NFT, Crypto and Metaverse in Football

From ticketing to merchandising to managing a football club. NFTs, cryptocurrencies and the Metaverse are making their way into the football industry.
11.8.2022

The potential behind Web3 for football clubs

The football industry has already produced some innovative use cases related to NFTs, the Metaverse and cryptocurrency. These have been implemented in different areas of the clubs. However, not only the clubs themselves, but also exciting projects from Web3 startups point to the potential.

Structure and revenue sources of a football club

Before we take a closer look at the application examples, it is first important to understand how a football club is structured and what generates revenue. Most of the football clubs we know from the Bundesliga have not been associations in the legal sense for a long time. The professional departments of the majority of clubs are outsourced and belong to legal forms such as an AG or GmbH & Co. KGaA.

Since a professional football club is run like a modern company nowadays, it can be divided into the two major areas of sports and business. Sporting success can lead to economic growth, but in the same way, economic growth can also have a positive influence on sporting success. This becomes apparent when one looks at the largest and thus most important sources of income for a professional club:

  • TV Revenues
  • Sponsorship Money
  • Transfer Revenues
  • Tickets
  • Merchandise

Potential for football clubs through Web3

Web3 projects have already been implemented for four of the five revenue sources. They offer enormous potential for clubs to sustainably and successfully expand their existing revenue structure and, above all, to increasingly address the young target group. This is illustrated by the following practical examples.

Secure ticketing and simplified cross-selling

The creation and sale of fake tickets and the resale of tickets at inflated prices are problems that most clubs have to deal with every match day. The solution to this problem is the introduction of NFT tickets. Due to blockchain technology, the ticket cannot be faked and the club has insight into the entire transaction history. There are several approaches to leveraging the black market here. One of them is the establishment of a so-called royalty fee of 100%. A royalty is a fee that automatically goes to the creator every time an NFT is resold. This would mean that with every resale, the creator of the NFT (in this case the club) receives 100% of the resale price. The resale therefore only makes sense for the owner via the club.

The Italian first division club Lazio Rome will introduce NFT tickets in the 2022/23 season. Security against fraud and the fight against the black market play a major role here. Nevertheless, the ticket as NFT brings with it other advantages. Fans who own the NFT receive discounts on selected games and merchandise. This means that the ticket is no longer just a way to get in, but also serves as a digital voucher and a digital souvenir. More application examples can be found here.

NFT Ticket by Lazio Rome

The sale of virtual merchandise

As described in the Lazio Rome use case, NFT Holders get exclusive discounts on merchandise. As one of the more important sources of revenue for clubs, the range now goes far beyond jerseys, scarves and caps. But now virtual fan merchandise is also being sold. Indeed, thanks to NFT technology, virtual items can also be uniquely assigned to an owner, leading to the ever-increasing popularity of virtual fashion. One company that recognized this hype very early on is The Football Company. They have launched an NFT-based fantasy manager game in which, among other things, you can win officially licensed virtual jerseys from different football clubs and then trade them. You can then put these jerseys on your avatar and use them in the Metaverse.

Virtual Jersey by The Football Company

A stadium visit in the Metaverse

Some of you will have thought to yourself with the previous example, why do you need a virtual jersey? Manchester City provides the answer by building a stadium in the Metaverse. For this, the English first division club has announced a partnership with Sony to have the Etihad Stadium virtually recreated. Not much is known about the project yet, but the possibilities are obvious. With a virtual stadium, you can sell unlimited tickets for games and reach fans from all over the world. They can enter the virtual stadium with their avatar, which at best wears the virtual jersey, and follow the game as if they were sitting in the real stadium, for example, with the help of VR glasses. Virtual meetings with the stars and the integration of video games are also planned.

Metaverse Stadium by Manchester City

Digital collectibles as memories

The collectible is probably the best known application area in the NFT field. People love to collect things and as mentioned earlier, NFTs now allow digital ones to be uniquely assigned to an owner. This has led to NFTs becoming popular collectibles. Both image and video files can be associated with an NFT. The team at OneFootball has recognized this trend and built Aera, an NFT platform for collectibles. Users can collect moments from their favorite clubs and also win exclusive experiences. The moments are stored as NFT and can be traded accordingly. The clubs benefit from an increase in awareness within their own target group.

Aera by OneFootball

Gaming as an extension of the Collectible

You can not only collect and trade NFTs, but also use them in a game. Similar to The Football Company, Sorare has also released a fanatsy football manager that uses NFTs. The game principle is to build a team and win as many points as possible. Each player is an NFT trading card and the distribution of points is measured by the real performances of each player. The advantage over fantasy manager games that do not have NFTs integrated is that users actually own their trading cards. This means that they can also sell them and thus earn money. We are not talking about an in-game currency like FIFA Points, but the cryptocurrency Ethereum. This can then be exchanged for all kinds of FIAT currencies, such as euros or dollars. Such so-called play-to-earn games (P2E) are becoming increasingly popular and are easier to implement than before thanks to the technology behind NFTs.

