Crypto’s Hat Trick – Salaries, Sponsorships and Fan Tokens
- Sports clubs are increasingly choosing to pay players’ salaries in cryptocurrency.
- Crypto fan tokens are seen as valuable digital collectibles.
- The Futbol Coin (TFC) and NBA’s Top Shot could be milestones in fan tokens becoming mainstream cryptocurrency.
- Amid the growing and changing trends of fan tokens and crypto adoption, players seem to enjoy their first-mover advantage. The value of such tokens and currencies will only be tested in time.
“Pay me in Bitcoin.”
National Football League player, Russell Okung, tweeted the above in May 2019. His wish was granted in December 2020. Okung is the first American sportsman to have ever received part of his $13m salary in Bitcoin.
In 2021, sports players do not need to wait to get paid in cryptocurrency anymore. We are talking fan tokens, sponsorship deals, salaries and partnerships between cryptocurrency firms and sports clubs.
Soon ฿, Ł- the official symbols of Bitcoin and Litecoin - and others may find their way into the cell-phone keyboard lexicon. If the sports industry keeps adopting cryptocurrencies at the current rate, other industries may follow suit, sooner than expected.
The adoption of cryptocurrency does not rest entirely on its growing popularity. It also rests on the convenience of payments, the volume of money involved in sports and the increasing trust digital assets have enjoyed since the pandemic began. At least, that is what reports from 2020 and 2021 indicate.
Crypto Salaries are the New Normal in Sports
Let us first talk about player salaries that date back to 2018. Fun fact: Okung may have been the first American footballer to receive payment in cryptocurrency, but he was not the first sportsman in the world to do so. Here are two milestones:
- In 2018, Turkish footballer, Omar Faruk Kiroglu, received 0.0524 in Bitcoin (£385) and ₺2,500 (£470), as part of his deal with the football club Harunustaspor. This was the first time a football club used cryptocurrency to purchase a player.
- In January 2021, Segunda B side, DUX Internacional de Madrid, signed former Real Madrid graduate and Levante striker, David Barral, on a crypto-only deal.
There are several examples of sports clubs, such as the NBA’s Sacramento Kings or the English Premier League’s (EPL) Southampton F.C., now offering to pay players’ salaries, performance-based bonuses and transfer fees in cryptocurrency.
Not-so-cryptic Trend of Crypto Fan Tokens
When Argentinian soccer star Lionel Messi signed with Qatari-owned Paris St Germain (PSG) in August this year, the news created ripples around fan tokens and cryptocurrencies. PSG told Reuters that their fan tokens were part of Messi’s “welcome package.”
Fan tokens are a type of cryptocurrency that allow the token holders to access fan-related membership perks such as rewards, merchandise designs, voting rights and unique experiences. Fan tokens can be used by sports clubs, music fan clubs or any other organization to democratise and organise experiences.
Today, clubs see fan tokens as a source of revenue, which can be shared with, or used for, making partial payments to players. EPL champions, Manchester City, and Italy’s AC Milan were among several others who launched their tokens this year.
If the tokens are considered currency, then there must be providers. Sure enough, there are providers such as Socios.com that provide fan tokens for PSG and other top clubs. In fact, Socios is claiming that their tokens have generated close to $200m for its partner clubs in 2021, while PSG is already seeing revenue from the Messi deal.
Another example of the changing landscape in sports collectibles is the NBA’s non-fungible token (NFT) called Top Shot. The NBA and its players union, NBPA, partnered with Vancouver-based blockchain company, Dapper Labs, to develop a new digital platform called NBA Top Shot.
Today, Top Shot is a marketplace for NFTs where fans can buy, sell and trade NBA moments, such as packaged highlight clips. Just as fans used to collect physical items, they can now collect digital moments whose value may increase with time. Since its launch in October 2020, the platform boasts 800,000 users according to Business Insider.
TFC and the Growing Digital Wealth in Sports
Football fans around the world know The Futbol App (TFA) as a social platform for players, fans, coaches and clubs. It is already a thriving community. Unlike other social networks, TFA rewards its users with sports tokens that they can use in merchandise and offers a nominal fee to advertise on the platform. An integral part of this ecosystem is TFC - The Futbol Coin - a digital asset just like other cryptocurrencies, which is used as the only payment method to pay for the advertisements within TFA. TFC claims to have 100,000 users at the moment.
But here’s how the TFA ecosystem becomes crucial. In June 2021, TFC was used by Cyprus’ Second Division football club, ALKI Oroklini, to facilitate the transfer of Nigerian U21 International, David Fadairo, from the Lagos Islanders.
TFA launched the TFA Worldwide Association to give the community access to the digital wealth of the football community while managing the activities of the TFA ecosystem. The association, through its high-profile board members, will help connect social networking, blockchain and sports into a single sharing economy centered around TFC. Expect more transfers or payments in TFCs.
Crypto providers offering sponsorships to sports clubs and media channels date back to 2014. In December 2014, crypto payment processor, BitPay, signed a sponsorship deal with ESPN Events in one of the first-ever crypto marketing initiatives. BitPay also later sponsored the St. Petersburg Bowl.
Arsenal Football Club then brought the trend to the mainstream in 2018 when it inked a crypto-sponsorship deal with CashBet, as the club’s exclusive blockchain partner. Similarly, UFC clinched a deal with Litecoin, as their official crypto partner. That year, they sponsored the Light Heavyweight title fight between Alexander Gustafsson and Jon Jones.
Enter Futures Exchange (FTX) - a Hong-Kong-based cryptocurrency exchange backed by top cryptocurrency liquidity provider Alamada Research. FTX has been sending ripples in the world of sports with its big sponsorship deals. In June 2021, the esports organization, Team SoloMid (TSM), signed a $210m sponsorship deal with FTX for 10 years.
In the same month, FTX also became the first such platform to sponsor a professional sports league by signing a five-year partnership with Major League Baseball (MLB). The deal includes marketing rights and exposure across MLB’s broadcast, digital and social platforms. FTX has also bagged a 19-year $135m deal with Miami-Dade County to secure the naming rights of the home of the NBA’s Miami Heat.
One would need a whole blog to list the other sponsorship deals FTX has managed to clinch with leading clubs in the last two years.
Are Sports Players Happy about Crypto Payments?
One of the biggest hurdles in the large-scale adoption of cryptocurrency in sports has been the difficulty of understanding how it works. Even though it may be the last hurdle, it is still quite big.
When it comes to sports players being paid in crypto, they have the advantage of sports clubs advising them. Many sports players have come forward to demand payments in cryptocurrencies since such payments are easier, faster and more convenient.
Nothing in this article constitutes professional and/or financial advice. The content is provided exclusively for informational and/or educational purposes. Nothing is to be construed as an offer or a recommendation to buy or sell any type of asset. Seek independent professional advice in regards to financial, tax, legal and other matters.