Tokenization of Sports: Transforming Sports Franchise Ownership

by | Oct 27, 2020 | Token | 0 comments

Tokenization presents a novel way to enhance engagement with fans, build a borderless base, and leverage unprecedented funding, not forgetting the impact of tokenization on the transfer market. Early this year, FC Barcelona launched their digital token- Barca Fan Token ($BAR) – to foster fan engagement in the digital age. The tokens were issued and sold by Chiliz, the world’s first blockchain fintech provider for sports and entertainment, from June 22, 2020.

The first sale comprised of 600,000 tokens at €2, and they were depleted within two hours. The demand for the tokens shows that sports fans yearn to interact with their favorite teams in more meaningful ways.

Loyalty programs should leverage tokenization since they will enable teams to foster engagement without transferring a lot of power. Teams can provide redemption in various ways:

  • Experience-based events, such as player meet and greets, and VIP suites.
  • Merchandise, like signed jerseys, and limited edition memorabilia.
  • Trivial votes, such as lock-room murals, new uniform designs, and stadium concessions.

Ownership is another exciting yet distant application, considering the complexity, distribution of power, and legal effects. Currently, the freedom to invest in franchises is restricted, access to leagues is not available, and fans cannot participate in decisions associated with operations. As users continue to gain more power in the general marketplace, the sports industry would likely follow suit. Imagine giving knowledgeable and invested fans a seat at the table and a say on decisions traditionally limited to players, leagues, and owners.

BATRA and BATRK are the market symbols for Series A and Series C Braves Common Stock issued by Liberty Media Corporation, a media house. The firm has three divisions showing ownership in Formula One, SiriusXM, and the Atalanta Braves. Stockholders are allowed to vote on the Board of Directors and External Auditors of Liberty.

The Liberty Board, in turn, makes decisions about Braves management while Braves management makes decisions related to the franchise. Therefore, stakeholders lack a say in the daily operations, but they have to handle the effects of these decisions, such as season ticket resale value.

While it requires a long and complicated agreement between leagues, franchise owners, players, and referees, it is a good idea. Decisions concerning the relevance of fan input would have to be considered because most of them call for confidentiality and more in-depth knowledge of the league. What types of decisions should be open to fans? What percentage of the decisions does the collective fan voting base maintain? How do you determine a fan’s knowledge and context to make a decision that carries the best interest of the league/team/players? How do you even differentiate between a ‘plastic fan’ and a ‘real fan’? It would all need to be sorted- not an easy task, though.

But consider the benefits if fans were to have a say in the following-

$NFL: Should players be penalized or suspended for kneeling during the National Anthem?

$SFFN (SF 49ers): Which part of the team is essential to ensure another Superbowl run considering the salary cap?

$WRS/$KCC (Washington Redskins/Kansas Chiefs): What is the appropriate rebrand for the organization to prevent ethnic stereotypes and America’s traumatic past towards Native Americans?

$NBA: What should be the structure of a remaining season in case of incidences, like the COVID19 pandemic?

$LAL (LA Lakers): Is Antony Davies worth three first-round draft pics, Lonzo Ball, Brandon Ingram, and Josh Hart?

$MLB: What is the correct penalty for a team or individual guilty of sign stealing?

The stage is already set, and we are excited to see what happens next. Since fans want to interact with franchises in more meaningful ways, tokenization presents the potential to allow a new level of engagement by transforming loyalty programs and giving fans a seat at the table regarding crucial decision-making processes.

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