How Tokenization of Players will Transform the Football Transfer Market

by | Sep 4, 2020 | Industry | 0 comments

In the summer of 2006, two highly-rated South American players joined West Ham United in one of the most contentious dealings in football history. Carlos Tevez and Javier Mascherano moved from Corinthians, but the South American club had not owned them. A group of mysterious individuals held their economic rights, bringing complications in their transfer that finally lead to West Ham being fined £5.5 million.

This transfer saga made the Premier League chiefs to put an end to third-party ownership of footballers in 2008. This was the same year when an article was released, unfolding a revolutionary invention that had the power to change the way assets are owned, traded, and sold- the blockchain technology.

More than ten years since Satoshi Nakamoto’s white paper was unveiled, numerous blockchain use cases have already been developed in almost every sector. Blockchain technology allows assets, like cryptocurrencies, to be fragmented into digital tokens and exchanged via a smart contract that is immutable and transparent.

Football stars have already boarded the blockchain train. In 2018, Michael Owen unveiled his digital currency, and Lionel Messi openly endorsed a blockchain smartphone. But what if footballers were in reality on the blockchain itself? I firmly believe blockchain will soon transform the transfer market of this beloved game.

The Application of Blockchain in Football Transfers

“The ledger entry for a single player could be divided into multiple shares, each capable of being sold individually to create a fractional ownership scheme,” says Lu Zurawski, practice lead for retail banking at payments systems firm ACI Worldwide. “Depending on the type of ledger technology used, these shares would be tradable and could be bought and sold via exchanges — teal folding money being used in exchange for player tokens.”

Therefore the rights of a footballer would be owned by the team they play for; the presence of a secure and immutable record of ownership in the form of a blockchain network would enable fans and investors to have a stake of these stars. Besides, it will bring more trust and transparency to players, agents, teams, and concerned bodies.

“Given the murky reputation of football dealings at all levels of the game, such a system might be a great way of cleaning up tax evasion, money laundering and, potentially, modern-day slavery,” Mr. Zurawski elaborated, adding that the Premier League or football establishments, such as UEFA and FIFA, ought to control such dirty dealing before they get out of hand.

Premier League guidelines require that third parties, anyone or anything that is not classified as a football club, can trade players. Although FIFA illegalized the practice in 2015, there are still loopholes that the ‘bad boys’ in the industry are exploiting.

Former England football manager Sam Allardyce was sacked by the FA after he was secretly recorded explaining that it was possible to bend third-party ownership rules.

Therefore, before tokenization can be practically applied in the football transfer market, some existing rules need to be amended. Unlike the Tevez and Mascherano saga, tokenizing players would make any concern about ownership completely transparent.

Blockchain Tokenization in other Industries

Tokenization is already being embraced in other industries, like the art world. Recently, a multi-million-pound work of art by Andy Warhol was traded in the form of digital certificates, enabling investors to own a portion of the iconic Fourteen Electric Chairs piece. The company that facilitated the sale stated the first-of-its-kind auction was “democratizing access to fine art,” as now “anyone can own a Warhol.”

Another area where tokenization has been exploited well is the real estate sector. Property is one of the most appealing investments, but for many, particularly millennials looking to venture into this industry, it is too expensive for them.

Through tokenization, property buyers can partner with investors instead of financial institutions, where funds are more accessible, and approval periods are not length. Tokenization has also made it possible for investors to diversify their investments by participating in portfolios rather than individual properties.

Conclusion

The days of making football transfers through complicated paperwork that are marred with dubious activities and clauses are well numbered as the football world is ready to embrace blockchain technology. The possibility of performing online transactions of an asset that can be digitized has already been demonstrated in the real estate and art sectors. Therefore, the use of blockchain in the football transfer market won’t be a mountain to climb.

Tokenizer is a blockchain investment banking ecosystem financing humanity’s best ventures. Are you in need of investing, fundraising, and trading in Asset-Backed Tokens (ABTs)? Create a free account with us for all your investment banking needs now.

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