More and more football clubs are turning to the cryptocurrency industry to increase revenue by issuing a new type of digital asset called fan tokens.
In this guide, we will explain what football fan tokens are, how they work, and how football fans feel about them.
What are fan tokens?
Fan Tokens are utility tokens that give fans access to membership benefits such as exclusive promotions, merchandise, or events in sports and entertainment circles.
Additionally, they give fans the opportunity to vote on minor club decisions such as jersey designs, players participating in certain games, and goal music. Owning a fan token can also give you the opportunity to unlock VIP rewards, including a meet and greet with your favorite player, VIP seats, and other unique benefits. The more tokens you have, the greater your access and opportunity to rule the team.
Fan Tokens can also be used to access and purchase exclusive memorabilia from a team. The value of these rare items tends to increase over time, and when that happens, only fans with access to the memorabilia will have a chance to benefit. Still, a distinction must be made between these rare items and digital collectibles (NFT) sold by some football clubs.
Essentially, fan tokens provide an unorthodox form of fan engagement similar to a club membership.
How do fan tokens work?
Fans can buy fan tokens and trade them like any other crypto asset. The price of a fan token is subject to external pressures such as the cryptocurrency market and its popularity with club supporters.
Many of the clubs offering fan tokens have done so through the blockchain company. partners, which organizes the initial sale and subsequent exchange of fan tokens. While other platforms like Binance exist, the Socios model offers probably the best example of how fan tokens work.
Socios generally pays football clubs a minimum sum and shares a percentage of the revenue generated from fan token sales on their app. During the initial sale, fan tokens are sold at a fixed price, after which they go to the secondary market.
If the token sale reaches a certain threshold, the company benefits from subsequent trading fees and receives a 50% commission on each token sale. The balance is transferred to the club.
Thereafter, the tokens are released in batches over a period of time, usually years, until a predetermined supply limit is reached. Depending on a club’s preference, certain steps can be taken to limit the number of votes a token holder can cast.
Fan Tokens issued by Socios are based on the chilli protocol, which is a fork of the Ethereum (ETH) block chain. In fact, Socios uses the native Chiliz cryptography, CHZ as your exclusive currency on the platform.
In other words, all fan tokens are minted on Chiliz, and smart contracts are used to run all votes on the platform.
You can buy fan tokens on some centralized exchanges, but other fan tokens may not be big enough to be listed yet. In that case, you can trade the fan tokens on decentralized exchanges (DEX).
The best football clubs that have issued Fan Tokens
Here are the top five soccer fan tokens ranked by market cap (at the time of writing).
|No.||fan tokens||Price ($)||Market capitalization ($)||Description|
|1.||Paris Saint Germain (PSG) Fan Profile||$15.12||$47,798,095||
PSG is ranked 684th in terms of crypto market capitalization.
The fan token is capped at 20,000,000 PSG and has a circulating supply of 3.1 million PSG coins.
You can trade PSG on Binance.
Benefits include free match tickets, merchandise, player meet-ups, etc.
|two.||Manchester City Fan Profile (CITY)||$10.49||$40,978,913||
CITY is ranked 738th in terms of crypto market capitalization.
The fan token is capped at 20,000,000 coins and has a circulating supply of 3.8 million coins.
You can exchange cities on the Paribu exchange.
Benefits include exclusive merchandise discounts and in-app voting privileges.
|3.||Atletico Madrid Fan Token (ATM)||$7.09||$30,276,260||
ATM is ranked 849th in terms of crypto market capitalization.
The fan token is capped at 10,000,000 ATM coins.
You can buy and trade the ATM on Binance.
|Four.||Fan Sheet FC Barcelona (BAR)||$8.74||$26,568,216||
BAR is ranked 886th in terms of market capitalization
The fan token is capped at 40,000,000 BAR and has a circulating supply of 3 million BAR.
You can buy or trade BAR coin on Binance.
Benefits include governance, rewards, and participation.
|5.||Juventus Fan Club (JUV)||$8.48||$23,477,827||
JUV is ranked 923rd in terms of market capitalization.
The fan token is capped at 20,000,000 and has a circulating supply of 2.7 million JUV.
You can buy and trade JUV on Binance.
Clubs make money, fans (potentially) lose money
For football clubs, fan tokens are a way to raise money without making any changes to their corporate structure or taking substantial financial risk. This would not be the case if clubs used more traditional avenues such as private equity or bank loans.
In addition, fan tokens provide clubs with a more international appeal that replaces merchandise and digital media presence. Additionally, the convergence between cryptocurrencies and soccer is interesting given the demographic overlap between fans of both industries.
However, fan tokens are not without controversy.
In December last year, the UK advertising regulator forbidden fan token promotions Arsenal football club to potentially mislead investors about the risks of dabbling in crypto assets.
Football fans from all corners of the world have also expressed their displeasure at the appearance of fan tokens.
Borussia Dortmund ultras group Unitfor example, protested against fan tokens with a banner outside the stadium that reads “Stop the marketing madness: reduce fan tokens” while crystal Palace group of followers Homesdale fans shared his thoughts with a banner that read “Morally bankrupt parasites not welcome. Members not welcome.
Crypto analysts have raised concerns about the risk of bringing these digital assets to fans. For one thing, most fan tokens are highly volatile due to the small number of people who want to trade them. Speculators are aware of this and are looking to trade the tokens for short-term profits.
Coupled with the fact that many fans are unfamiliar with crypto assets, the danger of fans losing money buying tokens from their favorite club is very real.
Football clubs need to communicate the risks of owning these incredibly speculative assets. For now, the benefits of fan tokens largely depend on the clubs earning upfront revenue and a portion of the profits, while the risks posed by volatility are borne by the fans.
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