When Paris Saint-Germain signed Lionel Messi, the salary package included something previously unheard of for a player: a one-time payment in PSG ‘fan tokens’ worth around one million euros ($1.15 million).
It is the result of a partnership signed by the French giants in 2018 with Socios.com, in which fans use a cryptocurrency known as ‘chili to purchase tokens that allow them to vote on club-related issues.
These issues have tended to be rather mundane, with Juventus, for example, asking what music should be played in their stadium, but the concept has caught on.
According to CEO Alexandre Dreyfus, the company has grown quickly since its first partnerships with PSG and Juventus to being involved with 56 football clubs and around 100 sports teams worldwide. Messi has garnered more attention, and Dreyfus believes the Argentine will “set a trend.”
“This is more of a supplement that will never replace any compensation.” “It’s more like a bonus, but it’s a bonus that players will start to ask for at some point,” Dreyfus tells AFP from his office in Malta.
“We’re hoping that in two years, during the Mercato (transfer window), a player will say, ‘Yes, I’m going to that team, but they better give me a million dollars in fan tokens.'”
Dreyfus admits that the pandemic and ensuing economic downturn have benefited his company by allowing them to expand their partnerships.
“The fact is that clubs suddenly lost 50, 70, or even 80 percent of their revenue and realized, ‘Hey, we have fans all over the world, what can we sell them?'”
They now have shirts sponsored by Inter Milan and Valencia to promote their fan tokens.
According to a new KPMG Football Benchmark analysis, over 40 shirt sponsorship deals have been signed-in Europe’s five major leagues since the pandemic began.
It claims that switching from Pirelli to Socios.com and a $23.57 million deal doubled Inter’s income.
There is a mini-revolution taking place as cryptocurrency-related businesses have begun to appear on t-shirts.
Roma announced in July a three-year deal worth $14 million per year in which their shirts will bear the name of DigitalBits, “an easy-to-use open-source blockchain used to power consumer digital assets.”
“Fans can not only witness history, but they can now own a piece of it,” Roma boasted. “Be prepared to trade and collect. Join us as we embark on a journey into the future of football.”
The emergence of crypto-related businesses in football coincides with countries enacting regulations to restrict gambling sponsorship — a ban, for example, is in place in Spain, and the UK government is considering one.
“The door is open for new companies to enter,” said KPMG.
“Something has to fill the void, and fan tokens, or something that is not defined as gambling but is gambling,” Kieran Maguire, a lecturer in football finance at Liverpool University, tells AFP.
There are concerns that inexperienced gamblers will be drawn into using crypto-related products without a proper understanding.
To demonstrate their volatility, the value of ‘chiliz’ — a lesser-known cryptocurrency than, say, Bitcoin — increased by 58% in the four weeks following Messi’s arrival.
“In the end, these are speculative products.” “They were described to me as gambling with a small G,” Maguire says.
Meanwhile, some fan groups have chastised their clubs for accepting fan tokens.
The Aston Villa Supporters Trust told Joe.co.uk that the club’s agreement with Socios.com was “wholly inappropriate,” and they questioned why fan engagement should be monetized.
“The clubs are targeting ‘non-legacy fans’ and asking, ‘Can we make some money off of these new fans?'” says Maguire. Take Manchester United, which claims to have 1.1 billion fans and earns around 600 million pounds ($805 million) in revenue in a typical year. That equates to about 55 pence per fan per year. That’s really bad.”
This is where Dreyfus, the founder of the French online gambling and poker company Winamax, comes in.
“We’re talking about two generations that aren’t fighting each other; they just don’t see the same things,” he insists.
“I always joke that we’re not looking for a guy with a tattoo who lives next to the stadium.”Our market is really about digital fans, casual fans all over the world who consume sports differently than you and me in the past.”