Let’s start with the inevitable. The technology of blockchain will change the ways sports interact with their fans and followers. Hopefully, that will lead to a whole new way in which the sector can drive commercial revenues from the fans whilst providing real value in return. When this happens, with the fan in the driver’s seat, we could see sports team’s valuations reach their true potential.
There are a few fundamental reasons for seeing big growth ahead.
1. Sport is a serious business:
Since 2010 there has been an influx of capital into the space…and where there is an influx of capital into any industry, the valuations will be driven up.
2. Underpinned by good basics:
There is a recognition that the sector has some sound underpinnings – the irrational behaviour of fans, the full venues, the passion, the globalisation of content and the continued growth in media revenues (though European markets are putting this to the test).
3. There’s plenty on the table:
There’s also a recognition that the sector is under-managed and poorly leveraged in terms of alternative and new revenue models. The professionalisation of the business model is an ongoing process and will continue to drive new growth.
4. And technology holds huge promise:
This is perhaps the most exciting point, but it is the least impactful at the moment, in terms of valuation. The technology is still catching up (and in many cases yet to be adopted) and incoming investors have rarely modelled how they would innovate once they own the business – relying mostly on historic modelling to forecast the future. One thing is clear, for sports to make money from their global fanbase they will need to embrace innovation.
Blockchain will become ever more important in unlocking revenue and value in sports teams. This will be achieved through the ‘tokenisation’ of the fans.
What does tokenisation mean?
Do not mistake this as a simple endorsement of the sort of NFTs that have proliferated of late. They are simply one form of how fan and consumer interactions will change with the advent of blockchain applications whose goal is to drive up the engagement level and community feel around clubs via the use of a club token.
Tokenisation is more about the process of a fan moving onto the blockchain and all the interactions between sports and fans shifting into a space where the relationship is open, trustworthy and permanent.
This goes from their ticketing to the metaverse interactions and even social media. What better way than to build a conversation/social platform for sports than where your identify has to be linked on the blockchain?
It might be the solution to the abuse that some display and enable rightsholders to main control.
So, tokenisation is a broad concept that reaches to every touch point of a fans interaction with the teams they support and will enable a transformation of this previous dilemma of being unable to monetise your followers.
The emergence of blockchain-based ticketing and the ability for venues to know who bought the ticket and who actually attended is a ground-breaking moment. Not all that long ago a premium UK sports venue admitted that it only knew the identity of about 30% of the people coming through the doors – increasingly unthinkable in a post covid world. Driving this up to 90% will enable a host of new marketing and sales opportunities, especially in targeting VIP guests and suite users.
Of course, NFTs have landed on our doorsteps and generated new income streams for rights-holders. This is an exciting time but remains a step or two away from the true potential of the fan tokenisation concept.
Sports can rethink what it means to sell tickets, merchandise and membership and build it off the back of a blockchain. They can reinvent what a loyalty product looks like.
And they can reduce their dependence on the platform giants. The big platforms should be seen as marketing tools that drive the audience, while the blockchain enables sports to build their own fan ecosystems.
Building new ecosystems…
There is no reason why sports teams, and preferably leagues, couldn’t create rich environments for their fans within places like Sandbox, create gaming experiences and enrich their viewing via AR but all interlinked via their unique token.
Their history of interaction can be logged and known in perpetuity alongside their transaction record – be that a ticket to the next game or the purchase of a base card NFT or voting on an interaction with their favourite players.
The coming changes to the digital world are going to be far greater in the next five years than in the past ten. Creating a unique relationship direct with every fan via the tokenisation of the relationship is perhaps the single largest opportunity ahead of sports.
The risk is that when it comes to the tokenisation of the fan, sports will be beaten to the punch. Nike and Adidas are going for it. You know that Meta is fully focused on both its coming cryptocurrency and investments in the metaverse. Binance is building its financial eco-system while clearly also looking at how to forge a deeper relationship beyond use as simple trading platform.
The normalisation of crypto and blockchain will continue apace (just look at the Coinbase ad in the Super Bowl and how it crashed the site with so much volume).
Until now, sports has largely been the marketing vehicle for others…driving the massive growth of value in a host of industries. The promise of the ability to create a tokenised world within sports could generate a massive leap in revenue and value – but wait too long, or simply continue as the tool for others and that value will be owned by others.
The tokenisation of the fan is inevitable. Sports organisations have a decision to make. Do they want to retain the value or pass it on?