NFT Fantasy Manager by Sorare

Fan tokens as sponsoring by the own fans

Fans are the heart of a football club and play a major role in its economic and sporting success. Now, in addition to their classic membership, fans also have the opportunity to support their club financially in other ways. So-called Fan Tokens are cryptocurrencies created by the club, which can be purchased by fans on the most popular crypto exchanges. These are fungible tokens. This means that each Fan Token is worth the same amount and can therefore be replaced one-to-one. This makes them easier to trade, which is why they are also excellent as an internal means of payment for clubs.

Often, fan tokens are also used as governance tokens, which gives you the opportunity to help shape decisions made by the club. For example, only AC Milan fan token holders were allowed to vote on which slogan should be displayed in the professional players' dressing rooms. Participation in an art challenge in honor of club legend Franco Baresi was also reserved for Fan Token holders. The attraction is therefore, in addition to the support of the favorite club, above all the right to vote in special polls.

Moreover, with a certain number of Fan Tokens, you also get exclusive gifts and accesses through the football club. AC Milan has already launched its Fan Token $ACM in January 2021. At the current time, one Fan Token is worth $3.91. The club was able to sell over 3 million Fan Tokens and has a market capitalization of over $12 million.

Fan Token by AC Milan

The first decentralized football club

To take fans' voice in club decisions to the next level, there is the possibility of gaining a kind of digital stake in the club through NFTs. This could lead to each owner of an NFT not only investing in the club, but also being a co-owner and thus having voting rights in much broader club decisions. Even if the practice of a decentralized autonomous organization (DAO) sounds utopian and unfeasible at first, an example from England shows the direction it might take in the future.

With the takeover of the English fourth-division club Crawley Town FC, well-known names from the Web3 space have launched an exciting NFT project called WAGMI United. With the acquisition of an NFT, fans have the opportunity to participate in the operational decisions of the club. This even extends to transfer decisions. The goal is to lead the club to the Premier League through the collective of "fan investors". Of course, this example is not a 100% DAO, as the club still retains the structures described at the beginning of the article.

Nevertheless, it was already possible to create some momentum through the money raised from fans. Not only players were hired, but also a new head coach, several athletic and assistant coaches, video analysts and a CFO. They were able to offer home tickets up to 30% cheaper and even manage the training camp in Spain for the pre-season. The youth department was also reorganized. In addition, the innovative approach also led to a partnership with Adidas, which is now the supplier of WAGMI United.

Mascot of WAGMI United

The football industry benefits from Web3 solutions

Although we are still at the beginning of the transformation process from Web2 to Web3, many clubs have already recognized the potential and successfully implemented it. Football clubs can pursue different business goals with the help of NFTs, fungible tokens in the form of fan tokens or the creation or joining of a platform in the Metaverse.

The simplified cross-selling approach in the ticketing area, which could, for example, also include the catering offer in the stadium, can lead to higher sales. The protection against forgery gained through blockchain technology leads to more trust and solves the problem of illegal reselling. Clubs can not only open up a new source of revenue with the sale of virtual fan merchandise, but also reach the younger target group in particular. This goal can also be pursued with the gamification approach in conjunction with NFTs and provide an additional boost to the awareness of the club.

The target group can also be expanded with the help of a virtual experience such as a stadium visit in the Metaverse. Especially in times when remote working has become standard and people work from other cities or countries, this can lead to a stronger bond with this group. This is because they get to experience the stadium atmosphere as realistically as possible from anywhere in the world.

How to successfully implement a Web3 solution

Ownership is what defines Web3. People no longer just want to get information and communicate with each other on the Internet, they also want to have a voice, to design and to own. That's where both fungible and non-fungible tokens come in, which is why we talk about a token economy. Even if it would have been unthinkable a year ago for fans to have a say in the transfer of a football player, it is now a reality. It remains to be seen whether this will also lead to sporting success. Nevertheless, clubs should listen to their fans even more in the future and constantly improve the experience in order to remain competitive off the pitch.

In order to make a Web3 project as sustainably successful as possible, it requires a fully developed consultation and concept. The first important step is to understand that it is all about the technology. For this reason, the price development of cryptocurrencies plays a secondary role.

Our team specializes in implementing Web3 solutions into existing business models. We have also already been able to develop some solution approaches in the field of football. Basically, we recommend a Discovery Workshop at the beginning, in which basics are taught and first project ideas are outlined. This makes the perfect basis for the concept phase of a sustainable Web3 project. If you have any questions, please do not hesitate to contact us. Feel free to contact us for a non-binding initial consultation or register here directly for a Discovery Workshop.