting from the NFT craze. For example, the fantasy football game Sorare has become a licensed partner for several European football giants, including Real Madrid and AC Milan. In the game, players can play the role of managers and then form a team of football player NFTs on the Ethereum blockchain. The team is then ranked based on the actual performance of the players on the real-world football field, just like traditional fantasy football games.

The prices of player NFTs on Sorare are also very high, but generally not as high as NBA Top Shots. In March of this year, a unique Cristiano Ronaldo ("C Ronaldo") NFT was sold for about $290,000. Sorae's official Twitter also released this information:

“Wow! Congratulations to FC Camembert for just breaking the transaction record in our #Sorare market.
Unique 2020-21 Cristiano Ronaldo card was purchased on the transfer market for $289,920. #OwnYourGame
Season: 2020-2021
Series: 1/1
Price: $289,920

It is worth mentioning that digital collectibles are not the only way for sports organizations to use NFTs. For example, billionaire Mark Cuban, owner of the NBA Dallas Mavericks, plans to turn game tickets into NFTs. He said in March when he appeared on the Delphi Podcast:

"We hope to find a way for our consumers, our fans, to not only be able to buy tickets and resell them, but we can also continue to collect royalties."

By using NFTs, Mark Cuban hopes to not only meet fans' ticket purchasing needs, but also sell tickets for popular events on a seasonal basis while allowing the Dallas Mavericks to profit from ticket sales.

Fan Tokens Increase Engagement

In some cases, teams across many sports are also beginning to embrace crypto and blockchain, hoping to use this emerging technology to increase fan engagement.

Chiliz, a tokenized sports trading platform, provides teams with the ability to create fan tokens, allowing fans to purchase their favorite team tokens on Socios.com and become "part of" the team. Fan token owners can vote on key decisions that affect the club, while also having the opportunity to receive VIP rewards, promotions, and other unique fan experiences. For example, Italy's Juventus Football Club was the first to issue fan tokens on the Chiliz platform as early as 2019. Since then, many football teams and e-sports teams have also followed suit and issued fan tokens, including UEFA Cup champions Barcelona Football Club and Paris Saint-Germain Football Club, which are "giants" in the football field.

On February 13, FC Barcelona announced on its official Twitter account:

“FC Barcelona is proud to announce a global partnership with blockchain platforms Chiliz and Socios. Using the digital currency CHZ, fans will soon be able to purchase Barca Fan Tokens, which entitle you to vote in club polls and earn rewards.”

The global sports sponsorship market is expected to reach nearly $90 billion by 2027. This figure is likely to grow exponentially in the coming years as the sports industry adopts cryptocurrency and blockchain technology.