Complex Made Simple

Fan tokens: Soccer’s foray into cryptocurrency is scoring big

Image source: https://coinmarketcap.com/

Lionel Messi's recent transfer to Paris Saint-Germain from Barcelona included a payment in cryptocurrency fan tokens. Are other clubs doing the same and why?

PSG's token, which has a market capitalization of about $52 mn, soared over 130% in just five days Ownerships offer fans the ability to participate in fan-led decisions through a mobile voting platform Football clubs use Socios.com as part of their fan engagement strategy

Lionel Messi’s recent transfer to Paris Saint-Germain from Barcelona included a payment in cryptocurrency fan tokens, the club recently confirmed, providing another big-name endorsement for new digital assets.

The 34-year-old footballer signed a two-year contract with PSG, which included tokens as part of his welcome package. The tokens were offered by the club’s fan token provider, Socios.com.

PSG informed Reuters that fan tokens were a “significant” part of Messi’s welcome package, which has a reported value of $29-35 million.

Fan tokens are cryptocurrencies that allow holders to vote on mostly minor decisions related to their clubs. Among the clubs to launch tokens this year are English Premier League champions Manchester City and Italy’s AC Milan.

Like bitcoin and other digital currencies, fan tokens can be traded on exchanges. They also share in common with other cryptocurrencies a tendency for wild price swings.

PSG said there had been high volume of trading of its fan tokens after reports of Messi’s move to the club emerged.

“The hype surrounding the latest signings in the club’s busy summer transfer window created a huge surge of interest in $PSG Fan Tokens, with trading volumes exceeding $1.2 billion in the days preceding the move,” it said.

In June, a PSG fan token was going for $11.93. PSG’s token, which has a market capitalization of about $52 mn, soared over 130% in just five days amid speculation over Messi’s arrival to an all-time high of over $60.  

Fan tokens explained

While cryptocurrencies like bitcoin are used on their own blockchains, same as Ether coins used on the Ethereum network, tokens are created and used on any existing blockchain.

Tokens are generally assets that can represent proof of ownership or even membership. A growing number of specialized blockchains have been developed with native intent to support tokens.

The value of a token can be determined by its purpose and popularity and generally fall into two categories: Utility and security tokens.

A security token represents an asset or an entitlement to an earning stream or dividends comparable to equities, bonds or derivatives, and is expected to make a profit.

A utility token provides access to the goods and services that a project launched or will launch in the future, and can be used as a type of discount or premium access to the services. A lot of tokens tend to be used specifically as a funding mechanism for companies.

Fan tokens are specific to a team or club and are a finite digital asset that provide access to an encrypted ledger of voting and membership rights.

Ownerships offer fans the ability to participate in fan-led decisions through a mobile voting platform, as well as serving as a ticket into a secure, exclusive inner circle of fans, with shared passions and beliefs.

The more tokens a fan holds, and the more they vote, the higher the clout rating of that fan, moving them upwards through different reward tiers until they have access to the biggest VIP benefits that are on offer. Fans can also purchase fan tokens to gain access to exclusive content and augmented-reality games.

Socios fan tokens

Football clubs use Socios.com as part of their fan engagement strategy to continue to build their global fan bases.

According to the Socios website, fan tokens “give you the status of a true influencer. Step up and help your team take the right decisions by voting on all their official polls…”

Examples of such decisions include kit designs, goal music, the team’s destination for a pre-season tour. The more tokens a fan has, the more votes they get in the polls. Ultimately though, the polls are decided upon by the clubs.

Top 5 clubs that use fan tokens

Arsenal, Aston Villa, Everton, Leeds, Manchester City, Barcelona, AC Milan, Inter Milan, Juventus, PSG, and the Portuguese National Team, among others, offer fan tokens.

According to SportsProMedia, when Barcelona launched their first batch of fan tokens last June, they sold out in less than two hours, generating $1.3 mn. Socios claims the fan tokens have generated close to $200 mn in revenues.