More and more football clubs are turning to the crypto industry to boost revenues 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 supporters feel about them.
What are fan tokens?
Fan tokens are utility tokens that give fans access to membership perks such as exclusive promotions, merchandise, or events in sports and entertainment circles.
Additionally, they give fans a chance to vote on minor club decisions such as jersey designs, players participating in certain games, and the goal music. Owning a fan token can also give you the chance to unlock VIP rewards, including a meet and greet with your favorite player, VIP seats, and other unique benefits. The more tokens you hold, the greater your access and shot at team governance.
Fan tokens can also be used to access and acquire a team’s exclusive memorabilia. The value of these rare items tends to increase over time, and when that happens, only fans with access to memorabilia will have an opportunity to benefit. Even so, a distinction must be made between these rare items and digital collectibles (NFTs) being sold by some football clubs.
Essentially, fan tokens provide an unorthodox form of fan engagement akin to a club membership.
How do fan tokens work?
Fans can buy fan tokens and trade them like any other cryptoasset. The price of a fan token is subject to external pressures like the crypto market and its popularity with club supporters.
Many of the clubs offering fan tokens have done it through blockchain company Socios, which organizes the initial sale and subsequent trading of fan tokens. While other platforms such as Binance exist, the Socios model offers probably the best example of how fan tokens work.
Socios typically pays football clubs a minimum sum as well as shares a percentage of the revenue generated from fan token sales on its 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 profits from the subsequent trading fees and takes a 50% commission from the sale of each token. The balance is transferred to the club.
Thereafter, tokens are released in batches over some time, usually years, until it reaches a predetermined supply limit. Depending on a club’s preference, certain measures can be taken to limit the number of votes a token holder can cast.
Fan tokens issued by Socios are based on the Chiliz protocol, which is a fork of the Ethereum (ETH) blockchain. Indeed, Socios utilizes the Chiliz native crypto, CHZ as its exclusive in-platform currency.
In other words, all fan tokens are minted on Chiliz, with smart contracts being used to execute all in-platform voting.
You can purchase fan tokens on some centralized exchanges, but other fan tokens may not be large enough to be listed yet. In that case, you can trade the fan tokens on decentralized exchanges (DEXes).
Top Football Clubs That Have Issued Fan Tokens
Here are the top five football fan tokens ranked by market capitalization (at the time of writing).
|No.||Fan Tokens||Price ($)||Market Capitalization ($)||Description|
|1.||Paris Saint Germain Fan Token (PSG)||$15.12||$47,798,095||PSG ranks 684 in terms of crypto market cap.
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, meeting players, etc.
|2.||Manchester City Fan Token (CITY)||$10.49||$40,978,913||CITY ranks 738 in terms of crypto market cap.
The fan token is capped at 20,000,000 coins and has a circulating supply of 3.8 million coins.
You can trade city on Paribu exchange.
Benefits include exclusive discounts on merchandise and app voting privileges.
|3.||Atletico Madrid Fan Token (ATM)||$7.09||$30,276,260||ATM ranks 849 in terms of crypto market cap.
The fan token is capped at 10,000,000 ATM coins.
You can purchase and trade the ATM on Binance.
|4.||FC Barcelona Fan Token (BAR)||$8.74||$26,568,216||BAR ranks 886 in terms of market cap
The fan token is capped at 40,000,000 BAR and has a circulating supply of 3 million BAR.
You can purchase or trade the BAR coin on Binance.
Benefits include governance, rewards, and staking.
|5.||Juventus Fan Club (JUV)||$8.48||$23,477,827||JUV ranks 923 in terms of market cap.
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 for them to raise money without making any change to their corporate structure or taking substantial financial risk. This would not be the case if the clubs used more traditional avenues like private equity or bank loans.
Also, fan tokens give clubs a more international appeal that supersedes merchandise and a digital media presence. Moreover, the convergence between crypto and football is interesting given the demographic overlap between fans of both industries.
However, fan tokens are not without their share of controversy.
In December last year, the UK’s advertising regulator banned promotions of fan tokens from Arsenal Football Club for potentially misleading investors on the risks of dabbling in cryptoassets.
Football fans from all corners of the world have also voiced their discontentment about the emergence of fan tokens.
Borussia Dortmund ultras group The Unity, for example, protested against fan tokens with a banner outside the stadium stating “Stop the marketing craze – tamp down fan tokens,” while Crystal Palace supporters group Homesdale Fanatics shared their thoughts with a banner that read “Morally bankrupt parasites unwelcome. Socios not welcome.”
Crypto analysts have voiced concerns about the risk posed by pushing these digital assets to fans. For one, most of the fan tokens are highly volatile due to the small number of people who want to trade them. Speculators are aware of this and seek to trade the tokens for short-term profits.
Coupled with the fact that many fans aren’t conversant about cryptoassets, the danger of fans losing money by buying tokens of 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 heavily lean on the clubs who get upfront revenue and share of profits, while the risks posed by volatility are borne by the fans.